EC warns Czech Republic about growing regional disparities post-coronavirus

The EC has issued a set of country-specific recommendations for EU member states aimed at speeding up the recovery of the European economy and mitigating the impacts of the coronavirus crisis. The accent is on helping the companies affected through government aid and job creation, helping socially vulnerable groups and preventing growing regional disparities as a result of the crisis.

Photo: Gerd Altmann, Pixabay, CC0 1.0 DEED

The usual calls for compliance with fiscal rules took a back seat in the EC’s spring report as Brussels assessed the situation in individual member states and pointed to possible pitfalls stemming from the disruptions caused by the pandemic. The norms for state budget deficits and support for state companies have been relaxed, however as soon as conditions allow, the EC will demand "a balance between fiscal sustainability and investment” from member states, according to Vice-President of the European Commission Valdis Dombrovskis.

Commissioner for Economy Paolo Gentiloni emphasized that money invested by countries to support companies or employees should take into account the EU's current priorities, in particular promoting the green and digital economy and ensuring a socially just economy.

In the case of the Czech Republic, the Commission states that the government needs to support employment through active labour market policies, help small and medium-sized enterprises, and invest in digitization.

According to Brussels the current situation "carries a significant risk of increasing regional and local disparities", which it says are already visible in the Karlovy Vary and Ústí nad Labem regions as well as in other parts of the country. According to the Commission, the looming increase in unemployment or income inequality calls for a "targeted political solution".

The report says that the Czech Republic had managed to reduce the spread of coronavirus disease through timely measures, but points out that it will be necessary to improve the flexibility and crisis preparedness of the health care system in view of a possible second wave of the pandemic.

According to the report, the crisis in the Czech Republic may have a strong impact on vulnerable groups, like single parents caring for young children who have been unable to work due to the closure of schools. The government could reduce the impact of the pandemic by investing in childcare, complemented by flexible working conditions for mothers, such as part-time work or the possibility of working from home, the report says.