Government acts to curb social benefits

The Czech government has approved an amendment to the social welfare law which should encourage people on the dole to seek work. The move is part of a broader effort to save money as the government struggles to lower a staggering state deficit.

Government acts to curb social benefits

Government has approved an amendment to the social welfare law, photo: CTK

If the proposal to lower social benefits wins approval in Parliament, many people who have been living off the state will have to reconsider their position. The difference between the minimum wage and minimum social benefits will increase, motivating people to take worse paid jobs rather than picking up their monthly welfare contribution from the state. Labor expert Daniel Munich claims that approximately half of the country's nine percent unemployed are either not looking for a job because they can live well enough on social welfare or else they are working in the shadow economy, not paying taxes and picking up their monthly welfare contribution as an extra bonus.

"Previous welfare measures introduced during the 90s created a "welfare trap" which is well known in Western countries. As we went through a recession, many people discovered that it was relatively easy to live on welfare, they found ways how to claim they were unemployed even if they were not. As a result the government needs to reconsider not only the minimum guaranteed welfare but also who should be eligible and set down stricter conditions for unemployment."

Are you saying the state has been too generous in the past?

"Well, it was very easy to be generous because the fiscal situation was much better. But as the fiscal situation worsens every year some measures are necessary because there are people who really have social problems and these people are not getting enough help from the government."

So it is rather a question of re-distributing the benefits in a different way?

"Yes, that is an important component. Save money in order to have more money for people who are in real need."

Undeclared sources of income are the most common way of abusing the Czech welfare system, but recently the authorities have latched on another. An increasing number of Roma asylum seekers have been picking up social benefits from two governments - the country in which they seek asylum, such as Great Britain, and here in the Czech Republic on a retro-active basis. The government wants to prevent this form of abuse by placing a three month limit on retro-active payments. If these changes are approved by both houses of Parliament, they will come into force sometime next year, but it will take longer for us to see their effect on the labor market.