Business News

The cabinet has suspended its discussion of the long-awaited fiscal reform aimed at stopping the growth of the public finance deficit. Pilots working for the Czech national air carrier, Czech Airlines (CSA) have reportedly threatened to go on strike to support their wage demands. U.S. manufacturing conglomerate Honeywell has chosen the Czech city Brno for a planned global design center. Czech internet users will be able to get a broadband connection using the ADSL technology with a 3-month delay in March.

Business News

Cabinet suspends discussion on long-awaited fiscal reform

Estimated budget deficit (2002 - 2006), source: CTK

The cabinet has suspended its discussion of the long-awaited fiscal reform which should stop the growth of the public finance deficit. Finance Minister Bohuslav Sobotka had submitted two proposals - one radical and one less so - to be discussed by the government on Wednesday. However, the other ministers asked for more time to study the proposals. Public expenditure reform has been drafted alongside the state budget for this year which envisages a record deficit of 111 billion CZK. The reform has come under criticism both from the opposition and members of the ruling Social Democratic Party. Right-of-centre opposition politicians have called for even more stringent austerity measures than those included in the radical reform package. On the other hand, the Social Democrats object to cuts in social spending and insist that state revenues be raised instead. One of them is the Labour and Social Affairs Minister Zdenek Skromach who claims that the proposed reform is incompatible with the Social Democrats' political manifesto. Economists outside the governing coalition, including the Czech National Bank, have been calling for maximum expenditure cuts possible and consider even the radical alternative too soft.

CSA pilots want wage hike by hundreds of percent

Pilots working for the Czech national air carrier, Czech Airlines (CSA), have reportedly threatened to go on strike to support their wage demands. They want to be paid the same as their colleagues working for the other companies that form the SkyTeam alliance. That would mean an increase by several hundred percent. The daily MLADA FRONTA DNES wrote that the pilots intend to raise this issue during the forthcoming collective bargaining. The company's management admits that salaries in CSA are lower than in the partner airlines but relatively, their wages are in the same proportion to the national average wage - about five times higher.

Honeywell to build a design centre in the Czech Republic

U.S. manufacturing conglomerate Honeywell has chosen the Czech city Brno for a planned global design centre. The Czech government's agency CzechInvest, which helps foreign investors place their investment in the Czech Republic, said Honeywell unit Automation and Control Solutions already has two factories in Brno and will significantly expand capacity this year. The Czech Republic, which attracted foreign direct investment of $1.5 billion in the first three quarters of last year -- the highest figure per capita in east Europe -- broadened its scheme of investment incentives last year to create more sophisticated jobs amid fears manufacturers will begin to look further east as costs rise. CzechInvest's general manager Martin Jahn said that Honeywell's decision confirms the growing interest of Czech and foreign companies in building technology centres in the Czech Republic. The centre will initially employ 40 design engineers but the statement said Honeywell plans to hike that figure by several times over the next five years. Honeywell also has a research laboratory in the Czech capital, Prague, which develops advanced control and decision support software for industrial applications.

DSL to be introduced with a 3-month delay

Czech internet users will be able to get a broadband connection using ADSL technology with a 3-month delay in March. The technology which makes it possible to use telephone and data services at the same time was to be made available by the dominant telecommunications operator Czech Telecom in January. However, the former monopoly had failed to conclude contracts with the alternative operators.