Minister proposes incentives to halt abandonment of small villages

The Czech minister of agriculture has presented a plan aimed at halting the abandonment of small villages. The scheme would offer incentives to both employers and employees in municipalities with a population of 500 or less. However, the minister of finance takes a dim view of the measures.

Marian Jurečka, photo: Filip Jandourek

While the number of people living in rural areas is growing in general, it has fallen by 6.6 percent in municipalities of 500 or fewer, the minister of agriculture, Marian Jurečka of the Christian Democrats, told reporters on Tuesday. Unemployment is on average 4 percent higher in such villages, he said.

Under his new proposals aimed at halting the population flow away from these spots, workers in villages with 500 or fewer residents would get a CZK 500 a month discount on their social insurance.

Business people in small villages – of which there are approximately 2,000 around the country – who employ 10 or more people would be eligible for a CZK 2 million loan at advantageous rates.

The plan would cost up to CZK 2.3 billion a year. Explaining it in more detail, Minister Jurečka said that the social insurance discount would only apply to employees whose assessment base does not exceed one and a half times the average monthly salary.

This should concern more than 385,000 residents of small villages, Mr. Jurečka said. According to the Czech Statistics Office, the average monthly salary in the second quarter of this year stood at CZK 27,300.

The minister told reporters that he did not expect that people would exploit the proposed system by changing their address to such a small municipality just to gain CZK 6,000 a year.

Photo: Zdeněk Fiedler, CC BY-SA 3.0

Mr. Jurečka said dealing with issues, such as places in kindergartens and getting documents changed, connected to people’s official addresses ought to be a sufficient deterrent to abuse.

Though the scheme could initially cause a dent in the state coffers, this would not be an issue in the longer term thanks to the jobs created, he said.

One man opposed to the plan is Andrej Babiš, the ANO minister of finance, who argues that it does not appear workable. “It’s unsystematic,” he told journalists on Tuesday.

Under the mooted scheme, loans for entrepreneurs who are active in disadvantaged areas (which are defined by the Ministry of Regional Development) should be repaid within six years and applicants could apply to have their loan principal repayments deferred within a year of a contract being signed.

Mr. Jurečka denied that his proposals – which he plans to put to the cabinet in the near future – are a populist move linked to forthcoming regional and local elections. He said it had already been under discussion at the Ministry of Agriculture for three or four months.