Give up part of your full-time job to the unemployed, and you will be rewarded!

The unemployment rate in the Czech Republic last month was just over 9 percent. This is not as bad as in neighbouring Germany, or Poland, but it does give cause for concern. The Labour Ministry has now drawn up a plan to find work for more people without actually having to create new jobs. The cabinet launched the pilot project on Wednesday.

Social Affairs Minister Zdenek Skromach, photo: CTK

"Citizens of the Czech Republic: give up half of your full-time job to the unemployed and you will be rewarded" - this, in a nutshell, is what the Labour Ministry's plan recommends. People with full-time jobs but low salaries can volunteer to cut their time at work in half and spend the rest of the time helping the non-profit sector or studying - depending on the region that they are in. To make the decision easier, the state will pay 2,210 crowns a month or around 90 US dollars (half the minimum wage) to every volunteer. The vacated part-time job will then be filled by another person, thereby reducing unemployment, says Labour and Social Affairs Minister Zdenek Skromach:

"We have yet to do some 'fine tuning' in the area of work conditions and legislation. The pilot project is part of a larger employment policy plan and we expect to fill dozens or hundreds of jobs with it."

Minister Skromach talks of hundreds of jobs rather than thousands because the pilot project will be launched in only three of the country's 14 regions. In the region around the west Bohemian town of Karlovy Vary the volunteers will have to work the rest of the time in the agriculture sector. The labour office of north Bohemia's town of Most will offer a number of study programmes to volunteers from the Usti nad Labem region. And, in the Moravia-Silesian region in the far east of the country, volunteers will have to work for non-profit organisations.

But economists have been sceptical. They fear the project's impact will be minimal, and say that similar proposals in other countries have not proven successful. Stepan Jurajda is a labour market specialist at Charles University's Centre for Economic Research and Graduate Studies:

"My first reaction is that this is based on a false economic logic, which has been proven wrong many times over. For example, in the last couple of decades in the EU 15 countries. The basic logic that this project is using, which seems intuitively appealing, is actually wrong. You cannot divide the amount of work that is currently used on the labour market among more people by either shortening the work week or by trying to lure people into part-time jobs. This is not how the economy operates but explaining this would really take more than three sentences."

The mayors of some towns in the three selected regions have been saying that many people do not have the qualifications needed to fill the vacated jobs...

"So then maybe the right policy would be to offer retraining courses for those who are currently unemployed. But how the district labour offices are identifying what is the most potentially valuable labour market programme is a mystery to me. My suspicion is that there isn't really much of a regular evaluation, which has been recently used in the US and the EU15 economies, where statistical information is used to evaluate which of the potential programmes that you can offer have the largest benefit for a given amount of spending."

The project is aimed at people with low salaries, who would be compensated with 2,210 crowns a month, which is about 90 US dollars. To me, this doesn't sound enough to persuade anyone...

"I agree. What really needs to be worked out is the effective tax rate. When you are unemployed and you start working, you gain because you have this labour income but then you lose in terms of your unemployment benefits and all sorts of social support benefits and so on and what really needs to be worked out is how will people who make these choice between full-time and part-time work benefit - or lose - in terms of the implicit effective tax rate on their income. My bet is that this is what's driving 90 percent of these individual decisions and this small bonus won't really help that much."

But the government stresses that it is just a pilot project. Whether or not it will continue or include more regions will be decided after an evaluation by the end of January 2007.