The number of public sector employees in the Czech Republic continues to grow. It’s up by 23,000 since 2012, to today’s total of 437,000. But that number is far from a definitive count. According to a 2014 Centre for Economic Research and Graduate Education (CERGE) study, the actual total is estimated at 935,000, meaning around one-fifth of the country’s workforce. The economy is doing well, which means that government politicians have plenty of resources available to create new public sector jobs. And then, it seems, they expect such staff to remember who hired them at the voting booth. Which means they are using taxpayer monies to essentially buy votes, all the while boasting about their job-creation credentials. A nice trick.
This effort to essentially buy votes is also evident in comparison with other countries. But it would be unfair to merely attribute this phenomenon to the current government and events since 2012. Even in 2009 the Czech Republic dominated in this practice. According to a 2015 OECD study called “Government at a Glance”, Czech public sector employment – recalculated to account for only full-time work – accounted for 35 percent of overall employment levels. No other OECD country attained such a high share. In fact, even Scandinavian countries had a lower share, albeit Denmark barely trails. Czechia has also triumphed with regards to the share of public sector employment in comparison with the overall labour force. The latest data are sadly not yet available, but what is already clear is that Czech public sector employment is one of the highest among all economically developed nations.
Conversely, public debt measured against the size of the economy is one of the lowest among developed nations. And this year, the government may even end up balancing the budget.
Frustrations over the corpulence of the Czech public sector were highly evident during this October’s Prague Capital Market Summit conference. Business leaders, bankers and economists demonstrated a rare consensus over this single issue: the size of the state sector, and the regulatory framework which it has created, are stifling the private sector and killing investment activities; the consequence of this is the prevention of increased productivity levels and the stymied introduction of innovative methodologies. One experienced Czech banker in attendance even unashamedly used the phrase “bureaucratic terror”. Czech governments have apparently been soaking up tens of thousands of qualified staff to work in the public sector. The result has been labour shortages in the private sector. In an exponential effect, the new public sector then unleashes further “regulatory terror”. One cannot help but agree. Sadly, Parkinson’s law is merciless in this regard (“Work expands so as to fill the time available for its completion” –Ed.]. Which then leads to the question of whether the current trend of increased “terror” can be reversed, or whether we may one day end up seeing the total collapse of the current model of the social state. But today’s politicians need not concern themselves with such a potential future. After all, that scenario has nothing to do with the all-important next election.
Published in E15 weekly.
Lukáš Kovanda, Ph.D., je český ekonom a autor ekonomické literatury. Působí jako hlavní ekonom Trinity Bank. Analyzuje a komentuje makroekonomická témata, investice i nové fenomény typu sdílené ekonomiky, kryptoměn či fintechu. Přednáší na Národohospodářské fakultě Vysoké školy ekonomické v Praze.
Je členem vědeckého grémia České bankovní asociace.
