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Home » Archives » Business

Single office for state benefits

Cabinet centralizes management, increases pensions

By Victor Velek
Staff Writer, The Prague Post
September 26th, 2007 issue

People who need to apply for unemployment and other social benefits will soon have a one-stop shop to visit under a new government plan.
The plan will unite social benefits, unemployment and social workers under a single umbrella office, making management more effective and user-friendly.
The unified system is set to be in place by January 2009, said Labor and Social Affairs Minister Petr Nečas after the Cabinet approved his plan Sept. 24.
“Almost 90 billion Kč [$4.6 billion] passes through the fragmented system annually,” he said. The streamlined central office will rationalize this flow and save significant money, according to Nečas.
Synchronizing unemployment supports with social benefits will allow more complex monitoring of applicants’ needs and thus more effective and tailored help, added Labor and Social Affairs Ministry spokesman Jiří Sezemský.
Today, social benefits — poverty allowances, parental allowances or payments to those taking care of the disabled or elderly, among others — are administered by the regions and municipalities. Unemployment benefits and job-search assistance are provided by employment offices.
The country’s network of about 250 employment offices will serve as the new agency’s backbone, Sezemský said.
The fusion does not apply to sickness allowances or the administration of pension and sickness insurance, which will remain in the hands of the Czech Social Security Administration.
At the same meeting, the government gave a green light to Nečas’ proposal to increase pensions. As of 2008, the average pension will rise 346 Kč, pushing up the average monthly pension to 9,111 Kč. The boost will help cover the increased value-added tax on food and the introduction of an energy consumption tax, both provisions of the new public-finance reform, Nečas said.
Trade unions and senior members of the opposition Social Democrats are decrying the increase, saying it does not go nearly high enough to compensate for the impact of the reform on pensioners.
“An increase of 700 Kč would have been sufficient for the vast majority of pensioners,” said Milan Štěch, leader of the Czech and Moravian Confederation of Trade Unions.
“The announced rise is ridiculous,” he added. “Pensioners’ living standards will certainly drop next year.”
Pensions are becoming a heavy burden for the state budget, swallowing about 28 percent of revenues. Experts have warned that the pension scheme will collapse in the midterm if not redesigned.
Politicians across the parties have set up a joint commission to work on the issue. The first phase of the reform is expected next year.

Victor Velek can be reached at vvelek@praguepost.com


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