This content is not available in your region

Czech government slows or freezes salary hikes to cut budget gap

Access to the comments Comments
By Reuters

<div> <p><span class="caps">PRAGUE</span> – The new Czech centre-right government will freeze the pay of state workers and reduce previously announced pay hikes for others as it seeks to cut the budget gap amid a spike in inflation, ministers said on Wednesday.</p> <p>The government, appointed earlier this month, has pledged to cut the 2022 central government deficit below 300 billion crowns ($13.66 billion), versus 380 billion envisaged by the previous cabinet.</p> <p>“We are freezing pay for state administrative workers … and for ourselves,” Labour and Social Affairs Minister Marian Jurecka told a news conference.</p> <p>“We found a compromise so that key professions in the front line such as social services and healthcare, teachers, people in the army, will still get some increase.” </p> <p>The cut is a signal of the intention to make savings but is just a fraction of the overall savings ambition, with the freeze cutting central government spending by about 4.7 billion crowns versus previous plans.</p> <p>Teachers will get a 2% pay hike and health and social services workers exposed to the coronavirus pandemic will get a 6% hike. Military personnel and policemen will get a 700-crown monthly pay increase. </p> <p>The government will also prepare a law to freeze the salaries of politicians for next year. </p> <p>Inflation has soared to 6% in November and is expected to rise to around 8% in early 2022 as a jump in energy prices combines with supply chain disruptions and a tight labour market.</p> <p>Jurecka said the government agreed to expand aid programmes to help households hardest hit by the energy price hikes.</p> <p>The country will start 2022 on a provisional budget, and the cabinet plans to prepare its new draft in the first quarter.</p> <p>The Finance Ministry last forecast in November a 2022 public sector deficit of 4.4% of gross domestic product.</p> <p>($1 = 21.9620 Czech crowns)</p> <p/> </div>