Under the economic plans, Czechs will pay more tax on alcohol and medicine. Businesses will also pay more corporate tax.
Labour unions staged a day of protests and strikes across the Czech Republic on Monday to voice their opposition to the government’s package of cuts and austerity measures meant to keep the ballooning deficit under control.
The unions are also demanding more money for the education and healthcare sectors and are protesting proposed changes to the pension system.
Prime Minister Petr Fiala criticised unions for not negotiating and said his government was not ready to give in because the measures are “absolutely necessary”.
“We have to stop the state indebtedness,” Fiala said.
The unions were marching through Prague before rallying at a downtown square near the parliament building.
“The unionists protest because they don't like the development in the Czech Republic under the current government,” Josef Stredula, the head of a major umbrella union organisation, told the crowd of several thousand.
“Resign,” the protesters chanted, aiming their message at the government.
Stredula said the unions will plan more protests if the government refuses to negotiate.
Some 74% or over 7,200 nursery, primary and secondary schools across the country were either fully or partially closed Monday in the biggest such protest since the establishment of the Czech Republic in 1993, unions said. Several universities supported the unions’ move.
Workers at hundreds of companies, including some state offices and major carmaker Škoda Auto, were planning to join the protests, mostly by stopping work for an hour or two.
Both houses of the parliament approved and President Petr Pavel signed into law last week an economic package of dozens of measures introducing budget cuts and increased taxes designed to keep the budget deficit under control as the Czech Republic teeters on the edge of recession.
Among other measures, Czechs will pay more taxes on alcoholic beverages, including beer, and on medicine. Businesses will also pay higher corporate taxes.
According to the government, the measures should reduce the budget deficit by 97 billion Czech crowns (€4 billion) next year and by 150 billion in 2025.
As a result, the deficit of 3.5% of gross domestic product expected for this year should drop to 1.8% next year and to 1.2% in 2025.
The package is a compromise reached by Fiala’s five-party ruling coalition that took over after defeating populist Prime Minister Andrej Babiš and his centrist ANO movement in the 2021 parliamentary election.
Babiš has vehemently opposed the changes.
The government's recent proposals to change the pension system would link the age of retirement to life expectancy. Unions fear the new age would exceed the current 65 years. The proposals are not yet final.