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The economy has remained weak for longer than many other OECD countries and a hesitant export‑led recovery is materialising, but significant reductions of the output gap are unlikely to take place over the short-term, raising a fear of deflation. Also, the income convergence process vis-à-vis the euro area has stalled, reflecting the recession and a decline in potential growth, reflecting decelerating investment and productivity. The main policy challenges are to sustain the recovery and raise potential growth, pointing to a need for developing a more competitive service sector and improving school-to-work transitions.
A competitive service sector is key to boost value added in production, stimulate innovation and exploit domestic sources of growth. Competition in the sector is inhibited by red tape, government involvement competitive areas, and uneven application of competition policy. Since joining the EU, great strides have been made in removing these barriers. The competition framework is at par with best practise, but successful prosecution of hard‑core cartels has rarely happened. In addition, regulation of food retailing occupies scarce resources. Regulation of network sectors, on the other hand, has been weak, although improving in some sectors. This has meant that the drive towards competitive network sectors has been slower than in other European countries, leading to relatively high prices and slow implementation of new technologies.
Strengthening skill use and school-to-work transitions
The ongoing structural change of the economy leads to profound changes in labour demand, requiring a reallocation of available labour resources as well as workers with new and different skills. However, the education system has not sufficiently kept up with the exception of a large increase in graduates with tertiary degrees. Students that leave the education system without a degree are experiencing difficulties in finding a job, while many of those with vocational training find that either there is little demand for their skills or that their skills are not suitable to modern work practises. The large expansion of tertiary education mostly reflects higher intake in the public system, but also the emergence of many private institutions. The public system has not had a corresponding increase in resources, which could lead to bottlenecks and has raised concerns about how to secure quality that is at a comparable internationally level. The gender wage gap is high and the labour participation of women with young children is relatively low, accentuating labour shortages of the ageing society.
For further information please contact the Czech Republic Desk at the OECD Economics Department at firstname.lastname@example.org.
The Secretariat’s draft report was prepared for the Committee by Jens Christian Hoj and Sonia Araujo under the supervision of Andreas Wörgötter. Research and editorial assistance was provided by Béatrice Guérard.