Czech Republic and the OECD – “25 years for a Better Future”

 

Remarks by Angel Gurría,

Secretary-General, OECD

Paris, France, 8 December 2020

Dear Prime Minister Babiš, Minister Petříček, Ambassador, Excellencies:

I am delighted to join you to celebrate the 25th Anniversary of the Czech Republic’s accession to the OECD.

The Czech Republic has made impressive progress over this period, becoming both an important player within the OECD family, and a role model for many countries in its region.

In 1995, the Czech GDP per capita in PPP terms was 30% below the OECD average. Since then, the Czech Republic has started implementing reforms and policies that triggered an impressive convergence process. Today, real GDP per capita is almost 90% higher than in 1995, and the gap with the OECD average has now shrunk to less than 10%. These are remarkable numbers.

Geographical location and openness to foreign direct investment, boosted by the accession to the EU and the single market, spurred the Czech Republic’s integration in global value chains. Together with sound macroeconomic and structural policies, productivity, wages and the quality of life were lifted.

The Czech Republic has had an impressive record of accomplishment, with one of the lowest unemployment rates in the OECD over recent years. Despite the COVID-19 crisis, the Czech unemployment rate remained below 3% in the third quarter of 2020. 

The country also maintained one of the lowest inequality and poverty rates in the OECD, supported by high employment rates overall, and comprehensive redistribution through taxes and transfers.
The OECD is proud to have contributed to these positive developments. We have supported the Czech Republic through data driven, evidence-based and peer-reviewed analysis and policy recommendations. And this teamwork has proven effective.

We have worked, together, to support the Czech Republic on economic and environmental policies, housing affordability, pensions and ageing to mention a few areas.

Over the years, we have benefited from valuable contributions from Czech delegates to discussions on a wide range of topics, from taxation to the environment and energy. Just last week, we launched the 2020 Economic Survey of the Czech Republic and published the 2020 OECD Pension Review of the Czech Republic.

Our joint efforts must continue if we are to achieve a greener, more sustainable, and inclusive growth.

The Czech Republic’s impressive achievements must not be taken for granted, particularly given the uncertainty prompted by the pandemic. According to our latest projections, GDP will fall by 6.8% in 2020, and insolvencies and unemployment will continue to rise next year, before the economy moves onto a more sustained growth path.

Thanks to a legacy of sound policies, the Czech Republic had ample policy space at the start of the crisis. The authorities delivered bold monetary and fiscal support to sustain employment, incomes and liquidity. Support they have now extended in the face of a second and stronger wave of the pandemic.

The COVID-19 crisis has revealed the importance of addressing long-term challenges to sustain growth and secure a stronger future for all.
Let me name three of particular importance:

First, the need to tackle weak labour productivity growth, which has been disappointing since the Global Financial Crisis. The recent economic downturn will further hurt productivity-enhancing investments. Better-targeted R&D support policies could boost R&D investment by businesses, notably young and dynamic firms.

Second, the need to continue to fight significant regional variation in incomes and poverty. These gaps have grown over time. While globalisation and technological change lifted millions out of poverty, and allowed vibrant and open economies like the Czech Republic to thrive, they also left many people behind. This triggered a resurgence of populism, nationalism and protectionism, which today threatens growth prospects, and disproportionately harms low-income households.

Third, the need to leverage the economic recovery to help reduce the high carbon dependency of the Czech economy.

Distinguished guests:

The Czech Republic has been an exemplary member of the OECD, a member the Organisation is proud to accompany on its promising development path.

Rest assured that, as you forge ahead and continue championing international co operation and multilateralism, the OECD will remain at your side to support you through future reforms, advancing our collaboration and friendship.

Thank you.

 

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