A year ago, the Government of the Czech Republic, the first social-democratic government in the history of the country, presented its 'Policy Statement' as the basic document for the vote of confidence by the Chamber of Deputies of the Czech Parliament. A minority government cannot, of course, implement its programme other than on the basis of effective communication with all parliamentary parties. We believed that draft legislation submitted by the government would be assessed on the merit of its material content and that it would be able to win the necessary approval under the conditions of parliamentary democracy.
This first year has proved to be difficult. Heritage from years of conservative governments, growing economic problems and unemployment, unrealistic expectations of voters, war in Yugoslavia and never ending media attacks certainly did not make the Government popular. Some of the proposals failed to gain support in the Parliament, mistakes have been heavily criticised, successes passed almost unnoticed. But a major part of the work is still to be done and the priorities remain the same.
The Government considers its integral goal to be its contribution to the Czech society becoming a society of learning, participation and solidarity, and to this effect transforming itself into a modern society of the 21st century. It is aware of the fact that it cannot attain this goal without the active cooperation of all the citizens of the Czech Republic, and it is also aware of the limitations of government policy resulting from the free individual activities of citizens. Moreover, the long-term process of necessary modernisation of Czech society cannot be completed during a mere four-year-term of this Government. Nevertheless we believe that without a long-term vision of the development of Czech society, our policy would lack firm ground and that it is our duty therefore to attempt to formulate the necessary vision.
The idea of a learning society draws on the presumption that the qualifications of people are currently becoming a basic production factor. Only a society which is capable of making an investment in the lifelong education of its citizens, and in this respect in the development of their skills, will be able to achieve long-term success in international competition. We reject the idea that it is cheap labour which could become our basic comparative advantage in the world competition of an increasingly globalised society. On the contrary, we should be able to break through by the effective utilisation of qualified and well-paid labour with high productivity. Social spending, investment in human capital or in the development of the human potential is considered by the Government to be the most effective form of investment. It intends to reflect this form, especially investment in education, in its budget priorities and transform our society gradually into a knowledge society.
The participation of citizens in the administration of public affairs is a way of applying human potential, of freeing it from the conditions of an alienated - in fact, passive - society. We understand this participation is a motivational and inspirational factor which contributes to the growth of productivity of labour by expanding the number of carriers of innovation, and also as the basis for the self-confidence of citizens reflected in their participation in governing political entities. Participation requires decentralisation, the application of the principle of subsidiarity common in the European Union, communication between employees and employers, linking up inter alia to the successful entrepreneurial tradition of the well-known Bata company. It may be claimed that a society of stakeholders is the model for a fully-fledged civic society.
And finally, a society based on solidarity is the embodiment of the principle of social cohesion, of avoidance of unnecessary conflict during any one-sided polarisation of interest groups. The Government upholds solidarity of the healthy with the sick, because any one of us may become ill. It declares solidarity of the rich with the poor, since no-one should be deprived of their human dignity. In this respect we wish to develop the idea of a permanent and multilateral social dialogue and to take active part in this dialogue as one of its partners. It is for instance unacceptable that access to education or provided health care should depend on any other criteria than the aptitude of the candidate to learn or the state of exposure to health risk. Of course, the economic circumstances of the country will, in this context, always limit the capacity of public service provided.
The dispute on the proportion of the public and private sectors is a permanent dispute between left and right governments. The Czech Government rejects ideological fundamentalism which in its communist form led to the elimination of the private sector. However, it does not share the ultra-liberal views on the restriction of the public sector, either. It upholds the European Union idea of permanent partnership between both sectors and is aware of the fact that concrete practical policy must always seek anew the fragile and historically changing equilibrium between the two. We do not think it appropriate for economic entities whose mission is the maximisation of profit to remain in the hands of the government, just as we do not think it appropriate for entities providing public service to be subjected without restrain to the invisible hand of the market. The Government believes that the market mechanism is effective particularly in the short-term allocation of resources. The spheres distinguished by a significant time-lag between the investment and its effect - for example, education or basic research - should, in the view of the Government, remain a part of the public sector. Of course we are aware of the fact that the line between the two sectors is hazy and that its delimitation will remain the subject of permanent debate.
The Government has intended to demonstrate its emphasis on the long-term establishment of its policy when it assigned its ministers the task of drafting, by the end of the first quarter of 1999, long-term concepts of development of their departments, including a four-year legislative plan. Concepts of housing, energy and other policies are needed as well as at least a mid-term budget prospect besides the annual State Budget Act. Indeed, we are required to do so due by our commitments to the European Union.
The current state of Czech society is the result of developmental trends which bear the influence of the period of approximately forty years of communist regime and of the first eight years following the fall of that regime. Under communism, the discrepancy between the economic performance of then Czechoslovakia on the one hand and of the developed countries on the other continued to deepen and grow. Compared to the period before the second world war when Czechoslovakia was one of the ten most successful countries in the world, its ranking gradually declined under the communist regime and eventually dropped significantly. There is no need to repeat the reasons which led to this state: the constitution of a subjugated society under bureaucratic dictatorship, a society with no feedback, one that did not lean on democratic control over power, a society which made room for the average and below average and oppressed any individual who dared to voice a different view.
We still lack a systematic evaluation of the first eight years following the November revolution of 1989. It is understandable that at the time of the change democratic instincts had been weakened by forty years of communist dictatorship, creating space for often naive and one-sided solutions. Too soon did we proclaim ourselves the top of the class in central Europe without there being any rational reasons to do so. In describing the current situation, it is necessary to point out that countries which we used to outdistance continuously in the past - namely Poland and Hungary - are currently distinguished by a rapid economic growth while in the Czech Republic we have, in actual fact, economic stagnation, called an economic depression by some.
The incoming CSSD-led Government inherited a situation marked by a drop in economic performance (in 1997 the gross domestic product had been growing by a mere one per cent, and in the first quarter of 1998 growth was actually negative), by a declining standard of living measured by a drop in real wages (especially in the public sector), by growth in unemployment with regional consequences, and by a twofold increase of the national debt compared to the official figures published a year ago (due to the losses of some banks and other institutions). The lack of transparency of the capital market resulted in an outflow of foreign investors. The standard of living of significant social groups - namely old-age pensioners and young families - is lower today than in 1990. There is growing social tension, reflected in action by trade union associations. Revenue collected from the yield of "large scale privatisation" has been spent without achieving the desired restructuring of industry and agriculture. The previous Government had estimated the budget deficit for 1998 at twenty billion crowns.
We are not quoting these details to set an alibi for an austere budget and for its economic policy in general. The current government merely considers it necessary to inform the public about the true state of affairs and has therefore decided to present to the public and to the Chamber of Deputies a comprehensive inventory of the state of Czech society, unburdened by ideological ballast and relying on hard statistical data. This inventory should map the scope of our internal debt and define the distance separating us from the average standard of European Union countries with the aim of avoiding being overcome by illusions about the extent to which we are lagging behind. The Government believes that any, even the most complicated situation can be resolved; what it requires is not sugaring the pill, not concealing problems behind fine facades and being able to admit albeit even very unpleasant facts.
The Government of the Czech Republic fully supports the idea of social transformation launched by the November revolution of 1989. It is also firm in its decision to contribute by its policies to the amendment of the errors and mistakes that have accumulated during the transformation and have aggravated the mentioned loss of dynamics in the economy and the growing social tensions. Specific measures have been proposed in individual spheres and it is useful to present an outline of the measures considered essential:
- Stepping up the fight against economic crime demonstrated by tax and credit fraud, money-laundering, corruption and otherwise; elimination of circumstances in which the debtor has an advantage over the creditor and when those who default on their payments are inadequately penalised. More consistent control over the capital market to achieve greater transparency, more severe sanctions and law enforcement, closing gaps in legislation which allow enrichment that is in contradiction with traditional business ethics. Investigation of suspect financial operations, including past privatisation cases. Legal amendment of the funding of political parties to prevent their dependence on economic pressure groups; fight against political corruption carried out in a similar manner as in European Union countries (e.g. the Italian Clean Hands campaign). At the same time the Government emphasises unequivocally that such activities must not assume the nature of any kind of political purge. That, too, is another reason why the Government has decided as a matter of principle that the Minister of Justice should be a person with no party affiliation;
- Reform of public administration, including the commitment of a number of new bills for the implementation of the already adopted constitutional act on the establishment of self-governing regions. Depoliticizing the state administration by adopting a new Civil Service Act to stabilise the state apparatus, enhance its effectiveness and remove its dependence on short-term political pressure. To reduce state administration in spheres where there is rampant bureaucracy. The commitment of draft legislation allowing the extension of citizen participation (referendum, ombudsman, employee stockholding). Tax and budget reform reinforcing the economic powers of local and regional government;
- Revival of economic growth by applying active industrial, agricultural and pro-export policies. Support given to inflow of foreign investment. Accomplishment of the privatisation of the banking sector by the end of 2000 and using the yield from privatisation mainly to support housing development. Accomplishment of the deregulation of prices by the end of 2002 in a socially feasible manner and on the basis of regulation of natural monopolies. Change of budget priorities by increasing the share of education spending and by high multiplication impact investment into infrastructure;
- Acceleration of the approximation of our legislation to European Union law. Cooperation within NATO not only in the military field but also in the spheres of science, research and economy, including the utilisation of new opportunities for our arms industry. Extension of regional central European cooperation including the effort to develop special relations with the Slovak Republic;
- Adoption of the Social Charter of the Council of Europe (this proposal of the Government has already been approved by the Parliament). Increase of the minimum wage to secure, in compliance with the Charter, a life not dependent on social benefits, and to motivate the acceptance of employment. The extension of job offer opportunities by systematic organisation of work on community projects. Boosting the mechanism of tripartite bargaining and the establishment of a permanent social dialogue with the aim of securing social peace even in difficult economic conditions.
The Government of the Czech Republic expects to inform the Chamber of Deputies on the fulfilment of this 'Policy Statement' once a year (as we have recently done) and believes that at the end of its four year term the country will be in considerably better shape than when we took government.
The Government will strive to bring the Czech Republic into the ranks of active proponents of European and, as far as it is possible, also world politics, leaning on cooperation, solidarity, human rights and cooperative security. It will promote the development of all-round co-operation with the countries of Central Europe and coordination of preparations for EU membership, especially together with the Polish Republic and the Republic of Hungary. The Government supports the vision of a united, democratic, prospering and peaceful Europe without tensions and conflicts, a Europe of free citizens and cooperating regions.
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