As Czechia's new subsidy for part-time work kicks in, who benefits the most?

In a bid to strike a balance between family life and work, the Czech Republic introduced a new initiative earlier this year offering discounts on social contributions to employers who provided reduced working hours and part-time work for their employees. According to the Czech Labor Ministry, over-55-year-olds and parents are taking advantage the most.

Implemented in February, this initiative has led to a significant uptake in part-time work arrangements. By the end of June, almost 24,000 employers had embraced this flexible work model, benefiting around 99,000 individuals. The core objective of this scheme, according to Labor Minister Marian Jurečka, is to foster a better work-life balance and promote educational outreach to both employers and employees.

The most notable beneficiaries of this initiative have been individuals over the age of 55 and those caring for children, making up 39 percent and 38 percent of the total participants respectively. Notably, 10 percent of part-time workers were found to be disabled, showing that the scheme is popular for physically handicapped people.

Under this program, employers see a reduction of 5 percentage points in the insurance premium they typically pay, which is usually set at 24.8 percent of the worker's earnings base. This discount on contributions for reduced working hours has amounted to a total of CZK 415 million in savings as of end-June.

The discount on insurance premiums also extends to people under 21 years of age, although their working hours do not need to be reduced. However, certain conditions apply: the employee must not earn more than 1.5 times the average wage or more than 1.15 times the average per hour. Their monthly working hours should not exceed 138 hours for all duties within the company. Additionally, the discount does not apply to part-time work on the protected labor market.

Despite the Czech Republic boasting an above-average employment rate in the EU, it lags behind in employing mothers with young children, older workers, and the disabled. The Ministry's documents indicate that, prior to the introduction of these discounts, only around 260,000 people were engaged in reduced working hours, highlighting the relatively underutilized nature of such arrangements in the country compared to its European counterparts.

The Ministry of Labor estimated that the reduction in premium collection due to this initiative could range from CZK 1.9 billion to CZK 3.2 billion annually. While trade unions have criticized the move, citing potential negative impacts on the pension system, the Ministry counters that the increased employment resulting from this initiative could lead to higher government revenue from levies and taxes.

The Czech Republic's initiative to provide employers with discounts on social contributions for reduced working hours has proven successful in promoting part-time employment, particularly among older individuals and caregivers. This innovative approach aims to strike a balance between professional and personal life, benefiting both employees and employers while potentially boosting government revenue in the long run.