REVIEW #18: The Invisible in the Czech Republic: When the Social System Is Expensive and Inefficient

The Czech Republic is one of the Eastern European economies that, despite its socialist past, is catching up economically with Western Europe[1]. However, in addition to the increase in social welfare and overall national income, this process is naturally associated with a form of income and wealth inequality which is perfectly natural in modern market economies. The existence of a welfare system is, therefore, a kind of compromise between the philosophies of liberalism and egalitarianism, which is supposed to create a form of social cohesion to act as a fixed point in the current form of market economy.

Unfortunately, however, it very often happens that this idea of a lifeline for disadvantaged groups degenerates into increasingly swelling cushions, which – instead of providing help and a much-needed rebound for these groups – only cause them to sink deeper into it. Nevertheless, in the case of the Czech Republic, it could be cynically noted that, while the social system functions as an ever-widening cushion, disadvantaged groups fall outside its reach. The situation is, therefore, all the worse because the country has a social system that is not only costly, but also does not bring about social cohesion.


The situation is more complex because it is not just another form of non-receipt of social benefits (in the sense that the unwillingness to receive social benefits is only one of the problems). The reasons, problems, costs, and possible policies leading to an improvement of the case are specific to each subgroup of the total number of 1.3 million people falling through the social system of the Czech Republic – the so-called ‘invisible’[2]

One of the most pressing problems – which will be analyzed in a greater detail below – is undoubtedly the fact that these invisibles include not only the recipients of social services, but also the providers. This leads to a situation where those who help often need the assistance of public institutions themselves, thus creating a vicious circle of public spending. This is, perhaps, one of the reasons for the endless growth in spending on social transfers.

As already indicated, in this case, it is not possible to move in the classic dichotomy of ‘more money spent will save the world’. Indeed, it is a common misconception that the total amount and number of social transfers paid out is the best indication of how the weakest are being taken care of. In contrast, in a functioning society, the volume of social transfers paid out should be low because there should be a low number of disadvantaged individuals and groups. The initial idea in this case should be to try to reduce the total number of invisibles permanently, which cannot simply be achieved by mindlessly increasing public spending.

[1] Blaha F., Pánek M., and M. Opatrný (2022) Strategic Autonomy and the V4 Economies, Prague: Center for Economic and Market Analysis.

[2] See the website devoted to the invisible: [in Czech]


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