Ostrava is an often overlooked region in the Czech Republic, facing a very difficult and uncertain future over the next decades. The region has historically been entirely dependent on coal mining, which is an unenviable position at present time, as the mines are being closed. Mining has historically made it the industrial backbone of the country, but heavy industry is currently in decline.
It is telling that the public almost unquestioningly believes that the minimum wage helps low-income people in particular. But as the prominent Czech economist Robert Holman writes in his textbook on microeconomics, “If economists agree on anything, it is that legislating a minimum wage increases unemployment.”
Governments have responded to the pandemic by printing money, thus disrupting the usual economic relationships. Financial capital, which was long been regarded as a most-demanded resource, has lost its position to raw materials which in turn have lost to labor force.
If we want to start talking about next year’s minimum wage increase, we first need to look to the past. As we all know, 2020 was the year of the pandemic, and that brought with it, among other things, a significant downturn in the economy, and with it a fall in labor productivity. The private sector responded logically by reducing the growth in average wages. But not all businesses had this option.
Prior to the crisis triggered by the COVID-19 outbreak, the Lithuanian economy had been enjoying a rapid growth. Yet, while the number of available jobs had been increasing, the number of unemployed had remained steadily high.
Slovak large-scale employers want the highest possible wage compensation, looking up to the German or Austrian Kurzarbeit system, which covers up to 85% of wage costs. Journalists and some economists argue that we should borrow as much as we can.
Can money distribution really motivate people to find a job? It doesn’t seem like it. But this depends on the level of basic income. If it is high, people might lose the incentive to look for an employment. However, the financial side of the Finnish experiment is not a tricky one.
The current social pillars are divisive, but the divide is not across the “East-West” lines or even the “liberal-socialist” lines; rather, it goes along the “reality-delusion” lines. Sadly, the proposed social pillars will not make delusional politicians to accept reality
On the one hand, Slovak unemployment rate is declining. Automotive industry and large companies find it difficult to hire enough employees. According to the recent reports, workers are brought in not only from Ukraine or Hungary, but even from Serbia.
Since the Czech Republic is an export-based economy with one dominant trading partner (Germany), one can be very skeptical of the ability of the Czech government to actually reduce unemployment. On the other hand, there is much the government can do to make the situation worse.
