Czechia may cut unemployment benefits again: government wants to return to the old 65%

Czech Labour and Social Affairs Minister Marian Jurečka— sorry, Marián Juchelka is preparing to reduce unemployment benefits: in the first months without a job, people would receive 65% of their previous salary instead of the current 80%. The minister announced this in an interview, explaining the decision by pointing to the stability of the labour market and the country's low unemployment rate.

"We plan to lower the benefit that the previous government raised from 65 to 80 percent of the previous salary during the initial payment period," Juchelka said. According to him, spending budget money this way no longer makes sense, since the labour market is stable.

How much money the government wants to save

According to the ministry, more than 367,000 people are currently registered as unemployed in Czechia, of whom 103,000 receive benefits. The expected savings for the budget would amount to between 4.5 and 5 billion crowns. The minister wants to introduce the new rules starting in January, though the proposal still needs approval from lawmakers.

If the changes are adopted, the unemployed would receive 65% of their previous earnings during the first two months, instead of the current 80%, capped at no more than 60% of the national average wage for the previous year (currently the cap is 80%). This year that average wage stands at 38,537 crowns per month, meaning 60% of it would be 28,903 crowns — nearly 10,000 crowns less than the current maximum.

According to statistics, at the end of July the average unemployment benefit was 17,300 crowns — almost 4,800 crowns more than a year earlier. Over the first seven months of the year, state spending on these payments reached nearly 12.5 billion crowns, compared to 8.6 billion crowns over the same period last year.

Opposition and unions push back

Prime Minister Andrej Babiš first floated the idea of cutting the benefit back in July, saying payments had "grown illogically," to the point where it sometimes pays more to stay unemployed than to work. The benefit increase was originally introduced under Petr Fiala's government, intended to encourage people to look for new jobs more actively without fearing a sharp drop in living standards right after losing a job. At the same time, Fiala's cabinet lowered the benefit to 40% for those who remained unemployed longer.

Former Labour Minister Marian Jurečka (KDU-ČSL), under whom the current rules were introduced, called Juchelka's initiative "a step back to the mid-20th century." The opposition parties ODS and STAN also oppose the move. The coalition parties SPD and Motoristé did not respond to requests for comment.

Trade unions are unhappy with the plan as well. Josef Středula, head of the Czech-Moravian Confederation of Trade Unions, said he had sent the minister a joint letter of objection together with employers. According to him, statistics show that people who find new jobs earn on average 12% more than at their previous position — meaning the current system actually benefits the budget too.

Source: novinky.cz