TOWARDS MORE SUSTAINABLE AND INCLUSIVE GROWTH 218 OECD ECONOMIC SURVEY OF THE CZECH REPUBLIC & ENVIRONMENTAL PERFORMANCE REVIEW 218 Prague, July 16 th 218 http://www.oecd.org/eco/surveys/economic-survey-czech-republic.htm @OECDeconomy @OECD
The economy is thriving Real GDP growth, year on year per cent changes 8 Czech Republic OECD 8 6 6 4 4 2 2-2 -2-4 -4-6 27 28 29 21 211 212 213 214 215 216 217 218 219-6 Source: OECD (218), OECD Economic Outlook: Statistics and Projections (database). 2
Unemployment is at a record low Unemployment rate, % of labour force 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 21 211 212 213 214 215 216 217 218 Source: OECD Quarterly National Accounts (database). 3
The exchange rate is appreciating and inflation is around the target CZK/EUR 28. Exchange rate (left axis) Headline inflation (right axis) Y-o-y % changes 3. 27.5 2.5 27. 2. 26.5 1.5 26. 1. 25.5.5 25. 213 214 215 216 217 218. Source: OECD (218), OECD Economic outlook (database) and Thomson Reuters Datastream (database). 4
Well-being is higher than in other Central and Eastern European countries OECD Better Life Index, 217 Index scale (worst) to 1 (best) Czech Republic OECD CEE peers Subjective well-being Income and wealth 1 8 Jobs and earnings 6 Personal security 4 Housing 2 Environmental quality Work and life balance Civic engagement and governance Health status Social connections Education and skills Note: For each dimension indicators are normalised and averaged. CEE peers are Estonia, Hungary, Poland, the Slovak Republic and Slovenia. Source: OECD (217), OECD Better Life Index, www.oecdbetterlifeindex.org. 5
CZE ISL DNK SVK FIN NOR FRA AUT NLD SVN LUX DEU HUN CHE SWE IRL BEL GBR POL OECD PRT KOR NZL ITA AUS GRC CAN JPN EST ESP LVA CHL USA MEX TUR ISR Poverty is low Population with disposable income below the poverty line, % of population, 215 3 3 25 25 2 2 15 15 1 1 5 5 Note: The poverty line is 6% of median household income. Household income is adjusted to take into account household size. Source: OECD (218), OECD Social and Welfare Statistics (database). 6
CHALLENGES TO SUSTAINABLE GROWTH 7
Wages are rising due to labour market shortages Thousands 3 25 Vacancies registered at the employment offices (left axis) Average monthly wages of employees (FTE) (right axis) CZK 35 3 2 15 1 5 25 2 15 1 5 21 211 212 213 214 215 216 217 218 Note: 217-preliminary; vacancies refer to numbers registered at the end of the respective year and for 218 at the end of the first quarter, preliminary. Source: Czech Statistical Office, Public Database. 8
Productivity is picking up but remains low Real GDP per person employed, growth and level Y-o-y % change CZE, growth (lhs) OECD, growth (lhs) CZE, level (rhs) OECD, level (rhs) 7 6 5 4 3 2 1-1 -2-3 Thousand USD PPP 9 8 7 6 5 4 3 2 1-4 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 217 Source: OECD (218), OECD Productivity (database). 9
DNK SWE PRT SVN NOR ISR AUT LVA FIN BEL CAN NLD FRA ISL CHE LUX ESP POL USA DEU OECD IRL EST GBR AUS GRC NZL ITA JPN HUN SVK CZE CHL KOR MEX TUR Reconciling work and family remains difficult for mothers of young children 7 Employment gap of mothers with young children with respect to men aged 25-54, %, 215 7 6 6 5 5 4 4 3 3 2 2 1 1 Note: Mothers with young children refer to working-age mothers with at least one child aged to 14 years. The employment gap is the difference between the employment rate of men (aged 25-54 years) and that of young mothers, expressed as a percentage of the employment rate of men. Source: OECD (217), Employment Outlook 217. 1
ISR MEX TUR USA AUS LUX NZL NOR CHL DNK SWE ISL GBR IRL CAN FIN BEL FRA OECD LVA NLD HUN SVK CHE EST CZE AUT DEU POL SVN ITA KOR GRC PRT ESP JPN The population is ageing Percentage of population aged 65 years and over 4 25 215 4 35 35 3 3 25 25 2 2 15 15 1 1 5 5 Source: OECD (217), Health at a Glance 217: OECD Indicators. 11
Fiscal revenues rely heavily on social contributions 216 or latest, % of GDP 5 45 4 35 3 25 2 15 1 5 Social Security Contribution Other direct taxes Indirect taxes MEX CHL USA NZL SVK ESP POL CZE OECD PRT EST SVN DEU HUN AUT FRA DNK 5 45 4 35 3 25 2 15 1 5 Source: OECD (217), Revenue Statistics (database). 12
Ageing-related spending will increase 8 Change in gross public expenditure between 216 and 27, percentage points of GDP Pensions Health care and long-term care Other 8 6 6 4 4 2 2-2 -2-4 -4-6 FRA LVA ITA DNK POL SWE EU28 HUN SVK NLD AUT DEU BEL CZE NOR SVN -6 Source: European Commission (218), The 218 Ageing Report: Economic and Budgetary Projections for the EU Member States (216-27). Based on the reference scenario. 13
Key recommendations Addressing labour shortages Increase resources to education, skilling, reskilling and upskilling. Keep expanding the supply of affordable childcare facilities. Increase the flexibility of jobs by better enforcement of rights to part-time work, flexible teleworking and shared jobs. Tackling long run challenges, including the impact of an ageing society Keep some fiscal space to cope with future ageing-related spending. Rebalance tax revenues by reducing social security contributions and raising indirect taxes (VAT through better compliance and environmental taxes). Link tightly retirement age to life expectancy. Broaden the financing of health care and long-term care by expanding the base of contributions to all types of income. More in the Key Policy Insights of the Economic Survey of Czech Republic 218 and in Chapter 3 of the Environmental Performance Review 14
IMPROVING THE HEALTH CARE SYSTEM 15
Health outcomes have improved Life expectancy at birth in years, 215 84 82 8 78 76 74 2.7 2.5 25 Years gained during 25-15 1.4 2.3 3. 3.5 1.5 2.6 2.5 4.8 1.9 2.7 84 82 8 78 76 74 72 72 7 7 68 68 66 HUN SVK POL EST CZE CHL OECD SVN GRC PRT ISR ESP 66 Source: OECD (218), Health statistics (database). 16
TUR LVA MEX LUX POL EST SVK CZE ISR HUN KOR IRL GRC CHL SVN ISL ITA PRT ESP OECD NZL FIN AUS GBR AUT DNK BEL NOR NLD CAN JPN FRA SWE DEU CHE USA Total health care expenditure is relatively low Total health care expenditure, 216, % of GDP 2 18 16 14 12 1 8 6 4 2 2 18 16 14 12 1 8 6 4 2 Source: OECD (217), Health at a Glance 217: OECD Indicators, OECD Publishing, Paris. 17
1. 9.5 9. 8.5 8. 7.5 7. 6.5 6. 5.5 Health spending will increase further as the population ages Actual Drivers of health care expenditure, % of GDP Demographic scenario (ageing only) Expansion of morbidity Compression of morbidity Combination of non-demographic and demographic 1. 9.5 9. 8.5 8. 7.5 7. 6.5 6. 5.5 5. 5. 2 25 21 215 22 225 23 235 24 245 25 255 26 265 27 Note: The projections do not anticipate future policy change. Health care expenditure includes long-term health care. Non-demographic factors include e.g. technological and institutional improvements. Source: Calculations based on data from OECD (217), System of Health Accounts (database) and European Commission (218), Population projections from the Ageing Working Group by Eurostat. 18
MEX SWE CHL NZL CHE PRT FIN NOR DNK IRL LUX ISL LVA FRA EST AUT BEL ITA SVN OECD AUS POL ESP CAN NLD TUR DEU CZE SVK HUN JPN KOR The number of doctor consultations is high Consultations per inhabitant, 215 or nearest year 16 16 14 14 12 12 1 1 8 8 6 6 4 4 2 2 Source: OECD (217), Health Statistics (database). 19
TUR ISR MEX NOR CHL JPN SWE GRC ISL ITA NLD CAN FIN USA NZL OECD KOR ESP DNK CHE GBR AUS PRT SVK EST POL LVA HUN IRL DEU LUX CZE SVN FRA AUT BEL Adverse lifestyle affects health Litres of alcohol per capita consumed 14 14 12 12 1 1 8 8 6 6 4 4 2 2 Source: OECD Health Statistics 217 2
MEX CHL SWE DNK CAN GBR TUR NZL USA ESP IRL ISR ISL ITA PRT NOR AUS NLD GRC FIN SVN CHE OECD LUX EST LVA SVK FRA BEL CZE POL HUN AUT DEU KOR JPN Health care is still too hospital centred Number of hospital beds per 1 inhabitants 14 14 12 12 1 1 8 8 6 6 4 4 2 2 Source: OECD (217), OECD Health Statistics (database). 21
ITA ISR EST FRA LVA BEL DEU ISL LUX HUN DNK CZE SVK JPN USA OECD CHE SWE CAN AUT ESP CHL NZL SVN FIN AUS NLD NOR IRL KOR GBR 6 Ageing of doctors and health workers is threatening the supply of medical care Percentage of doctors aged 55 years and over in 215 (or nearest year) 6 5 5 4 4 3 3 2 2 1 1 Source: OECD (217), Health at a Glance 217. 22
Key recommendations for improving the health care system Gradually introduce a pay-for-performance scheme for hospitals and doctors based on a broad set of performance indicators. Reduce the scope of the reimbursement decree by limiting its coverage and leave room for negotiations between insurance funds and health providers Align payment schemes for long-term care in health and social care setting by coordinating the use of user fees. Continue reducing hospital beds by encouraging regions and municipalities to restructure capacities of health services and facilities Strengthen the role of primary care through gate-keeping and further shift towards a better mix of capitation fees and fee-for-service for General Practitioners. Increase the capacity of medical faculties and the number of students through scholarships and ensure the sustainable financing of universities. Increase taxes on tobacco, alcohol and consider introducing taxes on unhealthy food and beverages. Promote healthier lifestyles and further develop education, disease prevention and screening programmes. More in Chapter 1 of the Economic Survey of Czech Republic 218 23
ENVIRONMENTAL PERFORMANCE REVIEW OF THE CZECH REPUBLIC Prague, July 16 th 218 http://oe.cd/epr-czech-republic @OECD Environment @OECD
Poverty Food Health Education Gender Equality Water Sustainable Production Climate Oceans Biodiversity Energy Economy Infrastructure Inequality Cities Institutions Implementation Good performance on some Sustainable Development Goals Czech performance compared with the OECD average, Distance to target ( target achieved)..5 Target OECD Average..5 1. 1.5 2. 2.5 3. 1. 1.5 2. 2.5 3. People Planet Prosperity Peace Partnership Note: This figure shows how far the Czech Republic must progress to meet the SDGs. Source: OECD (217), "Measuring distance to the SDG targets: An assessment of where OECD countries stand". 25
EST CAN AUS KOR CZE POL USA GRC OECD JPN ISR MEX SVN CHL DEU FIN BEL NZL NLD SVK HUN TUR LUX PRT ESP AUT ITA GBR LVA ISL IRL DNK NOR FRA SWE CHE.7.6 The Czech Republic has one of the most carbon intensive economies in the OECD CO 2 emissions per unit of GDP, t/1 USD 215 2.7.6.5.5.4.4.3.3.2.2.1.1.. Notes: CO2 emissions from energy use only; excluding international marine and aviation bunkers; sectoral approach. GDP at 21 prices and purchasing power parities. Source: IEA (217), IEA CO2 Emissions from Fuel Combustion Statistics (database). 26
A shift from coal to nuclear and renewables Electricity generation by source, GWh 1 9 8 7 6 5 4 3 Coal and coal products Renewables and waste Nuclear Natural gas Natural gas 1 9 8 7 6 5 4 3 4 th lowest OECD share 2 1 Nuclear 2 1 Coal Source: IEA (217), IEA World Energy Statistics and Balances (database). 27
Achieving mid and long-term climate targets will require additional efforts Greenhouse gas emissions, Mt CO2eq Total GHG emissions Targets Kyoto Protocol target 2 18 16 14 12 1 8 6 4 2 2 18 16 14 12 1 8 6 4 2 199 1995 2 25 21 215 22 225 23 235 24 245 25 Note: Total greenhouse gas emissions excluding LULUCF. Source: OECD(217),"Air and climate: Greenhouse gas emissions by source", OECD Environment Statistics(database); MOE (217), Climate Protection Policy. 28
Average effective tax rates (EUR/t CO 2 ) Carbon prices are low Average effective tax rates on CO 2 from energy and carbon intensity, 215 12 CHE 12 Nuclear 9 Natural gas 9 6 6 SWE Oil 3 POL CZE KOR AUS EST 3 USA CAN.5.1.15.2.25.3.35.4 Coal.45.5 Carbon intensity of GDP (kg CO 2 per 21 USD at PPP) Note: The average effective tax rate is the price of carbon emissions resulting from excise taxes (it translates excise taxes on energy into rates per unit of CO2 emissions from energy use). Source: OECD (218), Taxing Energy Use 218: Companion to the Taxing Energy Use Database. 29
NZL AUS SWE ISL MEX FIN CAN NOR IRL ISR CHE FRA CHL EST ESP LUX USA DNK KOR OECD TUR PRT JPN GBR NLD AUT SVN ITA BEL DEU GRC CZE SVK POL LVA HUN The rate of mortality from air pollution is among the highest in the OECD 1 9 8 7 6 5 4 3 2 1 Number of premature deaths due to outdoor air pollution, per million habitants, 216 1 8 6 4 2 Note: Data have been updated after the finalisation of the publication. Source: OECD (218), OECD Environment Statistics (database). 3
Waste recovery is progressing but landfilling remains the main treatment method Municipal waste management, by type of treatment, 215 1% Landfill Incineration with energy recovery Other treatment Incineration without energy recovery Recycling and composting 1% 8% 8% 6% 6% 4% 4% 2% 2% % % Notes: Data refer to the indicated year or to the latest available year. They may include provisional figures and estimates. Household and similar waste collected by or for municipalities, originating mainly from households and small businesses. Includes bulky waste and separate collection. For the specific country notes see the source database. Source: OECD (217), "Municipal waste", OECD Environment Statistics (database); CZSO (217) Generation, recovery and disposal of waste. 31
Car traffic volume is growing in Prague s outer zone Passenger transport in Prague, 26=1 Public transport Outer zone road traffic volume City centre road traffic volume 125 125 1 1 75 75 5 26 27 28 29 21 211 212 213 214 215 216 5 Note: Public transport: index based on the number of passengers transported; break in time series in 214. Traffic volume: index based on the number of vehicles over the 24 hours of an average workday. City centre delineated at Petřín in the west, Letná in the north, Riegrovy sady in the east and Vyšehrad in the south (the Strahov and Mrázovka tunnels lie outside the central cordon). Outer zone: volume of traffic at the entrances of the main roads and motorways into the continually settled area of the city. Source: City of Prague (26-17), Prague transport yearbook. 32
Key recommendations 1 Towards Green growth Strengthen political commitment to a low-carbon economy and align the State Energy Policy with the Paris Agreement objectives Introduce a carbon component in energy product taxation to reflect the climate costs of energy use outside the EU ETS Increase the share of permits auctioned under the EU ETS and establish a stable support framework for renewables development Tighten environmental criteria of vehicle taxes to promote fleet renewal towards cleaner vehicles and extend distance-based charging to address air pollution and congestion 33
Key recommendations 2 Improving waste management Speed up the adoption of the new Waste Act Harmonise the national waste management information system and official statistics on waste and materials Review waste-related taxation in line with the waste hierarchy Ensure that municipal waste fees cover the full costs of service provision Promoting compact cities for sustainable development Use a functional rather than administrative approach in delimiting metropolitan areas Adopt a compact, co-ordinated, connected urban development model Link urban transport solutions to housing and land use planning to improve mobility and reduce air pollution Promote the development of brownfield sites 34
For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. http://www.oecd.org/eco/surveys/economic-survey-czech-republic.htm http://oe.cd/epr-czech-republic 35