President vetoes pension reform bill

25-09-2012

President Václav Klaus on Monday vetoed a third government bill in September alone, this time the government’s pension reform. The bill introduced a so-called “second pillar” to the pension system which would enable Czechs to send part of their compulsory pension insurance contributions to private accounts as of next year. Above all, Mr Klaus cited concerns over a lack of consensus with the opposition.

Václav Klaus, photo: archive of the Czech GovernmentVáclav Klaus, photo: archive of the Czech Government Prime Minister Petr Nečas has yet one more problem to worry about, this time the future of the government’s pension reforms. The amendment – which would have allowed Czechs to send part of their insurance contributions to private accounts managed by pension funds instead of the state-run pay-as-you-go system – was stopped by a presidential veto. In a statement on Monday, President Klaus cited several key concerns, chief among them the fact that the legislation had, in his view, been ‘forcibly’ pushed through without proper consensus across the political spectrum, and with input from experts. The president made clear that without broader backing such legislation, potentially impacting all Czechs long-term, would be on weak footing from the start. And he further criticised the timing, as the financial crisis had already, he wrote, undermined individuals’ confidence and represented a hazard with regards the stability of the pension system.

In response, the prime minister made clear in somewhat sour terms that Mr Klaus’ decision could perhaps have been expected, even if it caught many in his party off guard:

Petr Nečas, photo: CTKPetr Nečas, photo: CTK “I am familiar with the president’s views: I have been hearing the same from representatives of the Communists, Socialists and union leaders all year.”

The country’s foreign minister, Karel Schwarzenberg in New York for the annual meeting of the U.N. General Assembly, also reacted negatively. In an interview for Czech Radio and the Czech news agency, ČTK, he warned that failure to implement the bill would prolong reforms in the Czech Republic that “should have been passed 15 years ago”; he added that delaying the reforms would understandably further burden the state budget. By contrast, members of the opposition, like Social Democrat leader Bohuslav Sobotka said they welcomed the president’s move to veto the amendment and union leader Jaroslav Zavadil, in tripartite talks with the government, was noticeably pleased at a press conference with the finance minister that appeals by the unions had finally been noticed:

“All I can say is that it looks like the president finally read our position on pension reform... it’s too bad he didn’t do so earlier.”

Jaroslav ZavadilJaroslav Zavadil In fact, in his statement Mr Klaus went to pains to describe his differences with the amendment as different from those of the opposition; regardless, the result is largely the same. The prime minister is now faced with the task of passing the bill again in the Chamber of Deputies with a clear 101-vote majority, one he certainly cannot depend on automatically. Several rebel Civic Democrats have already sided with the president’s opposition to the proposed VAT rate hike and could easily side with Mr Klaus again. The prime minister has charged, the presidential veto has done little for the stability of the government. The VAT hike alone will be tied to a vote of confidence, now tensions over pension reform promise to only increase the pressure. The Chamber of Deputies are to vote on the bill in October.

25-09-2012