In this week’s Business News: central bank sees above target inflation; cold shoulder prepared for would-be Czech workers; foreign owners channel earnings abroad; nuclear expansion reports demanded for all eventualities; and military real estate portfolio up for grabs.
The Czech National Bank sees inflation and unemployment slipping over the next two years with wages and interest rates climbing. The bank expects consumer price rises at 2.3 percent by the end of this year, slipping to 2.2 percent by the end of 2012. Unemployment is seen sliding from an average 8.8 percent this year to 8.0 percent next. But wage rises are expected to average 4.2 percent in 2012 from the more modest 2.7 percent this year and interest rates are seen rising from around 1.3 percent this year to 2.0 percent next.
Some Czech might be preparing for the opening of the jobs markets in neighbouring Germany and Austria on March 1. But the rich neighbours are also making preparations, and it is not exactly an open arms welcome. Both countries are reported to be intensively preparing laws that would prevent local companies from hiring cheap Czech workers. Austrian preparations appear to be the most advanced, including a proposed law to punish companies that offer wages “below Austrian standards.” Germany is meanwhile preparing plans for a minimum wage of around 7.5 euros an hour. Czech unions say the stress on minimum pay levels could be an inspiration to stamp out abuse at home. Germany and Austria won a seven year exemption from opening their labour markets after the Czech Republic and other ex-communist countries joined the European Union in 2004.
Around 2.0 trillion crowns, around 100 billion US dollars, has been earned by foreign investors in the Czech Republic over the last decade with more than half that figure made up of dividend payments channelled abroad, according to the business daily Hospodářské noviny. The paper highlights the trend of many foreign owned firms to repatriate an increasing proportion of profits compared with investments in the country. That is a turnaround from the situation 10 years ago. It picks on the case of the bank ČSOB which has paid out more than 63 billion crowns to its Belgian owners over the last 10 years, that is around 25 billion crowns more than it paid in the first place for its share in the bank.
The Czech government is covering all the bases in its preparations for the expansion of the Temelín nuclear power plant. It has commanded six reports on the problems and implications of what has been dubbed the contract of the century. These will cover such issues as whether the high voltage grid can be reinforced in time to ship the extra electricity, whether more costs can be shouldered by the main foreign contractor, and if the country’s nuclear watchdog is up to the job of supervising the project. The reports should be delivered by the end of 2012, in time for the big announcement on the choice of the main contractor for the two new reactors in 2013.
As well as possibility of helping out in a looming hospital crisis, the Czech military is also being called up to assist with its strained budget by selling off a series of holiday hotels and flats. The military owns around a dozen such mountain and spa hotels, including three in the western spa resort of Karlovy Vary alongside tens of smaller chalets and centres dating back to its privileged position under the communist regime. A cut price sale of around 1,600 flats in Prague is also planned to their current tenants.
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