COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Czechia
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Czechia, budget policy, economic policy, economic recovery, economic reform, employment policy, innovation, pension scheme, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 603 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Czechia {COM(2024) 603 final} - {SWD(2024) 600 final}  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

The Czech economic model faces 
challenges related to 
decarbonisation and a shortage of 
workers 

Czechia’s  economic  growth  has  been 
hampered by one of the highest inflation 
rates  in  the  EU (1).  In  the  pre-pandemic 
years, domestic demand was a main driver of 
economic  growth,  but  the  pandemic  lockdown 
and,  more  recently,  the  high  inflation  rates 
registered in 2022 (14.8%) and 2023 (12.0%) 
negatively affected Czechia’s growth rates and 
led to a real GDP contraction of 0.3% in 2023. 
The decline in consumer spending in 2022 and 
2023 was triggered by a decline in purchasing 
power  and  an 
in  precautionary 
increase 
savings.  Furthermore,  as  the  central  bank 
tightened 
fight 
the  monetary  policy 
inflation,  construction  activity  and  especially 
slowed. 
residential 
Companies  were  confronted  with  higher  input 
costs,  but  accumulated  savings  allowed  them 
to  continue  investing  in  equipment.  With  the 
help of public investment supported also by EU 
funds,  overall investment in  the  economy  still 
rose by 4.0% in 2023.   

construction 

also 

to 

Growth  is  restarting  but  risks  and  new 
challenges  related  to  competitiveness 
and productivity are emerging. On the back 
of  a  decline  in  inflation,  loosening  financing 
conditions  and  an  increase  in  real  disposable 
income,  economic  growth 
is  forecast  to 
gradually restart. Czechia’s GDP is expected to 
grow by 1.2% in 2024 and 2.8% in 2025 (see 
details  in  Annex  20).  However,  medium-term 
growth  is  likely  to  face  challenges.  Labour 
productivity  growth  has  been  decelerating 

(1)  The cut-off date for the data used to prepare the 27 

Country Reports was 15 May 2024. 

since  2017  and  even  reversed  in  2022.  In 
terms  of  export  market  share  (measured  in 
volumes),  Czechia  has  fared  worse  than  the 
EU average since 2018, losing 4.1% of export 
market  share,  though  in  2022,  the  trend 
slightly reversed, with Czechia’s export market 
share  growing  by  2.0%.  Besides  cyclical 
influences, 
remain, 
including  the  need  to  phase  out  fossil  fuels 
and  to  switch  to  cleaner  technologies,  a 
shortage  of  workers,  and  risks  from  further 
energy and raw material price shocks.  

challenges 

structural 

in 

restarted 

in  2023. 

in  exports 

Exports  have  been  recovering  and  are 
still  dominated  by  the  industry.  The  trend 
of  growth 
the 
post-pandemic years. Industrial goods are still 
the main driver of this growth, accounting for 
81%  of  exports 
Industry  also 
accounted for 25% of GDP, compared to 19% 
for  the  EU.  Local  manufacturers  are  well 
integrated  into  the  global  value  chain  and 
have  been  a  main  driver  of  economic  growth 
over  the  past  decade.  In  particular,  motor 
vehicles  and  transport  equipment  accounted 
for  over  30%  of  goods  exports  in  2023,  and 
the  volumes  of  cars  exported  are  still 
increasing, though they remained below those 
of pre-pandemic years. However, over the past 
five years,  exports  of  services  have  increased 
much  faster  than  exports  of  goods,  led  by 
telecom  and  IT  services,  which  have  also 
gained  a  higher  percentage  of  gross  value 
added.  

The higher share of industry in local GDP 
creates  risks  but  also  opportunities  for 
improving  competitiveness.  The  higher 
share of industry in Czechia’s GDP also means 
a higher energy intensity of the economy (see 
Annex  5).  The  energy  sector  is  still  heavily 
reliant  on  fossil  fuels  (see  Annex  7).  This 
leaves the economy exposed to further energy 
price  shocks,  which  could  be  counteracted  by 
continuing  the  switch  to  clean  sources.  The 
green  transition  also  offers  opportunities  for 

2 

 
 
 
the  Czech  industry,  which  could  benefit  more 
from the production of green technologies, an 
area  where  local  producers  are  still  lagging 
behind.  Improving  the  innovation  environment 
and  companies’  access  to  non-bank  finance  –
including  private  capital  –  and  reducing 
regulatory  burdens 
could  help  address 
emerging competitiveness challenges.  

Lower revenue and population 
ageing weakens government 
finances 

The  government  deficit  and  debt  are  set 
to drop below 3% and remain below 60% 
of  GDP  respectively.  The  government  cut 
spending  and  increased  some  revenue  in 
2024.  On 
the  expenditure  side,  Czechia 
withdrew  measures  to  counteract  the  impact 
of high energy prices and reduced government 
subsidies to renewable energy sources. On the 
revenue  side,  the  country 
the 
corporate income tax and social  contributions. 
The  debt-to-GDP  ratio  is  expected  to  stabilise 
below  the  60%  threshold,  mostly  driven  by  a 
negative  headline  balance  being  partly  offset 
by GDP growth. 

increased 

Graph 1.1: Key fiscal indicators 

Source: Eurostat, European Commission 

Czechia’s  tax  revenue  is  relatively  low, 
reflecting  a  suboptimal  tax  mix.  Czechia’s 
tax  revenue  is  relatively  low  in  relation  to  its 
GDP,  and  has  been  further  reduced  by  a  big 
personal income tax cut implemented in 2021. 
Most  revenues  come  from  taxation  of  labour, 

to 

relatively  high 

social 
mostly  due 
contributions.  The  tax  burden  for  low-wage 
earners  stays  above  the  EU  average.  The 
above-EU-average 
tax  burden  on  second 
earners  in  families  with  children  lowers  the 
incentive  to  (re-)enter  the  workforce.  Revenue 
from  environmental  taxation  is  below  the  EU 
average,  and  property  taxation  remains  very 
low (see Annex 19). 

Fiscal  challenges  are  set  to  increase  in 
the medium and  long run.  According to the 
Commission’s 2024 ageing report, a projected 
increase  in  the  old-age  dependency  ratio,  the 
capping  of  the  Czech  retirement  age,  as  well 
as  a  still  high  number  of  people  taking  early 
retirement  would  lead  to  an  increase  in  total 
ageing costs of around 4 percentage points by 
2070,  split  between  spending  on  pensions, 
healthcare,  and 
care.  Unless 
in 
financed  by  a  corresponding  growth 
revenues,  the  projected  rise  in  age-related 
spending 
fiscal 
sustainability  risks  in  the  medium  and  long 
term (see Annex 21).  

long-term 

increase 

could 

the 

A continuous shortage of workers 
hampers economic growth and 
competitiveness 

growth 

economic 

Further 
is  also 
hampered  by  a  serious  shortage  of 
workers.  With  a  2.6%  unemployment  rate  in 
2023 (against an EU average of 6.1%) and an 
81.7%  employment  rate (2)  (against  an  EU 
average of 75.3%, and less than 1 percentage 
point  below  the  2030  national  target  of 
82.2%),  Czechia  continues  to  face  a  serious 
shortage of workers. This poses difficulties for 
economic  growth,  with  firms  pointing  to 
shortages  of  skilled  staff  as  one  of  the  main 
investment  barriers.  Despite  declining  in  real 
terms  and  growing  less  than  in  other  central 
and  eastern  European  countries,  the  3-year 
cumulative  nominal  unit  labour  cost  growth 
in  2023,  against  an  EU 
reached  15.8% 
to 
average 

of  10%, 

further 

adding 

(2)  For the population aged 20-64. 

3 

01020304050-8-6-4-20220152016201720182019202020212022202320242025% of GDPGross debt (rhs)Budget balance (lhs)forecast% of GDP 
   
 
 
competitiveness  pressures.  While  the  overall 
employment rate is high, further measures are 
possible  to  increase  the  supply  of  workers. 
These  include:  (i) incentivising  women  to  work 
or look for a job through increased provision of 
childcare  and  long-term  care  services;  (ii) 
encouraging older people to work or look for a 
job;  (iii)  getting  Ukrainian  refugees  into  work; 
and (iv) attracting workers from abroad.  

Graph 1.2: Labour market indicators 

Source: Eurostat 

young 

While  Czechia  has  a  low  share  of  people 
at risk of poverty or social exclusion, the 
recent  high  inflation  led  to  a  decline  in 
real wages of more than 9% across 2022 
and  2023.  Czech  minimum  wage  earners 
experienced  one  of  the  steepest  drops  in 
purchasing  power  in  the  EU.  Compared  to  the 
EU average, Czechia has a low share of people 
at  risk  of  poverty  or  social  exclusion  (11.8%, 
compared to an EU average of 21.6%). Certain 
groups  face  challenges  to  get  into  work, 
including  women  with 
children, 
Ukrainian 
refugees,  and  older  workers. 
Indebtedness  continues  to  be  a  problem,  with 
660 000  people  being  affected  by  over  4 
million  seizures,  pushing  people  into  poverty 
and  the  grey  economy.  Unemployment  and 
in  socially  excluded 
poverty  also  persist 
localities,  often  among  the  Roma  minority. 
These  problems  are  exacerbated  by  a  lack  of 
social  housing  –  an  issue  being  addressed  by 
upcoming  legislation  on  affordable  housing 
and  by  construction  projects  financed  by  the 
Recovery  and  Resilience  Facility.  Energy 
poverty is also an issue, with the bottom three 
income  deciles  of  the  population  spending  on 
average  15.7%  of  their  disposable  income  on 
energy in 2023, well above the EU average of 
10.0%. 

Czechia faces major long-term social care 
and  healthcare  challenges,  which  are 

because 

to  worsen 

of 
expected 
population  ageing.  Currently,  there  is  an 
estimated  shortage  of  15 000-30 000  places 
in long-term care (of which there are currently 
reliance  on 
75 000),  an  overwhelming 
residential services, and a declining capacity of 
community-based 
services,  despite 
care 
surveys  showing  that  users  prefer  such  care. 
Furthermore,  improvement  is  hindered  by  a 
fragmented 
financing 
environment,  regulatory  barriers  to  integrated 
social care and healthcare, and an overall lack 
of data (3). 

unstable 

and 

(3)  https://www.apsscr.cz/media/a4-financovani-terenni-

sluzby-2023-final.pdf 

4 

0.05.010.015.020.025.005101520252012201320142015201620172018201920202021202220232023CzechiaEUaverageInactivity rate 20-64 (lhs)Gender employment gap age 20-64 (rhs)Unemployment (rhs)Gender employment gap age 15-39 (rhs) 
  
 
Box 1: 

Czechia’s competitiveness in brief 

After  the  pandemic  and  the  energy  crisis,  the  competitiveness  of  the  Czech  economy  is 
recovering. Czechia’s trade integration is above the EU average and Czech companies remain an 
essential link in the value chain of the European manufacturing industry. Other sectors – like IT – 
are gaining importance. The Czech recovery and resilience plan aims to comprehensively tackle 
several  competitiveness  challenges  by  improving  the  business  environment,  including  by 
simplifying  and  streamlining  construction  permits  and  grid  connection  for  renewables  or  by 
implementing  anti-corruption  measures.  Furthermore,  cost  competitiveness  pressures  have 
eased recently.  

However, competitiveness challenges remain:  

•  weaknesses in public administration, which slow down the response to challenges, lower 
the quality of services provided to people and businesses, hinder efficiency, make it difficult 
to achieve savings, and undermine consistency and implementation across policies; 

•  weaknesses  in  the  business  environment  and  the  housing  market,  which  hold  back 

productivity, competitiveness, innovation, and mobility of workers; 

•  slow  industrial  transformation  and  clean  energy  transition,  which  poses  risks  to  the 
competitiveness, security and stability of the economy, and to preventing energy poverty; and 

• 

labour market and education issues, which make it difficult to encourage people to work 
or  look  for  a  job,  further  improve  the  provision  of  childcare  facilities,  tackle  labour  skills 
mismatches,  ensure  quality  of  education,  make  education  more  inclusive,  and  increase 
participation in higher education. 

Box 2: 

UN Sustainable Development Goals (SDGs) 

Czechia  is  making  progress  in  achieving  SDG  8  (Decent  work  and  economic  growth) 
and  SDG  9  (Industry,  innovation  and  infrastructure),  while  it  has  not  made  any 
progress on SDG 4 (Quality education). Czechia needs to step up its work to close the 
gap  with  the  EU  average,  particularly  on  SDGs  5  (Gender  equality)  and  13  (Climate 
action).  The  implementation  of  SDG  5,  which  is  related  to  gender  equality,  is  behind  the  EU 
average. This is notably due to gender employment and pay gaps as well as the lower share of 
women in leadership positions. Czechia is also lagging behind the EU average on SDG 13, which 
is  related  to  climate  action.  This is notably  due  to  higher  net  greenhouse  gas emissions  and  a 
lower share of renewable energy in gross final energy consumption. 

Out of the 17 indicators, 8 remain below the EU average.  These relate to environmental 
stability (SDGs 6, 7, 12, 13), fairness (SDGs 3, 4, 5) and productivity (SDG 9). 

5 

 
 
 
 
 
 
 
 
 
 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

Funding from the Recovery and Resilience 
Facility  (RRF)  and  cohesion  policy  is 
mutually  reinforcing  Czechia’s  efforts  to 
boost 
its  competitiveness  and  foster 
In  addition  to  the 
sustainable  growth. 
EUR 9.2 billion  of  RRF  funding  described  in 
Annex 3, cohesion policy provides Czechia with 
EUR 21.1 billion  for  the  2021-2027  period. 
Support from these two instruments combined 
represents close to 10% of the country’s GDP, 
compared  to  the  EU  average  of  4.1%  of  GDP 
(see Annex 4).  

Under  its  recovery  and  resilience  plan 
(RRP),  Czechia  has  launched  important 
policy  measures  that  are  expected  to 
improve  its  competitiveness.  In  particular, 
the RRP envisages major reforms in the areas 
of  digital  public  administration,  education, 
labour market, long-term care, healthcare, and 
renewable energy sources, including permitting 
processes.  Czechia  is  also  making  substantial 
investments in the green transition, the digital 
transition  of  public  services  and  business, 
labour  market 
education, 
participation 
and 
supporting SMEs. 

healthcare, 

services, 

social 

and 

In  2023,  Czechia  revised  its  RRP,  adding 
several  new  reforms  and  investments 
increasing  the  overall  ambition  of  the 
plan.  The  comprehensive  new  REPowerEU 
chapter  added  15 
reforms  and  nine 
investments  that  aim  to  improve  the  energy 
the 
efficiency  of  buildings,  accelerate 
deployment  of  renewable  energy  sources, 
the  electricity  grid,  promote 
strengthen 
sustainable 
streamline 
and 
transport, 
In  addition,  new 
permitting  procedures. 
measures  have  been  included  to  support 
provision  and  reform  of  affordable  housing, 
improve  childcare  services,  and 
increase 
cybersecurity. 

6 

The implementation of Czechia’s recovery 
and resilience plan is underway, however 
timely  completion  requires 
increased 
efforts.  Czechia  has  submitted  two  payment 
requests,  corresponding  to  65  milestones  and 
targets in the plan  and  resulting  in  an  overall 
disbursement  of  EUR  2.69  billion  on  2  April 
2024  (see  Annex  3).  The  size  and  complexity 
to 
of 
absorption  capacity,  call  for  accelerating 
investments  and  addressing  emerging  delays 
while  strengthening  administrative  capacities 
to  ensure  that  reforms  and  investments  can 
be  completed  on 
in 
particular, are highly concentrated towards the 
end  of  the  RRP  implementation  and  merit 
special attention.  

the  plan,  and  challenges 

Investments, 

linked 

time. 

Cohesion  policy  funding  helps  tackle 
Czechia’s  growth  and  competitiveness 
challenges  and  reduce  the  country’s 
territorial and social disparities. Under the 
2014-2020  cohesion  policy  programming 
period,  support  focused  on  research  and 
innovation,  reduction  of  environmental  risks, 
social  cohesion, and transport. For the current 
2021-2027  programming  period,  financing 
aims to support the green transition and social 
cohesion, 
living  and 
improving  people’s 
working conditions.  

Unlocking the green and  
digital transition 

transformation 

The  RRF  and  cohesion  policy  funds 
supported  measures  to  unlock  green  and 
digital 
boost 
competitiveness.  Measures  under  the  RRP 
helped  modernise  and  increase  the  safety  of 
railways and supported project preparation for 
electrification, 
thus  promoting  sustainable 
transport modes. RRP measures also increased 

and 

 
 
the  flood  protection  and  water  retention  of 
lands  and  municipalities  to 
increase  the 
capacity  to  adapt  to  environmental  risks.  In 
addition,  the  RRF  now  supports  projects  of 
Czech  companies  that  aim  to  reduce  water 
consumption  and  apply  circular  solutions  for 
businesses.  The  RRP  is  delivering  significant 
reforms as well, including the simplified single 
environmental opinion and legislative changes 
related  to  the  permitting  and  connection 
procedures for renewable energy sources (Lex 
RES I and II). These enable investments in the 
green  transition  from  EU  funds  across  the 
board.  Complementarily,  the  cohesion  policy 
funds invested in the electrification of railway 
lines, water management and flood protection, 
deployment  of  renewable  energy,  and  energy 
efficiency renovations, among other things.  

to 

improve 

continued 

Czechia 
its 
competitive edge not only by greening but 
also  by  digitalising  its  economy.  With  the 
help  of  cohesion  policy  funds  and  the  RRF, 
Czechia already increased the cybersecurity of 
public  information  systems,  and  invested  in 
the  use  of  5G  technology  for  municipalities. 
The  continued  digitalisation  of  public  services 
efficient 
supporting 
and 
the 
deployment  of  connectivity 
infrastructure 
constitute  another  push  towards  a  digital 
economy promoted by the RRF. 

reforms 

the  construction  of  an  intensive  medicine 
simulation  centre  began,  aiming  to  upgrade 
the  infrastructure  for  lifelong  learning  of 
healthcare  professionals.  Czechia  has  also 
improved  its  health  resilience  by  carrying  out 
reforms  such  as  the  adoption  of  the  new 
for 
national 
2022-2030.  The  RRF  also  supports 
the 
construction of the Czech Oncological Institute 
in Prague. 

programme 

oncological 

and 

educational 

programmes 

Using  EU  funds,  Czechia  is  investing  in 
the education of future generations.  With 
the  help  of  the  RRP,  Czechia  revised  its 
framework 
to 
promote  digital  literacy  and  IT  skills.  This 
reform  not  only  gives  more  importance  to  IT 
learning  in  education  but  also  extends  its 
scope  to  cover  areas  such  as  data  modelling, 
coding 
also 
robotics. 
a 
for 
introduced tutoring 
disadvantaged  socio-economic  background, 
including 
Ukraine. 
Strengthening  the  impact  of  these  measures, 
the 
Support 
Instrument is helping to develop  a framework 
for  monitoring  and  evaluating  early  childhood 
education and care. Furthermore, the European 
Social Fund Plus will invest EUR 366 million to 
improve  access  to  employment  for  92 000 
people, including young people.  

Czechia 
pupils  with 

Commission’s 

Technical 

refugees 

from 

Building a resilient society and an 
economy that works for people 

Supporting companies to increase  
their economic potential  

The  RRF  and  cohesion  policy  funds 
invested  in  people  for  economic  growth 
and  social  resilience,  which  are  key  to 
long-term  competitiveness.  Under  the  RRP, 

Complementary action of EU funds boosts 
competitiveness, 
Czech 
although  challenges  to  innovation  and 
access  to  finance  remain.  Yet,  the  RRF 

companies’ 

                   Box 3: 

Combined action for more impactful EU funds  

To boost economic growth and maximise the impact of EU funding, Czechia’s RRP includes 
reforms  that  support  investments  under  other  EU  instruments,  creating  significant 
synergies and complementarities between the various funds. For example, the REPowerEU 
chapter  will  fund  a  comprehensive  reform  of  the  advisory  services  for  energy  efficiency, 
training of renovation professionals, and public awareness campaigns. These measures will 
facilitate the implementation of investments supporting energy efficiency renovations, the 
creation of energy communities, and the installation of renewable energy sources in public 
and  residential  buildings  in  Czechia,  financed  by  the  Modernisation  Fund  (see  further 
example in Annex 4).  

7 

 
 
it 

supports 

In  addition, 

the  competitiveness  of 
already  supports 
companies  by  introducing  new  digital  public 
services. 
the 
preparation  of  new  financial  instruments  of 
the  National  Development  Bank  and  of  the 
European Investment Fund. Moreover, the RRF 
already 
finances  15  new  environmental 
research  projects  and  the  involvement  of  60 
firms  in  research  cooperation,  while  the  Just 
Transition  Fund  aims  to  create  455  new 
research  jobs  and  support  more  than  200 
SMEs in their green transition. 

8 

 
FURTHER PRIORITIES AHEAD 

finances, 

faces  additional 

Czechia 
challenges 
related to the long-term sustainability of 
government 
administrative 
capacity,  innovation  and  the  business 
environment, the green transition, labour 
these 
market  and  education.  Tackling 
challenges  will  help 
increase  Czechia’s 
long-term  competitiveness  and  ensure  the 
resilience  of  its  economy.  It  will  also  help 
make  further  progress  in  achieving  the  UN 
Sustainable Development Goals. 

is 

important  that  the 

identified 
It 
challenges  are  addressed  at  both 
national  and  regional  level.  This  will  help 
reduce  regional  disparities  and  improve  the 
administrative  and  investment  capacity  in  a 
balanced way across the country. 

Ensuring sustainable government 
finances in the face of an ageing 
population 

increased  due 

While  the  government  debt  level  is  low, 
the structural deficit and long-term risks 
persist.  Czechia  has  a  low  government debt-
to-GDP  ratio  compared  to  other  EU  countries 
(44.0% of GDP in 2023, against an EU average 
of  81.7%).  However,  the  structural  budget 
deficit  has 
to  permanent 
measures such as the personal income tax cut, 
which  has  not  been  offset  by  other  revenues, 
and  the  increase  in  social  security  benefits, 
which has not been financed by corresponding 
revenue growth. Debt sustainability challenges 
are expected to intensify in the long run due to 
an  ageing  population  and  the  associated 
increase  in  spending  on  pensions,  healthcare 
and  long-term  care.  The  old-age  dependency 
ratio (the ratio of people over 65 to people of 
working  age  (20-64))  is  assumed  to  increase 
from  34.9%  in  2022  to  a  peak  of  55.8%  by 
2059  according  to  the  Commission’s  2024 

report (4). 

ageing 
constrain 
This 
expenditure  supporting  the  competitiveness 
and growth of the Czech economy. 

could 

retirement 

Pension  spending  is  expected  to  rise 
especially after 2030. Czechia narrowed the 
deficit  in  the  pension  system,  including  by 
indexation  of  pensions  and 
reducing  the 
imposing  stricter  early 
rules. 
Savings  made  through  these  measures  would 
lower  pension  expenditure  in  the  short  term, 
and -limit the expected increase in expenditure 
in  the  long  term.  Still,  according  to  the  2024 
ageing  report,  without  additional  changes, 
government  pension  spending  is  expected  to 
increase from 8.0% of GDP in 2030 to a peak 
of 11.1% in 2058.  

If 

implemented, 

Further measures  are  being implemented 
to address fiscal sustainability. The Czech 
government  prepared  a  proposal  to  link  the 
statutory  retirement  age  with  life  expectancy, 
and to slow down the growth of newly granted 
pensions. 
these  changes 
would  improve  the  fiscal  sustainability  of  the 
pension  system.  Measures  supporting  the 
supply  of  workers  are  also  crucial  (see  the 
below  section  on 
tackling  shortages  of 
workers,  skills  mismatches  and  declining 
educational  outcomes).  In  addition,  Czechia 
increased  property  taxes  in  2024.  Further 
measures 
tax  base  by 
expanding the share of taxes less detrimental 
to  growth  is  an  option  to  support  economic 
growth and fiscal  sustainability. Implementing 
a property valuation system which chooses the 
property  values  as  the  tax  base,  aligns 
property  values  to  market  values  and  allows 
for  regular  updates  of  property  values,  would 
increase  the  efficacy  of  the  tax  as  a  tool  to 
mitigate  the  increases  in  property  prices,  and 

to  broaden 

the 

(4)  2024 ageing report, https://economy-

finance.ec.europa.eu/publications/2024-ageing-report-
economic-and-budgetary-projections-eu-member-
states-2022-2070_en. 

9 

 
 
 
to  put  existing  housing  stock  to  its  most 
productive  use.  This  would  raise  housing 
affordability  and  people's  ability  to  move 
around  for  work,  supporting  economic  growth 
and increasing fiscal  sustainability. Lastly,  the 
Commission  offers  technical  support  to  the 
Czech  government  to  develop  methodologies 
and  capacity  for  performance  budgeting  and 
spending  reviews (5).  These  budgetary  tools 
could  be  used 
inefficient 
to 
government spending and include the potential 
savings in the budget. 

identify 

To  address  fiscal  challenges,  Czechia 
could  take  action  to  strengthen  the 
medium-term 
framework. 
budgetary 
Czechia’s  medium-term  budgetary  framework 
scores  below  the  EU  average  (see  Annex  13). 
The  Czech  Fiscal  Council  is  tasked  with  the 
monitoring of compliance with fiscal rules and 
assessment  of  long-term  sustainability  of 
public finances. While it has an active outreach 
activity, 
improvement 
is  room  for 
information,  ex post 
to 
regarding  access 
forecast evaluations, and external reviews. 

there 

Strengthening administrative 
capacity for efficient regulation 
and investment  

public 
for 

shapes 
and 

administration 
the 
it 
environment 

is 
Czechia’s 
economy’s 
essential 
the 
competitiveness  as 
regulatory 
public 
investment,  especially  in  relation  to  the 
twin digital and green transitions. Overall, 
Czechia’s  public  sector  performance  and 
government  effectiveness  remained  stable 
and close to the EU average in 2022. However, 
challenges  persist  in  talent  attraction  and 
retention,  evidence-informed  policymaking, 
strategic  steering  and  public  procurement.  On 
the  more  positive  side,  Czechia  is  committed 
to  modernising  its  public  administration  by 
Public 
implementing 

‘Client-oriented 

its 

Administration 2030’ strategy. Maintaining the 
momentum  driven  by  the  Recovery  and 
Resilience  Facility  (RRF)  and  cohesion  policy 
funds  for  investing  in  the  digitalisation  of 
public  administration  and  public  services  will 
remain 
creation  of  a 
growth-friendly  and  competitive  regulatory 
environment. 

vital 

the 

for 

of 

the 

attractiveness 

The 
public 
administration as an employer and talent 
retention  in  the  civil  service  are  under 
pressure.  This  particularly  holds  true  for 
expert and management jobs. Amendments to 
the Civil Service Act entered into force in 2023, 
bringing  in  set  terms  of  office  for  senior  civil 
servants,  faster  recruitment  processes  and 
wider  options  to  attract  external  applicants. 
The 
resource 
management,  however,  hinders  a  more 
systemic approach to talent management. The 
size  of  the  Czech  public  administration  is 
below the EU average in both expenditure and 
numbers  employed  (see  Annex  13).  Still, 
wages are lower than in the private sector for 
comparable  education 
levels  and  have 
declined  in  real  terms  by  more  than  10% 
compared  to  2004,  further  reducing  the  civil 
service’s attractiveness (6). 

fragmentation  of  human 

Czechia  continues  to  have  issues  with 
evidence-informed  policymaking,  despite 
steps  in  the  right  direction.  Under  the 
recovery  and 
(RRP),  new 
resilience  plan 
requirements  for  ex ante  regulatory  impact 
into 
assessments  that  take  sustainability 
account  have  been  developed  and  will  be 
applied  as  of  2025.  Newly  created  analytical 
units 
in  central  government  should  help 
increase analytical capabilities. However, there 
are still major challenges related to the use of 
data,  whole-of-government 
coordination, 
municipal  coordination,  and  stewardship  at 
political level. 

(5)  2023 reform support through the Technical Support 
Instrument, https://reform-support.ec.europa.eu/our-
projects/country-factsheets/czechia_en.  

ei.cz/files/IDEA_Studie_2_2022_Statni_zamestnanci_a
_urednici/files/extfile/IDEA_Studie_2_2022_Statni_zam
estnanci_a_urednici.pdf 

(6)  https://idea.cerge-

10 

 
 
 
local 

is  a 

significant 

in  Czechia.  To 

administrative 
Fragmented 
capacity (7) 
factor 
preventing,  among  other  things,  the 
efficient absorption of EU funds by small 
increase 
beneficiaries 
absorption  by  small  municipalities,  small  to 
medium-sized  enterprises  (SMEs)  and  local 
NGOs, the national authorities need to support 
applicants,  for  example,  by  appointing  shared 
project  managers 
providing 
comprehensive information on applying for EU 
funding in one place. The priority in this regard 
local 
is  developing  targeted  support  for 
administrative capacity  building in structurally 
affected  regions  such  as  Severozápad  and 
Moravskoslezsko.  The  good  example  of  the 
Just  Transition  Fund  shows  that  the  regions 
would be activated if they had a stronger role 
in determining their specific needs. 

and 

by 

Public  procurement  continues  to  suffer 
from  various  issues  such  as  a  lack  of 
interest by companies. In 2023, the rate of 
single  bid  procedures  remained  high  (40%, 
against  an  EU  average  of  29%).  To  improve 
the  situation,  Czechia  has  adopted  an 
RRF-funded  public  procurement  strategy  and 
its  action  plan,  a  significant  step  towards 
strengthening 
implementing 
efficiency, 
sustainable  goals,  promoting  innovation,  and 
professionalising buyers. Nevertheless, to have 
results on the ground, the strategy needs to be 
implemented.  This  is  also  linked  to  the  wider 
question of attracting and developing talent to 
the civil service (see Annex 12). 

Strengthening innovation and the 
business environment 

Competitiveness  and  productivity  are 
held  back  by  a  suboptimal  innovation 
ecosystem,  shortages  of  workers  and 
skills,  and  excessive  administrative 
burden. Despite having a robust industrial and 
scientific  and 
research 

foundation, 

the 

and 

policies. 

the  system’s 

technological  outputs  fail  to  appropriately 
reflect 
full  potential.  As 
previously  observed,  Czechia’s  R&D  and 
innovation  performance  would  profit  from 
coordination  and  governance  of 
better 
research 
The 
innovation 
innovation  and  business  performance  suffers 
from  stagnating  levels  of  investment  in  R&D, 
to 
low  patent  activity,  and  constraints 
attracting  and  employing  foreign  qualified 
workers.  Also,  the  number  of  people  with  a 
post-secondary  education  qualification 
in 
science or engineering is limited, which plays a 
role  in  the  skills  mismatches  and  points  to 
weaknesses in the education system.   

in 

Czechia’s 

Despite  marked  improvements  in  recent 
years, Czechia trails behind in innovation. 
Czechia  is  a  moderate  innovator,  with  a 
performance  of  just  under  95%  of  the  EU 
average (8).  While  the  gap  to  the  innovation 
leaders  is  still  significant,  there  has  been 
continuous  growth  since  2016.  Further 
innovation 
improvements 
performance  are  still  being  held  back  by  the 
ineffectiveness  of  technology  and  knowledge 
transfer.  Improving  the  country’s  innovation 
to 
requires  stable 
performance 
support  entrepreneurship,  technology  transfer 
offices,  university  spin-offs,  and  start-up 
creation.  Regulatory  measures 
such  as 
effective  tax  relief,  employee  share  options 
and  sandboxes  are  needed  to  improve  the 
quality  of 
innovation  and  start-up 
ecosystems (see Annex 11).  

funding 

the 

to 

Challenges  in the  quality  of  the business 
environment  and  access  to  non-bank 
finance  persist.  The  ‘think  small  first’  and 
‘digital  first’  principles  must  be  applied 
effectively 
excessive 
reduce 
administrative  and 
regulatory  burden  on 
businesses (see Annex 12). By accelerating its 
work  on  the  digitalisation  of  public  services, 
Czechia  could  cut  red  tape  and  thus  increase 
businesses’  capacity  to  make  the  green 
transition  (see  Annexes  6,  10  and  12).  By 
implementing  legislative  changes  for  simple 

the 

(7)  Czechia has the highest number of municipalities per 

capita in the EU (see https://www.oecd.org/regional/EU-
Local-government-key-data.pdf). 

(8)  2023 European Innovation Scoreboard, country profile: 

Czechia, 
https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-
country-profile-cz.pdf. 

11 

 
 
 
and  effective  employment  of  workers  from 
abroad,  Czechia  could  ensure  a  sustainable 
labour  market.  Czechia  remains  below  the  EU 
average in access to venture capital financing 
and use of financial instruments supported by 
EU  funds (see  Annexes  10,  11  and  17). 
Leveraging  private  financing  with  the  support 
of  the  National  Development  Bank  together 
with  a  wider  use  of  EU  financial  instruments 
could improve access to non-bank finance for 
businesses,  including  equity  and  quasi-equity 
financing,  also  helping 
the 
competitiveness of Czech SMEs and start-ups. 
Broader  measures  could  also  be  taken  to 
promote  and 
incentivise  market  financing 
through the capital markets. 

increase 

to 

The  slow  construction permitting process 
continues  to  be  one  of  the  biggest 
barriers  to  the  Czech  economy.  This  limits 
investment  decisions  by  both  foreign  and 
Czech  companies,  slows  the  construction  of 
energy and transport infrastructure, and holds 
back  the  required  increase  in  housing  supply. 
While RRP-funded  reforms are currently being 
implemented, their impact is not yet visible on 
the  ground.  Furthermore,  Czechia  has  one  of 
the  lowest  property  tax  rates  in  the  EU (9), 
which  does  not  take  into  account  the  market 
value of land and real estate. As a result, there 
are  limited  incentives  to  put  property  to  its 
most  productive  use,  despite  the  tax  increase 
in 2024. This is illustrated by Czechia’s almost 
600 000  permanently  unused  houses  and 
flats (10).  High  property  prices  also 
lower 
housing  affordability,  which  in  turn  limits 
mobility of workers. 

Sustaining progress towards the 
green transition 

Continued  high  energy  and  commodity 
prices 
the 
competitiveness  of  the  economy.  Despite 

concerns 

raise 

for 

issues, 

the decrease in energy prices in 2023, gas and 
electricity  prices  are  still  above  EU-average 
and  pre-crisis  levels.  Soaring  wholesale  gas 
prices,  in  part  related  to  Russia’s  war  of 
aggression  against  Ukraine  as  well  as  global 
supply 
create  additional 
challenges for the power sector (see Annex 7). 
The  country’s  large  industrial  sector  presents 
an opportunity to harness the potential of the 
green transition. In this respect, Czechia would 
also  benefit  from  further 
in 
investments 
research  and 
in  clean  energy 
technologies. 

innovation 

could 

its  electricity  production 

To shift from coal to a more competitive 
mix  of  nuclear  and  renewables,  Czechia 
must  ensure  sufficient  backup  capacity 
and  grid 
infrastructure  to  maintain 
stability.  Czechia  faces  a  daunting  task  in 
phasing out coal use by 2033, given that 40% 
of 
is  currently 
coal-based.  The  fast-deteriorating  economic 
viability  of  coal  generation  makes  a  sharp 
increase  in  renewable  energy  sources  and 
storage  solutions  crucial  for  system  stability, 
especially  to  slow  down  the  growth  in  gas 
consumption. Additionally, the funding sources 
for building new nuclear units, including small 
modular reactors, are yet to be clarified. 

II,  especially 

Czechia’s  renewable  energy  legislation 
implementation  to  ensure 
needs  full 
faster  renewable  deployment  together 
with  grid  stability.  Czechia  has  taken 
positive steps with the recent adoption of Lex 
regarding  permitting. 
RES 
However, there are  risks of substantial  delays 
in  developing  a  decentralised  energy  system. 
Limited  grid  infrastructure  capacity  poses  a 
challenge 
increasing 
renewable capacity. Crucial aspects in ensuring 
a  reliable  electricity  supply  are  modernisation 
and  digitalisation  of  the  electricity  network, 
along  with  additional  investments  in  grid 
infrastructure  and  incentives  for  flexibility, 
including demand response and storage.  

in  managing 

an 

(9)  https://data.oecd.org/tax/tax-on-property.htm 

(10)  https://mmr.gov.cz/getattachment/b515c571-1a07-
460e-8aeb-f540825ea638/Studie-neobydlene-
byty.pdf.aspx?lang=cs-CZ&ext=.pdf 

There  is  still  untapped  potential  for 
energy  efficiency  that  can  help  improve 
firms’ 
the 
background  of  high  energy prices.  Despite 
recent  decreases  in  primary  and  final  energy 
consumption,  challenges  remain  in  reducing 

competitiveness  against 

12 

 
 
support  measures 

in  the  transport  sector  and 
consumption 
improving the energy efficiency of the building 
stock.  Most 
for 
energy-efficiency renovations are grant-based; 
instruments  could 
supplementary  financial 
help  accelerate  the  renovation  wave  in  the 
residential  and  government  sectors,  and  thus 
help Czechia meet its 2030 target for reducing 
energy  consumption  in  buildings.  The  use  of 
financial  instruments  would  also  put  less 
strain on the government budget. 

legal 
Czechia  does  not  yet  have  a 
definition of energy poverty, which is one 
of  the  causes  of  the  fragmented  policy 
response  to  the  problem.  In  2023,  the 
bottom three income deciles of the population 
spent  on  average  15.7%  of  their  disposable 
income on energy, well above the EU average 
of 10.0%. The problem of energy affordability 
is only partially addressed by social policy and 
consumer protection measures. The Lex RES II 
amendment  to  the  Energy  Act  introduced  the 
definition  of  a  vulnerable  consumer,  but  work 
is  still  ongoing  on  a  methodology  to  define  a 
consumer experiencing energy poverty.  

in 

circular 

While  Czechia  has  made  progress  on  the 
green  transition,  persistent  challenges 
economy. 
remain 
the 
Particularly,  Czechia  would  benefit 
from 
speeding  up  the  circular  economy  transition 
and strengthening waste management policies 
to  improve  industrial  competitiveness.  The 
investment  gap  for  the  circular  economy  and 
waste  is  EUR 470 million  per  year.  Czechia  is 
at  risk  of  missing  the landfill  reduction  target 
of  10%  by  2035  if  it  does  not  step  up  its 
action (11). 

includes 

investments 

The  RRP 
in 
sustainable  water  management.  However, 
the  chemical  and  ecological  status  of  water 
bodies  should  be  improved,  as  Czechia  is  at 
risk  of  missing  the  objectives  of  the  Water 
Framework  Directive.  Water 
stress  has 
on  water-dependent 
impacts 
negative 
economic sectors such as agriculture.  

(11)  European Environment Agency, 8 June 2023.  

13 

The  status  of  land  use,  land-use  change, 
and forestry (LULUCF) in Czechia could be 
improved.  The  draft  updated  projections 
indicate  that  Czechia  is  likely  to  fall  short  of 
the  2030  ambition (12).  The  LULUCF  sector  in 
Czechia  holds  substantial  importance  for  the 
country’s  greenhouse  gas  emissions  profile, 
offering  the  potential  to  function  as  a  net 
carbon  sink  and  highlighting  the  need  to  step 
up climate action.  

Tackling shortages of workers, 
skills mismatches and declining 
educational outcomes 

and 

job  vacancy 

Shortages 
skills 
of  workers 
mismatches  remain  a pressing  challenge, 
hindering  the  competitiveness  of  the 
Czech  economy.  The 
rate 
remains  high  (3.4%  in  Q4-2023)  and  well 
above  the  EU  average  (2.5%  in  Q4-2023), 
although  it  is  declining.  In  particular,  the  rate 
of women who are working or looking for a job 
remains  low  (with  an  employment  rate  of 
74.5%,  against  88.7%  for  men  in  Q3-2023), 
linked  to  insufficient  childcare  services  and 
suboptimal design of parental support.  

The  tax  and  benefit  system  dissuades 
parents from returning to work. Three-year 
parental 
leaves,  high  tax  deductibles  for 
non-working  spouses  and  family  benefits 
incentivising  the  lower-earning  parent  to  take 
long  leaves  discourage  women  from  working 
or looking for a job (13). The tax wedge (i.e. the 
taxation  of  earnings  from  labour)  for  second 
earners  was  above  the  EU  average  in  2022, 
and above the tax wedge for single people  at 
the  same  wage  level  (see  Annex  19).  Despite 
the RRF and the cohesion policy funds, there is 
a  lack  of  enforceable  legal  obligations  and/or 
to  ensure 
for  municipalities 
incentives 

(12)  European Commission staff working document 

Assessment of the draft updated National Energy and 
Climate Plan of Czechia, 2023.    

(13)  https://idea.cerge-ei.cz/studies/2016-12-danovy-

system-snizuje-motivaci-matek-s-mensimi-detmi-k-
praci 

 
 
 
childcare services’ availability, even more so in 
response to demographic fluctuations. 

for 

Weak  support  for  informal  carers  and 
later 
incentives 
insufficient 
retirement  exacerbate  the  shortage  of 
workers. The supply of workers could also be 
increased  by 
incentivising  the  activity  of 
workers  beyond  the  pension  age,  for  example 
by  lowering  social  contributions,  as  currently 
considered  by  government.  Similarly,  more 
than 100 000 informal carers report not being 
able to  work  full-time because  of  their  caring 
duties.  Improving  social  services  (in  particular 
community-based ones) would enable them to 
join the labour market. 

The  high  inflow  of  Ukrainian  refugees 
could  ease 
labour  market  tightness. 
Czechia  has  received  the  EU’s  highest  inflow 
of  Ukrainian  refugees  per  capita.  About  one 
third  of  the  350 000  Ukrainian  refugees  in 
Czechia are in employment (14). Still, more than 
50%  of  them  are  in  less  qualified  positions 
than  was  the  case  in  Ukraine,  with  language 
being  a  clear  barrier,  and  roughly  30%  also 
quoting qualification recognition as a barrier to 
getting  a  better  job (15).  Besides  ensuring 
affordable  language  courses,  the  situation 
could be improved by reforming the regulated 
professions (16). 

While education outcomes have remained 
largely  stable, 
the  basic  skills  of 
disadvantaged  pupils  declined.  According 
to  the  2022  results  of  the  Programme  for 
International  Student  Assessment  of 
the 
Organisation  for  Economic  Co-operation  and 
Development,  the  share  of  top-performing 
15-year-olds  is  above  the  EU  average  in  all 
three domains, but significant disparities exist 
by 
(Annex  15). 
Approximately one in four 15-year-olds do not 

socio-economic 

status 

the 

the 

level 

basic 

students 

proportion 

proficiency 

and  2022, 

in 
meet 
mathematics (25.5%), and the same is true for 
one  in  five  in  reading  and  science.  Between 
2018 
of 
in  mathematics 
underachieving 
socio-economically 
increased  among 
remained  stable 
disadvantaged,  while 
the 
among 
the 
socio-economic 
segregation  of  Roma  children 
in  schools 
increased  between  2016  and  2021,  despite 
dedicated reforms and resources (Annex 15). 

it 
the  advantaged,  widening 
addition, 

gap. 

the 

In 

in 
linked 
to 
In  particular, 

A  shortage  of  appropriately  qualified 
teaching  staff  negatively 
influences 
student  performance 
in  mathematics. 
Czechia  has  the  EU’s  highest  score-point 
students’  mathematics 
difference 
reported 
performance 
teacher 
shortages. 
inappropriately  or 
poorly  qualified  teaching  staff,  reported  by 
close to one third of school principals, has the 
strongest negative impact. According to expert 
views (17), equal access to quality education is 
also  hindered  by  the  fact  that  most  schools 
are  operated  by  small municipalities,  who  are 
not able to provide support to the pedagogical 
process in schools. 

support 

in  higher  education 

is 
Participation 
stalling  and 
for 
financial 
students  is  low.  In  2022,  34.6%  of  adults 
between  25  and  34  years  held  a  higher 
education  diploma.  This  rate  is  one  of  the 
lowest  in  the  EU  (average:  36.5%;  target: 
45%),  and  is  particularly  low  among  men 
(26.6%).  The  number  of  students  enrolling  in 
higher  education  is  decreasing.  Among  the 
contributing  factors  are 
low  government 
support  for  students  and  limited  possibilities 
for  students  to  access  or  move  between 
different 
secondary  education  pathways 
leading  to  higher  studies,  combined  with  the 
early  streaming  of  students,  which  limits 
access to tertiary education (see Annex 15). 

(14)

https://www.mpsv.cz/documents/20142/7095934
/TZ_bilance_UA_23022024_final.pdf/2cd843dc-330b-
e0a2-313e-da2a6f6cfc97 

(15)  https://www.paqresearch.cz/post/uprchlici-posun-jazyk-

prace-bydleni/ 

(16)  https://vlada.gov.cz/assets/ppov/NERV/aktuality/navrhy-

NERV.pdf, provision 4. 

(17)  ‘Responsible founders – better schools’, PAQ Research, 
2024, https://www.paqresearch.cz/tema/odpovedni-
zrizovatele-lepsi-skoly/. 

14 

 
 
 
 
Box 4: 

The mid-term review of cohesion policy funds for Czechia  

The  mid-term  review  of  cohesion  policy  funding  is  an  opportunity  to  assess  cohesion  policy 
programmes and tackle emerging needs and challenges in EU Member States and their regions. 
Member  States  are  reviewing  each  programme  taking  into  account,  among  other  things,  the 
challenges  identified  in  the  European  Semester,  including  in  the  2024  country-specific 
recommendations.  This  review  forms  the  basis  for  a  proposal  by  the  Member  State  for  the 
definitive allocation of 15% of EU funding included in each programme.  

Czechia  has  made  progress  in  implementing  cohesion  policy  programmes  and  the  European 
Pillar of Social Rights, but challenges remain as outlined in this report, including  in Annexes 14 
and  17.  In  particular,  Severozápad  and,  to  a  lesser  extent,  Moravskoslezsko  are  caught  in  a 
development  trap.  Against  this background,  it  remains  important  to  continue  to  implement  the 
planned  priorities,  with  particular  attention  to:  (i)  developing  the  administrative  capacity  of 
applicants from local communities, regions and SMEs to increase the absorption of EU funds and 
to  improve  partnership  and  ownership;  (ii)  supporting  sustainable  urban  and  regional  transport 
and  infrastructure  for  alternative  fuels;  (iii)  investments  in  renewable  energy  sources,  energy 
efficiency and circular economy; (iv) climate adaptation measures, with a focus on natural water 
retention  measures;  (v)  improving  the  impact  of  measures  aimed  at  the  most  disadvantaged 
groups, such as the Roma, with a particular focus on housing, ensuring fair access to education 
and services for children and indebtedness trap prevention;  and (vi) fostering the integration of 
Ukrainian  nationals fleeing  Russia’s war of  aggression  against  Ukraine  through,  for  instance,  a 
more agile qualification recognition system, Czech language courses and housing support.  

The potential for wider use of financial instruments and for combination of financial instruments 
with grants merits specific consideration in the preparation  of the mid-term review. Taking into 
account  Czechia’s  ambition  to  move  up  from  the  level  of  a  moderate  innovator, Czechia  could 
benefit  from  the  opportunities  available  under  the  Strategic  Technologies  for  Europe  Platform 
(STEP) (18)  initiative  in  the  areas  of  digital  technologies  and  deep  tech  innovation,  clean  and 
resource-efficient  technologies,  and  biotechnologies  –  where  relevant  in  line  with  the  national 
smart specialisation strategy – to support the transformation of industry. 

(18)  Regulation (EU) 2024/795 

15 

 
 
 
 
 
 
 
 
 
KEY FINDINGS 

resilience  plan 

With its wide policy scope and substantial 
financial  envelope,  Czechia’s  recovery 
and 
includes 
measures 
to  address  a  series  of 
structural  challenges,  in  synergy  with 
other  EU  funds,  including  cohesion  policy 
funds, by: 

(RRP) 

•  Advancing  the  green  transition  by 
supporting 
transport, 
sustainable 
renovating  buildings  and  making  them 
more  energy  efficient,  investing  in  cleaner 
and  more  efficient  energy  sources  and 
recycling 
infrastructure,  and  supporting 
biodiversity; 

•  Facilitating  the  digital  transition  by 
digitalising  public  administration  and 
businesses,  deploying  digital  technologies, 
and supporting digital skills education; 

•  Supporting  the  business  environment 
by  boosting  the  innovation  capacity  of 
domestic  businesses,  strengthening  the 
connection  with  the  public  research  sector, 
and  improving  access  to  finance  for  small 
to medium-sized enterprises; strengthening 
institutional  resilience  by  improving  the 
anti-corruption framework; 

•  Addressing  labour  market  challenges 
by  implementing  new  schooling  curricula, 
promoting  adult  learning,  and  encouraging 
more  women  to  work  or  look  for  a  job  by 
expanding childcare facilities’ capacity; 

•  Tackling  social  challenges  by  investing 
in social housing, healthcare and long-term 
care, 
infrastructure,  and 
improving  the  excellence  of  research  in 
medical sciences; 

investing 

in 

The implementation of Czechia’s recovery 
and  resilience  plan  is  facing  increasing 
challenges.  Renewed  efforts  are  key  for  a 
successful implementation of all the measures 

16 

of  Czechia’s  recovery  and  resilience  plan  by 
August 2026. 

Beyond  the  reforms  and  investments  in 
the RRP and cohesion policy programmes, 
Czechia would benefit from:    

•  Ensuring 

the 

sustainability 
including 

of 
the 
finances, 
government 
pension  system,  by  addressing  challenges 
linked  to  the  ageing  population,  and  by 
increasing revenue from recurrent property 
taxes;  

improving 

innovation, 

•  Improving  the  business  climate  and 
the competitiveness of the economy by 
strengthening  the  public  administration 
capacity,  encouraging  investments  in  R&D 
and 
technology 
transfer  from  academia  to  businesses, 
supporting  the  creation  of  spin-offs  and 
start-ups,  ensuring  a  business-friendly 
regulatory  environment,  and  by  improving 
access  to  non-bank  finance  for  businesses 
by  fostering  market  financing  via  the 
capital  markets  and 
leveraging  private 
financing  with  the  support  of  the  national 
development  bank,  and  by  wider  use  of 
financial instruments; 

•  Easing the labour market by addressing 
increasing 
shortages  of  workers  and 
participation  of  women,  older  workers, 
Ukrainian  refugees  and  informal  carers, 
tackling  skills  mismatches,  simplifying  the 
qualifications, 
recognition 
increasing participation in higher education, 
and  making  the  education  system  more 
inclusive  and  permeable  as  well  as  the 
teaching profession more attractive; 

foreign 

of 

•  Strengthening 

inclusion  by 
social 
helping to increase the housing supply and 
addressing regional  disparities in access to 
social services and essential infrastructure; 

 
 
costs 

(i)  continuing  action 

•  Accelerating  the  green  transition,  in 
particular  by: 
to 
decarbonise  the  economy;  (ii)  reducing 
energy 
the 
to 
competitiveness of industry, by speeding up 
deployment  of  renewable  energy  sources, 
modernising  the  power  grid,  increasing 
energy  storage  capacity,  and  improving 
energy  efficiency;  and  (iii)  promoting  the 
uptake of circular business models. 

support 

17 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2023 CSRs 
Key facts of the Czech RRP 

21 

23 

23 

25 

28 

30 

33 

35 

35 

39 

44 

47 

47 

49 

52 

55 

61 

63 

63 

66 

68 

70 

73 

73 

76 

79 

80 

26 
28 

 
 
 
Support from EU instruments in Czechia 
Resilience indices across dimensions for Czechia and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key Energy Indicators 
Key indicators for a fair transition in Czechia 
Circularity indicators 

A3.2.  Measures in Czechia's RRP 
A4.1. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A9.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Czechia 
A14.2.  Situation of Czechia on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level in Czechia 
A18.1.  Financial soundness indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Czechia 
A21.2.  Heat map of fiscal sustainability risks – Czechia 

LIST OF GRAPHS 

Progress towards the SDGs in Czechia 
Czechia’s progress on the 2019-2023 CSRs (2024 European Semester) 
Total grants disbursed under the RRF 
Total loans disbursed under the RRF 
Distribution of cohesion policy funding across policy objectives in Czechia 
Distribution of RRF funding by pillar in Czechia 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
Changes in livestock density and organic farming 
Environmental investment gap, annual average 
Czechia's energy retail prices for households and industry 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
Czechia's installed renewable capacity (left) and electricity generation mix (right) 
Fair transition challenges in Czechia 
Job vacancy rate in transforming sectors and mining and quarrying 
ETS emissions by sector since 2013 
Treatment of municipal waste 

A1.1. 
A2.1. 
A3.1. 
A3.2. 
A4.1. 
A4.2. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1.  Patent applications filed under PCT per billion GDP (in PPS) in 2020 
A12.1.  Hourly productivity in purchasing power standards (% of EU-27) 
A12.2.  Labour productivity by sector [2015=100] 
A13.1.  Share of women and men in management positions (2023 data) 
A15.1.  Underachievement rates in mathematics by socio-economic background, PISA 2018, 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A17.1.  Labour productivity (real GVA per worker), EU-27, Czechia NUTS 2 regions, 2000-2022 
A18.1.  Evolution of credit activity 
A19.1.  Tax revenues from different tax types, % of total revenue 
A19.2.  Tax wedge for single and second earners, % of total labour costs, 2023 

LIST OF MAPS 

A17.1.  GDP per capita index in Czech NUTS 2 regions (2013-2022) 

22 

29 
32 
33 
38 
43 
45 
48 
50 
53 
60 
62 
63 
64 
67 
69 
71 
75 
76 
79 
82 
82 

23 
25 
29 
29 
31 
31 
35 
37 
37 
39 
39 
41 
44 
45 
47 
48 
52 
55 
56 
61 
66 
68 
68 
70 
73 
77 
77 

70 

 
 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Czechia’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change  and  the 
environmental crisis, while ensuring that no one is 
left  behind.  The  EU  and  its  Member  States  are 
committed  to  this  historic  global  framework 
agreement  and  to  playing  an  active  role  in 
maximising  progress  on  the  SDGs.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context.  

While  Czechia  has  improved  on  all  of  SDGs 
related  to  environmental  sustainability,  it  is 
still  lagging  behind  the  EU  average  on 
SDG 13 (Climate action). Net greenhouse gas 
emissions  are  higher  (SDG 13;  11.4  tonnes 
per capital in 2022) than the EU average (7.3 

Graph A1.1: Progress towards the SDGs in Czechia 

tonnes  per  capital  in  2022),  while  the  share 
of  renewable  energy  in  gross  final  energy 
consumption  (18.2%  in  2022)  is  still  below 
the  EU  average  (23%  in  2022).  The  circular 
material  use  rate  (SDG 12)  improved,  from  9.1% 
of  material  input  for  domestic  use  in  2017  to 
11.9% of material input for domestic use in 2022. 
The  average  CO2  emissions  per  km  from  new 
passenger  cars  (SDG 12)  decreased,  from  150.4 g 
Co2  per  km  in  2017  to  137.7 g  Co2  in  2022,  but 
remain  above  the  EU  average  (109.8 g  CO2  in 
2022).  Energy  productivity  (SDG 12)  improved 
slightly, from EUR 4.3 per kgoe in 2017 to EUR 4.7 
per  kgoe  in  2022,  but  remains  below  the  EU 
average  (EUR 9.3  per  kgoe  in  2022).  On  a  more 
positive  note, 
to 
decarbonise its energy mix by increasing its share 
of renewable energy (SDG 7; from 14.8% in 2017 
to 18.2% in 2022).  

is  continuing 

the  country 

Czechia performs very well and is continuing 
to  improve  on  a  number  of  SDGs  related  to 
fairness  (SDGs 1  and  10).  At  the  same  time, 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

23 

 
 
 
 
 
 
 
and 

justice 

(Peace, 

EU  average  on  certain  indicators  related  to 
strong 
SDG 16 
institutions)  and  SDG 17  (Partnerships  for 
the  goals).  The  Czech  government  spends  less 
general  government  total  expenditure  on  law 
courts than the EU average. (SDG 16; EUR 76.8 per 
capita 
in  2022,  against  an  EU  average  of 
EUR 113.7).  Czechia  maintains  very  positive 
macroeconomic standards, reflected mainly in low 
general government gross debt (SDG 17; 44.0% in 
2023), which is significantly below the EU average 
(81.7%  in  2023).  While  Czechia  increased  its 
official  development  assistance  (SDG 17)  from 
0.15%  of  gross  national  income  (GNI)  in  2017  to 
0.38%  of  GNI  in  2022,  it  remains  below  the  EU 
average  of  0.58%.  Czechia  could  do  more  on  the 
share of environmental taxes in total tax revenues 
(SDG 17),  which  decreased  in  recent  years  from 
5.7%  of  total  tax  revenues  in  2017  to  4.2%  in 
2022.  

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

there is a need for improvement on SDGs 3, 4 
and  7,  and  for  a  strong  focus  on  SDG 5 
(Gender  equality).  Czechia  performs  particularly 
well  on  SDG 1 (No poverty)  and  SDG 10  (Reduced 
inequalities),  with  both  significantly  above  the  EU 
average  (SDG 1;  63.9%  and  SDG 10:  64.3%,  even 
if the latter figure is a decrease on the 2023 value 
of  71.5%).  Czechia’s  positive  stance  on  reducing 
poverty  (SDG 1)  is  reflected  in  a  number  of 
indicators  such  as  people  at  risk  of  poverty  or 
social  exclusion,  the  severe  material  and  social 
deprivation  rate,  and  the 
in-work  at-risk-of-
poverty  rate,  all  of  which significantly  outperform 
the EU average. Czechia’s share of the population 
unable  to  keep  their  homes  adequately  warm 
(SDG 7;  2.9%  of  the  population  in  2022)  remains 
below  the  EU  average  (9.3%  of  the  population  in 
2022).  However, 
for 
improvement,  mainly  on  SDG 5  (Gender  equality) 
as  regards  employment  and  leadership  positions. 
Nevertheless,  there  have  been  some  positive 
trends  in  closing  the  gender  gap  (SDG 5;  from 
21.1% of average gross hourly earnings of men in 
2017  to  17.9%  in  2022).  This  remains  above  the 
EU average of 12.7% in 2022.  

is  some 

room 

there 

Czechia  performs  particularly  well  on  SDG 8 
economic  growth), 
(Decent  work  and 
although  it  still  needs  to  catch  up  with  the 
EU  average  on  other  SDGs  related  to 
productivity  (SDGs 4  and  9).  Czechia’s  long-
term  unemployment  rate  (SDG 8)  was  0.8%  in 
2023, well below the EU average (2.1% in 2023). 
Czechia also recorded a change in its employment 
rate  (SDG 8)  from  79.9%  of  the  population  aged 
20 to 64 in 2018 to 81.7% in 2023, above the EU 
average  of  75.3%.  Another  positive  development 
relates  to  the  percentage  of  investment  share  of 
GDP,  which  increased  from  24.9%  in  2017  to 
26.8%  in  2022,  also  above  the  EU  average  of 
22.7% in 2023. Additional efforts should be made 
on  research  and  innovation,  as  evidenced  by  the 
(SDG 9;  22  per  million 
indicator  on  patents 
inhabitants  in  2023),  which  is  well  below  the  EU 
average  (153  per  million  inhabitants  in  2023). 
While  Czechia  is  performing  better  than  the  EU 
average  on  early  leavers  from  education  and 
training (SDG 4; 6.4% of the population aged 18 to 
24 in 2023, compared to 9.5%), it needs to catch 
up on tertiary education and digital skills.  

Czechia  continues  to  improve  on  all  SDGs 
related  to  macroeconomic  stability  (SDGs 8, 
16,  17)  but  still  needs  to  catch  up  with  the 

24 

 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

The Commission has assessed the 2019-2023 
country-specific  recommendations  (CSRs) (19) 
addressed to Czechia as part of the European 
Semester.  These  recommendations  concern  a 
wide  range  of  policy  areas  that  are  related  to  14 
of  the  17  Sustainable  Development  Goals  (SDGs) 
(see  Annexes  1  and  3). The  assessment  considers 
the policy action taken by Czechia to date (20) and 
the  commitments  in  its  recovery  and  resilience 
plan 
RRP 
implementation,  56%  of  the  CSRs  focusing  on 
structural  issues  from  2019-2023  have  recorded 
at  least  ‘some  progress’,  while  44%  recorded 
‘limited  progress’  (see  Graph  A2.1).  As  the  RRP  is 
implemented  further,  considerable  progress  in 
addressing  structural  CSRs  is  expected  in  the 
coming years. 

(RRP) (21). 

stage 

this 

At 

of 

Graph A2.1: Czechia’s progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission. 

(19)  2023 CSRs: EUR-Lex - 32023H0901(03) - EN - EUR-Lex 

(europa.eu) 

2022 CSRs: EUR-Lex - 32022H0901(03) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(03) - EN - EUR-Lex 

(europa.eu) 

      2020 CSRs: EUR-Lex - 32020H0826(03) - EN - EUR-Lex 

(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(03) - EN - EUR-Lex 
(europa.eu) 

(20)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(21)  Member States were asked to effectively address in their 
RRPs all or a significant subset of the relevant country-
specific recommendations issued by the Council. The CSR 
assessment presented here considers the degree of 
implementation of the measures included in the RRP and of 
those carried out outside of the RRP at the time of 
assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which have not yet been adopted or 
implemented but considered credibly announced, in line with 
the CSR assessment methodology, warrant ‘limited progress’. 
Once implemented, these measures can lead to 
‘some/substantial progress or full implementation’, 
depending on their relevance. 

25 

No progress0%Limited progress44%Some progress41%Substantial progress5%Full implementation10% 
 
 
 
 
 
 
      
 
 
 
Table A2.1:  Summary table on 2019-2023 CSRs 

(Continued on the next page) 

26 

Table 2.1: Summary table on 2019-2023 CSRsCzechiaAssessment in May 2024*RRP coverage of CSRs until 2026**Revelant SDGs2019 CSR 1Limited ProgressImprove long-term fiscal sustainability of the pension and health-care systems. Limited ProgressSDG 3, 8, 16Adopt pending anti-corruption measures.Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2023, 2024 and 2026. SDG 162019 CSR 2Some ProgressFoster the employment of women with young children, including by improving access to affordable childcare, and of disadvantaged groups. Limited ProgressRelevant RRP measures planned as of 2022, 2023, 2024 and 2025. SDG 4, 5, 8, 10Increase the quality and inclusiveness of the education and training systems, including by fostering technical and digital skills and promoting the teaching profession.Some ProgressRelevant RRP measures being implemented as of 2020, 2022 and planned as of 2025.SDG 4, 8, 102019 CSR 3Some ProgressFocus investment-related economic policy on transport, notably on its sustainabilitySome ProgressRelevant RRP measures being implemented as of 2022 and 2025.SDG 10, 11, digital infrastructureSome ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2025. SDG 9, 10, 11, and low carbon and energy transition, including energy efficiency , taking into account regional disparities. Limited ProgressRelevant measures being implemented as of 2021, 2022 and planned as of 2024 and 2026. SDG 7, 9, 10, 11, 13Reduce the administrative burden on investment Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2023 and 2026.SDG 8, 9and support more quality-based competition in public procurement. Limited ProgressSDG 9Remove the barriers hampering the development of a fully functioning innovation ecosystem.Some ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2025.SDG 92020 CSR 1Some ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableSDG 8, 16Ensuretheresilienceofthehealthsystem,strengthentheavailabilityofhealthworkers,primarycareandtheintegrationofcare,anddeployment of e-health services.Some ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2024.SDG 32020 CSR 2Some ProgressSupport employment through active labour market policies, Some ProgressRelevant RRP measures being implemented as for 2022 and planned as of 2025.SDG 8the provision of skills, including digital skills, and access to digital learning.Some ProgressRelevant RRP measures being implemented as of 2020, 2021 and planned as of 2024 and 2025.SDG 42020 CSR 3Some ProgressSupport small and medium-sized enterprises by making greater use of financial instruments to ensure liquidity support, Some ProgressRelevant RRP measures being implemented as of 2022.SDG 8, 9reducing the administrative burden and improving e-government. Some ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2023. SDG 8, 9, 16Front-load mature public investment projects andSome ProgressSDG 8, 16 promote private investment to foster the economic recovery.Some ProgressRelevant RRP measures planned as of 2023.SDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonhigh-capacity digital infrastructure and technologies, Limited ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2025. SDG 9clean and efficient production and use of energy,Limited ProgressRelevant measures being implemented as of 2021, 2022 and planned as of 2024 and 2026. SDG 7, 9, 13andsustainabletransportinfrastructure,includinginthecoalregions.Limited ProgressRelevant RRP measures being implemented as of 2022 and 2025. SDG 10, 11Ensureaccesstofinanceforinnovativefirmsandimprovepublic-private cooperation in research and development.Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2025.SDG 8, 92021 CSR 1Some ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Not relevant anymoreNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Not relevant anymoreNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition.Not relevant anymoreNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreNot applicableSDG 8, 16 
 
 
 
  
 
Table (continued) 

Note: 
* See footnote (21)  
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP may be necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being 
implemented’ are only those included in the RRF payment requests submitted and positively assessed by the European 
Commission. 
Source: European Commission. 

27 

2022 CSR 1Substantial ProgressIn2023,ensurethatthegrowthofnationallyfinancedprimarycurrentexpenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtothe evolving situation.Substantial ProgressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Substantial ProgressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.Full ImplementationNot applicableSDG 8, 16Takemeasurestoensurethelong-termfiscalsustainabilityofpublicfinances, including the sustainability of the pension system.Limited ProgressSDG 82022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 8 September 2021.SwiftlyfinalisethenegotiationswiththeCommissionofthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtostarting their implementation.2022 CSR 3Limited ProgressStrengthentheprovisionofsocialandaffordablehousing,includingbyadoptingaspecificlegislativeframeworkforsocialhousingandimproved coordination between different public bodies.Limited ProgressSDG 1, 2, 10, 162022 CSR 4Limited ProgressReduceoverallrelianceonfossilfuelsanddiversifyimportsoffossilfuel.Some ProgressRelevant RRP measures planned as of 2023, 2024 and 2026.SDG 7, 9, 13Acceleratethedeploymentofrenewables,streamlinepermitprocedures and make grid access easier.Limited ProgressRelevant RRP measures planned as of 2023 and 2026.SDG 7, 8, 9, 13Increasetheenergyefficiencyofdistrictheatingsystemsandofthebuildingstockbyincentivisingdeeprenovationsandrenewableheatsources.Limited ProgressRelevant RRP measures planned as of 2023 and 2024.SDG 72023 CSR 1Substantial ProgressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatthesearetargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordable and preserve incentives for energy savings.Full ImplementationSDG 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinancednetprimaryexpenditurein2024tonot more than 6.0%.Full ImplementationSDG 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofRRFgrantsandotherEUfunds,inparticularto foster the green and digital transitions.Some ProgressSDG 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, to achieve a prudent medium-term fiscal position.Full ImplementationSDG 8Takemeasurestoensurethelong-termfiscalsustainabilityofpublicfinances, including the sustainability of the pension system.Limited ProgressSDG 8, 162023 CSR 2Acceleratetheimplementationofitsrecoveryandresilienceplan,alsobyensuringanadequateadministrativecapacity,andswiftlyfinalisetheaddendum,includingtheREPowerEUchapter,withaviewtorapidlystartingitsimplementation.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarity and synergy with the recovery and resilience plan.2023 CSR 3Limited ProgressStrengthentheprovisionofsocialandaffordablehousing,includingbyadoptingaspecificlegislativeframework,improvingcoordinationbetweendifferentpublicbodies,andincentivisingtheconstructionofnew housing units as well as the refurbishment of existing ones.Limited ProgressSDG 1, 2, 10, 162023 CSR 4Limited ProgressReduce reliance on fossil fuels.Some ProgressSDG 7, 9, 13Increasethedeploymentofrenewableswithadditionalinvestmentsin electricity grids and direct deployment of renewable capacity.Limited ProgressSDG 7, 9, 13Streamlinepermittingproceduresforrenewablesandmakethegridfittoaccommodateaccesstorenewablesthroughadditionalreforms,removingrestrictionsforsmall-scalerenewablesandsettingupaone-stopshop,boostinggridflexibilityandcreatingconducive conditions for energy communities.Some ProgressSDG 7, 8, 9, 13Increasetheenergyefficiencyofdistrictheatingsystemsandofthebuildingstockbyincentivisingdeeprenovationsandrenewableheatsources,easingadministrativeaccesstosubsidiesforbothhouseholdsandindustry,andcapacitybuildingandskillsinpublicauthorities.Some ProgressSDG 7, 8, 9, 16Promotetheuptakeofzero-emissionvehiclesandboosttheavailabilityofhigh-capacitychargingandrefuellinginfrastructurethroughnewreformstocreateenablingconditionsforandremoveexisting barriers to the deployment of vehicles and infrastructure.Limited ProgressSDG 11Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Limited ProgressSDG 4RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy.RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

This  Annex  provides  a  snapshot  of  Czechia’s 
implementation of its recovery and resilience 
plan  (RRP),  past  the  mid-way  point  of  the 
Recovery  and  Resilience  Facility’s 
(RRF) 
lifetime.  The  RRF  has  proven  central  to  the  EU’s 
recovery  from  the  COVID-19  pandemic,  helping 
speed  up  the  twin  green  and  digital  transition, 
while  adapting  to  geopolitical  and  economic 
resilience 
developments, 
against  future  shocks.  The  RRF  is  also  helping 
implement the UN Sustainable Development Goals 
and 
country-specific 
recommendations (see Annex 2).    

strengthening 

address 

and 

the 

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 8.4 billion in grants and EUR 818 million 
in  loans  under  the  RRF  over  the  2021-2026 
period, representing 3% of Czechia’s GDP (22). 
As  of  mid-May  2024,  EUR  2.69  billion  of  grants 
has been disbursed to Czechia under the RRF. 

Czechia  still  has  EUR  6.5  billion  available  in 
grants  and  loans  from  the  RRF.  This  will  be 
future 
disbursed  after 
fulfilment  of  the  remaining  276  milestones  and 
targets (23)  included  in  the  Council  Implementing 
Decision (24)  (CID),  ahead  of  the  2026  deadline 
established for the Facility. 

the  assessment  of 

Czechia’s progress in implementing its plan is 
recorded  in  the  Recovery  and  Resilience 
Scoreboard (25).  The 
scoreboard  gives  an 
overview  of  the  progress  made  in  implementing 
the  RRF  as  a  whole.  Graphs  A3.1  and  A3.2  show 
the  current  state  of  play  as  reflected  on  the 
Scoreboard. 

Czechia’s RRP includes a REPowerEU chapter 
to phase out its dependency on Russian fossil 
fuels,  diversify 
its  energy  supplies,  and 
produce  more  clean  energy  in  the  coming 

(22)  GDP information is based on 2023 data. Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en    

(23)  A milestone or target is satisfactorily fulfilled once a Member 
State has provided evidence to the Commission that it has 
reached the milestone or target and the Commission has 
assessed it positively in an implementing decision. 

(24)  https://data.consilium.europa.eu/doc/document/ST-11047-

2021-ADD-1/en/pdf  

years.  To  kick-start  the  REPowerEU  chapter’s 
implementation, EUR 147.09 million was disbursed 
as  pre-financing  on  21  December  2023.  This 
helped launch relevant reforms like facilitating the 
Renovation  Wave  by  supporting  and  advising 
households,  businesses  and  public  sector  entities 
in the renovation of their buildings. 

Table A3.1:  Key facts of the Czech RRP 

Source: RRF Scoreboard 

The  plan  has  a  strong  focus  on  the  green 
transition, dedicating 42.9% of the available 
funds  to  measures  that  support  climate 
objectives  and  22.8%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures,  especially  related  to  increasing  the 
resilience  of  healthcare  and  social  services,  be  it 
through  building  new  hospitals  and  social  care 
facilities,  acquiring  new  medical  equipment, 
strengthening  cancer  screening  programmes  or 
rolling out e-Health.    

its  RRP 

implementation  of 
timely 

With  two  payment  requests  completed, 
Czechia’s 
is 
underway.  However, 
completion 
requires  increased  efforts.  The  Commission 
gave  a  positive  assessment  of  Czechia’s  first 
payment  request,  taking  into  account  the  opinion 
of the Economic and Financial Committee. This led 
to  EUR  928  million  being  disbursed  in  financial 
support  on  22  March  2023 (26).  The  related  37 
milestones  and  targets  covered  reforms  in  the 
areas of school curricula to promote digital literacy 

(25)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

(26)  When requested payments are disbursed, the pre-financing 
is cleared proportionally. The net amounts are quoted here.  

28 

Initial plan CID adoption date8 September 2021Scope Revised plan with REPowerEU chapterLast major revision17 October 2023Total allocation EUR 8.4 billion in grants and EUR 0.8 billion in loans (3% of 2023 GDP)Investments and reforms 105 investments and 58 reforms Total number of milestones and targets341Fulfilled milestones and targets65 (19.1% of total) 
 
 
 
   
 
 
 
 
Table A3.2:  Measures in Czechia's RRP 

and  digital  skills,  of  eHealth,  and  of  the  country's 
audit  and  control  system  for  the  implementation 
of  the  RRF,  as  well  as  major  investments  for  the 
reconstruction  of  three  railway  bridges  and  45 
safer  railway  level  crossings,  as  well  as  digital 
tools for education.  

Graph A3.1: Total grants disbursed under the RRF 

Source: FENIX 

Note: This graph displays the amount of grants, including 
pre-financing, disbursed so far under the RRF. Grants are non-
repayable financial contributions. The total amount of grants 
given to each Member State is determined by an allocation 
key and the total estimated cost of the respective RRP. 
Source: RRF Scoreboard 

The most recent payment request, which the 
Commission  positively  assessed  on  19 
February  2024,  has  led  to  the  disbursement 
of  EUR  702  million  on  2  April  2024.  The 
disbursement reflected the positive assessment of 
28 milestones and targets covering building high-
capacity  Internet  networks,  sustainable  mobility 
and e-administration. 

Graph A3.2: Total loans disbursed under the RRF 

Source: RRF Scoreboard 

As  of  15  May  2024,  Czechia  is  working 
towards its third payment request. Table A3.2 
highlights  some  relevant  measures  achieved  so 
far,  and  some  that  will  be  implemented  before 
2026 to keep making Czechia’s economy greener, 
more digital, inclusive, and resilient.  

29 

EUR 2.69billion (32%)Total allocation: EUR 8.409billionEUR 0billion (0%)Total allocation: EUR 0.818billionReforms and investments implemented• Anti-Corruption Reforms• National Plan to Strengthen Oncological Prevention and Care• Digital Transformation of EnterprisesUpcoming reforms and investments• Facilities and housing for children at risk• National and Regional waste management plan• Creation of European and national Digital Innovation Hubs 
      
      
 
      
 
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member States. In addition to the EUR 9.2 billion 
of  Recovery  and  Resilience  Facility  (RRF)  funding 
described in Annex 3, EU cohesion policy funds (27) 
provide  EUR 21.1 billion  to  Czechia  for  the  2021-
2027  period (28).  Support 
two 
instruments combined represents around 9.90% of 
the  country’s  2023  GDP,  compared  to  an  EU 
average  of  5.38%  of  GDP (29).  Cohesion  policy 
supports  regional  development,  economic,  social 
and  territorial  convergence  and  competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

these 

from 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Czechia’s 
competitiveness, with  tangible achievements 
notably in research and innovation, reduction 
of  environmental  risks,  social  cohesion,  and 
transport.  By  the  end  of  the  eligibility  period  in 
December  2023,  2014-2020  cohesion  policy 
funds (30)  had  made  EUR 22.7 billion  available  to 
Czechia (31),  of  which  EUR 13.9 billion  has  been 
disbursed  since  March  2020,  when  the  COVID-19 
pandemic  began (32).  The  expansion  of 
the 
transport  network  (with  222 km  of  newly  built 
motorways  and  backbone  roads  and  378 km  of 
modernised  railway  lines)  has  created  conditions 
for long-term development. Cohesion policy funds 
have  also  made  a  significant  contribution  to 
reducing  environmental  risks,  in  particular  by 
removing 
burdens, 
strengthening  the  adaptation  of  urbanised  areas 
to  climate  change,  and  strengthening  flood 

environmental 

old 

(27)  In 2021-2027, cohesion policy funds include the Cohesion 
Fund, the European Regional Development Fund, the 
European Social Fund Plus and the Just Transition Fund. 

(28)  European territorial cooperation (ETC) programmes are 
excluded from the figure. In 2021-2027, the total 
investment, including national financing, amounts to 
EUR 26.7 billion. 

(29)  RRF funding includes both grants and loans, where 

applicable. The EU average is calculated for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(30)  In 2014-2020, cohesion policy funds included the Cohesion 

Fund, the European Regional Development Fund, the 
European Social Fund and the Youth Employment Initiative. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(31)  In 2014-2020, the total investment, including national 

financing, amounted to EUR 30.0 billion. 

(32) Cut-off date: 14 May 2024. 

30 

protection.  874  municipalities  now  have  digital 
flood  risk  management  plans  in  place.  Over  the 
entire  programming  period,  cohesion  policy  funds 
supported  14 000  businesses  and  enabled  2 500 
businesses to cooperate with research institutions, 
In 
strengthening  Czechia’s  research  capacity. 
addition, the European Social Fund (ESF) supported 
112  newly  established  community  centres  and 
297 461  after-school  activities  that  help  people 
develop new skills. Furthermore, 4 581 pupils with 
special  educational  needs 
targeted 
support.  In  the  field  of  employment,  EU  funding 
helped  create  9 719  new  jobs  in  science  and 
research  and  6 131 
jobs  for  people  from 
marginalised groups. Czechia is one of the biggest 
recipients of displaced people from Ukraine in the 
EU,  with  370 000  people  receiving  temporary 
protection 
temporary 
resettlement  was  supported  by  EUR 63 million  of 
EU funding.  

received 

Czechia. 

Their 

in 

In  2021-2027, 

In  the  current  programming  period  (2021-
2027),  cohesion  policy will  provide a  further 
boost  to  Czechia’s  competitiveness,  to  the 
green  transition  and  to  social  cohesion, 
improving  the  living  and  working  conditions 
of  Czechia’s  people. 
the 
European  Regional  Development  Fund  and 
Cohesion Fund will support sustainable transport in 
Czechia  by  developing  clean  urban  and  suburban 
public  transport  and  charging  infrastructure  for 
clean  vehicles.  Moreover,  support  from  the  funds 
will  help  Czechia  to  improve  its  response  to 
climate  change,  increase  the  share  of  renewable 
energy  sources,  reduce  public  buildings’  energy 
consumption  and  greenhouse  gas  emissions,  and 
replace  fossil  fuels  with  renewables.  Cohesion 
policy will enable SMEs to adapt to the challenges 
of  the  digital  era,  and  further  support  the 
deployment  of  digital  solutions  in  businesses. 
These  measures  will  help  people  overcome  the 
challenges of the green and digital transition. Half 
of  the  country’s  Just  Transition  Fund 
(JTF) 
allocation  is  planned  to  be  implemented  via 
integrated  projects.  Projects  will  be  set  up  in 
various  areas 
(renewables,  circular  economy, 
education,  support  to  research  and  development) 
and should have a major impact on the transition 
to  climate  neutrality  in  the  three  JTF  regions.  As 
part of this, over 2 221 SMEs will  receive support 
through grants and financial  instruments. The JTF 
innovation 
will  also 
equipment, 
jobs. 
Furthermore, 
investment  will  play  an 
important role in the transformation of the former 

in  research  and 
455 

creating 
JTF 

research 

invest 

 
 
 
 
 
Graph A4.2: Distribution of RRF funding by pillar in 
Czechia 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle while the secondary contribution is shown in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Czechia. 
Source: European Commission 

to  design  and 

The Technical Support Instrument (TSI) helps 
Czechia  invest  in  the  effectiveness  of  public 
administration  and  create  a  better  enabling 
environment for EU and national investment. 
The  TSI  and  its  predecessor  Structural  Reform 
Support  Programme  have  funded  projects 
in 
Czechia 
implement  growth-
enhancing  reforms  since  2017.  The  support 
provided  in  2023  included  action  to  implement  a 
housing  reform,  develop  a  framework  for  the 
monitoring  and  evaluation  of  early  childhood 
education  and  care,  strengthen  the  efficiency  of 
the judicial system, and implement a performance 
budgeting  framework.  The  TSI  also  helps  Czechia 
implement  the  methodology  for  applying  the  ‘do 
no significant harm’ principle to projects supported 
by national funds as well as to the green reforms 
and investments under its RRP.  

Czechia  also  receives  funding  from  several  other 
EU 
in 
including 
Table A4.1. 

instruments, 

those 

listed 

industrial  brownfield  sites.  The  European  Social 
Fund  Plus  (ESF+)  will  invest  EUR 367  million  to 
improve access to employment for 92 000 people 
–  including  long-term  unemployed  and  young 
people  –  and  a  further  EUR 180 million  to  help 
workers,  businesses  and  entrepreneurs  adapt  to 
change.  With 
policy 
this  work, 
substantially  contributes  to  achieving  the  UN 
Sustainable Development Goals (SDGs) in Czechia, 
innovation, 
in  particular  SDG  9 
infrastructure),  SDG  7  (Affordable  and  clean 
energy)  and  SDG  8  (Decent  work  and  economic 
growth). 

(Industry, 

cohesion 

Through combined action, cohesion policy and 
the recovery and resilience plan (RRP) have a 
mutually  reinforcing  impact  in  Czechia.  For 
instance,  in  the  2021-2027  programming  period, 
cohesion  policy  funds  finance  the  installation  of 
smart  elements  and  smart  metering  in  energy 
networks,  the  construction  and  modernisation  of 
distribution  networks,  and  the  introduction  of 
management  systems  for  energy  demand  in 
Czechia.  The  Czech  RRP  includes  a  reform  that 
aims to: (i) improve the use of available electricity 
grid  capacity;  (ii)  facilitate  the  connection  of 
renewable  energy  sources 
the  grid  and 
self-consumption;  and  (iii)  set  a  comprehensive 
regulatory  framework  for  flexibility  services  such 
as  energy  storage,  demand 
response  and 
aggregation. The RRP also includes investments to 
accommodate  the  expected  increase  in  demand 
for  integrating  intermittent  renewables  into  the 
distribution  grid  and  setting  up  an  electricity  data 
centre. The contribution of cohesion policy and RRP 
illustrated  by 
funding  by  policy  objective 
Graphs A4.1 and A4.2. 

to 

is 

Graph A4.1: Distribution of cohesion policy funding 
across policy objectives in Czechia 

Source: European Commission 

31 

PO1 Smarter EuropePO2 Greener EuropePO3 Connected EuropePO4 Social EuropePO5 Europe closer to citizensPO8 JTF specific objectiveGreen transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generation 
   
 
   
Table A4.1:  Support from EU instruments in Czechia 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period.   
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027.   
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9) The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023).   
(10) SURE - European instrument for temporary support to mitigate unemployment risks in an emergency. 
Source: European Commission 

32 

Amount 2021-2027 (EUR million)Cohesion policy21 054.1RRF grants (1)8 409.2Public sector loan facility (grant component) (2)124.5Common agricultural policy (3)5 647.0EMFF/EMFAF (4)30Connecting Europe Facility (5)1 043.7Horizon 2020 / Horizon Europe (6) 357.9LIFE programme (7) 64.8Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8) 909.4InvestEU 2021-2027 (9) 178.9PeriodTotal amount available (EUR million)Disbursed amount (EUR million)SURE (10)2020-20224 500.04 500.0RRF 2021-2026818010 900.0 299.0 47.5EU loans31.11 150.2 512.6 40.7EU guaranteesEU Guarantee (EUR million)EU grantsAmount 2014-2020 (EUR million)22 676.2-- 
 
  
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Czechia and the EU-27 

(1)  The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each country’s relative situation in the latest available year is compared with the collection of values of that indicator for all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

This  Annex  uses  the  Commission’s  resilience 
(RDB) (33)  to  show  Czechia’s 
dashboards 
relative 
and 
resilience 
vulnerabilities (34)  that  may  be  of  relevance  for 
green 
societal, 
transformations,  and  for  dealing  with  future 
shocks and geopolitical challenges. (35) 

capacities 

economic, 

digital, 

and 

According  to  the  set  of  resilience  indicators 
in the RDB, Czechia has medium-high overall 
capacities,  which  remained  stable  from  last 
year  and  are  similar  to  the  EU  average.  The 
country  also  has  medium  vulnerabilities, 
increasing slightly from the 2023 RDB, but in line 
with  the  EU  average  in  overall  resilience.  The 
distribution  of  indicators  by  vulnerabilities  and 
capacities  confirms  this  assessment,  with  over 

(33)  https://ec.europa.eu/info/strategy/strategic 

planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en 
Resilience is defined as the ability not only to withstand and 
cope with challenges but also to undergo transitions, in a 
sustainable, fair and democratic manner. 2020 Strategic 
Foresight Report: Charting the course towards a more 
resilient Europe (COM(2020) 493). 

(34)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals, 
while capacities refer to enablers or abilities to cope with 
crises and structural changes and to manage the transitions. 

(35)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

33 

70%  of  indicators  showing  at  least  medium 
capacities  or  at  most  medium  vulnerabilities,  and 
only  under  10%  of  indicators  in  the  critical  range 
of high vulnerabilities and low capacities.  

In  the  social  and  economic  dimension, 
Czechia  maintained 
its  medium-low 
vulnerabilities  and  medium-high  capacities. 
Czechia's  employment  in  energy-intensive  sectors 
and low share of children under 3 years in formal 
childcare  are  critical  challenges  for  its  social  and 
economic resilience.  

In  the  green  dimension,  Czechia  has  stable 
medium  vulnerabilities  and  stable  medium-
high  capacities,  in  line  with  the  EU  average. 
Despite  its  stable  green  vulnerabilities,  Czechia’s 
GHG  emissions  and  raw  materials  consumption 
have both increased. 

In  the  digital  dimension,  Czechia  scores 
medium  on  digital  vulnerabilities  and 
capacities. The significant gender gap among ICT 
specialists continues to be a major vulnerability in 
Czechia. On capacities, there are improvements in 
e-health,  use  of  social  networks,  e-tools  in  the 
judicial system and the collaborative economy but 
fewer  young  people  are  participating  in  online 
learning activities. 

Finally, Czechia’s geopolitical capacities have 
improved, thanks for instance to an increase 
in  armed  forces  staff  and  greater  trade 
countries. 
openness 
towards 
to 
Geopolitical  vulnerabilities  have 

extra-EU 

increased 

CZCZEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowDimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0.620.560.50Capacities0.610.630.67VulnerabilitiesSocial and economicVulnerabilities0.700.630.47Capacities0.630.610.670.600.590.65GreenVulnerabilities0.550.430.44Capacities0.640.650.70CapacitiesGeopoliticalVulnerabilities0.630.590.41Capacities0.570.650.65DigitalVulnerabilities0.610.580.52Capacities0%20%40%60%80%100%Vulnerabilities(60 indicators)Capacities(64 indicators) 
 
 
 
   
 
 
medium, but are on par with the EU average. The 
concentration of import partners from outside the 
EU  is  the  highest  among  the  member  states  and 
creates the biggest challenge. 

34 

 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Czechia  has  made  progress  in  the  green 
transition,  with  more  action  needed,  for 
example to specify the funding framework for the 
transition  and  circular 
climate  and  energy 
economy.  This  Annex  provides  a  snapshot  of  the 
climate,  energy  and environmental  aspects  of the 
transition in Czechia (36). 

Czechia’s  draft  updated  national  energy  and 
climate plan (NECP) lacks key information on 
investment  needs  and  sources  of  funding  to 
achieve its 2030 climate and energy targets. 
Czechia has not identified the investment needs to 
implement  the  planned  policies  and  measures 
under  the  five  dimensions  of  the  Energy  Union.  It 
lacks  a  clear  overview  of  the  main  sources  of 
financing,  and  the  funding  sources  are  not  linked 
to  planned  policies  and  measures.  It  lacks  an 
overview of budgetary information on policies and 
measures,  which  means  it  is  not  possible  to 
identify potential funding gaps (37). 

the 

Czechia’s 

Czechia is projected to reach its 2030 effort 
it  adopts  and 
sharing  target,  provided 
additional 
implements 
measures planned (38). 
2022 
greenhouse gas emissions from these sectors are 
expected  to  come  in  at  8.9%  below  2005  levels. 
Current policies are projected to reduce emissions 
in the effort sharing sectors by 16.9% from 2005 
levels by 2030. The additional  policies included in 
Czechia’s  draft  updated  NECP  are  projected  to 
reduce  these  emissions  by  33.2%  from  2005 
levels. This results in reductions of 7.2 percentage 

points  over  and  above  Czechia’s  effort  sharing 
target to achieve a 26% reduction (39). 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

is  scope  for 

increasing  Czechia’s  
There 
target  for  renewable  energy  in  its  final 
updated  NECP (40).  Czechia’s  renewable  energy 
contribution set in its draft updated NECP, 30% by 
2030,  is  below  the  required  contribution  of  33%. 
Its energy efficiency contribution of 29.19 Mtoe in 
primary  energy  consumption  and  20.2  Mtoe  in 
final energy consumption for 2030 set in the draft 
updated  NECP  reflects  the  EU  target  of  11.7%  in 
the Energy Efficiency Directive.  

The  transition  to  sustainable  transport  still 
hasn’t  fully  gained  ground  in  Czechia (41).  At 
0.2%,  the  share  of  battery  electric  vehicles  in 
Czechia’s  passenger  car  fleet  is  increasing  only 
slowly.  The  rate  of  installing  publicly  accessible 
charging  infrastructure  also  remains  slow,  with 

(36)  This Annex is complemented by Annex 7 on energy transition 

(39)  The effort sharing emissions for 2022 are based on 

and competitiveness, Annex 8 on the fair transition to 
climate neutrality, Annex 9 on resource efficiency, circularity, 
and productivity, and relevant topics in other annexes to this 
country report. 

(37)  See the Commission’s (2023) assessment of the draft 

national energy and climate plan of Czechia. 

(38)  The national greenhouse gas emission reduction target is 
laid down out in Regulation (EU) 2023/857 (the Effort 
Sharing Regulation). The aim is to align action in the sectors 
concerned with the objective to reach the EU-level economy-
wide target of greenhouse gas reductions of at least 55% 
compared to 1990 levels. The target also applies to the 
sectors outside the current EU Emissions Trading System, 
notably buildings (heating and cooling), road transport, 
agriculture, waste and small industry (known as the effort 
sharing sectors).  

approximated inventory data. The final data will be compiled 
in 2027 after a comprehensive review. Projections on the 
impact of current policies ('with existing measures', WEM) 
and additional policies ('with additional measures', WAM) as 
per Czechia’s draft updated NECP. 

(40)  The EU target set out in the revised Renewable Energy 

Directive is to have 42.5% of gross final energy consumption 
coming from renewable energy sources by 2030, with the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Czechia at 28.8 Mtoe for primary energy consumption and 
20.2 Mtoe for final energy consumption. See the Commission 
Recommendation of 18.12.2023 Czechia 

(41)  Unless otherwise indicated, data in this section refer to 
2021. See European Commission, 2023, EU transport in 
figures, transport.ec.europa.eu. 

35 

01020304050607020052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
            
 
 
  
 
  
 
  
 
  
 
  
some  4 500  publicly  accessible  charging points in 
2023 (one for every five e-vehicles, against the EU 
average  of  1:10).  In  Czechia,  82%  of  distances 
travelled are by passenger car, only slightly below 
the EU average of 85%. Three quarters of freight 
transport is transported by road. 34% of Czechia's 
rail  network is electrified (against  the EU average 
of 56%). 

Czechia’s action to increase carbon removals 
from  the  atmosphere  through  its  land  use 
sector  is  projected  to  undershoot  its  2030 
target  for  the  land  use,  land-use  change  and 
forestry  (LULUCF)  sector.  Czechia’s  forests  have 
been  releasing  rising  volumes  of  greenhouse  gas 
since  2018.  To  meet  its  2030  LULUCF  target, 
additional  carbon  removals  of  827 kt CO2eq are 
needed (42).  The  latest  projections (43)  for  2030 
indicate  that  Czechia's  efforts  may  not  be 
sufficient, and it is likely to miss the target. 

Climate  change  affects  many  sectors  in 
Czechia,  and  a  particular  challenge  is  to 
improve  the  status  of  its  water  bodies.  The 
effects of conventional agriculture and forestry on 
soil  quality  and  other  factors  exacerbate  the 
impact  of  intensifying  droughts,  floods  and  land 
erosion  from  wind  and  torrential  rain.  The  risk  of 
floods  has  significantly  increased,  in  particular  by 
heavy  rainfall  combined  with  low  water  retention 
in  soils,  both  in  terms  of  the  number  of  towns 
exposed  and  the  expected  damage (44).  Czechia 
ranked  4th  (from  highest  to  lowest  score)  on  the 
water  exploitation  index  plus  (WEI+),  reaching 
12.07% 
in  2019.  The  worst  seasonal  water 
scarcity conditions reached 19.5% in Q3 of 2019. 
Between  2000  and  2020,  on  average,  4.5%  of 
land  in  Czechia  was  affected  by  droughts.  This 
rose  to  27.1%  in  2022.  Croplands  are  generally 
the  ecosystem  most  damaged  by  droughts  in 
Czechia.  The  Czech  economy  lags  behind  the  EU 
average  in  terms  of  water  productivity (45),  with 
EUR  195  generated  per  cubic  metre  of  water 
abstracted.   Based  on  reporting  in  the  2nd  river 

(42)  National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

(43)  Projections submitted in Czechia’s draft updated national 

energy and climate plan, 2023. 

(44)  Also see the Commission’s 2023 assessment and 
recommendation on Czechia’s progress on climate 
adaptation. 

basin  management  plan,  only  19%  of  all  surface 
water  bodies  reached  at  least  a  good  ecological 
status and 68% reached a good chemical status.  

Despite achieving an overall improvement to 
air  quality  and  continuing  to  reduce  air 
pollution,  air  quality  in  Czechia  remains  a 
cause  for  concern.  The  national  scheme  for 
individual households to change boilers, supported 
by  EU  funds,  has  been  running  since  2015.  Still, 
domestic  solid  fuel  combustion  remains  the  main 
source of air pollution. Czechia recorded 822 years 
of  life  lost  for  every  100 000  inhabitants  due  to 
exposure  to  PM2.5  in  2021  and  relatively  fewer 
impacts  from  exposure  to  NO2 (46).  The  smog-
precursor  emission intensity indicator  fell  by  55% 
reach  1.03 
between  2008  and  2021 
tonnes/EUR 10, slightly above the EU average. The 
pace of Czechia’s transition to a circular economy 
is  also  too  slow,  with  scope  to  improve  waste 
management and recycling (see Annex 9).  

to 

Intensive  agriculture  has  a  major  impact  on 
ecosystems,  biodiversity  and  air  quality.  The 
annual  output  of  Czechia’s  agricultural  sector 
generated  EUR 4.9  billion  in  2023.  The  average 
size  of  Czech  farms  is  the  highest  in  the  EU  and 
large-scale  farming  is  a  major  cause  of  natural 
habitat  decline.  Conservation  tillage  practices, 
which  increase  soil  organic  carbon,  covered  32% 
of  Czechia's  tillable  area  in  2016.  The  country  is 
increasing  its  share  of  organic  farming,  which 
accounted  for  15.6%  of  total  utilised  agricultural 
area  in  2021  against  the  EU  target  of  25%  by 
2030.  The  livestock  density  index  was  0.47%  in 
2020  against  the  EU  average  of  0.75%,  down 
from 0.49% in 2010. At the same time, the share 
of  extensive  livestock  farming  over  the  total 
utilized  agricultural  area  was  40.7%  in  2016, 
above the EU average of 23.8%. Most regions and 
provinces  reduced  the  number  of  livestock  units. 
Intensive  livestock  farming  puts  a  high  burden  on 
the  environment  in  terms  of  ammonia  emissions 
into the air. The agricultural sector was responsible 
for  generating  92.4%  of  all  ammonia  emissions, 
against the EU-27 average of 90.7%. Only 0.7% of 
Czechia’s total utilised agricultural area is irrigated 
and the share of water abstracted for agricultural 
purposes  accounted  for  3.9%  of  all  water 
abstracted in 2019.   

(45)  Measured as GDP over total fresh surface water abstracted 

(46)  Czechia recorded 57 years of life lost for every 100 000 

in cubic meters.  

inhabitants. 

36 

 
 
 
Graph A6.2: Changes in livestock density and 
organic farming 

Graph A6.3: Environmental investment gap, annual 
average 

The numbers are computed by the European Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

Pesticide  contamination  of 
rivers  and 
groundwater  remains  a  challenge.  The  latest 
figures  for 
the  gross  nitrogen  balance  on 
agricultural  land  in  Czechia  show  an  average 
surplus of 75.6 kg of nitrogen per hectare per year 
in  2019,  below  the  EU  average.  The  content  of 
nitrates in groundwater is below the EU average at 
18.5 versus 20.5 mg nitrates/l. 7% of groundwater 
monitoring  stations  indicate  levels  above  the 
maximum  50  mg  nitrates/l  over  the  2016-2019 
reporting  period.  The 
status  of 
chemical 
waterbodies 
is  highly  affected  by  pesticide 
pollution. In 2021, 25.2% of monitoring sites were 
reported  to  have  pesticide  levels  exceeding  the 
thresholds set by the Water Framework Directive. 

investment,  particularly 

increasing 
Czechia  would  benefit  from 
environmental 
in 
pollution  prevention  and  control,  and  in 
circular economy and waste. In 2014-2020, the 
environmental  investment  gap  was  estimated  at 
EUR 1.6  billion  per  year,  equivalent  to  0.8%  of 
GDP.  The  gap  is  estimated  to  be  higher  in  2021-
2027,  at  EUR  1.8  billion  per  year.  The  annual 
investment  gap  for  pollution  prevention  and 
control  has  widened  to  EUR 877  million  per  year, 
the  investment  gap  for  circular  economy  and 
waste narrowed slightly to EUR 470 million. 

37 

0120510152020162020% LSU per hectare% of total utilised agricultural areaLivestock density index Czechia (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Czechia (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area)61420357915687752447090100200300400500600700800900Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
                     
 
                     
 
 
 
 
 
 
 
 
 
Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions  for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

38 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp64,965.3-2%-5%-6%-9%-26%-106Net greenhouse gas removals from LULUCF (2)Kt CO2eq-8 7226 493 9 7006 5883 378 -1,228n/an/aShare of energy from renewable sources (1) (3)%7%16%17%18%18%33%--Energy efficiency: primary energy consumption (3)Mtoe42.539.737.639.538.628.8Energy efficiency: final energy consumption (3)Mtoe26.125.324.526.124.920.4Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---18.920.5769.0786.611.5Share of zero-emission vehicles in new registrations (4)% 0.30.31.61.32.0912.1n/aNumber of publicly accessible AC/DC charging points --109719901414299178446956n/aShare of electrified railways%33.8%33.8%33.9%34.0%-56.1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---13.212.8537.0486.713.3Final energy consumption in buildings2015=100104.3%104.2%104.0%111.1%103.1%104.0%97.2% Climate adaptation         Climate protection gap (5)score 1-4--1.91.21.31.51.5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater10.712.1---3.6--Circular economy | Material footprint (7)tonnes per person17.617.316.118.318.714.214.814.9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants1,079729643822-545584-Biodiversity | Habitats in good conservation status (9)%19.414.7                       Common farmland bird index (10)2000=100716868--78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area14.7615.1915.3315.55-9.1--Nitrates in groundwatermg NO3/litre29.7929.5430.51--20.42--Food waste per capitaKg per capita91--130131-Share of soil in poor health (11)%4441Soil organic matter in agricultural land (12)Mt per ha190----7,904--DistanceEU-27 
 
            
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

This  Annex (47)  sets  out  Czechia’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector (48). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plans (NECP) for 2030 (49). 

clean 

the 

in 

Czechia displays some positive developments 
in  terms  of  energy  legislation  and  measures 
to  decarbonise 
its  economy.  However, 
renewables  still  play  a  minor  role  in  Czechia,  and 
reducing the energy consumption of the residential 
sector  remains  a  challenge.  Comparatively  high 
energy 
on  Czechia’s 
competitiveness. 

prices  weigh  down 

Despite  a  noteworthy  decline  in  the  second 
half  of  2023,  aligning  with  the  prevailing 
trends witnessed across the EU, energy retail 
prices 
in  Czechia  remained  substantially 
higher  than  pre-crisis  levels.  Between  the 
second  semester  of  2022  and  of  2023,  average 
retail  household  prices  witnessed  an  increase  of 
5.5% for gas, and of 30% for electricity. Both still 
significantly  exceed  pre-crisis 
levels.  Average 
electricity  prices  for  household  remain  at  one  of 
the  highest  levels  in  the  EU  (10%  above  EU 
average).  For  the  industrial  and  services  sectors, 
average retail gas prices have been steadily falling 
since  their  peak  in  the  second  half  of  2022. 
Similarly,    the  average  retail  electricity  price 
decreased  by  9%  in  the  second  half  of  2023,  as 
compared  to  the  first  half  of  the  same  year.  In 
both cases, price remain twice as high as the pre-
crisis  average.    The  gap  between  Czechia  and  EU 
average  for  industry  and  service  electricity  prices 
continues to close. 

(47)  It is complemented by Annex 6 as the European Green Deal 

focuses on the clean energy transition and by Annex 8 on the 
action taken to protect the most vulnerable groups, 
complementing ongoing efforts under the European Green 
Deal, REPowerEU and European Green Deal Industrial Plan. 

(48)  In line with the Green Deal Industrial Plan and the Net-Zero 

Industry Act. 

(49)  Czechia submitted its draft updated NECP in October 2023; 
the Commission issued an assessment and country specific 
recommendations on 18 December 2023. Commission 
Recommendation, Assessment (SWD) and Factsheet of the 
draft updated National Energy and Climate Plan of Czechia - 
European Commission (europa.eu). 

Graph A7.1: Czechia's energy retail prices for 
households and industry 

1) For industry, consumption bands are I3 for gas and IC for 
electricity, which refer to medium-sized consumers and 
provide an insight into affordability 
(2) For households, the consumption bands are D2 for gas 
and DC for electricity 
(3) Industry prices are shown without VAT and other 
recoverable taxes/levies/fees as non-household consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

consumers 

In  relative  terms,  electricity  prices  for  non-
increased 
household 
significantly compared to the US, Japan, and 
to  a  lesser  extent,  the  UK,  thus  potentially 
affecting  the  international  competitiveness 
of energy-intensive industries in Czechia. 

have 

Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

(1) For Eurostat data (EU and CZ), the band consumption is ID 
referring to large-sized consumers with an annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight into international competitiveness 
(2) JP = Japan 
Source: Eurostat, IEA 

39 

0.0000.0500.1000.1500.2000.2500.3000.350€/KWhGas (industry & service) - CZGas (industry & service) - EUGas (households) - CZGas (households) - EUElectricity (industry & service) - CZElectricity (industry & service) - EUElectricity (households) - CZElectricity (households) - EU050100150200250300Index ( 2018 S2 = 100)JPUKUSCZEU 
 
 
     
  
 
 
To  shield  consumers  from  soaring  prices 
during  the  energy  crisis,  the  government 
capped  electricity  and  gas  prices  until  the 
end  of  2023.  The  price  cap  covered  100%  of 
household  consumption  of  electricity  and  gas.  It 
applied  also  to  small  and  medium-sized  firms  as 
well  as  to  some  public  institutions.  Beyond  this 
extraordinary  measure,  low-income  households 
can  benefit  from  general  social  support  when 
facing  difficulties  paying  their  energy  bills.  This 
consumer  group  is  also  increasingly  included  in 
energy  efficiency  funding  schemes  (such  as  the 
dedicated New Green Savings Light).   

renewable 

(Lex  RES 
for 

Consumer  empowerment  has  improved,  with 
a  number  of 
legislative  acts  under 
preparation  or  adopted  in  2023,  but  some 
caveats  remain.  The  second  amendment  to  the 
II)  sets  a  regulatory 
Energy  Act 
framework 
energy 
and 
for 
communities,  promoting  an  active 
consumers  within  such  communities.  However, 
further  work  is  needed  to  make  this  legislative 
framework  more  comprehensive.  For  example, 
renewables  self-consumers  with  an 
installed 
capacity  of  up  to  10  kW  are  not  yet  allowed  to 
feed  excess  electricity  into  the  grid  to  avoid  grid 
overflow.  

role 

The  legislative  process  to  address  flexibility 
as  well  as  dynamic  pricing  and  comparison 
tools has also started. Czechia is preparing the 
conditions  to  deploy  smart  meters,  whose  rollout 
remains  at  an  early  stage.  With  regards  to  the 
retail  market  situation,  after  a  sharp  increase  in 
2021, the switching rates in electricity and gas fell 
below  10%  in  2022.  The  share  of  fixed  price 
contracts  also  decreased  during 
the  same 
period. (50) 

The interruption of Russian gas supply due to 
the  war  in  Ukraine  prompted  Czechia  to 
diversify  its  supply  channels,  prioritising 
securing  alternative  sources  for  oil  and  gas. 
Czechia  could  rely  on  robust  gas  infrastructure 
with  neighbouring  countries,  in  particular  with 
Germany and Slovakia, that allowed the country to 
cover  its  gas  consumption  with  non-Russian  gas. 
Czechia  has  eight  underground  storage  facilities 
with  a  total  capacity  of  around  4.17  bcm, 

representing a bit more than half of its total yearly 
the  underground 
consumption.  Since  2022, 
in  Dolni  Bojanovice,  which 
storage 
facility 
previously  only 
is  now 
supplied  Slovakia, 
connected  to  the  Czech  gas  market.  Czechia 
fulfilled  its  gas  storage  obligations  last  winter, 
reaching  99%  by  1  November  2023,  and  ended 
the winter season with a storage filled at 64.29% 
by  1  April  2024.  Czechia  managed  to  reduce  its 
gas demand between August 2022 and December 
2023  by  19%  compared  to  the  average  of  the 
previous 5 years. 

Czechia’s  energy  mix  remains  dominated  by 
fossil  fuels,  although  the  country  plans  to 
phase  out  coal  by  2033.  Fossil  fuels  are 
representing  70.4%  of  gross  available  energy  in 
2022.  Natural  gas  holds  a  slightly  less  prominent 
position 
the  EU  average, 
constituting 15% of the overall energy mix. Before 
the  war  in  Ukraine,  Czechia  had  a  relatively  high 
import  dependence  on  Russia,  reaching  25.4%  in 
2021, mainly for oil, liquid fuels and natural gas. 

in  comparison 

to 

Nuclear energy, along with renewables, has a 
key  role  to  play  in  decarbonisation  of  the 
Czech  economy,  securing  energy  supply  and 
providing  affordable  energy  for  consumers. 
The  government  plans  to  maintain  the  existing 
installed  nuclear  capacity (51)  and  further  expand 
the share of nuclear in the national energy mix, up 
to  25-33%  (currently  15%)  in  primary  energy 
sources and to 46-58% (against 37% in 2022) in 
gross  electricity  production  by  2040.  To  meet 
these  targets,  both  the  construction  of  up  to  four 
new  nuclear  reactors  and  the  development  of 
small modular reactors (mainly at former sites of 
coal-fired  power  plants)  are  planned.  To  avoid 
Russian dependency,  the nuclear operator of both 
plants  has  secured  alternative  nuclear  fuel 
supplies  by  concluding  supply  contracts  with 
Westinghouse  and  Framatome.  To  support  the 
implementation  of 
the  nuclear  programme, 
Czechia  is  putting  a  strong  emphasis  on  nuclear 
research, development and innovation. 

of 

renewables 

Deployment 
remains 
substantially slow. Installed renewables capacity 
grew  by  1.9%  in  2023,  mainly  due  to  a  small 
increase in solar photovoltaics and wind. The total 
renewable  energy  capacity  in  Czechia  in  2023 

(50)  Energy Retail and Consumer Protection 2023 Market 

Monitoring Report (europa.eu) 

(51)  4240 Mwe from 6 nuclear reactors in Dukovany and Temelin 

40 

 
 
 
regards 
the 

stood  at  4  823  MW (52).  As 
the 
total 
acceleration  of  solar  deployment, 
installed capacity in 2023 was 2 420 MW, almost 
an 8% increase from 2022 (53), but lower than last 
year’s growth (17% from 2021). Wind capacity in 
Czechia  saw  a  slight  increase  for  the  first  time 
since  2019  (1%)  but  remains  very  limited. (54) 
Therefore,  there 
is  considerable  potential  to 
further  accelerate  the  deployment  of  renewable 
energy in Czechia. 

Graph A7.3: Czechia's installed renewable capacity 
(left) and electricity generation mix (right) 

(1) "Other" includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

the 

has 

some 

steps 

taken 

simplifies 
for  small-scale 

Czechia 
in 
implementing  reforms  to  accelerate  the 
deployment  of  renewables.  Its  amendment  to 
the  Energy  and  Building  Act  (Lex  RES  I)  entered 
into  force  at  the  beginning  of  2023.  This 
permit-granting 
amendment 
procedure 
renewable  energy 
installations, by exempting projects of up to 50 kW 
from  the  need  to  obtain  an  electricity  production 
license  and  a  building  permit.  It  alsoestablishes 
that 
energy 
installations  larger  than  1  MW  are  considered  to 
be  built  and  operated  in  the  public  interest. 
However, so-called Renewables Acceleration Areas 
remain to be defined and a one-stop-shop has not 
been established.   

low-carbon 

renewable 

and 

Although  Czechia  is  well  connected  with  its 
neighbours,  the  electricity  network  (and 
especially  the  regional  distribution  systems) 

(52)  IRENA report Renewable Energy Statistics 2024 

(53)  IRENA report Renewable Energy Statistics 2024, the data 
might differ from the Eurostat data due to the use of a 
different methodology to calculate the capacity in AC and 
DC. 

(54)  IRENA report Renewable Energy Statistics 2024 

41 

integrating 

needs  to  be  modernised  and  digitalised,to 
remove  severe  bottlenecks  in  the  grids  and 
maximise  the  additional  technical  capacity 
for 
renewables.  Czechia  has 
included  specific  reforms  and  investment  in  this 
area in the REPowerEU chapter of its recovery and 
resilience  plan.  Further  reinforcements  of  the 
transmission  grid  are  planned,  to  keep  the 
the 
adequate  connectivity 
reliability of the grid in the future. Some of these 
projects  have  received  PCI  status,  namely  the 
cluster of internal lines in the northwest-south and 
southwest-east corridors and a new interconnector 
with  Slovakia.  Other  electricity  projects  focus  on 
modernising  the  distribution  grid:  Gabreta  Smart 
Grids  (Czechia,  Germany)  and  ACON  -  Again 
COnnected Networks (Czechia, Slovakia). 

level  and  ensure 

in 

The  deployment  of  renewable  hydrogen 
infrastructure  is  to  be  supported  with  the 
the  REPowerEU 
reforms  announced 
chapter.  Hydrogen  projects  have  also  been 
included in the first EU list of Projects of common 
interest  and  Projects  of  mutual  interest:  the 
hydrogen  corridor  between  Czechia  and  Germany 
and  the  corridor  from  Ukraine  to  Czechia,  Austria 
and Germany. In addition, Czechia’s draft updated 
NECP  sets  a  capacity  target  of  300-400  MW  for 
hydrogen electrolysers by 2030. 

Czechia  demonstrated  progress  but  there  is 
still untapped potential on energy efficiency, 
which  weight  on  Czechia’s  competitiveness. 
Czechia  has  been  decreasing  both  primary  and 
final  energy  consumption  (on  primary  energy 
consumption a 2.3% decrease compared to 2021, 
and a 4.3% decrease compared to 2012, while for 
final  energy  consumption  a  4.5%  decrease 
compared to 2021, and a 2.1% increase compared 
to  2012).  Reducing  energy  consumption  in  the 
transport  sector,  whose  final  energy  consumption 
increased  by  4%  in  the  last  year,  remains  a 
particular challenge.  

Czechia  has  implemented  a  series  of  energy 
efficiency  measures  with  the  support  of 
several  EU  funds.  Most  of  these  schemes 
address  the  building  stock,  including  in  the  public 
sector.    More  than  17%  of  the  recovery  and 
resilience plan (EUR 1.3 billion)  will finance large-
scale  renovation  programmes  to  increase  the 
energy  efficiency  of 
residential  and  public 
buildings,  including  childcare  and  long-term  care 
facilities,  as  well  as  scaled-up  investment  into 

 
 
 
coal-exit. Therefore, Czechia should focus more on 
levelling  the  playing  field  between  electricity  and 
fossil  fuels,  in  particular  in  terms  of  charges,  to 
further  support  decarbonisation  of  heating  and 
cooling.  

Czechia remains highly dependent on non-EU 
countries  for  clean  energy  technologies, 
though  it  has  demonstrated  progress  in 
battery manufacturing and has a foothold in 
the  wind  supply  chain.  For  wind,  Czechia  has 
manufacturing  facilities  for  onshore  wind  towers 
in  Chrudim  and 
and  the  related  machinery 
Běrunice.  Regarding  battery  facilities,  the  first 
lithium-ion  battery  manufacturing  facility  was 
opened 
in  2017,  and  a  second 
manufacturing plant opened in the Karvina region 
in  2020,  with  an  annual  production  capacity  of 
1200  MWh.  The  envisaged  large-scale  lithium 
mining  project  in  Cínovec,  home  to  one  of  the 
could 
largest 
significantly 
battery 
manufacturing supply chain (see Annex 12).  

lithium  deposits 

in  Europe, 

in  Ostrava 

Czechia's 

bolster 

private 

steadily 

improved 

its  energy 
Czechia 
research  and  innovation  (R&I)  investments, 
but  still  lags  behind  the  EU  R&I  investment 
target and remains one of the countries with 
the  lowest  investment  in  renewables.  Public 
investment in Energy Union R&I topics increased to 
0.049%  in  2021  (as  a  share  of  GDP).  Including 
investments,  Venture  Capital 
also 
investment  in  clean  energy  tech  start-ups  and 
scale-ups represented 24,1% (EUR 36.8 Million) of 
the total  Venture Capital  Investment for start-ups 
and  scale-ups,  mostly  focusing  alternatives  to 
conventional 
and 
technologies  to  improve  the  energy  efficiency  of 
buildings and for heating & cooling.The distribution 
of  public  and  private  investment  and  patents 
continues  to  be  dominated  by  energy  efficiency, 
sustainable transport and nuclear safety.  

construction 

processes, 

decarbonising  district  heating.  To  support  energy 
savings in family houses and apartment buildings, 
as  well  as  constructing  buildings  with  very  low 
energy  intensity  and  efficient  use  of  renewable 
energy,  Czechia  has  been 
implementing  the 
programmes  New  Green  Savings  and  New  Green 
Savings  Light.  Most  of  the  existing  funding 
schemes on energy efficiency are still grant-based, 
implemented  via  calls  for  projects.  A  more 
significant  use  of  financial  instruments  would 
usefully complement the grants, while putting less 
strain on public budgets. 

Czechia  needs  to  step  up  its  efforts  to 
achieve  a  meaningful  contribution  to  its 
2030 target for building energy consumption 
reduction.  As  per  its  most  recent  Long  Term 
Renovation  Strategy,  Czechia  aimsto 
reduce 
building  energy  consumption  by  8%  in  2030 
compared  to  2020.  However,  between  2020  and 
2022,  the  final  energy  consumption  of  the 
residential  sector did not change (55).  According to 
research projects, Czechia's building stock presents 
relatively poor levels of energy performance, with 
only 11-12% of buildings considered very efficient 
and  just  under  50%  of  buildings  considered 
inefficient  or  very 
the 
measures  on  energy  efficiency  supported  under 
public schemes have been focused on reaching at 
least the medium level (30% savings), the number 
of deep renovations remains thus very low. 

inefficient.  Most  of 

country’s 

Heating and cooling represent almost 85% of 
the 
final  energy 
residential 
consumption,  with  district  heating  playing  a 
key  role.  Coal  remains  the  main  source  for 
heating.  Czechia’s  share  of  renewables  in  heating 
and cooling (24.4% in 2021)  is slightly above the 
EU  average,  mostly  related  to  biomass  use. 
Approximately  60  000  heat  pumps  were  sold  in 
2022, an increase of 107% in one year. However, 
because of the electricity to gas price ratio in the 
first  half  of  2023, Czechia  is  on  the  edge  of  cost 
rentability  of  heating  by  heat-pumps.  In  addition, 
reconstruction of the district  heating systems and 
the  deep  renovation  of  all  buildings  that  are 
connected  to  the  district  heating  system  is  too 
slow  to  significantly  diminish  the  need  for  new 
natural  gas  heat  sources  during  the  upcoming 

(55)  Final energy consumption in households from Eurostat (data-
tables of December 2023), climate-corrected by the Joint 
Research Centre with reference period 2005-2022 (FEC 
climate corrected = FEC/ (HDD/HDD reference period). 

42 

 
 
Table A7.1:  Key Energy Indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2022) 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

43 

20192020202120222019202020212022Import Dependency [%] 40.8%38.8%40.0%41.8%60.5%57.5%55.5%62.5%of Solid fossil fuels 8.6%12.8%13.9%13.9%43.3%35.8%37.3%45.8%of Oil and petroleum products 97.5%101.2%96.9%99.9%96.7%96.8%91.7%97.7%of Natural Gas 109.8%86.0%92.1%113.4%89.7%83.6%83.6%97.6%Dependency from Russian Fossil Fuels [%]of Natural Gas 99.7%100.0%100.0%59.8%39.7%41.3%41.1%21.0%of Crude Oil49.4%48.8%49.9%56.0%28.8%26.7%26.4%19.5%of Hard Coal11.3%10.1%4.3%1.2%43.5%49.1%47.4%21.5%2016201720182019202020212022Gas Consumption (in bcm)8.5                   8.7                   8.3                   8.7                 8.8                 9.5                 7.6                 Gas Consumption year-on-year change [%]7.9%2.8%-5.3%5.0%1.6%7.2%-19.5%Gas Imports - by type (in bcm)8.1                   8.9                   8.0                   9.5                 7.6                 8.7                 8.6                 Gas imports - pipeline8.1                   8.9                   8.0                   9.5                 7.6                 8.7                 8.6                 Gas imports - LNG0.00.00.00.00.00.0-                 Gas Imports - by main source supplier (in bcm) (1)Norway0.0                   0.1                   0.0                   0.0                 -                 -                 1.1                 Russia8.1                   8.8                   8.0                   9.5                 7.6                 8.7                 5.1                 20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals00000LNG Storage capacity (m3 LNG)00000Underground StorageNumber of storage facilities9                      9                      9                      9                    9                    Technical Capacity (bcm)3.1                   3.2                   3.2                   3.2                 3.9                 20162017201820192020202120222023Gross Electricity Production (GWh) (2)83,309            87,056            88,038            87,035          81,525          85,016          84,848          -              Combustible Fuels53,279         52,783         52,338         50,474       44,933       47,677       47,346       -              Nuclear24,104         28,340         29,921         30,246       30,043       30,731       31,022       -              Hydro3,202           3,040           2,679           3,175         3,437         3,620         3,083         -              Wind497               591               609               700             699             602             641             -              Solar2,131           2,199           2,365           2,316         2,294         2,250         2,626         -              Geothermal-                -                -                -              -              -              -              -              Other Sources96                 103               125               124             118             136             130             -              Gross Electricity Production [%]Combustible Fuels64.0%60.6%59.4%58.0%55.1%56.1%55.8%-              Nuclear28.9%32.6%34.0%34.8%36.9%36.1%36.6%-              Hydro3.8%3.5%3.0%3.6%4.2%4.3%3.6%-              Wind0.6%0.7%0.7%0.8%0.9%0.7%0.8%-              Solar2.6%2.5%2.7%2.7%2.8%2.6%3.1%-              Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Other Sources0.1%0.1%0.1%0.1%0.1%0.2%0.2%-              Net Imports of Electricity (GWh)10,974-            13,037-            13,907-            13,097-          10,153-          11,075-          13,529-          -              As a % of electricity available for final consumption -18.4%-21.4%-22.7%-21.4%-17.2%-17.8%-22.6%-              Electricity Interconnection [%]19.3%21.7%25.4%27.5%24.3%28.6%25.3%Share of renewable energy consumption - by sector [%]-              Electricity13.6%13.7%13.7%14.0%14.8%14.5%15.5%-              Heating/cooling19.9%19.7%20.6%22.6%23.5%24.3%25.8%-              Transport6.5%6.6%6.6%7.8%9.4%7.2%7.2%-              Overall14.9%14.8%15.1%16.2%17.3%17.7%18.2%-                 20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)-                3.04              -                -                 36.80             as a % of total VC investment (3) in Czechia start-ups and scale-ups-                2.7%-                -                 24.1%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)114.1           87.8              117.9           -              -              Public R&I (% GDP)0.05%0.04%0.05%-              -              Private R&I (EUR mln)76.8              72.4              -                -              -              Private R&I (% GDP)0.03%0.03%-                -              -              ELECTRICITY/ENERGYCLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESCzechiaEUENERGY DEPENDNCE 
 
   
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

among  the  most  energy-intensive  in  the  EU. 
Nevertheless, employment in mining and quarrying 
has fallen by .43.4% since 2015 (from 37 800 in 
2015to  around  21400  workers  in  2023).  The  job 
vacancy rate in construction (see Graph A8.2)  – a 
key  sector  for  the  green  transition  –  is  much 
higher  than  the  EU  average  (8.1%  vs  3.6%  in 
2023).  Also,  79%  of  small  and  medium-sized 
enterprises (SMEs) in this sector agreed that skills 
shortages  are  holding  them  back  in  general 
business  activities (59).  According  to  the  European 
Labour  Authority  (ELA) (60),  labour  shortages  were 
reported in 2022 for a number of occupations that 
required specific skills or knowledge for the green 
transition, 
insulation  workers,  civil 
engineers  and  construction  managers.  In  2023, 
labour  shortages  were  recorded  for  building 
construction labourers, and  heavy truck and lorry 
drivers. 

including 

Graph A8.1: Fair transition challenges in Czechia 

This  Annex  monitors  Czechia’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
vulnerable situations. Czechia’s green economy 
is  expanding.  Between  2015  and  2021,  total  jobs 
in  the  environmental  goods  and  services  sector 
grew by 24.9% (to around 151 000) (EU:  18.2%), 
reaching  2.9%  of  total  employment  (EU:  2.7%). 
Also,  between  2015  and  2020,  the  greenhouse 
gas emission intensity of Czechia’s workforce (see 
Graph A8.1 and Table A8.1) declined from 20.8 to 
18.4 tonnes per worker, indicating a positive trend 
in  the  green  transition,  but  still  above  the  EU 
average (14.3 tonnes per worker in 2022) (56). The 
upskilling  and  reskilling  of  workers  in  energy-
intensive  sectors  has  increased  to  some  extent, 
contributing  to  a  fair  transition  towards  climate 
neutrality 
Council 
Recommendation on  ensuring  a  fair  transition 
towards  climate  neutrality (57).  However, 
the 
following developments remain key to achieving a 
fair  transition  and  implementing  the  REPowerEU 
plan: i) accelerating the readiness of the education 
system  for  further  development  of  green  skills; 
ii) providing  support 
job-to-job 
transitions;  iii)  ensuring  the  economic  accessibility 
of  green  technologies  including  electromobility; 
iv) strengthening  the  role  of  the  social  dialogue; 
and 
authorities’ 
the 
communication with the public and social partners 
is coordinated and effective. 

for  effective 

ensuring 

public 

with 

line 

the 

v) 

in 

Employment  in  Czechia’s  sectors  that  are 
most  affected  by  the  green  transition 
remains  well  above  EU  average,  but  labour 
shortages  linked  to  green  economy  remain, 
causing  a  bottleneck.  In  2023,  over  140 000 
employees  worked  in  the  automotive  sector  in 
Czechia (58).  In  2023,  employment  in  Czechia’s 
energy-intensive  industries  comprised  7.4%  of 
total employment (EU: 3.5%), placing its workforce 

(56)  Workforce-related calculations are based on the EU Labour 
Force Survey. Note, in the 2023 country report for Czechia, 
such indicators were calculated based on employment 
statistics in the national accounts. This may result in limited 
comparability across the two reports. 

(57)  The Council Recommendation of 16 June 2022 on ensuring a 
fair transition towards climate neutrality (2022/C 243/04) 
covers employment, skills, tax-benefit and social protection 
systems, essential services and housing. 

Source: Eurostat, EU Labour Force Survey, EMPL-JRC GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

Upskilling  and  reskilling  in  energy-intensive 
industries  slightly  increased,  but  workers 
need  continuous  active  support.  In  energy-
intensive  industries, (61)  workers’  participation  in 
education  and  training  decreased  from  9.5%  in 
2015  to  8.2%  in  2023  (EU:  10.9%),  highlighting 
that more training needs to be provided to match 
the  needs  of  the  changing  economy.  By  2030, 
between  2 300  and  6  600  additional  skilled 
workers will be needed for the deployment of wind 
and  solar  energy if  Czechia  matches  its  projected 

(59)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(60)  European Labour Authority (2023), EURES Report on labour 

shortages and surpluses 2022.  

(58)  Czech Automotive Industry Association: average salaries and 

(61)  Mining and quarrying (NACE B), chemicals (C20), minerals 

number of employees in 2022 and 2023. 

(C23), metals (C24) and automotive (C29). 

44 

0.00.51.01.52.02.5Greenhouse gasemissions per workerEmployment inEnergy-IntensiveIndustriesEducation & trainingin Energy-IntensiveIndsutriesEnergy povertyTransport poverty(proxy)Carbon inequalityCZ Latest vs EU LatestEU LatestCZ 2015 vs EU Latest 
 
 
  
 
 
Table A8.1:  Key indicators for a fair transition in Czechia 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

in 

contribution  to  the  EU’s  2030  renewable  energy 
target. This may require an investment in skills of 
EUR  9.8-12.2  million (62).  Trautom 
the 
Moravskoslezsko 
the  Just 
region  funded  by 
Transition  Fund  (JTF)  aims  to  upskill  and  reskill 
workers  and  help  employees  or  jobseekers  move 
from  occupations  at  risk  to  new  and  better  jobs. 
Project Jsem v Kurzu, funded by the Recovery and 
Resilience 
and 
individuals  of  all  ages  and 
unemployed 
including 
educational 
backgrounds 
vocational  training  and  retraining  programmes 
aimed  at  strengthening  digital  skills.  Project 
Outplacement  funded  by  ESF+,  with  a  EUR  12 
is  set  to  assist  over  3 700 
million  budget, 
employees in finding new jobs during mass layoffs 
or  sudden  unemployment  spikes  in  Czechia's 
regions. 

employed 

courses, 

Facility, 

offers 

Graph A8.2: Job vacancy rate in transforming 
sectors and mining and quarrying 

situation for vulnerable households. The share 
of  the  population  unable  to  keep  their  homes 
adequately warm decreased from 5.0% in 2015 to 
2.2%  in  2021;  it  rose  again  to  2.9%  in  2022  on 
the  back  of  energy  price  increases  due  to  supply 
constraints caused by the COVID-19 pandemic and 
Russia’s  war  of  aggression  against  Ukraine, 
despite  the  emergency  measures  implemented  in 
Czechia.  However,  it  is  still  well  below  the  EU 
average  of  9.3% (63).  7.3%  of  the  population  at 
risk  of  poverty  (AROP)  in  2022  suffered  from 
energy  poverty  (EU:  20.1%),  although  a  national 
definition  is  yet  to  be  put  in  place.  At  the  same 
time, in January 2023, 32.4% of population at risk 
of  poverty  spent  a  considerable  share  of  their 
budget (more than 6%)  on private transport fuels 
(EU:  37.1%) (64).  Czechia  does  not  yet  have  a 
national definition of energy poverty in place. Work 
is  still  ongoing  on  a  methodology  defining  a 
consumer  suffering  from  energy  poverty.  Overall, 
there  is  a  lack  of  specific  policies  or  structural 
measures  to  improve  energy  affordability  that 
at 
targeting 
improving energy affordability. The issue of energy 
poverty  is  currently  only  partially  addressed  by 
social  policy  measures  and,  to  some  extent,  by 
consumer protection policy measures.   

vulnerable 

customers 

aimed 

B - Mining and quarrying 
C - Manufacturing 
D - Electricity, gas, steam and air conditioning supply 
E - Water supply; sewerage, waste management and 
remediation activities 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

Energy poverty  indicators  remain well below 
the  EU  average,  but  the  spike  in  energy 
prices  has  put  additional  strain  on  the 

(62)  EMPL-JRC AMEDI+ project. 

Air  pollution  remains  a  critical  issue  leading 
to  environmental  inequalities.  In  2021,  the 
consumption  footprint  for  20%  of  the  population 
with the highest income was 1.3 times higher than 
the footprint of the poorest 20% (65) (EU: 1.8). For 

(63)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(64)  Affordability of private transport fuels is one key dimension 

of transport poverty. The indicator has been developed in the 
context of the EMPL-JRC GD-AMEDI/AMEDI+ projects. 
Methodology explained in Economic and distributional 
effects of higher energy prices on households in the EU. 

(65)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology explained in Joint Research Centre, 2024. 
Carbon and environmental footprint inequality of household 
consumption in the EU. JRC137520. The EU average refers to 

45 

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%BCDEFHEU 2023CZ 2023CZ 2015IndicatorDescriptionCZ 2015CZEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes20.818.4 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), and automotive (C29)8.4%7.4% (2023)3.5% (2023)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries9.4%8.2% (2023)10.9% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm5.0%2.9% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport24.2%32.4% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution1.31.3 (2021)2.7 (2021) 
 
      
 
 
 
 
  
 
both  groups,  the  consumption  footprint  is  highest 
for  food  and  housing.  The  average  levels  of  air 
pollution  in  Czechia  stood  above  the  EU  average 
(13.5  vs  11.4  µg/m3  PM2.5),  with  91%  of  the 
population  living  in  regions  exposed  to  critical 
levels  of  air  pollution (66).  This  has  led  to  a 
significant  impact  on  health,  affecting  vulnerable 
groups  in  particular,  and  an  estimated  8 500 
premature deaths  (67). 

Czechia is starting to make progress towards 
achieving  a  fair  transition  to  climate 
neutrality, but significant challenges persist. 
Czechia 
is  making  good  efforts,  particularly 
through  measures  financed  under  the  JTF  and 
Recovery  and  Resilience  Facility, 
in  providing 
support  to  those  most  affected  by  the  transition, 
including  through  social  entrepreneurship  and 
digitalisation, However, several challenges are still 
to be addressed. It will be essential for Czechia to 
upskill  and  reskill  its  workforce  while  focusing  on 
the  most  affected  workers,  as  well  as  ensure 
access  to  funding  for  SMEs,  particularly  in  the 
sectors  and  regions  most  affected  by  the  green 
transition.  Effective  coordination  and  involvement 
of  the  social  partners,  civil  society  organisations 
and 
stakeholders  would  help  ensure 
engagement and ownership in the green transition, 
funding,  where 
including 
relevant (68). 

through 

specific 

key 

EU27 without Italy (household income data not available for 
IT in the HBS) 

(66)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

(67)  EEA - Air Quality Health Risk Assessment 

(68)  Based on the monitoring review of the Council 

Recommendation on ensuring a fair transition towards 
climate neutrality, which took place in October 2023. 

46 

 
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Czechia’s 
essential 
competitiveness (69). In this regard, priorities for 
Czechia  are  waste  management  and  the  use  of 
circular materials in industry and construction. 

circularity, 

boost 

to 

Czechia  is  not  on  track  to  achieve  the  EU 
Circular  Economy  Action  Plan  goals,  despite 
in  developing  a  circular  and 
its  work 
innovative 
industry.  The  material  footprint 
increased  from  16.4  to  18.5  tonnes  per  capita 
between  2020  and  2022,  staying  above  the  EU 
average of 14.8 tonnes per capita. Czechia’s total 
waste  production  increased  to  3.6  tonnes  per 
capita  in  2020,  less  than  the  EU  average  of  4.8 
per  capita.  There  is  still  room  to  make  better  use 
of the potential of the circular economy transition, 
also  to  drive  the  decarbonisation  of  Czechia’s 
economy.     

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

In  2023,  the  sectors  covered  by  the  EU 
emissions trading system (ETS) in Czechia (70) 
emitted  25%  less  greenhouse  gases  than  in 
2019.  In  2023,  71%  of  the  greenhouse  gases 
emitted  by  Czechia’s  ETS  installations  came  from 
power generation, much more than the EU average 
(57%).  Of  the  total  emissions  from  all  industry 
sectors, around 20% each came from cement and 
lime production and from the metals industry, 7% 
from  refineries,  and  only  a  minor  share  from  the 

(69)  See also Annexes 6, 7 and 12. 

(70)  This analysis excludes air travel. The data for 2023 reflects 
verified emissions as of 14 May 2024 and may still be 
revised due to late data submissions. For more details and 
the data sources, see Weitzel, M; van der Vorst, C. (2024), 
Uneven progress in reducing emissions in the EU ETS, JRC 
Science for policy brief, JRC138215, Joint Research Centre. 

47 

chemical  industry,  2%;  about  55%  was  classified 
as coming from ‘other’ sources (71). Between 2019 
and  2023,  the  power  sector  registered  a  higher 
greenhouse  gas  emissions  reduction  (27%)  than 
the industry sectors (21%).  While greenhouse gas 
emissions from power generation have declined by 
35%  since  2013,  emissions  from  refineries  have 
increased  by  15%.  Between  2013  and  2023, 
greenhouse  gas  emissions  from  industry  sectors 
decreased by 19%. 

Czechia  is  narrowing  the  efficiency  and 
productivity  gap  with  the  EU  average.  The 
overall  circular  material  use  rate  increased  from 
9.1%  in  2017  to  11.9%  in  2022.  Similarly, 
resource  productivity  stood  below  the  EU  average 
but  has  recorded  a  steady  increase  since  2017 
and reached almost 2 purchasing power standards 
in  2022.  Resource  productivity 
per  kilogram 
expresses  how  efficiently  the  economy  uses 
material  resources  to  produce  wealth.  Improving 
resource  productivity  can  help  minimise  negative 
reduce 
impacts  on 
dependence  on  volatile  raw  material  markets. 
Furthermore,  Czechia  was  dependent  on  imports 
for 33% of materials used in 2022, compared with 
an  EU  average  of  22.4%,  making  the  country 
comparatively  more  vulnerable  to  supply  chain 
disruptions.  Water  abstraction  for  manufacturing 
purposes  accounted  for  16.2%  of  total  water 
abstracted in 2019.    

the  environment  and 

Although  public  awareness  of  circular 
economy  principles  is  rather  low,  the  uptake 
of  circular  business  models  is  progressing. 
The  2022  Eco-Innovation  Scoreboard  placed  the 
country  in  the  ‘average  performers  group’,  with  a 
score  of  111.  As  of  September  2023,  Czechia 
totalled  32  awarded  EU  Ecolabel  licences  and 
5 374  products  with  the  EU  Ecolabel,  showing  an 
increasing take-up of products and licences.  

Despite  positive  trends  in  recycling,  there  is 
still  room  to 
improve  Czechia’s  waste 
disposal methods to meet all EU targets. With 
a  municipal  waste  recycling  rate  of  43.3%  in 
2021,  Czechia  is  on  track  to  meet  the  2025 

(71)  Greenhouse gas emissions classified as coming from ‘other’ 
sources appear to relate to the metals industry (around 
20%), the chemical industry (around 30%), and smaller 
installations in industries such as chemicals, manufacture of 
industrial gases, paper, or glass production (around 30%). 

00.20.40.60.81010203040506020132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherCzech Republic (both axes) 
 
 
  
 
 
 
EU  average  –  31.61  versus  36.48 m2  per  capita. 
Non-residential floor areas grew slower and stood 
at  8.29 m2  per  capita  versus  an  EU  average  of 
15.31 m2. In 2020, Czechia submitted a long-term 
renovation  strategy  aiming  to  decarbonise  the 
building stock.    

is 

room 

there 

Waste 

still 
generated 

Czechia  made  progress 
in  sustainably 
managing  waste  from  the  construction 
for 
sector,  but 
improvement. 
from 
construction  and  demolition  activities  doubled 
between  2010  and  2020,  reaching  approximately 
6.5  million  tonnes  and  almost  equalling  the  EU 
average  per  capita.  The  proportion  of  backfilling 
has  increased  since  2018  and  stood  at  84.9%  in 
2020,  well  above  the  EU  average  of  52.6%. 
Czechia’s recovery rate increased to 96% in 2020, 
meeting  the  Waste  Framework  Directive’s  target 
for 2020 and exceeding the EU average. 

In  2020,  85%  of  the  Czech  population  was 
connected to  at  least  secondary  wastewater 
treatment. 

targets  for  municipal  waste  and  packaging.  The 
rate  of  plastic  packaging  dropped 
recycling 
significantly  after  2020  but  remained  above  the 
EU  average  –  45.1%  versus  39.7%  in  2021. 
Furthermore, Czechia is a top performer in e-waste 
recycling  with  94.5%  of  electrical  and  electronic 
equipment  recovered  in  2021.  The  country  is  still 
highly  reliant  on  landfilling,  which  is  the  main 
waste  treatment  option,  and  risks  missing  the 
2035  landfilling  target.  Czechia  registered  7  new 
patents on waste recycling in 2020, slightly fewer 
than the previous year, but the overall trend is still 
positive. 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

As regards the built environment’s transition 
to the circular economy, there is still room to 
improve  the  efficiency  of  resource  use. 
Residential  floor  areas  per  capita 
increased 
between 2016 and 2020 but remained below the 

Table A9.1:  Circularity indicators 

Source: Eurostat, European Environment Agency 

48 

4945005435700010020030040050060020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)1.71.81.91.92.0-2.52022Circular material use rate (%)10.410.511.511.411.9-11.52022Eco-innovation index (2013=100)100.4103.7104.9109.9111.0-121.52022Recycling of plastic packaging (%)57.061.041.845.1--40.72021Cost of air emissions from industry (EUR bn)23.119.917.8---352.72021Built environmentRecovery rate from construction and demolition waste (%)--96.090.8--89.02020Soil sealing index (base year = 2006)103.0-----103.42018Non-residential floor area (m2 per capita)11.011.111.2---18.02020Waste backfilled (%)23.8-26.2-13.8-9.92020 
                     
 
                 
 
ANNEX 10: DIGITAL TRANSFORMATION 

its 

for 

targets 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  policy  programme,  and  in 
particular  with 
digital 
transformation  by  2030,  this  Annex  describes 
Czechia’s  performance  on  digital  skills,  digital 
infrastructure/connectivity and the digitalisation of 
businesses  and  public  services.  Where  relevant,  it 
makes  reference  to  progress  on  implementing 
Czechia's  recovery  and  resilience  plan.  Czechia 
allocates 23% of its total Recovery and Resilience 
Facility 
targets 
(EUR 1.9 billion) (72).  Under  cohesion  policy,  an 
additional  EUR 1.9  billion  (9%  of  the  country’s 
total  cohesion  policy  funding)  is  allocated  to  the 
country’s digital transformation (73). 

budget 

digital 

(RRF) 

to 

The  Digital  Decade  Policy  Programme  sets 
out  a  pathway  for  EU’s  successful  digital 
transformation  by  2030.  Czechia’s  national 
roadmap outlines the actions it intends to take to 
reach the objectives and targets at national  level. 
The first Report on the State of the Digital Decade 
highlighted the need to accelerate and deepen the 
collective efforts to reach the EU-wide targets and 
objectives (74).  Among  others,  a  digitally  skilled 
population 
the  development  and 
adoption  of  digital  technologies  and  leads  to 
productivity  gains  and  new  business  models.  It 
also  leads  to  higher  inclusion  and  participation  in 
an environment increasingly shaped by the digital 
transformation (75). 
technologies, 
infrastructure  and  tools  all  play  a  role 
in 
addressing 
the  current  structural  challenges, 
including  strategic  dependencies,  cybersecurity 
and climate change. 

increases 

Digital 

(72)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII to the 
Recovery and Resilience Facility Regulation. 

(73)  This amount includes all investment specifically aimed at or 
substantially contributing to digital transformation in the 
2021-2027 Cohesion Policy programming period. The source 
funds are the European Regional Development Fund, the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(74)  European Commission (2023): Report on the State of the 
Digital Decadea 2023, 2023 Report on the state of the 
Digital Decade | Shaping Europe’s digital future (europa.eu). 

(75)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org) and OECD (2019): Going Digital: 
Shaping Policies, Improving Lives – Summary, 
https://www.oecd.org/digital/going-digital-synthesis-
summary.pdf. 

A  relatively  large  proportion  of  the  Czech 
population  has  at  least  basic  digital  skills, 
but  the  current 
lack  of  ICT  specialists 
hampers  the  digital  transformation  of  the 
economy. Almost 70% of individuals have at least 
basic digital  skills, which is above the EU average 
of  56%.  The  share  of  ICT  specialists  as  a 
proportion  of  total  employment  is  below  the  EU 
average  (4.3%  versus  EU  average  of  4.8%). 
Moreover, only 12.4% of ICT specialists in Czechia 
are women, the lowest score in the EU. In addition, 
77%  of  Czech  enterprises  report  difficulties  in 
hiring  ICT  specialists,  the  second  highest  score  in 
the  EU (76).  The  challenge  is  being  tackled  by  the 
ongoing  education  curricula  reform  (supported  by 
the RRF), which is expected to stimulate interest in 
advanced  digital  technologies  already  in  primary 
schools.  Furthermore,  among  other  measures,  a 
new  instrument  of  active  employment  policy, 
including a contribution to the payment of a digital 
education course to support development of digital 
skills  and  skills  for  Industry  4.0,  is  also  funded 
from the RRF. 

in 

in 

The 

lowest 

challenges 

digital 
faces 
Czechia 
infrastructure/connectivity. 
country’s 
coverage in very high capacity network (VHCN) and 
fibre  to  the  premises  (FTTP)  are  statgnating  and 
remain below the EU average. Moreover, the take-
up  of  fast  and  gigabit  broadband  remains  one  of 
the 
the  EU.  Concerning  mobile 
broadband,  high  prices  to  consumers (77)  are  the 
main  deterrent  for  take-up,  a  trend  that  is 
amplified  by  the  inflation  rate  as  some  telecom 
operators raised their prices in January 2023. The 
mobile  broadband  take-up  is  around  the  EU 
average at 90% of individuals. Telecom operators 
are  increasing  their  overall  5G  coverage  (95%  of 
populated  areas  covered  versus  83%  last  year), 
focusing  mainly  on  cities  and  the  main  transport 
routes. 

The  proportion  of  Czech  SMEs  with  at  least 
basic  level  of  digital  intensity  is  well  below 
the  EU  average.  However,  the  country  performs 
well  in  online  sales  and  the  turnover  from  e-
commerce  is  increasing.  Czech  enterprises  are 
below  the  EU  average  in  their  use  of  cloud 
solutions,  artificial  intelligence  and  data  analytics. 

(76)  Please refer to Annex 12. 

(77)  Study on Mobile and Fixed Broadband Prices in Europe 2021, 

EC, 2022. 

49 

 
 
 
 
 
Table A10.1:Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The fibre to the premises coverage indicator is included separately as its evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence. 
Source: Digital Economy and Society Index 
Source:  

According  to  a  study  by  SAP  and  Ipsos (78), 
more  than  half  of  medium  and  large  Czech 
enterprises have a team dedicated to digital 
transformation. Czechia contributes to European 
research 
digital 
technologies.  In  2022,  a  leading  technological 

experimentation 

and 

in 

(78)  https://news.sap.com/cz/2022/12/firmy-v-cesku-planuji-

investovat-pres-60-miliard-korun-do-digitalizace-do-roku-
2025/ 

50 

centre  in  Ostrava  –  IT4Innovations  –  installed  a 
new supercomputer (Karolina), which is one of the 
30  most  powerful  supercomputers  in  Europe.  In 
2022, 4.7% of enterprises in Czechia reported ICT 
service  outage  due 
(e.g. 
ransomware  attacks,  denial  of  service  attacks). 
Over  the  same  year,  17.7%  of  enterprises 
developed  or  reviewed  their  ICT  security  policy 
within the previous 12 months. 

cyberattacks 

to 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills60%60%69%56%80%% individuals20212021202320232030ICT specialists (1)4.6%4.5%4.3%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage52%53%51%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)36%37%36%64%-% households2021202220232023Overall 5G coverage49%83%95%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity53%NA49%58%90%% SMEs2021202320232030Data analyticsNANA20%33%-% enterprises20232023Cloud40%40%35%39%-% enterprises2021202120232023Artificial intelligence5%5%6%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA43%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens75767679100Score (0 to 100)20212022202320232030Digital public services for businesses81848485100Score (0 to 100)20212022202320232030Access to e-health recordsNA475179100Score (0 to 100)2022202320232030Czechia 
 
 
 
      
 
 
 
 
on 

indicators 

services. 

Czechia is stagnating on the digitalisation of 
the 
The 
public 
digitalisation  of  public  services  for  citizens  and 
businesses  are  the  same  as  last  year.  A  new 
government  agency  is  expected  to  steer  the 
digitalisation of the central administration. Czechia 
has  notified  three  electronic  identification  (eID) 
means  to  the  European  Commission  under  the 
eIDAS  Regulation.  The  country  is  following  an 
ambitious strategy and is planning to increase the 
use  and  popularity  of  e-government  solutions  by 
allowing  citizens  to  carry  ID  cards  or  driving 
licences in a mobile app instead of physical cards. 
However,  the  access  to  e-health  records  is  low 
with  a  score  of  51  out  of  100,  whereas  the  EU 
average score is 79. 

51 

 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Czechia’s  research  and 
innovation  system,  which 
is  essential  for 
delivering  the  twin  transition  and  ensuring  long-
term competitiveness. 

Czechia is a ‘moderate innovator’ but the gap 
between its performance and the EU average 
is  narrowing.  According  to  the  2023  edition  of 
the  European 
its 
innovation 
by  21 
percentage  points  since  2016,  at  a  higher  rate 
its  overall 
than  the  EU’s 
performance  remains  slightly  below 
the  EU 
average (94.7% of the EU performance). 

Innovation  Scoreboard (79), 

(8.5pp).  However, 

performance 

increased 

R&D  intensity (80)  declined  in  2022  after 
yearly  growth  since  2016.  It  reached  its  peak 
(2%  of  GDP)  in  2021  but  decreased  to  1.96%  in 
2022 and remains below the EU average (2.24%). 
The  past  growth  was  mainly  due  to  a  steady 
increase  in  business  enterprise  expenditure  on 
R&D  (BERD)  reaching  1.26%  of  GDP  in  2022 
(compared  to  1.47%  of  the  EU  average) (81).  By 
contrast,  public  expenditure  on  R&D  as  a 
percentage  of  GDP  continues  to  decrease  (0.74% 
in  2021  to  0.69%  in  2022)  and  remains  slightly 
below  the  EU  average  of  0.73%.  While  it  can  be 
expected  that  R&I  investments  from  both  the 
Recovery  and  Resilience  Facility  (RRF)  and  the 
Cohesion  Funds  will  contribute  in  the  coming 
years,  more  and  consistent  effort  is  needed  to 
reach the national target of 3% for 2030 (82). 

Despite  a  solid  industrial and  research  base, 
the scientific & technological outputs do not 
sufficiently mirror the system’s potential. The 
overall 
further 
improvement  to  achieve  its  national  goal (83)  to 

performance 

requires 

R&I 

(79)  2023, European Innovation Scoreboard (EIS), country profile: 
Czechia, ec_rtd_eis-country-profile-cz.pdf (europa.eu). The 
EIS provides a comparative analyses of innovation 
performance in EU countries. 

(80)  R&D intensity is defined as gross domestic expenditure on 

R&D as a percentage of GDP. 

(81)  In the business sector, the majority (63%) of R&D funding 

was spent in 2021 by private foreign-controlled enterprises 
according to the 
Analysis_of_the_state_of_RDI_2021_web01(2).pdf. 

(82)  Czechia’s innovation strategy for 2019-2030 sets targets for 
increasing R&D funding (by 2% by 2020, 2.5% by 2025 and 
3% by 2030). 

(83)  Set in the national research, development and innovation 
policy of the Czech Republic 2021+ (NRDIP 2021+) 

move  up  to  the  ‘innovation  leaders’  group (84).  As 
shown  in  Figure  A11.1  below,  patent  applications 
remain well below the EU average (0.83 per billion 
of  GDP  in  2020  vs  3.4).  The  share  of  scientific 
publications  among  the  top  10%  most  cited 
publications  experienced  substantial  year-on-year 
increases  between  2019  and  2020  but  remains 
low  in  comparison  to  the  EU  average  (5.6%  in 
2020  vs  9.6%).  Current  policy  papers (85)  contain 
some  measures  to  direct  reform  processes  and  a 
new R&I legislative act is under preparation. Their 
timely  and  accurate  implementation  could  help 
results.  Also,  as  previously 
achieve  better 
observed (86),  stronger  institutional  governance  of 
R&I  policy  and  collaboration  between  ministries, 
funding agencies and stakeholders are necessary. 

Graph A11.1: Patent applications filed under PCT 
per billion GDP (in PPS) in 2020 

Source: OECD 

Academia-business  linkages  remain  weak. 
Public  expenditure  on  R&D  financed  by  domestic 
business  enterprises  as  a  percentage  of  total 
public expenditure on R&D remains around half of 
the EU average (3.27% in 2021 vs 7.11%) and has 
declined  over  time.  Also,  Czechia  lags  behind  the 
EU  average  in  terms  of  researchers  employed  by 
businesses (4.3 per thousand active population vs 
5.4  in  2021).  The  recovery  and  resilience  plan 
(RRP) aims to incentivise stronger science-business 
linkages, chiefly by continuing the existing support 
schemes (87).  There 
to 

the  need 

remains 

(84)  Group of Member States with the highest performance 
according to the European Innovation Scoreboard. 

(85)  E.g. NRDIP 2021+ and Innovation Strategy of the Czech 

Republic 2019–2030. 

(86)  ST 8174/20 - COM(2020) 503 final and Country report 

2020. 

(87)  Cooperation of SMEs with a public research organisation 

under National Centres of Competence. 

52 

8.63.40.83012345678910SEFIDKDENLATEUBEFRITLUSIMTIEESEEPTHULVCYCZELSKPLLTBGHRRO 
 
 
   
 
 
Table A11.1:Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical Database), Invest EU 

structurally  improve  the  transfer  of  technology 
and knowledge from academia to businesses, e.g. 
by  enhancing  the  effectiveness  of  technology 
transfer  offices (88).  The  scope  of  the  Horizon 
Europe  Policy  Support  Facility  to  support  science-
business  linkages  is  under  discussion,  and  if 
implemented should support this reform process. 

invest 

in  R&D 

The  framework  conditions  for  businesses  to 
innovate  and 
require 
continuous  attention  and 
improvements. 
Although  the  situation  has  improved  over  the 
years  as  regards  access  to  finance,  many  young 
and dynamic Czech firms lack sufficient sources of 
funding  suited  to  their  needs (89).  Start-ups  and 
scale-ups  play  a  critical 
fostering 
innovation,  but  data  show  that  the  number  of 
start-ups  has  stagnated  since  2012.  These 
weaknesses are caused by various factors, such as 
the  low  availability  of  venture  capital,  which  is 
below  the  EU  average  (0.022%  of  GDP  in  2021 
versus the EU average of 0.085%) (see also Annex 
12)  or  the  lack  of  highly  skilled  and  qualified 

role 

in 

further 

workforce (90).  The  latter  is  illustrated  by  the 
decreasing  number  of  graduates  in  science  and 
engineering (91). The amended RRP includes top-up 
investments  to  foster  innovation  in  companies, 
new investment to support access to finance in the 
strategic  technologies  sectors  and  reform  helping 
the harmonisation of rules for granting public R&I 
support.  To 
innovation 
potential and the relevant framework conditions it 
is  essential  to  swiftly  design  and  implement 
measures taking into account findings from recent 
studies (92).  Also,  regulatory  measures  such  as 
effective  tax  relief,  employee  share  options, 
compliance  exemptions,  sandboxes  and  open-
source  initiatives  are  needed  to  improve  the 
quality 
start-up 
ecosystems (93).  This  could  improve  innovation 

innovation 

improve 

and 

the 

the 

of 

(90)  Domestic companies often have difficulties in competing 
with foreign companies for the workforce on the market. 

(91)  New graduates in science and engineering per thousand 
population aged 25-34 (14.5 in 2011 vs 10.5 in 2021). 

(88)  Innovation diffusion in the Czech Republic (oecd.org). 

(92)  INKA 3: Výsledky 3. kola mapování inovačních kapacit - 

(89)  P.94, 2023 OECD Economic Surveys CZECH REPUBLIC 

e392e937-en.pdf (oecd-ilibrary.org). 

Technologická agentura ČR (tacr.cz). 

(93)  Startup Nations Standard. Report 2023. 

53 

2022R&D intensity (GERD as % of GDP)1.331.921.9921.962.24Public expenditure on R&D as % of GDP0.550.870.770.740.690.73Business enterprise expenditure on R&D (BERD) as % of GDP0.751.041.211.251.261.48Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 4.74.55.06::9.6PCT (Patent Cooperation Treaty) patent applications per billion GDP (in PPS)0.710.83::3.4Public-private scientific co-publications as % of total publications5.3677.57.97.6Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0160.030.0250.0240.0230.054New graduates in science & engineering per thousand pop. aged 25-3414.513.110.610.5:16.9Total public sector support for BERD as % of GDP0.1730.1790.1510.154:0.204R&D tax incentives: foregone revenues as % of GDP0.0330.0550.0370.04:0.104Share of environment-related patents in total patent applications filed under PCT (%)15.17.116.3::14.7Venture capital (market statistics) as % of GDP0.020.0030.0090.0220.0330.085Employment share of high growth enterprises measures in employment (%):15.8110.86::12.512021Finance for innovation and economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2020Czechia20102015EU average (1) 
 
 
 
  
 
diffusion  and  instigate  aspirations  of  domestic 
companies for higher order innovation. 

54 

 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

the 

and 

Czech 

reflecting 

economy 

considerably, 

Multiple  crises  continue  to  pose  challenges 
its 
for 
competitiveness.  In  2023,  Czechia  was  the  only 
EU  country  not  to  exceed  the  real  GDP  pre-
pandemic  level  of  2019.  Its  economic  growth 
slowed 
significant 
increases  in  energy  and  other  commodity  prices 
and  disruptions  in  global  value  chains.  Industrial 
producer  prices  increased  by  24.3%  year-on-year 
on  average  in  2022  and  by  a  further  5%  in 
2023 (94).  Industrial  production  fell  by  0.4%  in 
2023  compared 
the 
weakest  performance  since  2020.  Despite  the 
recovery  in  the  automotive  sector  (production 
increased  by  16.1%),  energy  intensive  industries 
such  as  metallurgy  and  foundry  saw  one  of  the 
biggest  declines  (14.4%).  In  addition,  geopolitical 
tensions  and  specific  features  of  the  industrial 
structure  of  the  Czech  economy  and  its  exports 
have  demonstrated  the  need  to  build  a  resilient 
its  structural 
economic  base  by  addressing 
challenges  in  order  to  stay  competitive  in  the  EU 
and in the global market. 

to  2022 (95), 

recording 

Accelerating the twin transition and boosting 
productivity are key to competitiveness. Even 
though Czechia’s overall position in the IMD World 
improved 
Competitiveness  Ranking  2023  has 
compared  to  2022,  the  economic  performance 
indicator  shows  a  significant  decline  (falling  from 
18th  in  2022  to  27th  in  2023) (96).  In  the  2023 
Global  Innovation  Index (97),  Czechia  ranked  31st, 
down  7  places  compared  to  2020.  A  favourable 
business environment, including by simplifying the 
construction  and  permitting  processes 
for 
renewable energy sources and timely investments 
for 
in  clean 
maintaining 
at 
European and global level. 

technologies  will  be  crucial 
competitiveness 

Czechia’s 

Slovakia  (78.4%)  (Graph  A12.1).  This  highlights 
further  potential  for  productivity  growth.  In  2023, 
the  productivity  growth  relied  exclusively  on 
capital deepening. Total factor productivity growth 
continues to be above the EU average (110.3% in 
Czechia in 2023 vs 108.5% in the EU, [2006=100]) 
but  it  has  shown  a  downward  trend  in  recent 
years (98). 

Graph A12.1: Hourly productivity in purchasing 
power standards (% of EU-27) 

Source: European Commission calculation based on AMECO 

(Graph 

construction 

significantly  varies  across 
Productivity 
sectors,  with  construction  recording  the 
worst  performance.  The  most  significant  and 
long-lasting  declining  trend  in  productivity  was  in 
A12.2). 
sector 
the 
Considerably  higher  construction  work  prices 
(12.4%  year-on-year  in  2022  and  43.7%  in  April 
2023  compared  to  2015) (99),  low  demand  and 
lengthy  construction  permitting  procedures  can 
partially  explain  the  situation.  Industry  performed 
worse  than  the  EU  average  in  2023,  with  a 
productivity  decline  of  -0.6%  compared  to  an 
average  of  +3.5%  in  the  EU (100).  The  stagnating 
economy  is  likely  caused  by  the  fact  that  growth 
based  on  factors  such  as  low  wages  and  foreign 
direct investment has lost momentum (101). 

the  EU  average 

Labour  productivity  growth  is  stagnating  in 
the  catching-up 
Czechia,  slowing  down 
process  with 
labour 
productivity.  Even  though  Czechia  was  a  leader 
in hourly productivity within the Visegrad countries 
in the last years, it reached only 77.6% of the EU 
average  level  in  2023  (in  purchasing  power 
standards)  and  remained  below  its  direct  peer 

(94)  Indexy cen výrobců - prosinec 2023 | ČSÚ (czso.cz) 

(95)  Český statistický úřad, 6/2/2024 

(96)  World Competitiveness Ranking 2023 

(97)  Global Innovation Index 2023 

(98)  European Commission calculations based on AMECO. 

(99)  Česká spořitelna, Current situation in the Czech construction 

industry, June 2023. 

(100) Eurostat (nama_10_lp_a21) 

(101) Czech Chamber of Commerce, Economic threats to the Czech 

Republic: Competitiveness, August 2023. 

55 

40506070809000020406081012141618202224% of EU27Czech RepublicSlovakiaHungaryPoland 
 
 
        
 
 
Graph A12.2: Labour productivity by sector 
[2015=100] 

Source: Eurostat 

by 

the 

afforded 

With  its  diverse  manufacturing  capabilities 
and high degree of economic complexity, the 
industry  could  better  seize  the 
Czech 
opportunity 
green 
transformation.  Industry  accounts  for  25%  of 
GDP,  84%  of  exports  and  more  than  28%  of 
employment  in  Czechia.  Czech  factories  are  often 
referred to as ‘assembly plants’ but can be largely 
seen as the drivers of innovation. According to the 
Ministry of Industry (102), almost  60% of domestic 
industrial  production  falls  into  the  ‘high-tech’  or 
‘medium high-tech’ segment.  

(R&D 

Czechia has solid entry conditions to produce 
clean strategic technologies. In some sectors it 
already has a relatively strong position (production 
of  heat  pumps),  in  others  it  could  build  on  the 
existing  developing  projects 
in  solar 
technologies,  battery  energy  storage)  or  use  its 
strong  traditional  industrial  base  (solar  thermal 
for  wind 
collectors,  mechanical  components 
energy,  electrical  engineering  for  batteries  and 
accumulators)  and  accelerate  their  development 
and  manufacturing  capacities  (see  Annex  7).  The 
hydrogen sector is in  its infancy stage in Czechia. 
Some  companies  are  already  operating  in  this 
sector  but  given 
its  high  potential  for  the 
decarbonisation  of  the  economy,  especially  in 
freight road transport, more could be done.  

the  Czech 

economy  – 

For  the  automotive  industry  –  the  key  pillar 
of 
research, 
development  and  the  production  of  car 
batteries  will  be  decisive.  Czechia  has 
recognised  e-mobility  and  the  battery  industry  as 
a  new  strategic  sector  for  the  economy.  The 

Cínovec  lithium  mining  project  is  a  significant 
opportunity for Czechia to create jobs, diversify its 
economy,  secure  its  energy  supply  and  become  a 
leader in the European battery industry. It involves 
the largest lithium deposit in Europe, representing 
3-5%  of  the  world's  total  lithium  reserves.  The 
final  feasibility  study  for  the  entire  technology 
park  is  expected to  be  completed in  the  first  half 
of  2024,  to  be  followed  by  the  permitting 
procedure. If the project proves to be economically 
viable,  the  plan  is  to  start  construction  in  2025 
and  produce  lithium  carbonate  in  2028.  The  full 
value  chain,  from  lithium/manganese  mining  and 
processing, 
vehicle 
manufacturing  to  recycling  processes,  can  be 
developed.  Intensifying  public  dialogue  on  the 
conditions  under  which  raw  materials  can  be 
sustainably  extracted,  processed  and  recycled  is 
an important factor in raising awareness about the 
importance  of  raw  materials  for  the  green  and 
digital transition in Czechia and the EU. 

battery 

electric 

and 

integration 

Czech businesses are well integrated into the 
single  market  and  global  value  chains. 
is  above  the  EU 
Czechia’s  trade 
average,  expressed  as  a  share  of  imports  and 
exports  to  national  GDP (48.3%  in  Czechia  vs  the 
EU  average  of  42.9%).  However,  as  the  Czech 
economy  is  dependent  on  international  trade  and 
relies  on  exports,  particularly  in  automotive  and 
other  manufacturing,  a  decline  in  global  demand 
has  a  direct  impact  on  its  economic  growth.  In 
2023,  material  shortages  were  reported  by  27% 
of  Czech  companies  compared  to  the  EU  average 
of 17%, which represents the fourth largest share 
in  the  EU,  hampering  production  and  further 
growth.  The  transition  to  an  economy  with  higher 
added  value  and  innovation  intensity  would  help 
build  a  more  resilient  economy  less  vulnerable  to 
external shocks. 

to 

Czechia could further benefit from the single 
market.  According 
its  conformity  deficit 
indicator,  Czechia  has  had  the  fourth  highest 
average  of  incorrectly  transposed  single  market 
directives in the EU in the last 5 years. The Single 
Market  Scoreboard  indicates  scope  for  further 
improvement,  also  on  the  number  of  ongoing 
infringement  procedures,  which  are  above  the  EU 
average  (29  in  Czechia  vs  25.9  in  the  EU  in 
2023) (103),  delaying  implementation  of  the  single 
market  rules. In 2023, Czechia solved 76% of the 

(102) Ministerstvo průmyslu a obchodu, Analýza vývoje ekonomiky 

ČR, červen 2023 

(103) Single Market Scoreboard 2023. 

56 

60100140180201520162017201820192020202120222023Agriculture, forestry and fishingIndustry (except construction)ConstructionWholesale and retail trade, transport, accommodation and food service activitiesInformation and communicationFinancial and insurance activitiesProfessional, scientific and technical activities; administrative and support service activities 
       
 
 
SOLVIT cases it handled as lead centre, below the 
EU average of 88.3%.  

legal 

form, 

incompatibility 

Regulated  professions  remain  one  of  the 
problematic  areas  of  the  single  market  for 
Czechia.  Regulatory  restrictiveness  in  Czechia  is 
higher  than  the  EU  average  for  the  regulated 
professions  of  lawyer,  architect,  estate  agent  and 
civil  engineer (104).  Lawyers  in  Czechia  are  subject 
to 
rules  and 
multidisciplinary  restrictions,  all  of  which  could 
affect the potential of this sector to innovate and 
roll out digital solutions and new business models. 
It  is  also  important  to  consider  the  impact  of  the 
shareholding and/or company form restrictions for 
architects. The property services currently reserved 
exclusively  for  estate  agents  would  benefit  from 
to  other 
the  possibility  of  opening  access 
professionals.  The 
that 
regulates  civil  engineers  could  hinder  the  free 
rules 
movement  of  professionals,  and 
spreading  responsibility  over  different  categories 
of professionals in the same area of activity could 
affect the efficiency of service provision.  

fragmented  system 

the 

the  system  will  enable 

Czechia  is  in  the  intermediate  stage  of 
implementing  the  components  needed  to 
connect  to  the  Once-Only  Technical  System 
(OOTS) (105). As part of the Single Digital Gateway 
Regulation (106), 
the 
automated  cross-border  exchange  of  evidence 
between  competent  authorities,  improving  online 
access  to  information,  administrative  procedures 
and  assistance  within  the  EU.  The  onboarding  of 
Czech  competent  authorities  is  crucial  for  the 
system  to  function  smoothly  and  to  reduce 
administrative burden.  

Czechia displays mixed results on innovation. 
A  relatively  high  share  of  its  GDP  (5.8%)  was 
invested in intellectual  property  in  2022,  the  fifth 
largest  among  EU  Member  States.  However,  in 
terms  of  patent  applications  and  grants  it  lags 
behind  competitors  from  the  most  developed 
countries. According to the European Patent Office, 
the  number  of  patents  granted  in  2022  fell 
considerably to 85, compared to 172 in 2019 (107). 

(104) European Commission recommendation on professional 

regulations, COM(2021)385. 

(105) Regulation (EU) 2022/1463. 

(106) Regulation (EU) 2018/1724. 

(107) European Patent Office 

Czechia  could  further  benefit  from  the  unitary 
patent system (108), which it does not participate in 
yet. The system entered into force in June 2023 to 
reduce  complexity  and  costs  for  companies  (see 
Annex 11).  

and 

burden 

reduce 
regulatory 

Streamlining Czechia’s regulatory framework 
could  make  it  easier  to  do  business.  Despite 
improvements,  challenges  in  the  quality  of  the 
business  environment  persist.  After  the  two  ‘anti-
bureaucratic  packages’  were  introduced  in  August 
2022 and June 2023, the third package with 400 
legal  changes  proposed  by  businesses  is  being 
the  excessive 
prepared.  This  should 
administrative 
on 
businesses.  Also,  the  mid-term  evaluation  of  the 
SME Support Strategy in the Czech Republic 2021-
2027 could further improve the policy framework, 
reflecting  current  and  upcoming  needs  of  small 
and medium-sized enterprises (SMEs). An effective 
application  of  the  ‘Think  Small  First’  and  ‘Digital 
First’  principles  is  needed  to  reduce  the  excessive 
administrative 
on 
businesses (109).  In  addition  to  the  need  to  further 
address  regulatory  burden,  business  associations 
stressed the labour shortage of skilled workers as 
a  barrier  to  doing  business,  hindering  productivity 
and  hampering  the  entry  of  foreign  companies. 
Further  efforts  to  increase  the  relevance  of  up- 
and  reskilling,  especially  in  the  transition  sectors, 
are  needed  to  support  the  transition  towards  a 
green economy (see Annex 8 and Annex 14).  

regulatory 

burden 

and 

The  slow  construction  permitting  process 
continues to be one of the biggest barriers to 
the  Czech  economy.  It  is  a  limiting  factor  for 
foreign 
investments  as  well  as  for  Czech 
companies’  decisions  about  further  investments. 
While there is a lack of data on permitting speed, 
according  to  a  survey (110),  the  main  reasons  for 
the lengthy construction permitting procedures are 
low  administrative  capacity  in  the  fragmented 
building offices, the lack of a methodology to unify 
the  procedures  of  the  relevant  authorities  and 
construction 
conflicting 
requirements from the authorities, requirements to 
supplement  the  opinions,  but  also  unresolved 
property rights relations. Shortening the permitting 

authorities, 

often 

(108) Unitary Patent system 

(109) Startup Nations Standard. Report 2023 

(110) Czech Chamber of Chartered Engineers and Technicians 

Engaged in Construction, January 2024. 

57 

 
 
 
process for energy and transport infrastructure as 
is  an  essential 
well  as 
condition for their realisation.  

residential  housing 

to 

reduce 

the  procedures 

There 
is  untapped  potential  to  further 
digitalise  the  economy.  By  accelerating  its 
effort  to  digitalise  public  services,  Czechia  could 
streamline 
the 
administrative burden on businesses. However, the 
lack  of  ICT  specialists  remains  an  obstacle  that 
hampers  the  digitalisation  not  only  of  public 
administration,  but  also  of  businesses.  77%  of 
Czech firms have reported difficulties in hiring ICT 
specialists,  which  is  significantly  higher  than  the 
63%  EU  average (111)  (see  Annex  10).  Facilitating 
and 
access 
to 
the 
strengthening 
digitalisation  of  businesses,  especially  SMEs, 
through  sustained  and  complementary  measures 
could  reap  the  benefits  of  digital  transformation 
and increase productivity. 

technologies 
encourage 

advanced 
policies 

to 

conditions 

The 
for  entrepreneurs  are 
deteriorating on the back of insolvencies and 
late  payments.  The  number  of  entrepreneurs  in 
insolvency  has  been  steadily declining in  the  past 
3 years. However, the trend was reversed in 2023, 
with an increase for the first time since 2019. Out 
of more than 35 000 entrepreneurs in insolvency, 
almost 90% are self-employed. High inflation, low 
demand  and  high  interest  rates  are  among  the 
reasons.  The  most  affected  sectors  are  the  food 
industry,  wholesale,  construction  and  road  freight 
transport (112).  Late  payments  hamper 
the 
competitiveness and resilience of small businesses 
in  Czechia.  The  share  of  SMEs  experiencing  late 
payments in the past 6 months increased in 2023, 
reaching  almost  65%,  the  fourth  worst  in  the  EU. 
This was well above the EU average of 48.7%. 

Further  improvements  are  needed  on  access 
to non-bank finance and venture capital. The 
domestic  venture  capital  market  cooled  off 
significantly in 2023. According to Czech Founders, 
total  investment  in  Czech  start-ups  fell  by  86.5% 
in  2023  to  EUR 204  million  (there  had  been  a 
year-on-year  rise  of  58.8%  in  2022  to  EUR 1.51 
billion).  The  drop  last  year  was  because  start-ups 
postponed  further  funding  rounds  due  to  the 
A 
unfavourable  macroeconomic 

situation. 

(111) Digital Decade Country Report 2023, Czechia.  

(112) Imper, Database of entrepreneurs Merk.cz 

investments 

technological  areas  and 

significant rebound is expected in 2024 (113). Also, 
in 
new  venture  capital/pre-seed 
strategic  and 
the 
possibility  to  offer  an  innovative  quasi-equity 
product  by  the  National  Development  Bank  (NDB) 
under  the  amended  recovery  and  resilience  plan 
could  help  create  more  favourable  conditions  for 
financing start-ups and growing businesses.  

The  increase  of  the  NDB’s  role  in  the  Czech 
economy  together  with  the  wider  use  of  EU 
financial  instruments  could  improve  access 
to  finance  for  SMEs  and  help  kick-start 
investments  in  Czechia.  In  2023,  the  NDB 
became  an  implementing  partner  of  the  InvestEU 
programme  with  the  potential  to  guarantee  a 
larger  volume  of  operating  and 
significantly 
investment 
If  the 
loans,  especially  to  SMEs. 
national  promotional  bank  is  strengthened  in 
terms  of  capital  while  a  larger  share  of  EU  funds 
through  financial 
in  Czechia  are  distributed 
instruments,  the  NDB  can  serve  as  an  important 
catalyst for economic growth. This is currently not 
the case. In 2022, the NDB provided new financing 
equal  to  0.2%  of  Czech  GDP,  while  best  practice 
for national  promotional  banks in the EU Member 
States ranges from 2% to 4% (114). Also, the share 
of  financial  instruments  in  2014-2020  European 
structural  and  investment  funds  in  Czechia  was 
only  4%  compared  to  the  EU  average  of  9% (115) 
(see Annex 17). 

The  adoption  of  the  new  Public  Procurement 
National Strategy (PPNS) and its action plan 
represents  a  significant  step  forward  in 
strengthening  public  procurement  efficiency, 
in  particular  in  implementing  sustainable 
and 
goals, 
professionalisation 
buyers. 
Implementation  of  the  measures  included  in  the 
strategy 
targeted 
administrative  burden  are  expected  to  improve 
competition  on  the  public  procurement  markets 

innovation 
public 

promoting 

reduction 

and 

the 

of 

of 

(113) Data from Czech Funding&Exits Startup Database and the 

upcoming Impact Report 2023. 

(114) Národní rozvojová banka Quo Vadis, presentation at the 
conference Financial Instruments under the shared 
management funds, Prague, 22 February 2024. 

(115) Summaries of the data on the progress made in financing 

and implementing financial instruments for the programming 
period 2014-2020 in accordance with Article 46 of 
Regulation (EU) No 1303/2013 of the European Parliament 
and of the Council. 

58 

 
 
 
(40%  vs  28.6% 

and address persistent challenges such as the lack 
of interest by companies, as indicated by the rate 
of  single  bid  procedures,  which  remained  high  in 
in  the  EU) (116).  The 
2023 
amendment  to  the  Public  Procurement  Act  that 
entered  into  force  in  July  2023  also  aims  to 
further  reduce  the  administrative  burden  on  both 
contracting  authorities  and  suppliers.  Despite 
these  efforts  to  improve  the  efficiency  of  public 
procurement,  the  rate  of  contracts  awarded 
directly  without  publication  (10%  vs  8.1%  in  the 
EU),  remains  unaddressed.  A  key  element  of 
improving  the  efficiency  of  public  procurement  is 
linked to attracting and developing talent in public 
administrations (see Annex 13). Also, the practical 
implementation 
sustainability-oriented 
approaches  will  depend  very  much  on  political 
support.  Moreover, 
the  negative  perceptions 
among practitioners about the risks related to the 
use of environmental and social aspects is one of 
leveraging  strategic 
to 
the  main  obstacles 
procurement.  To  tackle  these  obstacles,  the 
Sustainable  Procurement  Action  Plan,  one  of  the 
implementation  measures  of  PPNS, 
in 
preparation. It will set minimum responsible public 
procurement  standards 
for  selected  subject 
matters  and  could  help  procurement  practitioners 
to put responsible public procurement in practice. 

of 

is 

(116) The currently available data is preliminary. Due to the 

technical preparation of a new public procurement platform, 
only the regular data available in Tenders Electronic Daily 
(TED) has been taken into account. For 2022 data, see the 
Single Market Scoreboard: https://single-market-
scoreboard.ec.europa.eu/business-framework-
conditions/public-procurement_en  

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A12.1: Industry and the Single Market 

Source: (1) AMECO, (2) Eurostat, (3) Single Market Scoreboard, (4) OECD, (5) ECFIN BCS, (6) COMEXT and Commission 
calculations, (7) EIB Investment Survey, (8) Intrum Payment Report, (9) SAFE survey, (10) EIF SME Access to Finance Index.  

60 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP16.64.2455.13.8Net Public investment, level of public capital stock, net of depreciation, % GDP10.60.80.70.611.2Real labour productivity per person in industry (% yoy)22.8-6.64.21.60.8-1.24Cost competitivenessNominal unit labour cost in industry (% yoy)22.74.83.311.19.79.83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP250.447.450.452.248.342.9Transposition deficit, % of all directives not transposed30.81.52.41.40.90.7Conformity deficit, % of all directives transposed incorrectly31.722.32.11.71.1SOLVIT, % resolution rate per country3100.092.082.494.976.088.3Number of pending infringement proceedings3312931332925.9RestrictionsEEA Services Trade Restrictiveness Index40.050.050.050.050.050.05Single bids, % of total contractors3504140424028.6Direct Awards, %3991010108.1Material Shortage (industry), firms facing constraints, %520.911.435.646.726.917.2Labour Shortage using survey data (industry), firms facing constraints, %538.418.922.723.619.723.3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)27.8256.96.46.04.62.5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60.190.170.20.220.220.22Installed renewables electricity capacity, % of total electricity produced20.20.20.20.350Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle717.221.714.610.04.022.2Bankruptcies, Index (2015=100)2-----105.6Business registrations, Index (2015=100)2-----120.2Payment gap - corporates B2B, difference in days between offered and actual payment8-31191515Payment gap - public sector, difference in days between offered and actual payment8--11091716Share of SMEs experiencing late payments in past 6 months, %974.255.862.361.164.548.7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100.460.330.370.34-0.49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0.060.050.170.07-0.17ECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeCzechiaHEADLINE INDICATORSEconomic StructureSINGLE MARKETCompliancePublic procurement  
 
 
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

Czechia’s  public  administration  is  essential 
for  the  economy’s  competitiveness  by,  in 
particular,  shaping  the  conditions  for  the 
twin  transitions  and  creating  a  favourable 
business environment. The overall perception of 
government  effectiveness  has  remained  stable 
and  close  to  the  EU  average (117).  The  size  of  the 
Czech  public  administration  is  below  the  EU 
in  expenditure  and  numbers 
average  both 
employed (118). Czechia  continues  to  modernise  its 
public  administration  through  the  ‘Client-oriented 
public  administration  2030’  strategy.  Czechia’s 
revised national recovery and resilience plan (RRP) 
has  put  greater  focus  on  digital  government  with 
public 
more 
in 
administration 
and 
systems’ 
measures to increase access to open data. 

cybersecurity 

investments 

digital 

the 

digital 

the  EU  average.  However, 
interaction  with 

Czechia’s  overall  e-government  maturity  is 
below 
the 
the 
population’s 
government  is  above  (Table  A13.1).  Against  this 
backdrop,  Czechia  has  taken  steps  to  strengthen 
coordinating  the  digitalisation  of  public  services. 
New  legislation  will  allow  for  the  use  eIDs  (for 
example, mobile IDs instead of the current plastic 
ID  cards).  The  Citizen  Portal  was  redesigned  in 
2023 to simplify access to available e-services. 

development  programmes  for  managers  and 
specialists.  While  Czech  public  administration 
employees are relatively young, the ratio of 29-49 
to  50-64  year  olds  has  decreased  (Table  A13.1). 
The  downward  trend  of  gender  parity  in  senior 
management  positions  and  in  other  administrator 
categories  continues  and  is  one  of  the  lowest  in 
the EU (Graph A13.1). 

Graph A13.1: Share of women and men in 
management positions (2023 data) 

Source: European Institute for Gender Equality 

of 

the 

attractiveness 

The 
public 
administration  as  an  employer  and  keeping 
staff  continue  to  be  challenges,  particularly 
for  specialised  jobs.  The  amendments  to  the 
Civil  Service  Act  entered  into  force  in  2023, 
bringing  in  set  terms  of  office  for  senior  civil 
servants,  faster  recruitment  processes  and  wider 
options 
to  attract  external  applicants.  The 
fragmentation  of  human  resource  management 
and  of  human  resource  data,  however,  hinders  a 
more  systemic  approach  to  talent  management. 
The  attractiveness  of  the  civil  service  is  also 
hindered by its wages, which are lower than in the 
private sector for comparable education levels and 
have  declined  in  real  terms  by  more  than  10% 
compared  to  2004 (119).  New  RRP  measures 
include  piloting  a  human  resource  IT  system  and 

Czechia  has  taken  steps  to  improve  the  use 
of  evidence  in  policymaking.  In  view  of  the 
commitments  under  the  RRP,  new  requirements 
for  ex post  regulatory  impact  assessments  that 
take  sustainability  into  account (120)  have  been 
developed  and  will  be  applied  as  of  2025.  Newly 
created analytical units in central government will 
increase analytical capabilities. However, there are 
still  challenges  related to the  use  of  data,  whole-
municipal 
of-government 
political 
coordination, 
level, which  affect  the  consistent  implementation 
of  strategies  and  priorities (121).  Due  to  the  high 
territorial  fragmentation,  linked  to  the  highest 
number  of  municipalities  per  capita  in  the  EU, 
policy coordination among municipalities is crucial 
for  efficiency  of  public  services.  This  holds,  in 

coordination, 
stewardship 

and 

at 

(117) Worldwide Governance Indicators, 2022 data. 

(118) OECD (2021), Government at a Glance 2021, OECD 

Publishing, Paris, https://doi.org/10.1787/1c258f55-en. 

(119) https://idea.cerge-

ei.cz/files/IDEA_Studie_2_2022_Statni_zamestnanci_a_ured
nici/files/extfile/IDEA_Studie_2_2022_Statni_zamestnanci_a
_urednici.pdf 

(120) The Regulatory Impact Assessment guide is available 

at: https://ria.vlada.cz/wp-content/uploads/Obecne-zasady-
pro-RIA-2023.pdf. 

(121) OECD (2023), OECD Public Governance Reviews: Czech 
Republic: Towards a More Modern and Effective Public 
Administration, OECD Public Governance Reviews, OECD 
Publishing, Paris, https://doi.org/10.1787/41fd9e5c-en. 

61 

0102030405060708090100CZEU-27CZEU-27CZEU-27Level 1administratorsLevel 2administratorsSenioradministratorsMenWomen 
 
 
   
 
 
Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If unavailable, the latest value available is 
shown. (3) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as 
the existence of key enablers for the provision of those services. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: Source: E-government activities of individuals via websites, Eurostat (# 1); E-government benchmark report (# 2); Open 
data maturity report (# 3); Labour Force Survey, Eurostat (# 4, 5, 7); European Institute for Gender Equality (# 6); Fiscal 
Governance Database (# 8, 9); OECD Indicators of Regulatory Policy and Governance (# 10). 

areas with strong municipal  competences such as 
construction permitting, non-tertiary education and 
care, and social services.  

support  of  the  recovery  and  resilience  facility.  On 
judicial  independence,  no  systemic  deficiencies 
have been reported (122). 

that 

the 
reducing 

The justice system is working efficiently. The 
main  challenge  is  the  length  of  administrative 
cases, which was 225 days in first instance courts 
in  2022.  However,  there  has  been  continuous 
improvement  compared  to  the  265  days  in  2021 
and 317 in 2020. The clearance rate rose to 126% 
in  2022  (119%  in  2021  and  113%  in  2020), 
justice  system  has  been 
showing 
successfully 
of 
administrative  cases.  The  quality  of  the  justice 
system is good overall. The level of digitalisation is 
advanced: procedural rules enabling digital tools in 
courts  are  in  place,  and  some  digital  solutions  to 
initiate  and  follow  proceedings,  especially  in  civil, 
commercial  and  administrative 
cases,  are 
available.  The  use  of  distance  communication 
technology and the availability of secure electronic 
communication for the courts and the prosecution 
service  have  been  broadened,  also  with  the 

backlog 

the 

institution 

There  is  room  for  strengthening  Czechia’s 
independent  fiscal 
(IFI)  and 
medium-term  budgetary  framework  (MTBF). 
The value of the MTBF Index for Czechia is below 
the  EU  average  (Table  A13.1),  dampened  by  the 
narrow  coverage  of  the  national  MTBF,  and  the 
limited  role  given  to  the 
independent  fiscal 
institution  in the preparation  of  the medium-term 
budgetary plans. There is also scope for improving 
the  IFI’s  access  to  information  and  external 
reviews or ex-post forecast evaluations. 

(122) For more details, see the 2024 EU Justice Scoreboard and 
the Commission’s 2024 Rule of Law Report (forthcoming). 

62 

CZ20192020202120222023EU-27(2)1n/an/an/a86.076.775.02n/a62.762.663.868.575.830.60.70.70.90.90.8445.143.345.3 (b)47.144.252.9513.59.39.9 (b)16.217.817.9640.636.643.442.043.69.272.02.12.0 (b)1.71.61.580.50.60.60.6n/a0.791.01.01.01.0n/a1.410n/an/a1.67n/an/a1.7Medium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
 
 
          
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS 

l

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU.  This  Annex  provides  an  overview  of Czechia’s 
progress in implementing the Pillar’s 20 principles 
and the EU headline and national targets for 2030 
on employment, skills and poverty reduction. 

very 

close 

The  Czech  labour  market  has  one  of  the 
highest  employment  rates  in  the  EU  ,  but 
certain  groups  face  challenges  in  entering 
the  labour  market,  including  women  with 
young  children,  Ukrainian  refugees,  older 
informal  carers.  Despite  a 
workers  and 
slowdown  in  economic  growth,  the  employment 
rate  increased  to  81.7%  in  2023  (EU  average 
to  Czechia’s  national 
75.3%), 
employment  target  of  82.2%  by  2030.  The 
unemployment  rate  is  low  at  2.6%  in  2023  (EU 
average  6.1%).  Expenditure  on  active 
labour 
market  policies  (ALMPs)  have  been  relatively  low 
historically,  with  limited  flexibility  and  insufficient 
support  for  the  more  disadvantaged  groups. 
Housing  unaffordability  limits  labour  mobility.  At 
13.9%, the gender employment gap for women of 
working  age  (20-64)  remained  high  in  2023  (EU 
average  10.2%).  In  2022,  only  6.8%  of  children 
aged  under  3  attended  formal  childcare  (EU 
average:  35.9%),  pointing  to  a  shortage  of 
childcare facilities. Parental leave of up to 3 years, 
the  sub-optimal  design  of  taxes  and  parental 
support, 
flexible  work 
low  uptake  of 
arrangements and gender biases also contribute to 
a low rate of female  employment (123).  More than 
50%  of  employed  Ukrainian  refugees  are  in  less 
qualified  positions  than  they  had  in  Ukraine (124), 
language  skills  and  the  recognition  of 
with 
qualifications  acting  as  significant  barriers (125).  in 
2022  and  2023,  a  record  number  older  workers 
requested  early  retirement,  which  is  linked  to  the 
high  pension  indexation,  which  outweighed  the 
penalty  for  early  retirement.  Finally,  an  estimated 
200  000  –  300  000  people  are  providing  unpaid 

the 

informal care to people in need, and half of them 
cannot  participate 
full-time  employment 
because of this (126).  

in 

Inflation  reduces  households’  purchasing 
power.  Persistent  and  high  inflation  led  real 
wages  to  decline  by  6.7%  in  2022 (127)  and 
2.9%  in  2023 (128),  with  one  of  the  highest 
falls  in  purchasing  power  among  minimum 
wage earners in the EU (129).  

Table A14.1:Social Scoreboard for Czechia 

Update of 25 April 2024. Members States are categorised 
based on the Social Scoreboard according to a methodology 
agreed with the EMCO and SPC Committees. Please consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology. 
Source: Eurostat 

(126)https://www.mpsv.cz/documents/20142/4552532/TZ_pecujic

i_roku_27062023.pdf/033e480d-dfc7-d366-8e79-
9c33aeea06f2  

(123) EIGE (2022), Gender Equality Index 2022. 

(127) https://www.czso.cz/csu/czso/cri/prumerne-mzdy-4-ctvrtleti-

(124)https://www.mpsv.cz/documents/20142/7095934/TZ_bilance
_UA_23022024_final.pdf/2cd843dc-330b-e0a2-313e-
da2a6f6cfc97  

2022  

(128) https://www.czso.cz/csu/czso/cri/prumerne-mzdy-4-ctvrtleti-

2023 

(125) https://www.paqresearch.cz/post/uprchlici-posun-jazyk-prace-

(129)https://www.eurofound.europa.eu/en/resources/article/2023/

bydleni/  

minimum-wage-hikes-struggle-offset-inflation  

63 

21.26.469.110.113.93.581.72.60.8121.211.813.440.0022.76.96.80.2Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022)Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Better than averageBest performers 
 
 
 
 
   
 
 
 
Czechia is facing significant labour shortages 
and  skills  mismatches.  The  job  vacancy  rate 
was 3.4% (accounting for 151 363 job  vacancies) 
in  Q4-2023,  which  is  0.8 percentage  point  below 
Q4-2022, but 0.9 percentage points above the EU 
average.  The  share  of  employers  that  report 
labour  shortages  as  a  factor 
limiting  their 
production  remains  substantial  in  construction 
(38%),  while  it  is  lower  in  industry  (22%)  and 
services  (12%).  Quotas  for  workers  from  non-EU 
countries  were  increased  in  2023,  however  they 
are  still  significantly  lower  than  requested  by 
companies.  Adult  participation  in  learning  in  the 
previous  12  months  stood  at  21.2%  in  2022, 
below 
of  39.5%  and 
1.6 percentage  points  less  than  in  2016.  Along 
with  other  challenges,  this  also  undermines 
Czechia’s  potential  to 
its  economic 
competitiveness.  Further  efforts  to  increase  the 
attractiveness  and  relevance  of  upskilling  and 
reskilling  are  needed  to  support  the  transition 
towards  a  green  economy 
(see  Annex  8). 
Considerable  efforts  are  still  needed  to  achieve 
the  national  skills  target  of  45%  of  adults  in 
training every year by 2030. 

EU  average 

increase 

the 

Czechia has taken steps, with the support of 
EU  funds,  to  unlock  the  potential  of  women 
in 
the  workforce,  however  significant 
challenges persist. In 2023, a tax relief measure 
was  introduced  for  selected  groups  of  employees 
working  part-time.  This measure  aims  to  increase 
the  employment  of  vulnerable  people,  who  face 
early  exits  from  the  labour  market  or  experience 
difficulties in reconciling work and family life. The 
Work-Life  Balance  Directive  and  the  Directive  on 
Transparent  and  Predictable  Working  Conditions 
were  transposed  via  amendments  to  the  Labour 
Code  in  September  2023.  EU  funds  also  play  an 
important role in improving women’s employment 
with,  for  example,  investments  from  the  recovery 
and  resilience  plan  (RRP)  and  the  ESF+  dedicated 
to  increasing  the  capacity  of  childcare  facilities. 
Czechia  has  taken  steps,  with  the  support  of  EU 
funds,  to  unlock  the  potential  of  women  in  the 
workforce,  however  significant  challenges  persist. 
In  2023,  a  tax  relief  measure  was  introduced  for 
selected  groups  of  employees  working  part-time. 
This measure aims to increase the employment of 
vulnerable  people,  who  face  early  exits  from  the 
in 
labour  market  or  experience  difficulties 
reconciling  work  and  family  life.  The  Work-Life 
Balance Directive and the Directive on Transparent 
and 
Predictable  Working  Conditions  were 
transposed via amendments to the Labour Code in 

64 

September 2023. EU funds also play an important 
role  in  improving  women’s  employment  with,  for 
example,  investments  from  the  recovery  and 
resilience  plan  (RRP)  and  the  ESF+  dedicated  to 
increasing  the  capacity  of  childcare  facilities.  The 
Family  Policy  Strategy  2024-2030  focuses  on 
increasing  the  capacity  of  quality  and  accessible 
pre-school childcare services. 

The  limited  stocks  of  social  and  affordable 
housing are factors in the poverty and social 
exclusion  of  certain  groups  in  Czechia.  While 
the  share  of  people  at  risk  of  poverty  or  social 
exclusion  is  low  (11.8%  vs  the  EU  average  of 
21.6%  in  2022),  poverty  remains  concentrated  in 
some  localities  and  among  Roma.  Residential 
property  prices  have  increased  by  115.3%  from 
2015  to  2022  (EU  average  48.4%)  and  housing 
costs represent 41.6% of the disposable income of 
low-income  households  (EU  average  37.9%) (130)). 
Social housing makes up only around 0.4% of the 
total  stock  of  rental  dwellings  (EU  average 
7.5%) (131),  creating  significant  challenges  for 
vulnerable  population  groups.  New investments in 
affordable and social  housing are underway (with 
RRP support worth EUR 350 million) as are related 
legislation  on  affordable  housing  and  a  Housing 
Investment Advisory Hub.  

Table A14.2:Situation of Czechia on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months, special extraction excl. guided on-the-job training. 
(2) Change in the number of persons at risk of poverty or 
social exclusion (AROPE), reference year 2019. 
Source: Eurostat, DG EMPL. 

The  Roma  population  in  Czechia  is  facing 
significant  social  exclusion  challenges. 
In 
2021,  77%  of  Roma  people  and  85%  of  Roma 
children were at risk of poverty or social exclusion 
(both  figures  have  increased  significantly  since 

(130) Eighth overview of housing exclusion in Europe 2023 | 

Feantsa - Fondation Abbé Pierre p.107-108. 

(131) https://www.oecd.org/housing/data/affordable-housing-

database/housing-policies.htm, PH4.2 Social rental dwellings 
stock, 2011 

IndicatorsLatest dataTrend            (2016-2023)2030 targetEU target 81,7(2023)21,2(2022)-17(2023)Poverty reduction2 (thousands)-120-15.000Employment (%)82,278Adult learning1 (%)4560 
 
  
 
 
2016).  Furthermore,  despite  record 
levels  of 
employment,  in  2021  only  45%  of  Roma  people 
were  in  work.  The  rate  of  young  Roma  people 
(aged  16-24)  not  in  education,  employment,  or 
training  (NEETs)  was  47%  in  2021,  compared  to 
7%  among  the  total  population (132).  The  ESF+  is 
dedicating  EUR  15  million  to  support  the  social 
inclusion  of  marginalised  groups,  which  will  help 
progress on the national target  of 120 000 fewer 
people  at  risk  of  poverty  and  social  exclusion  by 
2030, of whom at least 50000 should be children. 
In  December  2023,  373  080  people  fleeing 
in 
Ukraine 
Czechia (133),  a  quarter  of  whom  are  children.  The 
ESF+ has supported Ukrainian people in accessing 
social services and social housing, with three calls 
for proposals worth EUR 30 million. 

temporary 

protection 

received 

Access  to  quality  community-based  services 
remains  limited  for  some  people  in  need, 
notably  women,  older  people  and  persons 
with  disabilities.  The  Czech  government 
approved the national  deinstitutionalisation action 
plan which aims to provide more opportunities for 
independent living and community-based services. 
A  government  resolution  was  also  approved  that 
could pave the way to unlock national funding for 
onwards. 
deinstitutionalisation 
Nevertheless,  there  remains  a  capacity  deficit  of 
between 15,000 to 30,000 care places (out of the 
current  75  000) (134).  High  reliance  on  residential 
services, a declining capacity of community-based 
services  (from  115  000  in  2010  to  95  000  in 
2022 (135),  a  fragmented  and  unstable  financing 
environment  and  regulatory  barriers  to  integrated 
social-health  care  are  further  challenges  in  the 
Czech care sector (136). 

2025 

from 

(132) FRA (2022), Roma Survey 2021, main results 

(133) Czech Republic: Temporary Protection Dashboard (unhcr.org) 

(134) https://www.cap.cz/images/Analyzy/Position_paper_LTC.pdf 

(135) https://www.efektivnizdravotnictvi.cz/post/problemy-socialne-

zdravotniho-pomezi-v-terennich-sluzbach---kde-brat-
inspiraci-dil-1  

(136) https://www.apsscr.cz/media/a4-financovani-terenni-sluzby-

2023-final.pdf  

65 

 
 
 
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Czechia’s education training system based  on 
the  2023  Education  and  Training  Monitor  and the 
2022  OECD  Programme  for  International  Student 
Assessment (PISA) results.  

Czech  student  performance  declined 
in 
mathematics,  but  remained  largely  stable  in 
reading and science. The 2022 PISA results (137) 
show  that  despite  the  pandemic,  the  share  of 
underachievers  in  reading  (21.3%)  and  science 
(19.9%)  remained  fairly  stable  compared  with 
2018,  but  remains  above  the  EU  target.  The 
average  reading  scores  of  both  4th  graders  and 
15-year-olds  in  Czechia  are  particularly  stable 
across  multiple  assessment  cycles  (Progress  in 
In 
International  Reading  Literacy  and  PISA). 
mathematics,  the  share  of  underachievers  has 
increased  compared  with  2018  (from  20.4%  to 
25.5%), but still remains below the EU average of 
29.5%. 

The  share  of  top-performing  15-year-olds  is 
above  the  EU  average  in  all  three  domains, 
but  significant  disparities  exist  by  socio-
economic status. 

Graph A15.1: Underachievement rates in 
mathematics by socio-economic background, PISA 
2018, 2022 

Source: OECD (2023). 

Students  from  advantaged  backgrounds  perform 
exceptionally  well  in  mathematics.  At  the  same 
time,  the  share  of  top  performers  among  pupils 
with  a  disadvantaged  background  is  close  to  the 
EU  average.  Worryingly,  around  half 
of 
underprivileged students (48.5% vs 48% in EU) do 
not  meet  the  basic  level  of  achievement  in 

(137) OECD (2023), PISA 2022 Results (Volume I): The State of 
Learning and Equity in Education, PISA, OECD Publishing, 
Paris. 

remained 

mathematics.  Between  2018  and  2022,  the 
proportion  of  underachieving  students  increased 
the  socio-economically  disadvantaged, 
among 
while 
the 
stable 
it 
advantaged (138), widening the socio-economic gap. 
Various drivers contribute to this, such as learning 
losses  linked  to  distance  learning  during  the 
pandemic,  which  affected  disadvantaged  pupils 
disproportionately. 

among 

Czechia  aims  to  increase  the  attractiveness 
of  the  teaching  profession,  amid  growing 
concerns  for  the  quality  of  education.  An 
amendment  of  the  Act  on  Pedagogical  Staff 
introduced  a  legal  indexation  of  the  salaries  of 
teaching  staff  at  130%  of  the  average  wage. 
However,  stakeholders  protested  against  planned 
cuts on school budgets, particularly affecting non-
teaching  staff;  this  led  to  the  largest  sectoral 
demonstration  of  the  last  30  years.  Shortages  of 
qualified  teachers  are  prominent  in  languages, 
mathematics, 
tele-
communications and computing (139). The shortage 
or lack of sufficiently qualified teaching staff and 
the limited availability of teachers to help students 
in need during the pandemic were associated with 
lower  levels  of  pupils’  mathematics  performance 
in the 2022 PISA study. 

engineering, 

physics, 

Efforts  are  focused  on  making  education 
more inclusive, but results are yet to be seen. 
Czechia is implementing various reforms under the 
Education  Policy  Strategy  2030+,  but  challenges 
still  exist.  The  segregation  of  Roma  children  in 
education  has  increased  from  29%  in  2016  to 
49%  in  2021.  There  are  still  about  130  schools 
where more than a third of pupils are Roma, 60 of 
which  are  set  up  as  special  schools,  with  reduced 
learning  outcomes  for  pupils  with  mild  mental 
disabilities (140). 
In  September  2023,  48 000 
children from Ukraine were enrolled in compulsory 
education in Czechia, and the number of students 
from  Ukraine  in  secondary  schools  increased  by 
The 
40% 

September 

2022 (141). 

since 

(138) The change among advantaged students (2.2 pps) is not 

significant. 

(139) Ministry of Education, Youth and Sport, 2019, Main outputs 
from the Extraordinary Inquiry on the state of provision of 
teaching. 

(140) PAQ and STEM, 2023, Research report. 

(141) https://www.msmt.cz/ministerstvo/novinar/aktualni-pocty-

ukrajinskych-uprchliku-na-ceskych-skolach  

66 

0102030405060CZEUCZEUCZEUTotalAdvantagedstudentsDisadvantagedstudents%201820222030 EU target 
 
   
 
 
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: b = break in time series; d = definition differs; e = estimated; p = provisional; u = low reliability; : = data not available. 
Source: 1,3,4,5,7,8,9,10,12=Eurostat; 11= Eurostat, Adult Education Survey; 2,6=OECD, PISA. 

of 

school 

governance (142) 
fragmentation 
contributes  to  regional  disparities  in  access  to 
in  disadvantaged 
quality  education,  especially 
areas. 

Czechia  continues  to  improve  capacity  and 
affordability  in  early  childhood  education 
and care. In 2021, participation in early childhood 
education  between  3  years  and  the  age  of 
compulsory  primary  schooling  (85.4%)  remained 
well  below  the  EU  average  (92.5%)  and  the  EU-
level  target  (96%).  On  a  positive  note,  the 
participation  of  Roma  children  in  early  childhood 
education  and  care  significantly  increased  from 
24%  in  2016  to  51%  in  2021  (FRA,  2022). 
Between  2019  and  2023,  70  new  kindergartens 
opened (143).  The  government 
introduced  new 
measures  to  regulate  preschool  fees  to  make 
them more affordable (see Annex 14).  

(142) 90% of municipality school founders in Czechia operate only 
one school, often with insufficient administrative capacity 
and expertise. See J. Zeman, PAQ Research, 2024. 

(143) Czech School Inspectorate, 2023, Quality of Education in the 

Czech Republic, Annual Report 2022-23. 

is  the 

Participation  in  higher  education  is  stalling 
and  financial  support  for  students  is  low.  In 
2023,  33.7%  of  adults between  25  and  34  years 
held a tertiary education diploma. This rate is one 
of  the  lowest  in  the  EU  (average  43.1%,  target 
45%), and is particularly low among men (26.9%). 
Between 2016 and 2021, the number of students 
enrolled  decreased  by  11.6% (144),  beyond  the 
impact of demographic fluctuations. A contributing 
factor 
low  permeability  of  secondary 
education  pathways  leading  to  higher  studies, 
combined  with  the  early  streaming  of  students, 
which 
In 
addition, Czechia is also among the countries that 
invest  the  least  in  financial  support  for  students: 
2.5% of public expenditure in tertiary education vs 
on average 18.8% in the EU (145). Stakeholders and 
experts  have  called  for  more  investment  in  the 
competitiveness of the sector to attract and retain 
talent.  In  2024,  Czechia  is  preparing  a  funding 
reform to improve the success of doctoral studies. 

limits  access  to  tertiary  education. 

(144) Eurostat: educ_uoe_enrt02. 

(145) Eurostat, educ_uoe_fina01. 

67 

96%76.8%201391.8%201386.7%92.2%85.4%202192.5%2021,dReading< 15%16.9% 18.0%20.7% 22.5%21.3%202226.2%2022Mathematics< 15%21.0% 22.1%20.4%22.9%25.5%202229.5%2022Science< 15%13.8% 16.8%18.8%22.3%19.9%202224.2%2022< 9 %5.5%12.6%6.2%10.5%6.4%9.5%Men6.1%14.5%6.4%12.1%6.4%11.3%Women4.9%10.6%6.1%8.7%6.4%7.7%Cities5.3%b11.2%5.6%9.4%6.5%8.6%Rural areas4.7%b14.0%5.3%11.0%4.7%9.9%5By country of birthNative5.5%11.3%6.2%9.2%6.0%8.2%EU-born10.3%u26.2%9.6%u22.4%25.1%u21.0%Non EU-born8.3%u30.1%6.4%u23.0%11.0%u21.6%6Socio-economic gap (percentage points)30.8:31.829.539.5202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :16.1% 64.5%45%27.8%34.1%33.3%38.7%33.7%43.1%Men23.2%29.1%26.3%33.3%26.9%37.6%Women32.8%39.2%40.7%44.2%41.1%48.8%Cities39.6%b43.5%45.5%49.0%50.0%53.3%Rural areas19.8%b24.8%24.9%27.7%24.1%31.7%Native27.8%35.4%33.1%39.7%32.6%44.2%EU-born26.4%29.3%42.2%36.7%57.6%40.2%Non EU-born32.6%24.2%34.0%31.0%36.0%37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::22.8%201637.4%201621.2%202239.5%202220.0%201322.7%201328.1%23.8%30.5%202124.5%2021Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over1Participation in early childhood education (age 3+)2Low-achieving 15-year-olds in:Early leavers from education and training(age 18-24)3Total3By gender4By degree of urbanisation201220182023IndicatorTargetCzechiaEU-27CzechiaEU-27CzechiaEU-27 
 
 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Czechia. 

result  of 

the  pandemic, 

Life expectancy in Czechia was below the EU 
the 
average  both  before  and  during 
COVID-19  pandemic.  Between  2019  and  2021, 
as  a 
it  dropped 
significantly  and  fell  further  behind  the  EU 
average.  As  mortality  from  COVID-19  declined  in 
Czechia in 2022 (146), life expectancy rebounded to 
pre-pandemic levels and is now among the highest 
in the Central  and Eastern EU countries, relatively 
close  to  the  EU  average  (79.0  vs  80.6  years). 
Mortality  rates  from  preventable  and  treatable 
causes  are  40%  higher  than  the  EU  average.  In 
2021,  diseases  of 
the  circulatory  system 
(‘cardiovascular  disease’),  cancer  and  COVID-19 
were  the  leading  causes  of  mortality,  accounting 
for  over  70%  of  all  deaths.  Lung  cancer  remains 
the  leading  cause  of  cancer  death.  COVID-19 
accounted  for  17.9%  of  all  deaths  in  Czechia  in 
2021, one of the largest proportions among all EU 
countries. 

differences  in  purchasing  power)  is  around  a 
quarter lower than the EU average. Public funding 
for health as a proportion of total health spending, 
at 86.4% in 2021, was higher than the EU average 
of 81.1%. Related to this, the proportion of out-of-
pocket  expenditure  for  healthcare  (12.7%  of 
health spending in 2021) is still among the lowest 
in  the  EU,  and  mainly  takes  the  form  of  fees  for 
outpatient  pharmaceuticals.  Most  health  spending 
in  Czechia  (based  on  purchasing  power  standard 
per  inhabitant)  goes  to  inpatient  and  outpatient 
care  (with  each  accounting  for  around  30%  of 
by 
spending), 
total 
pharmaceuticals  (around  16%).  Based  on  the  age 
profile of the Czech population, public expenditure 
on  health 
increase  by  0.7 
(pps)  of  GDP  by  2070, 
percentage  points 
compared  to  0.6 pps  for  the  EU  overall  (see 
Graph A16.2 and Annex 21). 

is  projected 

followed 

health 

to 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Graph A16.1: Life expectancy at birth, years 

Baseline scenario 
Source: European Commission / EPC (2024) 

Source: Eurostat 

Health spending substantially increased over 
the  course  of  the  COVID-19  pandemic,  both 
in  relation  to  GDP  and  in  nominal  terms.  In 
2021, health spending was at 9.5% of GDP, below 
the  EU  average  of  10.9%.  Provisional  data  from 
the  OECD  suggest  that  in  2022  total  health 
spending  fell  back  to  9.1%  of  GDP.  In  general, 
health spending per capita in Czechia (adjusted for 

(146) Based on data provided directly by Member States to the 

European Centre for Disease Prevention and Control, under 
the European Surveillance System. 

In  2021,  spending  on  prevention  in  Czechia 
surpassed  the  EU  average  –  at  8.1%  of  total 
healthcare spending, compared to 6.0% for the EU 
overall. From 2019 to 2021, it increased by 185%, 
outstripping  the  106%  increase  for  the  EU  as  a 
whole. Proportionally, budget shares for prevention 
across  the  EU  increased  most  for  emergency 
response,  disease  detection  and  immunisation 
factors 
programmes. 
explaining 
immunisation 
programmes,  with  a  740%  increase  in  spending, 
and  early  disease  detection  programmes,  with  an 
increase of around 1 100%. 

increase  are 

In  Czechia, 

the  main 

this 

Ongoing 
reforms  aim  at  strengthening 
primary  healthcare,  making  health  services 
more  integrated,  and  digitalising  the  health 
system,  which  may  help  to  speed  up  the  slow 
uptake of digital health solutions. For example, the 
number  of  individuals  accessing  personal  health 

68 

79.179.179.378.277.279.080.981.081.380.480.180.6201720182019202020212022CzechiaEU6.65.90.60.702468EUCzechia% of GDP20242070increase 
 
   
 
 
     
 
Table A16.1:Key health indicators 

Note: The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia (professionally active). Nurses’ density data refer to practising nurses in all countries except Ireland, France, Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

ill 

for 

records online in Czechia is below the EU average, 
indicating  a  lag  in  the  uptake  of  e-health  and 
overall health systems digitalisation. Reforms also 
intend  to  restructure  public  health  services  and 
address  the  country’s  main  preventable  risk 
factors 
alcohol 
health, 
consumption  (among  the  highest  in  the  EU), 
to 
tobacco 
environmental  threats.  According  to  a  recent 
Eurobarometer  survey,  the  most  frequently  cited 
obstacles  to  access  to  mental  healthcare services 
were  long  waiting  lists  and  diagnostic/  treatment 
delays (147). 

exposure 

including 

obesity 

use, 

and 

The  number  of  doctors  and  nurses  (per 
1 000 population)  is  slightly  above  the  EU 
average.  However,  there  are  issues  with  the 
uneven  geographical  distribution  of  health 
workers, leading to concerns about equal access to 
healthcare,  and  with  the  number  of  nursing 
graduates  per  100 000  population,  which  is  well 
below  the  EU  average.  While  densities  of  doctors 
and  nurses  have  risen  in  Czechia  since  2010, 
healthcare  needs  have  also  risen,  and  some 
hospitals  report  closed  wards  due  to  a  lack  of 
nurses 
workers. 
Comparatively high unmet needs for medical care 
in  rural  areas  are  reported.  Moreover,  around  a 
quarter  of  nurses  are  55  years  or  older,  raising 
some  concerns  about  the  long-term  accessibility 
response 
of  health  services.  The  pandemic 
highlighted  areas  for 
in  crisis 
improvement 
preparedness  and  health  workforce  capacity, 
especially 
regions.  Retaining  and 
strengthening the health workforce is high on the 

healthcare 

in  some 

other 

and 

political agenda. For example, the government has 
taken action to increase the number of students in 
medical  schools  and  offers  subsidies  for  opening 
primary care offices in underserved areas. 

EU  funds  support  substantial  investment  in 
healthcare  in  Czechia.  Historically,  investment 
levels in healthcare have lagged behind. Among EU 
countries,  Czechia  has  invested  a  comparatively 
low  percentage  of GDP in  gross  capital  formation 
in  healthcare.  This  is  also  reflected  in  the  low 
availability  of  key  diagnostic  technology  (medical 
imaging).  In  2021-2027,  over  EUR 665  million 
from  the  cohesion  policy  funds  will  support 
investment in healthcare (148). This investment will 
mainly  go  into  health  infrastructure,  e-health 
services  and  applications,  health  equipment,  and 
measures to increase access to health services in 
the  most 
underserved 
disadvantaged  population  groups.  Through 
its 
recovery  and  resilience  plan  (RRP),  Czechia  will 
invest  EUR 1.22  billion  in  healthcare  (13.25%  of 
the RRP’s total value), focusing on oncological care 
(in particular the setting-up of a Czech oncological 
institute) and intensive care services (for example, 
the  construction  of 
Intensive  Medicine 
the 
Simulation  Centre).  In  addition,  there  will  be  a 
for  healthcare 
focus  on 
professionals, 
and 
research 
development. 

training 
and 

increased 

e-health 

areas 

and 

for 

(147) https://europa.eu/eurobarometer/surveys/detail/3032 

2024. 

(148) The EU cohesion policy data reflect the status as of 13 May 

69 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)124.2120.3122.5125.9NA93.3 (2021)Cancer mortality per 100 000 population272.1272.4267.2257.0NA235.4 (2021)Current expenditure on health, % GDP 7.57.69.29.5NA10.9 (2021)Public share of health expenditure, % of current health expenditure84.985.087.786.4NA81.1 (2021)Spending on prevention, % of current health expenditure 2.92.93.78.1NA6.0 (2021)Available hospital beds per 100 000 population666663661666NA525 (2021)Doctors per 1 000 population4.04.14.14.3NA4.1 (2021)*Nurses per 1 000 population8.18.18.28.3NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***NA16.913.413.717.119.4 (2022) 
 
 
 
   
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Annex 17 showcases the economic and social 
regional  dynamics  in  Czechia.  It  provides  an 
analysis  of  the  regional  cohesion  and  assesses 
emerging  investment  needs  and  measures  to 
foster  economic  growth,  social  development  and 
competitiveness in the country.  

Graph A17.1: Labour productivity (real GVA per 
worker), EU-27, Czechia NUTS 2 regions, 2000-
2022 

Overview 
performance at the regional level  

economic 

of 

and 

social 

Regional disparities in Czechia remain stable 
but  significant.  Praha  is  a  highly-developed 
capital  city  where  GDP  per  capita  stood  at  207% 
of  the  EU  average  in  2022.  In  the  rest  of  the 
country,  the  GDP  per  capita  of  a  group  of  six 
moderately  developed  regions  ranged  between 
71%  and  83%  while  the  GDP  per  capita  for  the 
poorer region of Severozápad stood at 60% of the 
EU average.  

Map A17.1:  GDP per capita index in Czech NUTS 2 
regions (2013-2022) 

Source: Eurostat, DG REGIO elaboration 

Almost  all  regions  are  converging  towards 
the EU average, albeit at different speeds. As 
a  result,  Czechia  has  continued  to  converge 
towards the EU average, from 84% of the EU GDP 
per  capita  average  in  2011  to  90%  in  2022.  The 
only exception in this process of convergence was 
Severozápad,  whose  GDP  per  capita  compared  to 
the EU average declined between 2011 (63%) and 
2022 (60%).  

70 

Source: ARDECO, DG REGIO elaboration 

This  pattern  of  disparities  is  similar  for 
labour  productivity,  displaying  the  same 
divide  between  the  capital  region  and  the 
rest  of  the  country.  The  evolution  of  labour 
productivity  shows  that  almost  all  regions  are 
catching  up  with  the  EU  average  but  again  at 
different  speeds.  Real  productivity  growth  was 
highest  in  Praha,  with  a  3.2%  annual  growth 
between  2013  and  2022.  The  other  moderately 
developed  regions  experienced  lower  productivity 
growth,  most  of  them  still  above  the  EU  average 
(0.45%). This mixed performance at regional level 
led to a national productivity growth of 1.21% per 
year on average between 2012 and 2021. 

The  availability  of  key  assets  such  as  the 
transport  network  and  connectivity  remain 
relatively  uneven  and  affects  the  development 
less  developed 
regions  with 
prospects  of 
infrastructure.  In  Praha,  86%  of  the  population 
living  in  a  radius  of  120 km  could  be  reached  in 
less 
In  Jihozápad  and 
Severovýchod,  two  transition  regions,  this  ratio 
dropped to around 50%. 

than  90  minutes. 

Human  capital  levels  are  considerably  lower 
outside the capital region. In almost all regions, 
the share of population aged 30-34 with a tertiary 
education degree is below the EU average (42.8%), 
with  the  lowest  observed  in  Severovýchod  and 
Severozápad. The share is by far the highest in the 
Praha  region,  (60.6%)  which  reflects  the  unique 
position of the capital region in the country. 

 
 
 
 
 
 
 
Table A17.1:Selected indicators at regional level in Czechia 

Source: Eurostat, EDGAR database 

This  concentration  of  human  capital  is  also 
reflected  in  innovation  and  technology.  In 
2021, R&D expenditure was highest in the capital 
region  where  it  stood  at  2.8%  of  GDP  (2.5%  in 
Jihovýchod).  At  the  other  end  of  the  spectrum, 
R&D expenditure was only 0.3% of GDP in the less 
developed region of Severozápad.  

There  are  also  differences  between  the  less 
developed  regions  and  the  rest  in  the  share 
of  population  at-risk-of-poverty  and  social 
exclusion.  However,  it  is  important  to  point  out 
that in 2022 this share in Czechia (11.8%) was the 
lowest in the EU (21.6%).  

The  differences  in  productivity,  investment, 
education  and  poverty  are  only  partially 
reflected  in  the  labour  market  figures.  In 
2022,  the  unemployment  rate 
is 
remarkably  low  (2.2%)  and  did  not  vary  widely 
between regions.  

in  Czechia 

There  is  a  clear  tendency  for  people  to 
agglomerate in the most prosperous regions. 
Between  2013  and  2021,  the  population  grew  in 
all regions except for the three regions having the 
lowest  GDP  per  capita  in  the  country  (-1.6%  in 
Střední  Morava,  -2.3%  in  Severozápad  and  -3.6% 
in  Moravskoslezsko).  The  regions  of  Praha  and 
in  the 
Střední  Čechy  showed  a  sharp  rise 
population  in  the  same  period,  9%  and  9.9%, 
respectively,  standing  well  above  the  national 
(2.2%)  and  the  EU  averages  (1.9%).  Severozápad 
and  Moravskoslezsko  are in  a  talent  development 
trap  because  of  the  drop  in  the  working-age 
population  and 
education 
attainment levels.  

lagging 

tertiary 

for 

are 

funds 

crucial 

EU 
regional 
development.  In  Czechia,  EU  funds  represent 
40%  of  all  public  investments.  The  2021-2027 
Just Transition Fund investments in Czechia will go 
the  Severozápad  and  Moravskoslezsko  regions. 
Those structurally affected regions face a number 
of  challenges,  such  as  having  no  prospects  for 
young people and for having a reputation of being 
deprived  regions.  These  regions  should  therefore 
invest  in  becoming  more  attractive  places  to  live 
and work. 

Investment  and  subnational  reform  needs 
ahead  

Different  regions  have  different  investment 
needs.  The  strategic  need  in  the  more  developed 
regions is to support investments in the digital and 
green  transition, 
in  particular  the  R&D  and 
entrepreneurial  ecosystems.  These  investments 
there  must  focus  on  smart  solutions.  In  the 
Severozápad region, the key condition for catching 
up  is  to  invest  in  quality  education,  an  attractive 
business  environment  and  good  transport  links. 
Investments  in  Czechia’s  carbon-intensive  regions 
should  support  the  green  transition,  for  instance 
by  investing  in  renewable  energy  and  energy 
efficiency  measures.  The  development  of  local 
administrative  capacity 
is  giving 
the 
technical  assistance 
Severozápad  region  and  preparing  for  a  project 
pipeline.  

is  vital  as 
to  applicants 

in 

The  lack  of  administrative  capacity  is  a 
significant  factor  preventing  investment  by 
small  actors  in  Czechia.  In  order  to  increase 
absorption by small municipalities, SMEs and local 

71 

GDP per head (PPS)GDP growthProductivity (GVA (PPS) per person employed)Transport performance by carPopulation aged 30-34 with high educational attainmentR&D expenditureAt-risk-of-poverty or social exclusionEU Regional Competitiveness Index 2.0Population growthIndex, EU-27 = 1002022Average % change on the preceding year (2013-2022)Index, EU-27 = 1002022Share of population in a 120-km radius that can be reached within 1h30 (%) in 2021% of population aged 30-342023% of GDP2021% of population2022Index, EU-27 = 1002022 editionAverage annual change per 1 000 residents (2013-2021)Czechia902.1585.465.234.92.011.899.82.2Praha2073.20134.486.060.62.88.9114.39.0Střední Čechy792.7785.673.529.62.38.7114.39.9Jihozápad731.4371.054.932.11.610.993.02.6Severozápad600.3265.764.426.30.417.286.60.0Severovýchod722.3072.452.525.41.411.495.70.5Jihovýchod831.9178.466.539.22.511.798.81.8Střední Morava731.9972.457.331.31.611.495.5-1.6Moravskoslezsko710.9073.566.127.21.215.596.80.0 
 
  
 
NGOs,  the  national  authorities  need  to  support 
applicants,  for  example  through  shared  project 
managers  and  by  providing  comprehensive 
information  in  one  place  on  applying  for  EU 
funding.  

Czechia  does  not  optimise  the  use  of 
financial instruments,  with  only  2.5% of the 
2021-2027 Cohesion Policy Funds (and 5.5% 
of  the  Czechia  RRP)  planned  for  financial 
instruments, as compared to the EU average 
of  9%.  There  is  a  reluctance  to  use  alternative 
methods  of  financing  for  cost  saving  or  to  make 
productive  investments  (see  also  Annex  12).  One 
of  the  reasons  for  the  deeply  rooted  subsidy 
mentality  of  regional  and  local  bodies  is  the 
absence of guarantees that the funds will stay in 
territories.  Guaranteed  revolving  funds  would  be 
an  incentive  for  a  broader  uptake  of  the  funding 
opportunities. 

financial 

from  dedicated 

The  Czechia  regions  should  have  stronger 
role in defining their specific needs. The socio-
economic  development  of  the  regions  would 
injections 
benefit 
supporting  long-term  growth,  such  as  targeted 
fiscal  stimulus.  The  potential  of  integrated  tools 
should be used to a greater extent in the Czechia 
programmes. 
the 
integrated  territorial  tools  implemented  through 
Integrated Territorial Investments and Local Action 
Groups.  Methodological  and  financial  support  for 
the  development  of  specific  short  and  mid-term 
strategic planning at local and regional level would 
be appropriate. The Territorial Just Transition plans 
could serve as a good example. 

appreciate 

regions 

The 

72 

 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

Czechia’s  financial  sector  is  predominantly 
bank-based,  with  a  high  degree  of  foreign 
ownership.  The  total  assets  of  the  country’s 
banking sector were equivalent to 130.6% of GDP 
in September 2023, representing circa 80% of the 
financial sector in terms of assets. Almost 90% of 
all assets in the country’s banking sector belonged 
to foreign-controlled entities.  

November before rebounding to 7.4% in December 
(Graph A18.1). 

Graph A18.1: Evolution of credit activity 

Czech banks remain robust and above the EU 
average  in  terms  of  size  and  quality  of 
capital.  Banks’  overall  capital  ratio  slightly 
improved in the first 9 months of 2023 to 20.4%, 
and  their  common  equity  Tier  1  ratio  remained 
strong  at  18.7%.  On  both  of  these  measures, 
Czech  banks  are  ahead  of  the  EU  average.  The 
recent  decisions  by  Czechia’s  central  bank,  the 
Czech  National  Bank 
the 
countercyclical  capital  buffer  rate  of  Czech  banks 
first  to  2%  from  2.5%  as  of  1 October 2023  and 
again to 1.75% as of 1 April 2024, should further 
increase  banks’  capital  management  buffers 
above  minimum  capital  requirements.  Banks  are 
expected  to  meet  the  binding  target  set  for  the 
minimum  requirement  for  own  funds  and  eligible 
liabilities  (MREL)  as  of  1 January 2024  thanks  to 
their  efforts  in  2023  to  increase  MREL-eligible 
liabilities and, partly, via the use of own funds.  

(CNB), 

lower 

to 

Following  a  strong  2022,  banks’  net 
profitability  has  since  been  more  subdued 
but  remains  solid.  At  15.2%,  return-on-equity 
continues  to  be  well  above  the  EU  average  of 
9.9% as of September 2023. However, the banking 
sector’s  net  profit  for the first  8 months  of  2023 
was only marginally up year-on-year due to higher 
impairment  losses  in  2023  than  in  the  same 
period in 2022. Moreover, the CNB reported lower 
year-on-year interest margins on new loans as of 
August  2023  for  consumer  and  non-financial 
corporation loans. Banks’ cost-to-income ratio only 
edged  up  slightly  in  2023  and  continues  to  be 
much  lower  than  the  EU  average,  supporting 
profits.  

Credit  growth  is  showing  clear  signs  of 
deceleration. The annual rate of credit growth for 
households  fell  to  4.8%  in  December  2023, 
compared to 6.6% a year earlier. Credit growth for 
non-financial corporations, which had fared better 
in  the  first  half  of  2023,  also  fell  sharply  in  the 
second half, registering an annual rate of 4.2% in 

Adjusted loans for sales and securitisations  
Source: ECB 

Credit  risk  is  on  the  rise,  but  asset  quality 
continues  to  be  strong.  Although  the  share  of 
non-performing loans fell in the first 9 months of 
2023 to 1.2% (vs an EU average of 1.8%), Stage 2 
loans  as  a  share  of  total loans  and  advances  are 
again  on  the  rise  in  the  second  half  of  2023 
according  to  EBA  data,  increasing  to  10.1%  in 
December  2023  from  9.7%  in  June  2023  and 
6.4%  in  December  2021 (149).  Migrations  to  Stage 
2 come mostly from loans secured by commercial 
and  residential  property,  as  well  as  unsecured 
consumer credit. Moreover, in December 2023, the 
cash coverage ratio of Stage 2 loans deteriorated 
to  3.5%  from  3.6%  in  June  2023  and5.1%  in 
December  2021,  suggesting  the  need  for  higher 
provisioning.  Nevertheless,  the  risk  of  household 
insolvency  connected  with 
refixing  of 
mortgage  rates  appears  manageable,  given  the 
predominance  of  mortgage  loans  with  a  fixation 
period  of  5  years  or  longer.  Although  the  12-
month  default  rate  on  housing  loans  has  started 
to  rise  gradually  to  0.6%,  it  is  still  well  below  its 
long-term  average  (2.5%  in  the  period  2007-
2022).  Moreover,  private  debt  has  declined  as  a 
share of GDP, supporting borrowers’ debt-servicing 
capacity. On commercial  real  estate  activities, the 
share  of  domestic 
relevant 
investments  has  increased  substantially  over  the 

financing  of 

the 

(149) EBA Risk Dashboard Q3-2023. 

73 

-20246810121416200920102011201220132014201520162017201820192020202120222023Total privateNFCHH% 
 
 
  
 
 
last 5 years, suggesting greater direct exposure of 
the  local  financial  sector  than  in  the  past.  Loans 
collateralised  by  commercial  real  estate  property 
constituted circa 43% of all loans and advances to 
non-financial  corporations  as  of  September 
2023 (150).  This  has  led  banks  to  take  a  more 
prudent  approach  to 
lending  standards  and 
provisioning.  Nonetheless, there  are  no  signs  of  a 
material impact on banks’ asset quality so far.  

Despite  banks’  resilience,  the  swift  increase 
in  foreign  currency  loans  warrants  closer 
oversight. There continues to be a lower interest 
rate  on  euro-denominated  loans  than  on  loans 
denominated 
in  Czech  koruna  and  this  has 
resulted in a gradual increase in the share of euro-
denominated  loans  to  49%  of  all  non-financial 
corporation  loans  at  the  end  of  Q3-2023 (151). 
Such  loans  historically  have  a  lower  default  rate 
than  koruna  loans  and  are  granted  to  companies 
with  income  in  euro,  thus  providing  a  natural 
hedge to currency risk. Nonetheless, exchange-rate 
risk needs to be carefully monitored, as it may not 
be fully hedged (naturally or financially), while the 
level of hedging may decrease if there is a fall in 
export  demand  and  therefore  a  decline  in  foreign 
currency 
income  for  export  companies.  The 
relatively high share of these loans to businesses 
also  increases  the  importance  of  banks’  foreign 
currency liquidity position. Although banks’ overall 
liquidity  position  is  strong,  with  an  aggregate 
liquidity  coverage  ratio  excluding  state-owned 
institutions  of  187%  in  June  2023,  the  weighted 
average  liquidity  coverage  ratio  in  euro  for  the 
banking  sector  as  a  whole  stood  at  71% at  the 
same point in time (152). 

The  real  estate  market  went  through  a 
correction in 2023 but there are now signs of 
stabilisation  for  residential  properties.  Year-
on-year  growth 
in  residential  property  prices 
turned negative in Q2 and Q3 of 2023 for the first 
time  since  2012,  amid  subdued  GDP  growth  and 
rising  interest  rates.  Prices  declined  across  all 
regions  and  market  segments,  including  new 
buildings.  However,  there  are  now  signs  of  a 
bottoming  out,  as  price  growth  was  slightly 

(150) EBA Risk Dashboard Q3-2023, at amortised cost. 

(151) Foreign currency funding may actually be higher if loans 
from foreign banks or intercompany loans are added. 

(152) Czech National Bank, Autumn 2023, Financial Stability 

Report. 

positive  quarter-on-quarter 
in  Q3  2023.  The 
limited  supply  of  properties  should  support  prices 
in  the  future,  and  prices  may  possibly  also  be 
supported  by  recent  tax  changes (153).  However, 
despite some improvement during the first half of 
2023, the affordability of owner-occupied housing 
remains low. Higher interest rates also triggered a 
fall  in  transaction  activity  in  commercial  property 
in  the  second  half  of  2022  compared  with  the 
same  period  in  2021,  and  transactions  in  this 
segment  have  remained  subdued  ever  since.  This 
was  due  to  uncertainty  about  the  future  path  of 
rents,  rising  property-operating  costs,  and  rising 
costs  for  debt  financing.  Newly  completed  space 
for offices is also close to historical lows. However, 
there  are  still  signs  of  persistent  overvaluation  in 
commercial  property.  This  entails  the  risk  of 
further  price  reductions,  at  least  for  retail  and 
office  space,  where  occupancy  rates  are  falling 
and growth in rents is weaker. 

CNB 

recently 

recalibrated 

The 
its 
macroprudential  policy.  The  CNB  removed  the 
debt-service-to-income  and  debt-to-income  limits 
as  of  1  July  2023  and  1  January  2024, 
respectively,  given  a  perceived  decrease  in  the 
level of cyclical  and systemic risk associated with 
mortgage  lending.  Moreover,  the  CNB  assessed 
these 
that 
measures a hard limit for a greater-than-intended 
range  of  possible  borrowers.  However,  the  CNB 
kept  the  upper  loan-to-value  limits  unchanged, 
given  the  continuing  overvaluation  of  residential 
property  prices  and  the  heightened  uncertainty, 
which  pose  some,  albeit  lower,  risk  of  a  larger 
price correction. 

rates  had  made 

interest 

rising 

The  Czech  capital  market  remains  under-
developed, but the domestic investment-fund 
industry  is  growing.  The  market-funding  ratio 
has  deteriorated  since  2021,  and  was  40.9%  in 
2022,  below  the  EU  average  of  51.8%.  In  2022, 
the  overall  market  capitalisation  of  the  Prague 
Stock  Exchange  as  a  share  of  GDP  fell,  and  the 
volume  of  corporate  bonds  issued  in  2022  also 
dropped year-on-year, for the third year in a row. 
The degree of direct retail investment in the Czech 
capital  markets  is  low,  but  the  investment-fund 
industry  continues  to  grow  and  now  represents 

(153) An increase from 5 to 10 years in the required holding period 
to benefit from exemptions on the income tax paid on profits 
from the sale of real estate for properties acquired after 
2021 may curb supply, while a VAT reduction on some new 
builds from 15% to 12% could potentially help demand. 

74 

 
 
 
Table A18.1:Financial soundness indicators 

(1) Last data: 2023-Q3. 
(2) Data are annualised. 
(3) Data available for EA countries only, EU average refers to Euro Area. 
Source: ECB, Eurostat 

segment  were  flattish  over  the  same  period  and 
claim-settlement  costs  rose  more  slowly  than 
premiums  for  both  segments (156).  As  a  result, 
aggregate  profitability  remained  above  its  long-
term average, with the highest return on assets in 
10  years.  Czech  insurers  face  risks  related  to 
climate  change.  The  country  scores  close  to 
average  in  terms  of  the  insurance-protection  gap 
in  the  EIOPA’s  relevant 
for  natural  hazards 
dashboard (157).  

close  to  9%  of  total  financial  sector  assets. 
Investment-fund  assets  increased  by  14%  in  the 
first  half  of  2023 compared  to  end-2022 (154). 
Their liquidity position did not change significantly 
in  the  first  half  of  2023  and  remains  solid.  In  an 
effort 
to  boost  domestic  capital  markets, 
legislation  was  recently  passed  covering  a  long-
term  investment  product  which  benefits  from  tax 
relief  and  offers  an  alternative  to  other  tax-
efficient  long-term  savings  products  (i.e.  pension 
funds  and  life  insurance  products).  The  Czech 
fintech  industry  is  growing,  with  firms  active  in 
areas  such  as  accounting,  payments,  savings, 
personal finance, P2P lending and crowdfunding. 

The Czech insurance sector is relatively small 
and  concentrated  but  resilient.  The  insurance 
sector  represented  only  3.9%  of  the  overall 
financial  sector  assets  in  June  2023.  In  terms  of 
assets-to-GDP,  it  represented  only  6.1%  in  June 
2023,  compared  to  an  EU  average  of  54.3%.  The 
sector  is  very  concentrated,  as  two  insurers 
account for close to 50% of all written premiums 
in  both  the  life  and  non-life  segments (155).  Its 
overall capital adequacy remained adequate, rising 
slightly  to  222%  in  the  first  half  of  2023  from 
219%  in  2022.  Following  a  solid  2022,  gross 
premiums  continued  to  rise  in  the  first  half  of 
2023, led by the non-life-insurance segment with 
4.4% growth. Gross premiums in the life-insurance 

(154) Czech National Bank, Autumn 2023, Financial Stability 

Report. 

(156) Czech National Bank, Autumn 2023, Financial Stability 

Report. 

(157) See the dashboard on the insurance-protection gap for 

(155) Czech Banking Association statistics, September 2023. 

natural catastrophes in a nutshell (europa.eu). 

75 

2017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)143.0135.6133.2141.8145.4134.4130.6257.0184.6Share (total assets) of the five largest banks (%)63.764.564.865.365.465.5--69.6Share (total assets) of domestic credit institutions (%)18.38.68.98.213.415.315.6-62.9NFC credit growth (year-on-year % change)6.16.33.9-0.68.16.87.4-2.4HH credit growth (year-on-year % change)8.47.96.66.810.26.64.8-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)2.82.11.71.91.71.41.21.81.8- capital adequacy ratio (%)18.118.319.722.121.220.320.419.620.1- return on equity (%)213.013.313.96.710.614.415.29.913.2Cost-to-income ratio (%)147.147.047.049.648.941.742.652.844.9Loan-to-deposit ratio (%)194.9101.9103.9102.1100.694.192.293.380.2Central bank liquidity as % of liabilities0.00.00.00.00.00.00.0-0.7Private sector debt (% of GDP)80.383.078.681.778.876.0-133.0118.4Long-term interest rate spread versus Bund (basis points)66.3158.5180.1163.9227.8319.0200.4107.7104.2Market funding ratio (%)48.247.046.046.041.740.9-50.839.8Green bonds outstanding to all bonds (%)3-------4.02.71-34-1011-1718-2424-27Colours indicate performance ranking among 27 EU Member States. 
 
 
 
  
 
ANNEX 19: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Czechia’s  tax  system.  It  includes 
information on the tax structure (the types of tax 
that Czechia derives most of its revenue from), the 
tax  burden  on  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance. 

information  on 

Czechia’s  tax  revenue  is  relatively  low  in 
relation  to  its  GDP,  except  for  consumption 
taxes.  Table  A19.1  shows  that  Czechia’s  tax 
revenue as a percentage of GDP was considerably 
below the EU aggregate in 2022. Total tax revenue 
has increased by about 2.5 percentage points (pps) 
of  GDP  since  2010  but  remains  below  the  EU 
average (35.3% in 2022 compared with 40.2% in 
the  EU;  see  Table  A19.1).  Tax  revenue  in  all 
categories remains below the EU aggregate except 
for  consumption  taxes  (11.3%  of  GDP  in  2022, 
compared  with  11.0%  in  the  EU).  Revenue  from 
labour taxes has increased since 2010 (by 0.9 pps 
of  GDP  to  17.9%  in  2022)  and  revenue  from 
consumption  taxes  have  increased  to  a  lesser 
extent over the same period (by 0.6 pps to 11.3 in 
2022), while revenue from capital taxes increased 
to  6.2%  of  GDP 
in  2022.  Revenue  from 
environmental  taxes  is  below  the  EU  average  (at 
1.5%  of  GDP,  compared  with  the  EU  average  of 
2.0%)  and 
taxation 
(including  recurrent  property  taxation)  remains 
very  low  (expressed  as  a  percentage  of  GDP  and 

from  property 

revenue 

as  a  percentage  of  total  tax  revenue)  (see  Table 
A19.1  and  Graph A19.1).  Such  low  taxes  on 
property will increase in coming years as laid down 
in  the  Act  on  the  Consolidation  of  Public  Budget 
(Consolidation Package) explained below.  

The  Act  on  the  Consolidation  of  Public 
Budgets 
includes  a  host  of  tax-related 
measures,  which  mostly  increase  revenue, 
and  has  been  effective  since  January  2024. 
Some of the key tax measures are as follows. The 
corporate income tax rate has increased from 19% 
to  21%,  bringing the Czech  Republic  closer  to the 
European  average.  For  personal  income  tax,  a 
higher  tax  rate  of  23%  now  applies  to  income 
above  a  specific  threshold  and  certain  deductions 
or  tax  credits  are  abolished,  thus  broadening  the 
tax  base.  The  minimum  assessment  base  for 
social  security  contributions  of  self-employed 
persons  has  increased  from  25%  to  40%  of  the 
average  wage.  On  VAT,  reduced  tax  rates  have 
been unified as a single 12% rate, leaving only the 
rates of 21% and 12% for different categories of 
goods and services (some goods and services have 
shifted  from  one  rate  category  to  another).  Real 
estate  tax  rates  have  increased  on  average  by 
80%. In the case of excise duties, there is a multi-
year  plan  to  increase  the  rates  on  alcohol  and 
tobacco  products,  for  which,  in  addition,  taxation 
of  alternative  products  not  yet  taxed  (e-cigarette 
refills,  nicotine  sachets)  has  been  introduced.  In 
addition,  exemptions  on  mineral  oil  excise  duties 

Table A19.1:Taxation indicators 

Forward-looking effective tax rate (OECD). 
A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2022, if available. For more details on the VAT gap, see European Commission, Directorate-General for 
Taxation and Customs Union, 2023, VAT gap in the EU, https://data.europa.eu/doi/10.2778/911698. 
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
Source: European Commission, OECD 

76 

CZ2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)32.935.935.935.337.940.040.440.2Labour taxes (as % of GDP)17.020.219.017.920.021.320.720.3Consumption taxes (as % of GDP)10.711.311.411.310.810.711.211.0Capital taxes (as % of GDP)5.14.45.56.27.18.08.68.9Of which, on income of corporations (as % of GDP)3.23.13.84.22.42.53.03.4Total property taxes (as % of GDP)0.50.30.30.31.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.20.20.20.21.11.21.11.0Environmental taxes as % of GDP2.31.91.81.52.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)35.739.735.435.135.733.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)42.144.140.039.940.241.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)18.318.318.319.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)8.06.77.26.18.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)31.428.840.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)22.712.17.05.39.75.4CzechiaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
       
 
Graph A19.1: Tax revenues from different tax types, % of total revenue 

Source: European Commission 

and energy taxes were modified  or abolished. For 
the  gambling  tax,  the  second  rate  has  been 
increased  from 23%  to  30%  and  the tax  revenue 
from all internet games now belongs to entirely to 
the  state  budget.  Most  of  these  measures  will 
result in increased revenue.  

In  its  revised  RRP,  Czechia  included  two 
reforms in the field of green transition. These 
concern tax measures in support of zero-emission 
mobility  and  a  highway  vignette  to  incentivise 
zero-emission mobility. Regarding further pollution 
and  resources  taxes,  there  could  be  potential  to 
strengthen  the  application  of  the  ‘polluter  pays’ 
principle. Czechia has implemented three of the six 
main  types  of  pollution  and  resources  taxes 
(i.e. taxes on NOx emissions, waste landfilling, and 
discharge of waste into water). 

Czechia’s  labour  tax  burden  is  slightly  less 
progressive than the EU average. Table A19.1 
shows  that  the  tax  wedge  for  single  workers 
earning  50%  of  the  average  wage  has  been 
reduced  in  recent  years  (35.7%  in  2023  against 
39.7%  in  2020).  However,  it  is  above  the  EU 
average  of  31.7% 
(see  also  Graph  A19.2). 
Similarly,  the  tax  wedge  for  second  earners 
earning  67%  of  the  average  wage  was  43.4 
(above  the  EU  average).  Also,  the  tax  wedge  for 
second  earners  was  significantly  above  the  tax 
wedge  of  single  persons  at  the  same  wage  level. 
The tax wedge at 100% of average wage has also 
decreased  in  recent  years  and  is  close  to  the  EU 
average  in  the  latest  data.  The  ability  of  the  tax 
and  benefit  system  to  reduce  income  inequality 
(measured  by  its  ability  to  reduce  the  GINI 
coefficient)  has  decreased  since  2010  and  has 
remained  below  the  EU  average  in  recent  years 

(see  Table  A19.1).  The  latest  measures  approved 
in 
the  Consolidation  Package  may  prompt 
improvements in this respect. 

Graph A19.2: Tax wedge for single and second 
earners, % of total labour costs, 2023 

The second earner tax wedge assumes a first earner at 100% 
of the average wage and no children. For the methodology of 
the tax wedge for second earners, see OECD, 2016, Taxing 
Wages 2014-2015. 
Source: European Commission 

Czechia 
in  tax 
is  doing  relatively  well 
compliance and enforcement. The VAT gap (an 
indicator of the effectiveness of VAT enforcement 
and  compliance,  where  a  low  gap  indicates  high 
effectiveness)  decreased  in  Czechia  by  5.1  pps 
from 12.1% in 2020 to 7% in 2021, although this 
was in part due to COVID-19 effects. However, this 
is  still  above  the  2021  EU-wide  average  VAT  gap 
of 5.4% (see Table A19.1) The downward trend in 
Czechia’s  VAT  gap  is  expected  to  continue  into 
2022,  when  the  VAT  gap  is  expected  to  decrease 
to  5.3%.  The  stability  of  this  trend  from  2019  is 
also  a  signal  that  there  was  no  major  issue  with 
recording  deferred  VAT  payments  in  VAT  revenue 
between  2020  and  2021.  With  effect  from  1 

77 

35.738.040.242.043.42025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - CZSingle earner - EU averageSecond earner -  CZSecond earner -  EU average50.627.322.150.631.917.4Tax revenue shares in 2022, Czechia (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital4.13.90.10.90.00.20.52.50.32.70123456Czechia -environmentaltaxationEU -environmentaltaxationCzechia -propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Czechia and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
      
      
them 

shielding 

January  2023,  Czechia  doubled 
the  annual 
turnover  threshold  for  VAT  registration  (from 
CZK 1 million [about EUR 40 000] to CZK 2 million 
[about EUR 80 000]). This measure supports small 
enterprises  by 
from  VAT 
it  also  means  that 
compliance  burdens,  but 
Czechia  will  collect  less  tax  from  them.  However, 
according  to  estimates  provided  by  Czechia,  the 
introduction of the special measure would lead to 
a  decrease in  VAT  revenue  collection  of  less  than 
2%  and  would  therefore  not  significantly  affect 
the  total  amount  of  revenue  from  VAT  or  the 
overall  amount  of  tax  revenue  collected.  Czechia 
anticipates  that 
increasing  the  threshold  will 
reduce  the  burden  on  the  tax  administration  by 
lowering  the  requirement  to  manage  and  inspect 
eligible small enterprises that opt into this scheme.  

78 

 
 
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1:Key economic and financial indicators 

(1) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

79 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)5.90.22.23.62.4-0.31.22.8Potential growth (y-o-y).2.02.30.51.12.01.51.5Private consumption (y-o-y)3.60.61.74.1-0.6-3.12.33.8Public consumption (y-o-y)0.2-0.12.51.40.33.51.82.2Gross fixed capital formation (y-o-y)7.1-1.93.40.83.04.03.02.4Exports of goods and services (y-o-y)18.14.23.26.97.22.82.83.7Imports of goods and services (y-o-y) 15.52.93.413.36.3-0.71.34.4Contribution to GDP growth:Domestic demand (y-o-y)3.8-0.32.22.40.60.32.22.8Inventories (y-o-y)0.6-0.40.04.80.9-3.3-2.10.2Net exports (y-o-y)1.51.00.1-3.60.92.61.1-0.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y).0.30.3-0.50.31.10.40.2Capital accumulation (y-o-y).0.80.70.60.70.70.80.8Total factor productivity (y-o-y).1.01.30.50.10.10.30.5Output gap3.7-0.30.3-0.90.4-1.9-2.2-0.9Unemployment rate7.26.43.62.82.22.62.82.9GDP deflator (y-o-y)2.10.92.43.38.58.62.62.5Harmonised index of consumer prices (HICP, y-o-y)2.32.71.63.314.812.02.52.2HICP excluding energy and unprocessed food (y-o-y)1.82.11.93.812.49.52.82.4Nominal compensation per employee (y-o-y)6.02.55.05.06.07.07.36.9Labour productivity (real, hours worked, y-o-y)4.90.32.30.4-2.1-0.61.42.3Unit labour costs (ULC, whole economy, y-o-y)1.32.13.51.85.18.26.34.1Real unit labour costs (y-o-y)-0.71.21.0-1.5-3.2-0.33.61.5Real effective exchange rate (ULC, y-o-y)3.62.01.45.05.82.9-3.91.3Real effective exchange rate (HICP, y-o-y)3.42.40.63.99.68.4..Net savings rate of households (net saving as percentage of net disposable income)7.27.48.414.811.7...Private credit flow, consolidated (% of GDP)7.94.33.32.94.5...Private sector debt, consolidated (% of GDP)57.677.580.878.876.0...of which household debt, consolidated (% of GDP)18.128.631.534.432.6...of which non-financial corporate debt, consolidated (% of GDP)39.548.949.344.443.4...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)...1.41.2...Corporations, net lending (+) or net borrowing (-) (% of GDP)-2.7-0.9-1.2-2.0-5.7-0.5-1.2-1.0Corporations, gross operating surplus (% of GDP)28.628.228.628.329.130.727.827.3Households, net lending (+) or net borrowing (-) (% of GDP)1.01.92.66.24.96.66.35.3Deflated house price index (y-o-y)4.6-0.95.516.41.6-10.0..Residential investment (% of GDP)4.44.44.14.74.33.9..Current account balance (% of GDP), balance of payments-3.2-2.31.0-2.8-4.90.40.90.5Trade balance (% of GDP), balance of payments1.83.56.62.81.15.2..Terms of trade of goods and services (y-o-y)-0.5-0.70.6-0.1-3.72.7-0.60.1Capital account balance (% of GDP)0.30.91.01.70.71.2..Net international investment position (% of GDP)-27.8-43.5-26.0-14.5-18.7-13.2..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)17.88.627.036.928.930.4..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)30.541.960.172.163.150.7..Export performance vs. advanced countries (% change over 5 years)..3.62.4-3.71.2..Export market share, goods and services (y-o-y)10.0-0.91.7-4.8-5.01.6-0.70.0Net FDI flows (% of GDP)-4.8-1.7-1.6-0.5-1.2-0.2..General government balance (% of GDP)-2.0-3.6-0.7-5.1-3.2-3.7-2.4-1.9Structural budget balance (% of GDP)..-0.8-4.8-3.3-2.9-1.5-1.5General government gross debt (% of GDP)27.736.536.042.044.244.045.245.5forecast 
 
 
 
  
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks for Czechia over the short, medium and 
long  term. 
It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

decline  also  benefits  from  a  slightly  favourable 
but  declining  snowball  effect,  notably  thanks  to 
the 
impact  of  Next  Generation  EU.  Finally, 
government gross financing needs are expected to 
slightly  increase  by  the  end  of  the  projection 
period  in  2034  around  7%  of  GDP,  above  the 
average over 2024-2025. 

Government 

(Table A21.2) (158). 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  short-term  fiscal 
risks 
gross 
financing  needs  are  expected  to  decrease  around 
6%  of  GDP  on  average  over  2024--2025 
(Table A21.1, Table 1). 
markets’ 
perceptions  of  sovereign  risk  remain  positive,  as 
confirmed  by  the  CDS  spread  and  the  ‘AA’  rating 
that  the  three  major  rating  agencies  assign  to 
Czech government debt. 

Financial 

2  –  Medium-term  fiscal  sustainability  risks 
appear medium.   

The DSA baseline shows that the government 
debt  ratio  is  expected  to  remain  broadly 
unchanged  and  below  60%  of  GDP  in  the 
medium  term  (at  around  48%  of  GDP  in 
2034) (Graph 1,  Table  1) (159).  The  debt  dynamics 
is  supported  by  an  assumed  structural  primary 
deficit  (excluding  changes  in  cost  of  ageing)  of       
-0.1%  of  GDP  as  of  2024.  This  assumption 
appears  relatively  ambitious  compared  to  past 
fiscal  performance  (Table  A21.2) (160).  The  debt 

the 

the 

(i.e. 

four 

The  baseline  projections  are  stress-tested 
deterministic 
alternative 
against 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1). For Czechia, all the stress test scenarios 
would  lead  to  worse  results  as  compared  to  the 
baseline,  with  particularly  adverse  developments 
lower  structural  primary  balance 
under 
cumulative 
projected 
scenario 
improvement  in  the  SPB  over  2023-2024  is 
halved).  Under  this  stress  scenario,  the  debt  ratio 
would be higher than under the baseline by about 
8  pps.  of  GDP  in  2034.  Similar  impact  (about  7 
pps.)  is  projected  under  the  historical  structural 
primary  balance  (SPB)  scenario  (i.e.  the  SPB 
returns to its historical  15-year average of  -0.9% 
of  GDP).  Under  the  adverse  interest-growth  rate 
differential  scenario  (i.e.  the  interest-growth  rate 
deteriorates by 1 pp. compared with the baseline), 
the  debt  ratio  would  be  higher  than  under  the 
baseline  by  around  4  pps.  of  GDP  in  2034.  The 
smallest  adverse  impact  on  the  debt  ratio  is 
projected  for  2034  under  the  financial  stress 
scenario (i.e. interest rates temporarily increase by 
1 pp. compared with the baseline) with debt ratio 
that would be higher by only around 0.4 pp.   

(158) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of fiscal and financial-
competitiveness indicators that have proven to be a good 
predictor of emerging fiscal stress in the past.  

(159) The assumptions underlying the Commission’s ‘no-fiscal 

policy change’ baseline include in particular: (i) a structural 
primary deficit, before changes in ageing costs, of 0.1% of 
GDP from 2024 onwards; (ii) inflation converging linearly 
towards the 10-year forward inflation-linked swap rate 10 
years ahead (which refers to the 10-year inflation 
expectations 10 years ahead); (iii) the nominal short- and 
long-term interest rates on new and rolled over debt 
converging linearly from current values to market-based 
forward nominal rates by T+10; (iv) real GDP growth rates 
from the Commission 2024 spring forecast, followed by the 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10 (average of 1.5%); (v) ageing costs in line with the 
2024 Ageing Report (European Commission, Institutional 
Paper 279, April 2024). For information on the methodology, 
see the 2023 Debt Sustainability Monitor (European 
Commission, Institutional Paper 271, March 2024). 

(160) This assessment is based on the fiscal consolidation space 

indicator, which measures the frequency with which a tighter 
fiscal position than assumed in a given scenario has been 
observed in the past. Technically, this consists in looking at 

to 

plausible 

The  stochastic  projections  indicate  low  risk, 
pointing  to  the  low  sensitivity  of  these 
projections 
unforeseen 
events  (161). These stochastic simulations indicate 
a 52% probability that the debt ratio will be higher 
in 2028 than in 2023, implying low risks given the 
relatively 
the 
uncertainty 
the  baseline  debt 
projections  is  low,  as  measured  by  the  difference 

In  addition, 

surrounding 

low  debt 

level. 

the percentile rank of the projected SPB within the 
distribution of SPBs observed in the past in the country, 
taking into account all available data from 1980 to 2022. 

(161) The stochastic projections show the joint impact on debt of 

10,000 different shocks affecting the government’s 
budgetary position, economic growth, interest rates and 
exchange rates. This covers 80% of all the simulated debt 
paths and therefore excludes tail events. 

80 

 
 
 
 
 
 
 
4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment. On 
the one hand, risk-increasing factors are related to 
the  recent  increase  in  interest  rates  and  the 
significant share of short-term debt. On the other 
hand,  risk-mitigating  factors  include  the  stability 
of  debt  maturity  in  recent  years,  the  relatively 
stable  financing  sources  (with  a  diversified  and 
currency 
large 
denomination of debt  

investor 

base) 

and 

the 

between  the  10th  and  90th  debt  distribution 
percentiles in five years’ time (Graph 2).  

3  –  Long-term  fiscal  sustainability  risks 
appear  overall  medium.  This  assessment  is 
based  on  the  combination  of  two  fiscal  gap 
indicators,  capturing  the  required  fiscal  effort  to 
stabilise  debt  (S2  indicator)  and  bring  to  60%  of 
GDP  (S1  indicator)  over  the  long  term (162).  This 
assessment  is  driven  by  the  projected  increase  in 
ageing  costs  and  to  a  smaller  extent,  the 
unfavourable  initial  budgetary  position.  Hence, 
these  results  are  conditional  on  the  country 
maintaining a sizeable SPB over the long term, and 
duly implementing legislated pension reforms. 

The  S2  indicator  points  to  medium  fiscal 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  would  need  to 
improve by 4.7 pps. of GDP in 2025 to ensure debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by  the  projected  increase  in  ageing-
related costs (contribution of 4.0 pps. of GDP), and 
to  a 
initial 
cost 
budgetary  position 
developments are primarily driven by the projected 
increase 
expenditure 
(contribution  of  2.1  pps.),  coupled  with  the 
projected  increase  in  health-care  and  long-term 
care  spending  (1.9  pps.  of  GDP)  (Table A21.1, 
Table 2).  

the  unfavourable 
(0.7  pp.).  Ageing 

lesser  extent 

pension 

public 

in 

The  S1  indicator  points  to  medium  fiscal 
sustainability risks. The indicator shows that the 
country  would  need  to  improve  its  fiscal  position 
by  2.9  pps.  of  GDP  in  2025  to  bring  its  debt  to 
60% of GDP by 2070. This result is mainly driven 
by  the  projected  increase  in  age-related  public 
spending (contribution of 2.9 pps. of GDP), and to 
a  lesser  extent  the  unfavourable  initial  budgetary 
position (0.4 pp.) (Table A21.1, Table 2).   

(162)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2025 that would be required 
to stabilise public debt in the long term. It is complemented 
by the S1 indicator, which measures the permanent SPB 
adjustment in 2025 to bring the debt ratio to 60% by 2070. 
For both the S1 and S2 indicators, the risk assessment 
depends on the amount of fiscal consolidation needed: ‘high 
risk’ if the required effort exceeds 6 % of GDP, ‘medium risk’ 
if it is between 2% and 6% of GDP, and ‘low risk’ if the effort 
is negative or below 2% of GDP. The overall long-term risk 
classification combines the risk categories derived from S1 
and S2. S1 may notch up the risk category derived from S2 if 
it signals a higher risk than S2. See the 2023 Debt 
Sustainability Monitor for further details. 

81 

 
 
Table A21.1:Debt sustainability analysis - Czechia 

Source: Commission services 

Table A21.2:Heat map of fiscal sustainability risks – Czechia 

Source: Commission services 

82 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMLOWDebt level (2034), % GDP47.654.655.651.448.0Debt peak year20342034203420342034Fiscal consolidation space26%28%28%26%26%Probability of debt ratio exceeding in 2028 its 2023 level52%Difference between 90th and 10th percentiles (pps. GDP)25.7Source: European Commission (for further details on the Commission's multidimensional approach, see the 2023 Debt Sustainability Monitor)(1)Debtlevelin2034.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2028its2023level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifferencebetweenthe90thand10thpercentilesmeasuresuncertainty,basedonthedebtdistributionunder10000differentshocks.Green,yellowandredcellsindicateincreasinguncertainty.(Forfurtherdetailson the Commission's multidimensional approach, see the 2023 Debt Sustainability Monitor)LOWMEDIUMMEDIUMMEDIUMMEDIUMShort termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)Table 1. Baseline debt projections20212022202320242025202620272028202920302031203220332034Gross debt ratio (% of GDP)42.044.244.045.245.345.044.744.644.845.145.546.046.847.6Changes in the ratio4.42.2-0.21.30.1-0.3-0.3-0.10.20.30.40.60.70.9of whichPrimary deficit4.42.02.31.00.20.0-0.10.10.20.30.40.60.70.8Snowball effect-1.7-3.1-2.0-0.2-0.9-0.3-0.2-0.10.00.00.00.00.00.0Stock-flow adjustments1.73.2-0.50.50.70.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)10.910.66.85.55.54.95.05.35.76.16.56.97.37.5S1S2Overall index  (pps. of GDP)2.94.7of which Initial budgetary position0.40.7Debt requirement-0.3Ageing costs2.94.0of which    Pensions1.62.1     Health care0.50.7     Long-term care0.71.2Education0.10.1Table 2. Breakdown of the S1 and S2 sustainability gap indicators010203040506020212022202320242025202620272028202920302031203220332034Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9001020304050607020212022202320242025202620272028% of GDPGraph 2. Stochastic debt projections 2024-2028MedianBaseline