COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Czechia
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Czechia, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 203 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Czechia {COM(2025) 203 final}  
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Growth has resumed, but global 
uncertainty weighs on the 
economy 

Economic  growth  to  be  driven  mainly  by 
internal  demand.  GDP  growth  has  been  low 
in  the  last  two  years,  reaching  1.1%  in  2024, 
with  internal  demand  and  net  exports  being 
the  main  drivers.  Internal  demand  is  likely  to 
remain  the  main  GDP  driver.  The  resumption 
of  growth  in  real  wages,  falling  inflation  and 
the  monetary  easing  applied  by  the  Central 
Bank  are  likely  to  cause  internal  demand  to 
grow  more  quickly.  Moreover,  households’ 
consumption  volumes  are  below  2019  levels, 
one  of  the  lowest  compared  to  other  EU 
countries,  while  saving  rates  are  among  the 
highest  in  the  EU.  These  factors  further 
support 
households’ 
consumption.  Public  and  private  investments 
are  expected  to  stay  strong,  driven  by 
monetary  easing(1)  and  increased  EU  funds 
absorption,  with  the  Recovery  and  Resilience 
Facility 
in  2026.  Private 
investments  are  among  the  highest in  the  EU 
as a percentage of GDP. 

(RRF)  ending 

growth 

the 

in 

Net  exports  are  negatively  affected  by 
trade uncertainty and increasing imports. 
As 
industrial  goods  (with  the  automotive 
sector in first place) represent 81% of exports, 
the  uncertainties  regarding  trade  policy  and 
the  outlook  for  the  main  trading  partners  are 
likely  to  impede  the  growth  of  Czech  exports. 
Structural challenges, such as increasing costs 
of  energy  and  labour,  also  have  a  negative 
impact on net exports. The forecast increase in 
domestic  demand  is  likely  to  drive  imports 

higher.  Thus,  net  exports  are  forecast  to 
hamper GDP growth. 

Inflation  is  set  to  continue  declining.  The 
high  inflation  rate  from  2022  and  2023  had 
an  adverse  effect  on  the  Czech  economy.  It 
impacted  on  real  wages  growth,  prompted 
households  to  increase  their  savings  and 
affected  certain  industrial  sectors  which  are 
energy  intensive.  However,  inflation  declined 
significantly  to  2.7%  in  2024  and  is  forecast 
to stay low at 2.2% in 2025. 

Labour  market  remains  tight.  Despite  a 
small  increase  in  unemployment  rate  from 
2.2%  in  2022  to  2.6%  in  2024,  the  Czech 
lowest 
labour  market  has  one  of 
unemployment 
The 
employment  rate(2)  is  also  high  at  82.3%, 
above  the  EU  average  of  75.8%.  The  tight 
labour  market  thus  remains  an  important 
limiting factor of economic growth. 

the 
the  EU. 

rates 

in 

energy  prices.  However, 

Czechia’s public finances still in deficit. In 
2024,  Czechia’s  government  balance 
(the 
difference  between  government  revenue  and 
expenditure)  recorded  a  deficit  of  2.2%  of 
GDP,  down  from  3.8%  in  2023.  The  decrease 
in  the  budget  deficit  was  driven  by  the 
government  consolidation  package  and  the 
phase-out of measures to mitigate the impact 
the 
of  high 
government  balance  continues  to  be  reduced 
by  around  2  percentage  points  of  GDP  due 
mainly  to  the  permanent  cut  in  personal 
income  tax  effective  from  2021,  and  tax 
evasion. The budget deficit is forecast to  stay 
broadly  unchanged  at  2.3%  of  GDP  in  2025 
and  2.2%  of  GDP  in  2026.  The  planned 
phasing out of windfall profits tax is set to cut 
revenue  in  2026.  Finally,  gross  government 
debt  was  43.6%  of  GDP  at  end  of  2024, 
forecast to rise to 45.4% in 2026. 

(1)  https://iate.europa.eu/entry/result/1125542/en 

(2)  Calculated for the age class 20-64 

2 

 
 
 
 
in  Czechia 

Net  public  expenditure  to  accelerate 
growth in the 2025 election year. In 2024, 
net  expenditure (3) 
remained 
unchanged,  with  0%  growth  (see  Annex  1). 
This  outcome  was mainly driven by  growth  in 
social  transfers  to  support  living  standards, 
public-sector  pay  and  the  provision  of  public 
goods  and  services.  In  2025,  the  year  of  the 
parliamentary  elections,  net  expenditure  is 
forecast  by the Commission  to grow by  4.0%, 
which  is  below  the  maximum  growth  rate 
recommended 
The 
cumulative  growth  rate  of  net  expenditure  in 
2024 and 2025 taken together is projected at 
4.0%,  which  is  below  the  maximum  growth 
rate recommended by the Council. 

Council(4). 

the 

by 

The Czech economic model faces 
competitiveness challenges  

The  Czech  economy,  which  is  based  on 
industry  and  a  middle  position  in  the 
value  chain,  has  experienced  slower 
productivity growth in the last few years. 
Czechia’s  economy  is  characterised  by  a  high 
reliance  on  industry  (25.4%  of  GDP,  second 
highest  in  the  EU),  a  high  percentage  of 
foreign  ownership  in  the  economy  (45%  of 
gross value added produced by foreign-owned 
companies,  fifth  highest  in  the  EU)  and  a 
relatively 
low  value  added  compared  to 
economic output (40%, third lowest in the EU) 
(Graph  1.1).  The  high  increases  in  energy  and 
in  nominal  unit  labour  costs  in  the  past  few 
years 
the 
competitiveness  of  the  economy  and  led  to 
stagnating  productivity.  Labour  productivity 
grew  by  1%  in  the  past  five  years,  compared 
to 1.3% in the EU. This comes also on the back 

pressure 

have 

put 

on 

of a tight labour market which is experiencing 
gaps in mobility and supply. 

to 

challenges 

Czechia´s  energy-intensive  sectors  face 
remaining 
several 
competitive  in  the  context  of  volatile 
energy  prices.  The  Czech  economy  has  one 
of  the  highest  energy  intensities  (i.e.  amount 
of energy consumed to produce a unit of GDP) 
in the EU (5). This is the cumulative result of a 
higher  share  of  the  industry  in  GDP  (Graph 
1.1),  an  above-average  energy  intensity  of 
industry (6),  higher  energy 
transformation 
losses (7)  and  higher  energy  intensity  of  the 
building stock (8) compared to EU averages. As 
Czechia  is  still  heavily  dependent  on  fossil 
fuels,  its  high  energy  intensity  leaves  the 
economy  exposed  to  movements  in  energy 
prices.  While  electricity  and  gas  prices  for 
households  and  industry  are  only  slightly 
above  the  EU  averages  (5-15%  as  of  H1 
2024),  the  increase  from  2019  has  been 
significant,  especially  for  electricity.  Electricity 
prices more than doubled in the last five years, 
arguably also because in 2019 they were at a 
20-30% discount to EU averages (see Section 
3).  Sustained  increases  in  energy  prices  risk 
leading  to  losses  as  regards  the  economy's 
price competitiveness. This translates not only 
into  higher  input  costs  for  industry  but  also 
into  a  higher  social  burden  for  households, 
which would  ultimately also add pressures on 
salaries.  Taxation  on  electricity 
less 
favourable than on gas, which exacerbates the 
gap  between  electricity  and  gas  prices,  thus 
disincentivising electrification. 

is 

(3)  Net expenditure is defined in Article 2(2) of Regulation 
(EU) 2024/1263 as government expenditure net of 
interest expenditure, discretionary revenue measures, 
expenditure on programmes of the Union. 

(4)  Council Recommendation of 21 January 2025 

endorsing the national medium-term fiscal-structural 
plan of Czechia (OJ C, C/2025/666, 10.2.2025, ELI: 
http://data.europa.eu/eli/C/2025/666/oj) 

(5)  101.21 KGOE per thousand euro of GDP in purchasing 
power standards compared to 78.5 EU average. 

(6)  61.7 toe per euro value added produced in industry and 
construction segments compared to 53.7 EU average. 

(7)  65% energy transformation output per transformation 

input, compared to 81% EU average. 

(8)  15.5 thousand kgoe per sqm compared with 11.1 EU 

average. 

3 

 
 
 
 
 
Graph 1.1: Structural economic differences 
between Czechia and the EU-27 

Source: Eurostat, European Commission 

Lack  of  diversification  makes  Czechia 
more  vulnerable  to  external  shocks  and 
holds  back  productivity  growth.  With 
exports  representing  57%  of  GDP,  Czechia  is 
one of the most trade-dependent economies in 
the  EU.  However,  Czech  exports  are 
concentrated  primarily 
in  the  automotive 
industry,  which  leaves  them  vulnerable  to 
trade  disruptions  caused  by  changes  in  trade 
policy,  and  highly  dependent  on  the  main 
trading  partner,  Germany.  While  exports  of 
other  goods  and  services  are  growing,  this  is 
still  happening  slowly.  Slow  growth  in  local 
businesses and low R&D performance seem to 
be  among  the  causes.  Despite  households 
having  the  highest  saving  rates  in  the  EU 
savings  are 
(19.4% 
concentrated in traditional banking products or 
property.  The  local  capital  market  remains 
underdeveloped,  limiting  the  growth  of  new 
businesses,  and  the  business  environment 
could  be  further  enhanced  (see  Annex  4).  An 
additional drag on growth comes from the low 
performance  of  the  R&D  sector  due  to  low 
low  knowledge 
government  support  and 
transfer between research and businesses (see 
Annex 3). 

in  2023), 

these 

risks 

associated  with 

There  is  wide  scope  to  improve  the 
quality  of  public  finances.  Public  debt  is 
below  60%  of  GDP,  and  Czechia  faces  low  to 
medium 
fiscal 
sustainability.  Still,  given  medium-  to  long-
term  spending  pressures,  such  as  those 
coming  from  the  ageing  population  and  the 
challenges  to  the  growth  model,  further 
reforms are needed to  boost competitiveness, 
productivity 
Czechia 
increase  defence 
announced  to  gradually 

sustainability. 

and 

spending  by  2030,  which  could  add  to 
pressures  on  government  spending.  However, 
public  finances  struggle  to  prioritise  and  put 
expenditure  to  its  most  productive  use,  make 
the  tax  and  benefit  systems  more  efficient, 
and  improve  quality  of  services.  For  example, 
the  tax  system  fails  to  incentivise  housing 
construction,  the  long-term  rental  housing 
market  and  R&D  investment.  The  tax  and 
benefit  system  excessively  burdens 
low-
income earners and does not encourage young 
mothers  to  go  back  to  work  (see  Section  4). 
Finally,  property  taxation  is  still  below  the  EU 
average,  and  environmental  taxes  have  been 
decreasing  in  Czechia  over  the  last  15  years. 
This  has  caused  the  tax  system  to  be  reliant 
on  labour  taxation  and  less  growth  friendly 
(see Annex 2). 

Fully  implementing  the  recently  adopted 
pension  reforms  will  be  crucial  for 
limiting  ageing-related  fiscal  pressures. 
In 2023 and 2024, Czechia adopted legislative 
reforms  addressing  the  long-running  country-
specific  pension  recommendation.  The  reform 
primarily seeks to gradually raise the statutory 
retirement age to 67 by 2056. In addition, the 
pension  formula  was  adjusted  to  slow  down 
the  growth  of  newly  granted  pensions.  Also, 
the maximum duration of early retirement was 
reduced from five to three years, and eligibility 
conditions  for  early  retirement  were  made 
stricter.  In  combination  with  Czechia’s  penalty 
system  for  early  retirement,  these  measures 
are  projected 
the  effective 
retirement age and limit the increase in public 
pension spending in the long term by  1.9 pps. 
of  GDP  (see  Annex  1).  Fully  implementing the 
recently  adopted  pension  reforms  would  help 
to  mitigate ageing-related spending pressures 
and the resultant risks for fiscal sustainability. 

increase 

to 

coordination 

Challenges  remain  as  regards  strategic 
and 
planning, 
implementation  capacity  in  the  public 
administration.  Enhancing  the  ability  to 
attract  and  retain  skilled  professionals,  build 
analytical  capabilities  and  promote  evidence-
based 
strong 
involvement  of  stakeholders  would  help  to 
make  public  investment  and  spending  more 
effective.  Processes  such  as  spatial  planning 
and  construction  permitting  remain  complex 

policymaking  with 

the 

4 

0%5%10%15%20%25%30%35%40%45%50%Value added / Totaleconomic outputValue added by foreign-owned companiesValue added in industryas percentage of totalEU 27Czechia 
 
  
 
to 

recent 

changes 

subsidies 

centralised  energy  sources,  such  as  nuclear 
and gas, is prioritised despite higher costs and, 
in the case of gas infrastructure, potential for 
stranded  assets.  Limited  social  acceptance  of 
renewables,  bottlenecks  in  the  grid  capacity 
and 
for 
renewables  run  the  risk  of  considerably 
delaying  future 
in 
improving  the  energy  efficiency  of  buildings 
remains  slow,  despite  a  diverse  set  of 
programmes 
renovations  and 
decarbonisation  of  heating.  Greenhouse  gas 
emissions  from  road  transport  have  been 
increasing,  exposing  households,  businesses 
and transport users in Czechia to the impact of 
the carbon price. 

investments.  Progress 

supporting 

Expanding tertiary education and 
improving labour market mobility 
are key to increasing productivity 

Higher education’s potential to transform 
Czechia  into  an  innovative  knowledge 
economy  is  underused.  Tertiary  educational 
attainment  (33.7%)  is  far  below  the  EU 
average (43.1%), in particular because of high 
drop-out  rates.  This  is  linked  to  Czechia’s 
shortage  of  general-education  secondary 
limited  permeability  between 
schools  and 
general  and  specialised  schools,  leading  to 
early  specialisation.  Furthermore,  educational 
performance  in  Czechia  is  strongly  dependent 
Finally, 
on 
Czechia  faces  structural  challenges  with 
teacher  shortages,  particularly 
in  science, 
technology,  engineering  and  mathematics 
(STEM)  subjects,  which  negatively  influences 
student performance. 

socio-economic 

background. 

and  slow,  becoming  a  key  constraint  on 
economic development (see Annex 6). 

Boosting innovation capacity and 
business dynamism 

Enhancing  innovation  and  improving  the 
business  environment  and  firms’  access 
to capital market financing are  essential 
for  improving  Czechia’s  competitiveness. 
Despite its robust industrial and research base, 
Czechia’s competitiveness and productivity are 
hindered by high energy costs, overly complex 
administrative  processes  and  a  fragmented 
innovation  environment.  Key 
impediments 
include  red  tape,  limited  links  between  the 
business  and  science  sectors  and  insufficient 
access to finance. Addressing these issues and 
implementing  reforms  and  investments  (see 
Annexes  3  to  8)  could  significantly  bolster 
business 
Czechia’s 
environment 
The 
functioning  of  the  capital  markets  could  be 
improved by adjusting regulations and helping 
retail  investors  to  more  easily  exploit  the 
untapped  potential  of  high  household  savings 
(see Annex 5). This would open up new sources 
of financing for Czech businesses. In turn, this 
would help drive economic growth and  enable 
the  economy  to  diversify  away  from  the 
traditional industrial sector. 

capacity, 
competitiveness. 

innovation 
and 

Accelerating decarbonisation will 
be key to lowering energy costs 
and will boost competitiveness 

Competitiveness  is  hindered  by  Czechia's 
high  energy  intensity  combined  with  the 
insufficient roll-out of renewables. Further 
investments  in  renewable  energy  sources  and 
in energy efficiency could help to lower energy 
costs  for  both 
industry  and  households. 
Despite  the  regulatory  reforms  supported  by 
the  recovery  and  resilience  plan  (RRP),  the 
deployment  of  renewable  energy  sources, 
especially  in  wind,  and  flexibility  of  the  grids 
remain  low.  Investment  in  more  traditional, 

5 

 
women,  with  the  gender  employment  gap  for 
women between 25 and 34 being 36.1 pps in 
2024 (against an EU average of 25.2 pps). 

jobs  remain 

Czechia’s  labour  market  delivers  high 
employment,  but  job  transitions  to  more 
productive 
low  and  the 
labour  market  participation  of  certain 
social  groups  could  be  higher.  Specifically, 
in  2024,  Czechia  had  an  82.3%  employment 
rate  (against  an  EU  average  of  75.8%)  (see 
Annex  10),  while 
rate 
the 
exceeded  3.3%  (against  an  EU  average  of 
2.4%).  Furthermore,  the  Czech  labour  market 
exhibits  one  of  the lowest  job  transition  rates 
among  EU  Member  States,  with  only 
in  Czechia 
approximately  1%  of  workers 
changing jobs in the course of a year (against 
an  EU  average  of  2.3%).  A  notable  barrier  to 
labour  mobility  is  the  affordability  of  housing 
in  cities.  Finally,  the  employment  of  certain 
groups  could  be  higher,  for  example  young 

job  vacancy 

Box 1: 

Barriers to private and public investment 

Czechia’s net private investment decreased from 4.8% of GDP in 2023 to 3.8% in 2024. Public 
investment  declined  as  a  percent  of  GDP  from  4.9%  in  2023  to  4.7%  in  2024.  Several 
barriers contribute to this development: 

• 

• 

Infrastructure  deficits.  Persistent  gaps  in  essential  infrastructure  –  particularly  in 
housing,  energy  and  transport  (e.g.  lack  of  high-speed  trains)  –  hamper  economic 
growth and deter investment. 

Labour and skills shortages. Tight labour market conditions, labour regulation and 
insufficient  skilled  labour  migration  from  abroad  deepen  skills  mismatches,  which 
prevents  the  expansion  of  businesses  and  is  considered  a  significant  obstacle  to 
investment. 

•  High costs of doing business. High energy costs, geopolitical uncertainty, excessive 
red  tape,  complexity  of  R&D  deductibles,  high  interest  rates,  and  underdeveloped 
venture capital constrain access to finance  for businesses and undercuts their ability 
to invest. 

lacks  a 

Czechia 
long-term  planning  document  for  nationally  funded  public 
investments, ensuring prioritisation and monitoring. Additionally, deployment of revolving 
financial instruments supported from the Cohesion Funds remains low (2.36% compared to 9% 
at EU level) and fragmented across sectors, exacerbating Czechia’s ability to transition towards 
making  greater use  of  these  funds  as opposed  to  grants.  In  this regard, financial  instruments 
are better suited to increasing economic incentives and a return on investment, while mobilising 
private finance. Clean technologies, energy efficiency, housing and SME support are examples of 
areas where the use of financial instruments could be scaled up. Absence of a stronger financial 
instruments hub also remains a challenge. 

The implementation of the recovery and resilience plan of Czechia is well on its way 
but faces considerable challenges. At present, Czechia has fulfilled 38% of the milestones and 
targets in its RRP. The absorption of recovery and resilience funds is particularly constrained by 
bottlenecks  including  limited  administrative  capacity  at  some  of  the  implementing  bodies  as 
well as suboptimal use of financial instruments as detailed above. This is particularly visible in 
areas such as the green and digital transitions.   

It remains important to accelerate the implementation of cohesion policy programmes. The mid-
term review offers opportunities to speed up progress and better address EU strategic priorities 
related to competitiveness, defence, housing, water resilience and the energy transition. 

Czechia  has  not  yet  taken  advantage  of  the  opportunities  provided  by  STEP  under  Cohesion 
Policy to reallocate resources towards this priority. However, it can still support the development 
or  manufacturing  of  critical  technologies  in  the  areas  of  digital  and  deep  tech,  clean  and 
resource efficient technologies, and biotechnologies. 

6 

 
 
 
Box 2:  UN Sustainable Development Goals (SDGs) 

Czechia performs well when it comes to SDGs on macroeconomic stability (SDGs 8) and fairness 
(SDGs 1 and 10) but is moving away from the targets for SDGs on quality education (SDG 4) and 
health and wellbeing (SDG 3). While Czechia has made progress on environmental sustainability, 
it  remains  below  the  EU  average  on  climate  action  (SDGs  12  and  13)  due  to  higher  net 
greenhouse gas emissions per capita and a lower share of renewable energy in gross final energy 
consumption.  Despite  improvements,  challenges  also  remain  as  regards  gender  equality, 
particularly  in  employment  and  leadership  positions  (SDG 5),  and  access  to  affordable  energy 
(SDG 7).  

7 

 
 
 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

the business and science sectors remain weak. 
There  is  room  for  improvement  as  regards 
how public support for innovative companies is 
organised.  Efforts  to  improve  this  should  be 
combined with initiatives to make the R&D tax 
deduction  more  attractive  for  companies  and 
involve less red tape (for R&D expenditure see 
Graph  2.2).  Only  a  third  of  companies  which 
are  consistently  engaged  in  R&D  use  indirect 
public  support 
in  the  form  of  R&D  tax 
incentives, while small and young firms utilise 
the 
(see 
Annexes  2  and  3).  Czechia  has  taken  some 
legislative  steps 
improve  knowledge 
transfer  and  would  benefit  from  swiftly 
adopting 
implementing  measures 
proposed  in  2024(9) as  well  as  the  expert 
recommendations of the policy support facility 
project  on  the  reform  of  the  technology 
transfer offices (see Annex 3). 

incentives  even 

less  frequently 

and 

to 

Graph  2.1:  Czech  summary 
index 

innovation 

Note:  The  line  chart  shows  the  development 
of Czechia's innovation performance over time, 
relative to the performance of the EU-27. 

Source: Eurostat, European Commission 

(9)  Referred to in the national reform programme 2024. 

Strengthening innovation and the 
business environment 

base, 

factors, 

Competitiveness  and  productivity  are 
held  back  by  a  suboptimal  innovation 
environment  and  excessive  red  tape. 
industrial  and 
robust 
Despite  having  a 
research 
and 
research 
complex 
innovation  (R&I)  governance  and  fragmented 
research  capacities  limit  the  effectiveness  of 
R&I  investment  and  capacity  to  set  clear 
priorities  and  pursue  R&I  reforms.  Czechia’s 
innovation  capacity  and  productivity  are  also 
hindered by a shortage of skilled workers and 
a complex bureaucracy. The latter is influenced 
by,  among  other 
incorrect 
transposition  of  EU  directives,  with  Czechia 
ranking  second  highest  in  the  EU  in  that 
respect  in  the  past  five  years.  Czechia  would 
benefit  from  reviewing  the  research  and 
innovation  governance  policy  coordination 
system  for  R&I  with  a  view  to  clarifying  the 
responsibilities  of  the  ministries  and  bodies 
involved  in  the  R&I  sector  as  regards  cross-
cutting  priorities.  Also,  conditions  in  terms  of 
permit  duration,  family  reunification  and  job 
mobility  for  highly  skilled  workers  from  non-
EU  countries  are  a  limiting  factor.  Czechia 
lacks  a  dedicated  institution  which  promotes 
productivity-enhancing  policies  and  would 
benefit from setting up a national productivity 
board. 

the 

improvements 

Despite  significant 
in 
recent  years,  Czechia  lags  behind  on 
innovation.  Czechia  is  a moderate innovator, 
with  a  performance  of  just  under  90%  of the 
EU  average  (see  Graph  2.1).  The  innovation 
activity  of  Czech  companies  continues  to  lag 
markedly  behind.  This  is  visible  in  the  low 
number  of  innovation  outputs  including  the 
number of patent applications, and the uptake 
of  emerging  technologies.  The  links  between 

8 

 
 
 
 
 
still 

consider 

Czechia has made some progress towards 
reducing  administrative  barriers  and 
digitalising  public  services,  but  further 
efforts  would  be  beneficial.  Specifically, 
the 
72%  of  businesses 
complexity of administrative processes to be a 
significant  barrier  to  doing  business  (vs  66% 
EU  average) (10).  To  improve  the  situation, the 
Czech government adopted three packages (11) 
aiming  to  reduce  bureaucracy,  with  a  similar 
package being adopted by the Czech National 
Bank (12).  To  improve  the  situation  further, 
more  systemic  implementation  of  the  ‘think 
small first’ and ‘digital first’ principles, coupled 
with 
impact  assessments  and 
regular evaluations of legislation with a strong 
focus on small and medium-sized enterprises, 
could help. Similarly, continued digitalisation of 
public services could pave the way for a more 
business 
growth-friendly 
environment.  Furthermore,  despite 
recent 
changes,  the  growth  potential  of  start-ups  is 
hindered  by  a  burdensome  approach  to 
employee stock-option plans, resulting in their 
limited  use (13).  Reforming  the  scheme  in  line 
with  business  proposals  could  increase  its 
uptake (see Annex 4). 

regulatory 

nurturing 

and 

Spatial  planning,  construction  permitting 
processes  and  fragmented  municipal 
governance 
significant 
represent 
administrative  barriers.  These  hold  back 
businesses  by  slowing  down  and  raising  the 
costs  of  commercial  development  as  well  as 
indirectly raising the costs of energy (via slow 
modernisation  of  the  energy  infrastructure) 
and  reducing  the  mobility  of  labour  (via 
inadequate  supply  of  affordable  housing). 
These  are  key  contributors  to  Czechia  having 
permitted  the  seventh  smallest  construction 
area  in  the  EU  in  2023  per  capita.  Spatial 

(10)  Eurobarometer, Businesses’ attitudes towards 
corruption in the EU in 2024, July 2024. 

(11)  Vláda schválila třetí antibyrokratický balíček připravený 
ministrem Michalem Šalomounem | Vláda České 
republiky, May 2024. 

(12)  ČNB omezuje zbytečnou byrokracii. Do konce roku zruší 
36 pravidel a výkazů - Česká národní banka, February 
2025 

(13)  91% of start-ups in Czechia do not use a scheme of 
this kind according to start-up representatives:, April 
2024. 

9 

the 

especially 

planning  rules  are  particularly  burdensome  in 
large cities, where updating an urban plan can 
take  over  a  decade.  Reform  is  needed  to 
accelerate 
by 
process, 
redesigning  competencies  and  differentiating 
planning  requirements  between  small  and 
large  settlements.  Such  measures  could 
improve 
significantly 
and 
in  urban  development.  On 
responsiveness 
construction  permitting,  while  progress  has 
been  made  on  the  legal  framework  and,  to 
some  extent,  on  digitalisation,  the  positive 
impacts  are  not  yet  visible  on  the  ground. 
Further 
the 
capacity  and  management  of  construction 
offices could further accelerate the process. 

improving  digitalisation  and 

efficiency 

Unlocking funds to allow 
companies to thrive 

invest 

funds  support 

The  potential  to  boost  competitiveness 
through better access to finance and the 
use of EU funds via financial instruments 
and 
in  structurally  affected  regions 
remains  untapped.  Numerous  instruments 
funded by the Recovery and Resilience Facility 
(RRF)  or  other  EU 
the 
competitiveness  of  companies,  such  as  by 
providing  new  digital  public  services  that 
facilitate  the  communication  of  businesses 
with the state (for example the entrepreneurial 
portal). In addition, the Czech authorities could 
make  use  of  the  incentives  provided  by  the 
strategic  technologies  for  Europe  platform 
in  the  development  or 
(STEP)  to 
manufacturing  of  critical 
to 
enhance EU’s industrial competitiveness. In the 
area of access to finance, the RRF supports the 
roll-out 
instruments 
implemented  by  the  National  Development 
Bank  and  the  European  Investment  Fund  with 
a view to supporting small  and medium-sized 
transition  or 
enterprises 
the  green 
in 
enhancing 
institutional 
participation 
capital.  However, 
venture 
in 
investors 
implementation  delays 
the  slow 
reflect 
progress  made 
in  mobilising  the  funding 
necessary  for  decarbonising  and  digitalising 
the  Czech  economy.  In  addition,  losses  in 
competitiveness  have  been  particularly  visible 
in  ‘structurally  affected’  regions  (Karlovarský, 

technologies 

financial 

new 

of 

of 

 
 
Ústecký  and  Moravskoslezský  regions).  These 
losses have included net out-migration among 
young  people,  i.e.  more  young  people  leaving 
than moving into the region. Effective support 
for  building  up  the  administrative  capacity  of 
these regions is missing. 

Leveraging  public  funding 
is  key  to 
mobilising  private  finance  to  support 
competitiveness  and  decarbonisation  of 
businesses.  The  National  Development  Bank 
(which  was  assessed  in  2023  and  recently 
became an implementing partner for InvestEU) 
has  limited  power  (compared  to  its  EU  peers) 
and  insufficient  administrative  capacity  (see 
Annex  6).  Measures  to  strengthen  the  role  of 
the  National  Development  Bank  would  help  it 
to  achieve  its  potential  in  addressing  market 
failures  and  the  lack  of  risk  capital  to  boost 
innovation,  without  crowding  out  private 
financial 
the 
institutions.  Building 
experience  with  the  RRF,  and  as  part  of  a 
much-needed transition away from reliance on 
grant  support,  better  coordination  with  the 
private  financial  sector 
is  essential.  For 
example,  putting 
in  place  simplified  and 
uniform  conditions  of  access  to  financing 
programmes  for  private  operators  can  reduce 
the  unnecessary  costs  incurred  by  financial 
institutions when designing products. 

on 

Czech firms do not have sufficient access 
to  savings  from  abundant  households.  In 
2024,  the  main  sources  of  business  funding 
were internal firm financing, followed by bank 
listed  shares  and  bonds 
lending,  while 
represented  only  6.6%  of  funding  sources. 
While 
loans  to  non-financial  corporations 
declined as a percentage of GDP (from 19.6% 
in  2021  to  17.9%  in  Q3-2024),  a  timid 
recovery  in  credit  growth  due  to  easing  of 
interest 
in  2025. 
Furthermore,  Czechia’s  capital  market  is  less 
developed  compared  to  other  EU  countries 
(with  the  stock  market  capitalisation  at  9.5% 
of  GDP  in  Q3-2024  compared  with  the  EU 
investor 
average 
participation 
low,  albeit  gradually 
growing mainly through investment funds. The 
recently  adopted  legal  framework  for  a  long-
to 
term 
demonstrate  a  material  positive  effect  on 
attracting  new  investments  –  rather  than 

investment  product  has 

expected 

is  also 

69.3%). 

Retail 

rates 

yet 

of 

is 

redirecting  the  existing  ones  –  from  retail 
investors.  Further  policy  action  is  essential  to 
promote retail investment in the Czech capital 
markets, 
including  by  strengthening  retail 
investor  trust  and  improving  financial  literacy 
(see  Annex  5).  Ensuring  an  appropriate 
incentive structure and the availability of low-
cost,  well-diversified 
investment  products 
suited  for  retail  investors  may  also  prove 
important. 

markets 

Less-developed  local  venture-capital  and 
further 
growth-capital 
compound the lack of funding sources for 
innovation,  which  is  a  key  element  for 
competitiveness.  Private  equity  and  venture 
capital  assets  are  significantly  below  EU 
averages  (with  averages  of  0.2%  and  0.03% 
of  GDP 
in  2021-2023,  compared  to  EU 
averages  of  0.6%  and  0.08%).  Domestic 
institutional  investors,  such  as  insurers  or 
pension  funds,  provide  little  in  the  way  of 
funding  for  start-ups  and  venture-capital 
investors.  Lack  of  funding  and  no  bespoke 
legal framework tailored to the specific needs 
of  start-ups  limit  the  prospects  for  setting up 
and  subsequently  scaling  up  innovative  start-
ups  with  no  or  limited  profitability.  However, 
recent policy changes (14) may facilitate a shift 
towards 
conservative 
strategies and could prove to be a first step in 
promoting  start-up  funding,  even  though  it 
may  need  to  be  complemented  by  further 
policy actions in future (Annex 5). 

funds  with 

less 

(14)  Act No 417/2024 introducing an ‘alternative 

participation fund’ providing more flexibility in the 
investment policies of pension funds to include riskier 
investments and increased mobility of the participants 
between types of pension funds. The recent 
amendment of the Income Tax Act also represented a 
first step towards improving the attractiveness of 
Czechia’s employee stock-option framework. 

10 

 
 
Graph  2.2:  R&D  expenditure  as  %  of  GDP 
by sector, 2023 

Source: Eurostat, European Commission 

Public procurement systems need 
to address deficiencies, including 
limited competition and corruption 
risks 

to 

More competition is key to making public 
procurement systems more cost-effective 
and  efficient.  The  implementation  of  the 
RRF-funded  public  procurement  strategy  and 
its  action  plan,  adopted  in  2024,  is  still  in  its 
early  stages,  with  limited  effects  on  the 
deficiencies  identified.  These  include  a  low 
number of companies submitting tenders, with 
a high proportion of single bids (41% over the 
last five years compared to an EU average of 
26%)  and 
insufficient  expertise  among 
professionals  involved  in  public  procurement. 
the  expertise  of 
Measures 
professionals  involved  in  public  procurement 
and 
to  develop  central  purchasing  and 
collaboration at the regional level in order also 
to  support  the  smaller  contracting  authorities 
are  essential  for  making  public  procurement 
more  efficient  and  cost-effective  (See  Annex 
4). 
risks 
competition, 
continue 
discouraging  potential  bidders.  The  risk  of 
collusion  and  conflicts  of  interest  persists  in 
the  public  procurement  system  and  fuels  a 
of 
among 
high 
insufficient  detection  and  enforcement  of 
corruption (see Annex 6). 

corruption-related 

In  addition, 

companies 

undermine 

perception 

improve 

to 

11 

 
 
 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

Accelerate decarbonisation to 
boost competitiveness 

than 

Czechia’s  low  share  of  renewables  in  its 
electricity  generation  and 
its  heavy 
reliance  on  coal  puts  its  economy  at  a 
competitive  disadvantage.  In  2024,  only 
15.9%  of  the  electricity  generated  in  Czechia 
came  from  renewable  sources,  down  by  0.5 
percentage  points  compared  with  2023,  and 
well  below  the  EU  level  of  47.4%.  Coal  and 
nuclear  accounted  for  more 
three 
quarters  of  the  total  electricity  generated 
(35%  and  40%  respectively).  While  nuclear  is 
currently the predominant source of electricity 
generation, coal still plays an important role in 
the  power  mix,  putting  upward  pressure  on 
electricity prices. Czechia is making progress in 
its  energy  transition  by  replacing  coal  with 
nuclear  power  and  renewable  energy  sources 
(RES). Czechia is also taking steps to diversify 
nuclear fuels away  from Russia. However, the 
planned  increase  of  nuclear  capacity  is  not 
expected  to  become  operational  until  the  late 
2030’s. In the meantime, a rapid expansion of 
renewables  would  help  ensure  security  of 
supply  and  affordable  prices.  Czechia 
is 
currently  discussing  an  amendment  to  the 
Energy  Act  called  Lex  GAS  that  introduces  a 
mechanism  for  coal  power  plants  which  are 
already  closed  to  start  operating 
in  an 
emergency. This could lead to legal uncertainty 
and  risks  causing  speculation  on  the  coal 
phase-out. 

Czechia’s  reliance  on  fossil  fuels  makes 
its  energy-intensive  economy  highly 
vulnerable to fluctuations in coal and gas 
prices.  Following  the  energy  crisis,  prices  in 
Czechia  have  stabilised  at  levels  higher  than 
those  of  pre-crisis  years,  mirroring  the  EU 
average.  Industrial  energy  prices,  which  were 

respectively(15). 

once relatively stable, have risen substantially 
due  to  increases  in  gas  markets  prices  and 
consequent  impact  on  wholesale  electricity 
prices  (see  Graph  3.1).  However,  small  and 
medium-sized industrial consumers in Czechia 
still  pay  gas  and  electricity  prices  in  line  with 
the  EU  average,  at  EUR 77/MWh  and 
EUR 209.9/MWh 
Energy-
intensive industries in Czechia have also been 
impacted by wholesale market price increases, 
in  particular  for  electricity  prices,  reaching  a 
peak  EUR 237.5/MWh  in  2023 (in  2024,  price 
went  down  to  EUR  201.2/MWh(16)),  which  is 
above  the  EU  average.  The  energy  crisis  has 
also  affected  households,  with  energy  prices 
at  higher  levels,  although  in  line  with  the  EU 
average.  In  2024,  natural  gas  prices  for 
households  in  Czechia  were  EUR 110/MWh, 
while electricity prices stood at EUR 280/MWh. 
This  was  driven  primarily  by  the  energy 
component  (where  coal  and  gas  are  the main 
drivers) but was also caused by a higher level 
of  electricity  taxation  in  comparison  with  gas 
(Annex  8).  Further  expansion  of  renewables 
and  lower  levels  of  electricity  taxation  would 
cause  electricity  prices  to  fall,  making  energy 
more  affordable  in  the  country. The  effective 
carbon rate is also lower than the EU average 
(Annex  2  and  8),  driven  by  the  low  fuel 
taxation 
(gasoline,  gas  and  petroleum 
products).  This  disincentivises  electrification, 
perpetuates reliance on fossil fuels and makes 
decarbonisation less cost-effective. 

(15)  For small and medium-sized industrial consumers, the 
EU average in 2024 is EUR 73.6/MWh for gas prices 
and EUR 197/MWh for electricity prices. 

(16)  For energy-intensive industries, the EU average is 

EUR 53/MWh for gas prices – the same price level as 
Czechia – and EUR 149/MWh for electricity prices. 

12 

 
 
 
Graph 3.1: Average industrial end-user gas 
(top) and electricity (bottom) prices 

battery  energy  storage  systems.  These 
systems  can  be  part  of  utility  photovoltaic 
plans or be stand-alone systems which provide 
ancillary  services  for  the  grid  and  energy 
flexibility  services.  Following  the  adoption  of 
Lex  RES  III,  further  efforts  to  revise  the  tariff 
structure,  which  have  been  pending  for  many 
years,  would  encourage 
in 
solutions  which  favour  decarbonisation  and 
would  better  address  dynamic  pricing  (see 
Annex 8). 

investment 

Graph 3.2: Installed capacity of main sources 
of renewables and national target for 2030 
(in GW) 

(1) prices include 3 components: the cost of energy and 
supply, network costs and taxes and levies excluding VAT 
(2) For gas, medium industrial consumers (band I3, 
10.000-100.000 GJ annual consumption) and large 
industrial consumers ( (band I5, 1-4 million GJ annual 
consumption) 
(3) For electricity, medium industrial consumers (ID band, 
annual consumption of 2 000 - 20 000 MWh) and large 
industrial consumer (IF band, annual electricity 
consumption between 70 000 - 150 000 MWh) 
Source: Eurostat 

Source: IRENA and CZ NECP 

In  2024, 

the  Lex  RES 

its 
renewables(17) 

legislative 
improved 
Czechia  has 
but 
framework 
for 
progress  on  storage  and 
flexibility 
remains  slow.  Lex  RES  I  streamlined  the 
permitting  process  with  a  focus  on  smaller 
installations. 
II 
amendment introduced a significant regulatory 
overhaul, establishing a framework for energy 
communities,  enabling  energy  sharing  among 
consumers, and mandating the creation of the 
Electricity  Data  Centre  (EDC),  a  new  market 
entity  responsible  for  managing  electricity 
sharing  within  the Czech electricity  system.  In 
April 2025, the Lex RES III amendment brought 
to  the  regulatory  framework  the  last  pillar  of 
II.  This  will  enable  households  and 
RED 
companies 
to  better  manage  electricity 
production  and  consumption,  e.g.  by  using 

‘renewable 

is  key  to  further 

acceleration 
Designating 
areas’ 
investment, 
especially in wind. Czechia is currently laying 
the  designation  of 
the  groundwork 
for 
renewable  acceleration  areas,  aiming 
to 
deploy  at  least  2.5GW  of  solar  and  wind 
capacity (see Graph 3.2). This will require close 
collaboration with local communities to ensure 
their  involvement  and  ownership.  Delays  in 
legal  framework  may  deter 
adopting  the 
and 
by 
investors 
instability  in  the  renewable  energy  sector.  By 
contrast,  swift  adoption  could  finally  unlock 
the  building  of  additional  capacity  for  wind 
energy,  currently  below  potential.  Moreover, 
the  establishment  of  a  digital  one-stop  shop 
for  renewable  projects,  which  includes  the 
connection process, faces delays. 

uncertainty 

creating 

(17)  The legislative reforms on renewables are part of 

Czechia’s national recovery plan. 

Introducing  long-term  contracts  can  play 
a  crucial  role  in  bringing  stability  and 

13 

02040608010012020172018201920202021202220232024EUR/MWhEU-27 (medium industrial consumer)EU-27 (large industrial consumer)Czechia (medium industrial consumer)Czechia (large industrial consumer)05010015020025020172018201920202021202220232024EUR/MWhEU-27 (medium industrial consumer)EU-27 (large industrial consumer)Czechia (medium industrial consumer)Czechia (large industrial consumer)0246810121420152016201720182019202020212022202320242030in GWWindSolarphotovoltaicinstalledtarget 
  
 
  
generated by a 1-2 MW wind turbine operating 
at  full  capacity  for  about  6-12  months. 
Czechia is currently taking steps to implement 
the second phase of the EDC to allow also for 
flexibility  services  but  delays  in  IT  public 
procurement  may  put  at  risk  the  timely 
completion  of  this  investment.  The  slow  roll-
out  of  smart  meters  is  a  key  obstacle  to 
consumer empowerment and energy sharing. 

Map 3.1:  Electricity Data Centre and its 
functionalities 

Source: Electricity Data Centre 

Czechia’s  distribution  grid  network  faces 
significant  challenges,  which  hold  back 
the  pace  of  investments  in  RES.  The 
increase  in  the  supply  of  renewables  requires 
substantial investments in the distribution grid 
to  expand  and  modernise  the  network  and 
create  solutions  to  make  it  more  efficient.  To 
address  the  lengthy  connection  queues,  the 
Lex  RES  III  amendment  introduced  a  binding 
maximum 
timeline  for  RES  project  grid 
connections. Although it is too early to assess 
the  impact  of  this  measure,  given  the  size  of 
the  challenge,  further  measures  should  be 
considered to reduce the number of projects in 
the queue. Such measures could, in particular, 
focus on more mature projects or on removing 
potentially 
Financial 
commitments  could  be  introduced  to  reserve 
allocated  grid  capacity  and  regular  checks 
could  be  conducted  on  waiting  lists  to  assess 
project progress towards key milestones. Such 
measures  would  make  it  possible  to  manage 
waiting  lists more dynamically, allowing slow-
moving or stalled projects to be removed. 

speculative 

bids. 

in  Czechia 

predictability to the market, incentivising 
further investment in renewables. The use 
of  power  purchase  agreements  (PPAs)  and 
contracts for difference (CfDs) is currently very 
(see  Annex  8).  The 
limited 
development  of  the  PPA  market,  in  particular, 
could  enable  the  growth  of  renewable  energy 
projects beyond traditional regulatory schemes 
It  could  also  allow 
and  period  auctions. 
renewable energy to be commercialised in the 
market, focusing on power self-generation and 
bilateral  contracting with end-consumers. This 
for  energy-
would 
intensive 
decarbonise. 
Furthermore,  both  PPAs  and  CfDs  would 
provide  consumers  with  protection 
from 
energy  price  volatility.  This  would  ensure 
certainty  in  energy  costs,  while  also  enabling 
companies  to  manage  their  revenue  streams 
effectively.  They  would  thereby  be  able  to 
and 
energy 
optimise 
investment  returns.  The  recent  adoption  of 
retroactive  cuts  dividends from  feed-in-tariffs 
for  solar  projects  built  between  2009  and 
2010 creates unpredictability for investors and 
may delay future projects. 

create  opportunities 
to 

production 

industries 

their 

Delays  in  the  implementation  of  the 
Electricity  Data  Centre  can  hinder  the 
quick  uptake  of  electricity  sharing  and 
the  benefits  it  offers  to  consumers.  The 
Electricity  Data  Centre  (EDC)  (see  Map  3.1) 
plays  a  crucial  role  in  overseeing  the  energy 
sharing process, collecting and analysing data 
on  electricity  usage  and  generation.  To 
facilitate this, every consumption and delivery 
location  participating  in  energy  sharing  must 
be  equipped  with  a  smart  meter,  which 
measures 
and 
production  at  15-minute  intervals.  The  EDC 
collects  and  manages  data  on  electricity 
consumption,  production  and  trading  daily, 
providing  a  comprehensive  overview  of  the 
energy-sharing  landscape.  Since  its  inception, 
more  than  13 000  sharing  participants  have 
already  signed  a  contract  with  the  EDC, 
sharing  105.49 MWh  of  electricity  with  each 
other(18).  This  is  equivalent  to  the  energy 

consumption 

electricity 

(18)  Electricity Data Centre, press release ‘From its 

establishment to over 1 000 MWh of shared electricity: 
The Electricity Data Centre celebrates its first year of 
existence’, January 2025. 

14 

 
 
 
 
 
for  clean 

tech 
Insufficient  support 
manufacturing  hinders  competitiveness 
and  scale-up  opportunities  in  multiple 
sectors.  Energy  storage  solutions,  whose 
deployment  remains  at  an  early  stage,  play  a 
key  role  in  stabilising  electricity  grids,  and 
Czechia  could  capitalise  on  the  opportunities 
arising  from  this  transition.  The  country  is 
emerging as a significant hub for battery and 
storage technologies. However, the absence of 
a regulatory framework for the battery sector 
puts  Czech  companies  in  the  sector  at  a 
disadvantage (see Annex 7). A dedicated clean 
tech  manufacturing  regulatory  framework, 
including  incentives  for  R&D,  manufacturing 
facilities,  and  workforce  development,  could 
help  increase  manufacturing  capacity  and 
leverage  Czechia’s  potential  to  become  a  key 
player in the lithium and batteries markets. As 
manufacturing  depends  heavily  on  imports  of 
critical  raw  materials,  Czechia  is  particularly 
vulnerable  to  supply  chain  disruption.  The 
lithium  and  manganese  deposits  in  Czechia 
that  were  recently  declared  deposits  of 
strategic 
importance  present  a  significant 
opportunity for sustainability and resilience. 

Czechia lags behind in the uptake of zero-
emission vehicles and would benefit from 
accelerating  clean  mobility  measures  to 
curb  rising  transport  emissions.  Despite 
importance  of  the  Czech  automotive 
the 
industry  to  Czechia’s  economy,  the  sector  is 
expected  to  face  competitiveness  issues  and 
low demand in the domestic market for zero-
emission vehicles. As the sector would benefit 
from  speeding  up  its  transformation  (see 
Annex 7), the uptake of zero-emission vehicles 
lags  far  behind  the  EU  average.  According  to 
Eurostat,  newly 
zero-emission 
passenger  cars  represented  only  3.1%  of  all 
new  passenger  cars  registered  in  Czechia  in 
2023, whereas the EU average is 14.5% of all 
cars  registered.  Moreover,  according  to  the 
European  Environment  Agency, 
transport 
emissions in Czechia have risen by nearly 72% 
since  1990  and  represent  nearly  20%  of  all 
Czech  emissions.  Czechia  has  been  making 
strides in reducing its transport emissions and 
increasing  zero-emission  vehicles  deployment 
through  measures  in  the  Czech  recovery  and 
resilience plan (RRP). In particular, Czechia has 
adopted  the  clean  mobility  action  plan  and  is 

registered 

boosting deployment of zero-emission vehicles 
through  RRP  investments  in  the  public  sector, 
public 
transport  and  private  companies. 
However, it would be beneficial if the financial, 
funding 
regulatory  measures  and 
fiscal, 
schemes outlined in the action plan were to be 
implemented  more  quickly.  These  measures 
should  include  strengthening  incentives  for 
zero-emission  vehicles,  expanding  charging 
and  hydrogen  refuelling  infrastructure,  and 
carefully  designing  subsidies  and  taxation  to 
avoid 
inefficient 
outcomes.  Furthermore,  Czechia  has  a  well-
developed  rail  network  and  both  the  RRP  and 
cohesion  funds,  and  the  Modernisation  Fund 
are also supporting substantial investments in 
sustainable  mobility.  However,  additional 
investments 
transport 
infrastructure  –  especially  in  rail  and  public 
transport  to  reduce  Czechia’s  car  dependency 
– are needed. 

regressive  effects  and 

low-emission 

in 

in 

sources 

installation 

renovations 

Progress 
the  energy 
improving 
efficiency  of  buildings  remains  slow, 
despite  a  diverse  set  of  programmes 
supporting 
and 
decarbonisation  of  heating.  Programmes 
like  the  new  green  savings  (Nová  Zelená 
Úsporám)  programme  have  helped  thousands 
of  households  to  invest  in  energy-savings 
measures, such as renovations, replacement of 
of 
and 
heating 
photovoltaics.  Despite  these  measures,  the 
climate-corrected final energy consumption of 
households  fell  by  only  1.26%  between  2018 
and  2022.  This  is  in  part  due  to  the  high 
ratio (19)  which 
electricity-to-gas 
price 
encourages households to continue to use gas 
for  heating  and  disincentivises  them  from 
switching  to  heat  pumps  and  electrification. 
Intensifying efforts to decarbonise heating and 
provide  support  to  renewable  heating  and 
cooling  would  positively  impact  the  national 
economy. Czechia is currently home to at least 
12  factories  specialised  in  the  manufacturing 
of  heat  pumps  and  there  is  an  increasing 

(19)  The electricity-to-gas ratio is a product of a fiscal 

burden disproportionately skewed towards electricity. 
Excluding taxes and levies, electricity costs 2.9 times 
more per unit than gas –  after taxes and levies, this 
ratio increases to 3.3 (considerably higher than the EU 
average of 2.6). 

15 

 
 
potential  in  this  area.  These  efforts  will  also 
help  Czechia  achieve  its  2030  target  of 
reducing  building  energy  consumption  by  8% 
compared to 2020, as outlined in its long-term 
renovation strategy. 

The 
renovation  of  public  buildings 
remains a challenge. Especially in cities like 
Prague, historical buildings are more expensive 
to  renovate  and  require  longer  permitting 
procedures.  Introducing  innovative  financial 
instruments,  such  as  energy  performance 
contracts,  would  help  to  speed  up  renovation 
of  public  buildings  and  activate  and  leverage 
private capital for energy savings investments. 
A recently proposed amendment to budgetary 
if  adopted,  would  allow  central 
rules, 
government  bodies  to  make  use  of  supplier 
finance to fund EPC renovations. 

Improve climate adaptation to 
protect long-term competitiveness 
and ensure economic prosperity 

like 

faces 

climate 

Insufficient 

significant 

climate 
Czechia 
adaptation  challenges,  with  substantial 
economic  impacts  from  extreme  weather 
floods,  droughts,  and 
events 
to 
heatwaves,  which  are  expected 
worsen. 
resilience 
threatens  the  competitiveness  of  the  Czech 
economy.  There  is  the  prospect  of  increased 
economic  harm  due  to,  among  other  things, 
stranded  assets,  health-care  costs,  losses  to 
labour  productivity,  decreased  agricultural 
productivity, water shortages and supply chain 
disruptions.  Estimates  show  that  between 
losses 
1980  and  2023 
amounted 
low 
insurance  coverage.  The  costs  of  inaction 
exceed  the  costs  of  action,  and  especially  in 
the  medium  to  long  term,  climate  adaptation 
will generate economic benefits (20). 

to  EUR 18.5  billion,  with 

climate-related 

and 

Developing 
comprehensive 
adaptation  strategy 

climate 

implementing 

a 
change 
is  crucial.  The 

(20)  Národní akční plán adaptace na změnu klimatu 

16 

is 

fragmented,  with 

implementation  of  the  current  adaptation 
framework 
isolated 
policies tackling separate environmental areas 
rather  than  there  being  a  coherent  set  of 
mutually  reinforcing  measures.  Particularly 
problematic  is  the  lack  of  a  clear  governance 
framework  and  governmental  responsibilities 
are  poorly  defined.  To  address  these  issues, 
Czechia should (i) clarify responsibilities within 
and  between  relevant  ministries,  (ii)  finalise 
the  climate  risk  assessment  and  use  it  to 
update  the  national  adaptation  strategy  and 
action  plan,  (iii)  increase  coordination  among 
actors  at  national,  regional  and  local  levels 
and  (iv)  utilise  synergies  between  policies 
tackling  separate  environmental  aspects  to 
comprehensively build climate resilience. 

on 

dependent 

Water resilience is a significant challenge 
for  Czechia,  with  its  water  resources 
atmospheric 
highly 
precipitation  and  with  ecological  and 
chemical  status  of  surface  water  and 
groundwater  bodies  deteriorating  (even 
though  it  is  partially  due  to  improved 
monitoring, the downward trend is clear). 
Water  stress  causes  economic  harm  and 
hampers  the  competitiveness  of  not  only 
exposed  sectors,  such  as  agriculture,  forestry 
or industry, but also the economy as a whole. 
For instance, it can threaten the stability of the 
energy supply due to the reliance on water in 
operating  nuclear  and  coal  power  plants. 
Tackling  the  main  sources  of  pressure,  like 
industrialised  agriculture,  industrial  emissions, 
(ensuring 
untreated 
and 
compliance  with 
the  Urban  Wastewater 
Treatment  Directive),  would  improve  water 
resilience.  Strengthening  sustainable  water 
management, 
nature-based 
prioritising 
solutions,  and  restoring  rivers  will  improve 
flood  resilience,  bringing  associated  benefits 
for climate adaptation and nature protection. 

wastewater 

and 

resilience 

The  conservation  of  biodiversity  and 
ecosystems  plays  an  important  role  in 
long-term 
climate 
economic stability. With 44% of Czech gross 
value added dependent on ecosystem services, 
equal  to  the  EU  average,  nature  degradation 
Czechia’s 
risks 
poses 
competitiveness and economic security (based 
on EU-level data, for sectors like agriculture or 

serious 

to 

 
 
forestry  the  level  of  dependence  reaches 
100%,  see  Annex  9).  But  ecosystems  in 
Czechia remain under pressure: a few habitats 
have  a  good  conservation  status,  and  the 
coverage  of  protected  areas  is  below  the  EU 
average.  Updating  the  national  biodiversity 
strategy,  increasing  investment  in  biodiversity 
conservation, and promoting sustainable land-
use practices to reduce habitat fragmentation 
and enhance species and habitat conservation 
would help address this challenge. 

Czechia  faces  challenges  in  achieving  its 
land  use,  land-use  change  and  forestry 
(LULUCF)  2030  targets  and  promoting 
sustainable  agriculture.  These  are  relevant 
for  reducing  greenhouse  gas  emissions  and 
mitigating  negative  effects  on  air,  water  and 
soils.  Contrary  to  EU-level  trends,  LULUCF 
sector  carbon  removals  have  been  declining 
over  the  last  decades  and  even  turned  into 
emissions between 2017 and 2019. Enhancing 
sustainable  agriculture  practices,  such  as 
reducing  nutrient  loss  from  mineral  fertilisers 
and  manure,  and  continuing  the  successful 
uptake  of  organic  farming,  which  has  been 
steadily  increasing  since  2005,  would  help 
address  these  issues.  Additionally,  ensuring 
the  successful  implementation  of  Czechia’s 
common agricultural policy  strategic plan – in 
which  Czechia 
environmental 
envisages 
measures  to  improve  agricultural  adaptation 
to  climate  change,  such  as  whole-farm  eco-
schemes  and  agroforestry  –  would  help  to 
make the agricultural sector more competitive. 

17 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

Increasing tertiary educational 
attainment and reducing 
inequalities 

Graph 
attainment 

4.1: 

Tertiary 

educational 

in 

fields 

in  science, 

The  potential  of  higher  education  to 
transform  Czechia  into  an  innovative 
knowledge economy is underused.  Tertiary 
educational  attainment  (33.5%)  for  Czechs 
aged  25-34  is  far  below  the  EU  average 
(44.2%) (see Graph 4.1), despite rising demand 
for  skilled  professionals 
like 
information  and  communications  technology 
and engineering (see Annex  12). High dropout 
technology, 
rates,  particularly 
engineering,  and  mathematics  (STEM)  fields, 
and declining enrolment in STEM programmes 
since  2017  illustrate  systemic  challenges.  In 
2022,  only  11.9  women  out  of  a  thousand 
people  aged  20-29  graduated  in  STEM  fields, 
below  the  EU  average  of  15.1.(21)  Insufficient 
career  guidance  and  lack  of  financial  support 
to  students  are  among  the  drivers  of  high 
dropout  rates  at  Czech  higher  education 
institutions.  This  is  despite  the  fact  that  the 
returns on employment and earnings are high 
compared  to  those  who  have  completed 
secondary  education.  Supported  by 
the 
Recovery and Resilience Facility (RRF), Czechia 
is  launching  new  study  programmes  in  high-
demand fields relevant to the green transition. 
Further improvements could include increasing 
financial  support  for  students, 
improving 
access  to  higher  education  for  people  from 
disadvantaged  backgrounds  and  for  those 
whose parents have a low level of educational 
attainment,  improving  career  guidance  and 
STEM 
participation 
encouraging 
in 
programmes 
financial  and  non-
financial incentives. 

through 

(21)Eurostat, data code: educ_uoe_grad04 

18 

Source: Eurostat, European Commission 

and 
general 

Czechia  has  a  shortage  of  general 
limited 
schools 
secondary 
and 
between 
permeability 
specialised  education  pathways,  limiting 
possibilities  for  students  to  successfully 
pursue  tertiary  education.  While  interest  in 
tertiary  educational  attainment  has  strongly 
increased  over  the  last  30  years,  the  number 
of  general  secondary  schools  has  not  kept 
pace  with  this.  The  shortage  of  general 
secondary schools pushes students to enrol in 
less competitive vocational schools, leading to 
early  specialisation.  Although  two  thirds  of 
people who complete vocational education and 
training (VET) enrol  in tertiary education, their 
success rates fall behind those of people who 
complete  general  tracks,  which  contributes  to 
educational 
consistently 
attainment.  To  address  these  challenges, 
Czechia has recently announced steps towards 
establishing  new  pathways  that  combine 
is 
general  and  professional  subjects  and 
seeking  to  modernise  VET  programmes  to 
bring  them  into  line  with  the  needs  of  the 
labour  market.  To  better  prepare  those  who 
have  completed  secondary  education  for  the 
labour  market  and  support  their  transition  to 
tertiary education, further improvements could 
focus  on  (i)  expanding  work-based  learning 
school-to-work 
opportunities, 
transitions,  (iii)  strengthening  the  permeability 
between  general  and  vocational  secondary 

tertiary 

easing 

low 

(ii) 

                                                                                        
 
 
  
education  and  (iv)  increasing  the  capacity  of 
general secondary schools. 

the  Programme 

Educational  performance  in  Czechia  is 
strongly  dependent  on  socio-economic 
background. Pupils in Czechia perform better 
than  the  EU  average  in literacy,  mathematics, 
science and digital skills, but the performance 
gap  between  socio-economically  advantaged 
and disadvantaged pupils is large and growing 
to  other  EU  Member  States. 
compared 
Specifically,  under 
for 
International Student Assessment (PISA 2022), 
the  results  gap  in  mathematics  between  the 
top  25%  and  bottom  25%  in  terms  of  socio-
economic  status  was  the  fifth  highest  in  the 
EU.  Early  tracking,  whereby  pupils  are  divided 
into  different  educational  pathways,  and 
differences 
in  pupil  performance  between 
school  types  contribute  to  these  results,  as 
does  the  educational  segregation  of  Roma 
children.  To  address  these  challenges,  strong 
support for teachers and school leaders would 
implement  the 
in  order  to 
be  beneficial 
recently  revised  curricula  and  to  reduce 
administrative burden on smaller schools. The 
planned  RRF-supported  reform  of  the  school 
financing system aims to increase support for 
is  also 
disadvantaged 
establishing  a 
for 
disadvantaged schools funded by the RRF and 
focusing  on  training  teachers  to  work  with 
disadvantaged pupils. 

support  programme 

schools.  Czechia 

Czechia  faces  challenges  with  teacher 
shortages,  particularly  in  STEM  subjects, 
which  has  an  adverse  impact  on  pupil 
performance.  Despite  efforts  to  make  the 
teaching  profession  more  attractive,  including 
a  strengthened  practical  component  in  initial 
teacher training and the introduction of a new 
teacher  skills  framework,  shortages  remain. 
Slow  salary  progression,  particularly  for  less 
experienced  teachers,  contributes  to  13%  of 
primary education teachers intending to leave 
the  profession.  To  address  these  challenges, 
the 
measures  should 
teaching  profession  more  attractive  by 
improving  salary  progression  and  reducing 
administrative  burden, 
for  example  by 
consolidating  operational  functions  across 
schools. 

focus  on  making 

19 

Maintaining high employment, 
increasing job transitions and the 
employment of specific population 
groups 

Czechia’s  labour  market  delivers  high 
employment,  but  job  transitions  to  more 
productive  jobs  remain  low,  and  the 
employment of certain population groups 
in  2024, 
could  be  higher.  Specifically, 
Czechia  had  an  82.3%  employment  rate 
(against  an  EU  average  of  75.8%)  and  an 
unemployment  rate  of  2.6%  (against  an  EU 
average  of  5.9%).  Despite  Czechia’s  high 
employment rate, the job transition rate is one 
of  the  lowest  in  the  EU.  Furthermore,  the  job 
vacancy  rate  exceeded  3.3%  (against  an  EU 
in 
average  of  2.4%).  Besides 
automation, higher labour market participation 
of  certain  groups,  notably  mothers, 
low-
income  people,  Ukrainians  that  fled  Russian 
military  aggression  and  Roma  people,  could 
help  fill  these  vacancies  and  thus  boost 
Czechia’s competitiveness. 

investment 

Easing the transition to more 
productive jobs, including by 
making housing more affordable 

in  Czechia  changed 

The  Czech  labour  market  exhibits  one  of 
the lowest job transition rates among EU 
Member States. In 2024, only approximately 
1%  of  workers 
jobs 
(against  an  EU  average  of  2.3%  and  3%  in 
Germany,  an  economically  close  high-vacancy 
high-employment  economy)  despite  Czechia 
having one of the highest vacancy rates in the 
EU. The rate at which people change jobs and 
have  a  period  of  unemployment  in  between 
jobs  is  likely  also  very  low,  as  only  0.8%  of 
workers  experienced  unemployment  after 
leaving  their  jobs  in  2024  (against  an  EU 
average  of  1.9%  and  1.5%  in  Germany).  This 
means labour is not being efficiently allocated 
to  high-productivity  sectors,  contributing  to 
Czechia’s 
low  real  wages  and  household 
consumption,  which  remain  below  2019,  the 

 
support 

steepest  decline  in  the  EU  compared  to  pre-
pandemic  levels.  Overall,  only  33%  of  Czech 
GDP  goes  into  wages  and  salaries,  the  fifth 
lowest  share  in  the  EU(22).  The  low  rate  of 
transitions  is  caused  by  factors  such  as  the 
affordability  of  housing  in  cities,  low  short-
(somewhat 
term  unemployment 
improved  by 
code 
amendments), a high proportion of specialised 
education  and  high  barriers  to  obtaining 
professional certification. Adult participation in 
life-long 
important 
learning  –  another 
contributor  to  labour  mobility  –  also  remains 
low. In 2022, only 21.2% of adults aged 25-64 
participated  in  formal  or  non-formal  learning 
in  the  previous  12  months,  compared  to  the 
EU average of 39.5%. 

labour 

recent 

the 

public 

administration. 

A notable barrier to labour mobility is the 
affordability  of  housing  in  cities.  At  the 
end of 2023, the standardised house price-to-
income  ratio  stood  15%  above  its  long-term 
average,  the  fourth  highest  in  the  EU(23). 
Similarly, in cities, more than 14.1% of people 
spend  more  than  40%  of  their  income  on 
housing (compared to an EU average of  9.8% 
in  cities)  (see  Graph  4.2).  This  is  driven  by 
many  factors.  First,  as  discussed  above, 
Czechia suffers from slow spatial planning and 
construction  permitting  processes  and  a 
fragmented 
This 
contributes  to  Czechia  having  permitted  the 
seventh  smallest  housing  area  in  the  EU  in 
2023 per capita. Second, there is a wide array 
of  other 
insufficient  municipal 
incentives  to  build  affordable  housing,  a  lack 
of  social  housing  and  sub-optimally  designed 
tax 
recurrent 
property  taxes  largely  not  based  on  property 
value  (which  fail  to  incentivise  land  use), 
mortgage  interest  deductibles  (two  thirds  of 
which  subsidise  purchases,  not  construction) 
and lower taxation for short-term rents (often 
used  for  tourism)  compared  to  long-term 
rents.  While  new  legislation  on  affordable 
housing  and  construction  permitting  has  been 
in  recent  years  and  RRF-funded 
adopted 

incentives.  These 

causes: 

include 

financial  instruments  supporting  affordable 
housing  are  being  rolled  out,  other  key  areas, 
such as spatial planning reform, have not been 
addressed. 

Graph  4.2:  Housing  cost  overburden  rate 
by degree of urbanisation, 2024 

Note:  The  housing  cost  overburden  rate  is 
defined  as  the  percentage  of  the  population 
living  in  households  where  the  total  housing 
costs  ('net'  of  housing  allowances)  represent 
more than 40% of disposable income ('net' of 
housing allowances). 

Source: Eurostat, European Commission 

Incentivising higher labour market 
participation of certain groups 

Female participation in the labour market 
lack  of  early 
is  constrained  by  a 
childhood  education  and  care  and  long-
term  care  capacities.  Parents  of  children 
under  four  years  of  age,  typically  mothers, 
have  problems  finding  childcare  and  are 
disincentivised from joining the labour market 
(for  long-term  care  challenges  see  the  last 
paragraph  of 
this  Section).  The  gender 
employment  gap  for  women  between  25  and 
34  was  36.1  pps  in  2024  (against  an  EU 
average  of  25.2  pps)(24),  corresponding  to 
almost  67  thousand  fewer  women  working 
than if Czechia had a gender employment gap 
corresponding to the EU average. 

(22)  Eurostat, nama_10_gdp. 

(23)  Eurostat, data code: tipsho60, 

https://ec.europa.eu/eurostat/databrowser/view/tipsho60
/ 

(24)  Eurostat, data code: lfst_r_lfe2emprt 

20 

 
 
 
 
in 

in  employment 

The  Roma  minority,  around  250 000 
people,  has  untapped  potential.  Currently, 
only  an  estimated  45%  of  working-age  Roma 
are  employed,  whereas  the  percentage  of 
the  general 
people 
population  is  82.3%  in  2024.  Bringing  them 
into  the  formal  labour  market  could  expand 
the  workforce,  broaden  the  tax  base  and 
reduce dependency on social security benefits. 
Empowering 
the  Roma 
community  through  education  and  training 
initiatives  and  measures  promoting  equal 
access  to  employment  opportunities  would 
help  to  integrate  them  more  effectively  into 
the  labour  market.  For  example,  better  ethnic 
data collection mechanisms could improve the 
integration 
targeting  of 
measures and assess their impact. 

labour  market 

upskilling 

and 

Other  population  groups  who  could  be 
include 
employed  at  a  higher  rate 
informal  carers  and  workers  who  are 
beyond  pension  age.  More  than  100 000 
informal  carers  (of  parents  and  other  family 
members),  typically  women,  report  not  being 
able to  work  full-time because  of  their  caring 
duties.  Increasing  long-term  care  capacity  (in 
particular  home  and  community-based  care) 
could  enable  them  to  join  the  labour  market. 
The supply of workers could also be increased 
by  further  promoting  working  beyond  pension 
age  even  though  the  employment  rate  for 
people  over  65  is  above  the  EU  average.  This 
is  also  linked  to  the  health  of  the  Czech 
population,  whose  life  expectancy  in  good 
health is below the EU average and which has 
the  fifth  highest  absenteeism  rate  in  the  EU. 
More  emphasis  on  prevention  could  help,  as 
Czechia  does  less  than  other  EU  countries  in 
this area. 

(esp. 

inactivity 

People  are  disincentivised  from  finding 
low-income or part-time work by the fact 
that  Czechia’s  labour  taxation  system  is 
not  progressive  enough.  For  example,  low-
income earners often face little or no financial 
benefit from working due not only to high tax 
rates 
through  health  and  social 
contributions  to  which  deductibles  do  not 
apply)  but  also  to  benefits  that  decrease  as 
income  rises.  This  is  part  of  the  reason  why 
Czechia’s  taxation  of  people  entering  the 
labour  market 
and 
(the 
unemployment  traps)  is  higher  than  the  EU 
average.  As  benefit  eligibility  is  calculated 
based  on  income  before  wage  garnishment 
(mandatory  deduction  from  a  person’s  wages 
for  payment  of  a  debt),  this  is  especially  the 
case  for  the  more  than  600 000  people  in 
enforcement  or 
insolvency  proceedings.  A 
recent  study  suggests  that  taxing  low-income 
workers  less  could  incentivise  up  to  50 000 
employees  to  transition  from  informal  or 
precarious  work  arrangements  to  standard 
employment (as well as lifting 29 000 people 
above the poverty line). Adjusting labour taxes 
to 
low-income 
households  would  bring  more  people  from 
these  households  into  the  labour  market. 
Combining 
of 
underutilised  environmental  and  property 
taxation  instruments  (see  Annex  2)  would 
make the tax system more growth friendly. 

greater  use 

the  burden 

this  with 

reduce 

for 

by 

high 

their 

levels 

Ukrainians seeking shelter in Czechia are 
integrating  into  the  labour  market,  as 
of 
shown 
employment,  but 
their  qualifications 
could be put to better use. Almost 400 000 
people  have  recently  arrived  in  Czechia  from 
Ukraine(25)  .  While  approximately  80%  of  the 
economically  active  are  employed,  50% 
reported that their work did not correspond to 
their qualifications. This  could be improved by 
reducing  Czechia’s  high  number  of  regulated 
professions  and  slow  qualification  and  skill 
recognition processes. This would also enhance 
the integration of other foreign nationals. 

(25)  UNHCR, Ukraine Refugee Situation, 

https://data.unhcr.org/en/situations/ukraine. 

21 

 
 
 
 
KEY FINDINGS 

To  boost  competitiveness,  sustainability  and 
social fairness, Czechia would benefit from: 

•  accelerating the implementation of the 
RRP,  including  the  REPowerEU  chapter; 
swiftly  implementing  cohesion  policy, 
taking  advantage  of  the  opportunities 
under  the  mid-term  review;  and  making 
instruments, 
optimal  use  of  EU 
including  InvestEU  and  STEP,  to  improve 
competitiveness; 

•  limiting 

ageing-related 

pressures  by  fully 
recently adopted pension reforms; 

implementing 

fiscal 
the 

and 

investment 

innovation  by 

•  stimulating 
improving 
research 
policy 
coordination, reducing fragmentation of the 
research 
implementing 
knowledge  transfer  reforms,  strengthening 
business-science 
simplifying 
employee stock-ownership plans and better 
exploiting the potential of R&D tax benefits; 

environment, 

linkages, 

procedures, and by putting the existing land 
and  housing  stock  to  its  most  productive 
use,  including  by  increasing  the  efficiency 
of property taxation; 

•  accelerating 

sources, 

renewable 

decarbonisation 

to 
improve  competitiveness  by  creating 
more favourable conditions for investments 
in 
grid 
energy 
modernisation  and  energy  efficiency, 
developing  a  regulatory  framework  for 
clean 
incentivising 
energy  intensive  industries  to  switch  to 
cleaner  energy  sources, 
improving  the 
energy  efficiency  of  the  building  stock, 
increasing  the  uptake  of  zero-emission 
vehicles,  and  completing  high-speed  rail 
infrastructure; 

tech  manufacturing, 

•  strengthening 

climate  and  water 
resilience  by  improving  the  governance 
and  implementation  of  Czechia’s  climate 
adaptation 
water 
management  frameworks,  and  prioritising 
nature-based solutions; 

sustainable 

and 

•  simplifying  the  business  environment 
by reducing regulatory barriers, particularly 
continuing 
for 
digitalisation  of  public  services,  and 
increasing  efficiency  and  competition  in 
public procurement; 

start-ups  and  SMEs, 

• 

promoting 
in 

increasing  firms’  access  to  non-bank 
institutional 
finance 
by 
investors’  participation 
the  venture 
capital  market  as  well  as  equity  markets 
more  widely,  increasing  retail  participation 
in  capital  markets,  improving  the  uptake 
and  additionality  of  long-term  investment 
products,  scaling  up  the  use  of  financial 
instruments  and  strengthening  the  role  of 
the National Development Bank; 

•  support  the  affordability  of  housing 
and  construction  by  streamlining  spatial 
construction  permitting 
planning  and 

•  boosting  educational  outcomes  by 
increasing  tertiary  educational  attainment, 
expanding  access  to  general  secondary 
education,  improving  permeability  between 
general 
education, 
promoting science, technology, engineering, 
and  mathematics  skills,  enhancing  support 
for  disadvantaged  schools  and  Roma 
pupils, and stepping up efforts to make the 
teaching profession more attractive; 

vocational 

and 

increasing 

•  tapping  into  the  labour  market’s  full 
potential  by, 
labour 
first, 
mobility  by,  for  example,  supporting  the 
affordability  of  housing;  and  second, 
boosting 
the  participation  of  certain 
population  groups,  for  example  women,  by 
increasing  the  capacity  of  early  childhood 
education  and  care  and  the  capacity  of 
long-term 
home  and  community-based 

22 

 
 
care,  improving  tax-benefit  incentives  to 
work,  reducing  the  tax  burden  on  low-
income  workers  and  simplifying 
the 
recognition of foreign qualifications. 

23 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Cross-cutting indicators 

A15.  Sustainable Development Goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation 
Defence expenditure 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF – Grants 
RRF - Loans 

27 

29 

29 

36 

39 

39 

44 

49 

57 

62 

62 

69 

76 

82 

82 

84 

88 

92 

93 

96 

96 

98 

105 

30 
30 
31 
31 
31 
32 
32 
33 
33 

 
 
 
A1.10.  Projected change in age-related expenditure in 2024-2040 and 2024-2070 
A1.11.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A8.1. 
A9.1. 
A13.1.  Social Scoreboard for Czechia 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Czechia 

Financial indicators 
Selected indicators on administrative burden reduction and simplification 
Key Digital Decade targets monitored through the Digital Economy and Society Index 
Key clean industry and climate mitigation indicators: Czechia 
Key Energy Indicators 
Key indicators tracking progress on climate adaptation, resilience and environment 

LIST OF GRAPHS 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 

Tax revenue shares in 2023 
Tax wedge for single and second earners, % of total labour costs, 2024 
Top 10% most cited publications in relation to public R&D expenditure 

A2.1. 
A2.2. 
A3.1. 
A4.1.  Making Business Easier: selected indicators. 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries 
A5.4. 
Composition of NFC funding as a % of GDP 
A5.5. 
Composition of household financial assets per capita and as a % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A7.4.  Municipal waste treatment 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 
A9.2. 
A10.1.  Employment rate by sex 
A10.2.  Quarterly job vacancy rates, seasonally adjusted 
A11.1.  Persons at risk of poverty or social exclusion by age 
A12.1. 
A12.2.  Key skills indicators 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Czechia 
A16.1.  Distribution of RRF funding in Czechia by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Czechia 
A17.1.  Labour productivity per hour 

Czechia's installed renewable capacity (left) and electricity generation mix (right) 
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 
Investment needs and gaps in EUR million, in 2022 constant prices 

Isolation of high-achieving students (top 25%) in mathematics from all students (PISA 2022) 

Retail energy price components for household and non-household consumers, 2024 

LIST OF MAPS 

A17.1.  Greenhouse gas emissions per capita, 2023 

28 

34 
34 
37 
43 
48 
56 
58 
59 
68 
75 
81 
92 
94 
101 
102 
106 

36 
38 
39 
45 
49 
50 
50 
52 
53 
57 
58 
64 
65 
66 
67 
69 
69 
72 
78 
79 
82 
83 
85 
89 
90 
93 
93 
96 
99 
99 
106 

107 

 
 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Czechia, 
including  how  Czechia  is  responding  to  Council  recommendations  issued  under  the  reformed  Economic 
Governance Framework.  

The  reformed  framework,  which  entered  into  force  on  30  April  2024(26),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Czechia submitted its plan on 16 October 2024. The plan covers the period until 2028, presenting a fiscal 
adjustment  over  four  years.  On  21  January  2025,  the  Council  adopted  the  Recommendation  endorsing 
Czechia’s plan.(27)   

The  assessment  of  the  implementation  of  the  Council  Recommendation  endorsing  the  Czechia’s  plan  is 
carried out on the basis of the outturn data from Eurostat and the Commission Spring 2025 Forecast, and 
taking  into  account  the  Annual  Progress  Report  (APR),  that  Czechia  submitted  on  30  April  2025. 
Furthermore, given Czechia’s request to activate the National Escape Clause(28) following the Commission 
Communication  of  19  March  2025(29),  the  assessment  also  considers,  as  appropriate,  the  projected 
increase in defence expenditure based on the Commission Spring 2025 Forecast.  

The Annex is organised as follows. First, developments in  government deficit and debt are presented 
based  on  the  figures  reported  in  table  A1.1.  Then,  the  assessment  of  the  implementation  of  the 
Council  Recommendation  endorsing  the  plan  follows,  based  on  the  relevant  figures  presented  in 
Tables A1.2 to A1.9, including data on defence expenditure.  

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(30) 

Developments in government deficit and debt  

Czechia’s government deficit amounted to 2.2% of GDP in 2024. Based on the Commission’s Spring 2025 
Forecast, it is projected to increase to 2.3% of GDP in 2025. The government debt-to-GDP ratio amounted 
to 43.6% at the end of 2024 and, according to the Commission, is projected to increase to 44.5% end-
2025. 

(26)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(27)  OJ C, C/2025/666, 10.2.2025, ELI: http://data.europa.eu/eli/C/2025/666/oj. 

(28)  On 21 May 2025, Czechia requested to the Commission and to the Council the activation of the National Escape Clause. On this 
basis, the Commission adopted a Recommendation for a Council Recommendation allowing Czechia to deviate from, and exceed, 
the net expenditure path set by the Council COM(2025)602. 

(29)  Communication  from  the  Commission  accommodating  increased  defence  expenditure  within  the  Stability  and  Growth  Pact of  19 

March 2025, C(2025) 2000 final. 

(30)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

29 

 
 
 
 
Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Developments in net expenditure  

The  net  expenditure(31)  growth  of  Czechia  in  2025  is  forecast  by  the  Commission(32)  to  be  below  the 
recommended  maximum.  Considering  2024  and  2025  together,  the  cumulative  growth  rate  of  net 
expenditure is also projected below the recommended maximum cumulative growth rate.   

Table A1.2:  Net expenditure growth 

* The cumulative growth rates are calculated by reference to the base year of 2023.  
Source: Council Recommendation endorsing the national medium-term fiscal-structural plan of Czechia (REC), Annual Progress 
Report (APR) and Commission's calculation based on Commission Spring 2025 Forecast (COM). 
Source:  

General government defence expenditure in Czechia amounted to 0.9% of GDP in 2021, 1.0% of GDP in 
2022 and 1.2% of GDP in 2023(33). According to the Commission 2025 Spring Forecast,  expenditure on 
defence is projected at 1.3% of GDP in 2024 and 2025. 

(31)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(32)  European Commission Spring 2025 Forecast European Economy-Institutional paper 318, May 2025. 

(33)  Eurostat, government expenditure by classification of functions of government (COFOG).  

30 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-2.2-2.2-2.3n.a.-2.22General government gross debt% GDP43.644.544.5n.a.45.4Variables20252026RECAPRCOMRECAPRCOM2024n.a.2.8%0.0%n.a.n.a.n.a.20254.5%3.3%4.0%10.1%6.1%4.0%20262.5%n.a.4.8%12.9%n.a.9.0%AnnualCumulative*Growth rates 
 
        
 
 
        
 
 
 
Table A1.3:  Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the 
recommendation 

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when 
setting the net expenditure path is year 2023. 
Source: Commission Spring 2025 Forecast and Commission's calculation. 

Table A1.4:  Defence expenditure 

Source:  Eurostat (COFOG), Commission Spring 2025 Forecast. 

Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR). 

31 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC3346.43444.53618.13748.92Interest expenditurebn NAC98.5108.0112.4117.63Cyclical unemployment expenditurebn NAC0.30.40.20.14Expenditure funded by transfers from the EUbn NAC81.479.194.595.05National co-financing of EU programmesbn NAC40.738.031.530.06One-off expenditure (levels, excl. EU funded)bn NAC0.00.010.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC3125.53219.03369.53506.38Change in net nationally financed primary expenditure (before DRM)bn NAC93.5150.5136.89DRM (excl. one-off revenue, incremental impact)bn NAC93.521.4-25.810=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC0.0129.1162.611Outturn / forecast net expenditure growth% change0.00%4.0%4.8%12Recommended net expenditure growth*% change5.3%4.5%2.5%13=(11-12) x 7Annual deviationbn NAC-165.7-15.778.414 (cumulated from 13)Cumulated deviationbn NAC-165.7-181.4-103.015=13/17Annual balance% GDP-2.1-0.20.916=14/17Cumulated balance% GDP-2.1-2.2-1.217p.m. Nominal GDP  bn NAC7618.58010.78402.28816.0Variables2021202220232024202520261Total defence expenditure% GDP0.91.01.21.31.31.32of which: gross fixed capital formation% GDP0.20.20.40.40.30.33Flexibility from increases in defence expenditure% GDP0.40.44Cumulated balance after flexibility% GDP-2.5-1.62024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change1.12.01.9n.a.2.12Private consumption% change2.23.63.3n.a.3.03Government consumption expenditure% change3.32.02.4n.a.2.24Gross fixed capital formation% change-1.20.70.6n.a.3.25Exports of goods and services% change1.81.61.1n.a.2.46Imports of goods and services% change0.93.42.5n.a.3.6Contributions to real GDP growth 7- Final domestic demandpps1.32.32.2n.a.2.78- Change in inventoriespps-0.90.70.6n.a.0.09- Net exportspps0.7-1.0-0.8n.a.-0.610Output gap% pot GDP-1.7-1.2-1.1n.a.-0.511Employment % change0.30.20.4n.a.0.212Unemployment rate%2.62.62.6n.a.2.613Labour productivity% change0.81.81.5n.a.1.814HICP % change2.72.32.2n.a.2.015GDP deflator% change4.02.72.9n.a.2.816Compensation of employees per head% change5.96.66.5n.a.5.317Net lending/borrowing vis-à-vis the rest of the world% GDP2.9n.a.2.5n.a.2.020252026Variables 
 
        
 
 
 
   
 
 
 
        
 
 
Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR). 

Table A1.7:  Debt developments 

* End of period.  
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects.  
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR). 

32 

2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue40.840.940.8n.a.40.3of which:2- Taxes on production and imports10.710.610.7n.a.10.63- Current taxes on income, wealth, etc.8.38.38.2n.a.7.94- Social contributions15.816.016.1n.a.16.15- Other (residual)5.96.05.8n.a.5.68=9+16Expenditure 43.043.143.1n.a.42.5of which:9- Primary expenditure41.741.741.7n.a.41.2of which:10- Compensation of employees 9.79.89.9n.a.10.011- Intermediate consumption5.85.85.8n.a.5.812- Social payments17.116.916.8n.a.16.513- Subsidies1.92.12.0n.a.2.014- Gross fixed capital formation4.74.84.9n.a.4.615- Other2.42.32.3n.a.2.216- Interest expenditure1.31.41.3n.a.1.318=1-8General government balance-2.2-2.2-2.3n.a.-2.219=1-9Primary balance-0.9-0.9-1.0n.a.-0.920Cyclically adjusted balance-1.6n.a.-1.9n.a.-2.021One-offs0.00.0-0.1n.a.0.022=20-21Structural balance-1.6-1.9-1.7n.a.-2.023=22+16Structural primary balance-0.2-0.5-0.4n.a.-0.7Variables (% GDP)202520262024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)43.644.544.5n.a.45.42=3+4+8Change in the ratio (pps. of GDP)1.11.01.0n.a.0.8Contributions**3Primary balance0.90.91.0n.a.0.94≈5+6+7'Snow-ball' effect-0.7-0.6-0.7n.a.-0.8of which:5- Interest expenditure1.31.41.3n.a.1.36- Real growth effect-0.5-0.8-0.8n.a.-0.97- Inflation effect-1.6-1.1-1.2n.a.-1.28'Stock-flow' adjustment1.00.70.7n.a.0.720252026Variables 
 
        
 
 
 
 
        
 
 
Table A1.8:  RRF – Grants 

Source: Annual Progress Report 

Table A1.9:  RRF - Loans 

Source: Annual Progress Report 

Cost of ageing  

Total age-related spending in Czechia is projected to rise from about 20% of GDP in 2024 to 
around 21% in 2040 and 22.5% in 2070, staying below the EU average (see Table  A1.10). The 
overall dynamic results from the projected increase in long-term care and healthcare spending. Following 
the 2024 reform, pension expenditure is expected to decline initially, from 8.7% of GDP in 2024 to 8.4% 
in 2040, followed by an increase, reaching a maximum of 9.2% in 2059 (34). 

Public healthcare expenditure is projected at 5.9% of GDP in 2024 (below the EU average of 
6.6%) and is expected to increase by 0.4 pps by 2040 and by a further 0.3 pps by 2070. While 

(34)  See 2024 Ageing report - country fiche Czechia (2025 update). 

33 

Revenue from RRF grants (% of GDP)20202021202220232024202520261RRF grants as included in the revenue projectionsn.a.0.10.30.40.40.60.62Cash disbursements of RRF grants from EUn.a.0.40.00.30.70.50.720202021202220232024202520263Total current expenditure0.00.00.10.10.10.10.24Gross fixed capital formation0.10.10.10.10.20.40.45Capital transfers0.00.00.10.10.10.00.06=4+5Total capital expenditure0.10.10.20.20.20.50.420202021202220232024202520267Reduction in tax revenue0.00.00.00.00.00.00.08Other costs with impact on revenue0.00.00.00.00.00.00.09Financial transactions0.00.00.00.00.00.00.0Expenditure financed by RRF grants (% of GDP)Other costs financed by RRF grants (% of GDP)Cash flow from RRF loans projected in the Plan (% of GDP)20202021202220232024202520261Disbursements of RRF loans from EUn.a.0.00.00.00.10.10.12Repayments of RRF loans to EUn.a.0.00.00.00.00.00.020202021202220232024202520263Total current expenditure0.00.00.00.00.00.00.04Gross fixed capital formation0.00.00.00.00.00.00.05Capital transfers0.00.00.00.00.00.00.06=4+5Total capital expenditure0.00.00.00.00.00.00.020202021202220232024202520267Reduction in tax revenue0.00.00.00.00.00.00.08Other costs with impact on revenue0.00.00.00.00.00.00.09Financial transactions0.00.00.00.00.00.00.0Expenditure financed by RRF loans (% of GDP)Other costs financed by RRF loans (% of GDP) 
 
        
 
 
 
       
 
 
the overall increase is driven by an ageing population, it also reflects recent improvements in access to 
preventive and mental healthcare (35).  

Public expenditure on long-term care is projected at 1.5% of GDP in 2024, slightly below the 
EU average of 1.7%) and is expected to increase by 0.5 pps of GDP by 2040 and by a further 
0.8 pps of GDP by 2070 (36).  

Table A1.10:Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report – 2025 update Czechia (EC/EPC). 

National fiscal framework 

The  Czech  Fiscal  Council  (CFC)  is  a  well-funded  Independent  Fiscal  Institution  (IFI)  with  an 
active  outreach  activity,  but  its  role  in  assessing  the  macroeconomic  forecast  of  the 
government  could  be  enhanced  and  access  to  information  could  be  improved.  The  Chamber  of 
Deputies  elects  the  Chairperson  on  a  proposal  of  the  government  and  the  other  two  members  on  a 
proposal  of  the  Senate  and  the  Czech  National  Bank,  respectively.  As  access  to  information  is  not 
regulated via memoranda of understanding with key providers, there is currently no uniform format and 
structure of even basic data from the general government sector and time series of sufficient length and 
granularity  are  often  not  available.  There  have  not  yet  been  any  external  reviews  of  the  CFC.  The 
macroeconomic and budgetary forecasts are evaluated by the Committee on Budgetary Forecasts (CBF), 
which is not an IFI. 

Table A1.11:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

(35)  Key performance characteristics, recent reforms and investments of the Czech healthcare system are discussed in Annex 14 ‘Health 

and health systems’. 

(36)  The adequacy and quality of the Czech long-term care system are covered in Annex 11 ‘Social policies’. 

34 

CZ20.4-0.30.40.5-0.10.621.0CZEU24.30.50.30.4-0.30.925.2EUCZ20.40.00.71.30.12.122.5CZEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal2023CzechiaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)12.3514.52Medium-Term Budgetary Framework Index (MTBFI)0.570.73 
 
  
 
 
     
 
 
 
35 

 
 
revenue  from  different  taxes 
in  2023,  the 
structure  remains  unchanged  from  2022  with  a 
similar weight of taxes on labour in Czechia and in 
the EU (50.4% as a share of total tax revenues vs 
an EU average of 51.2%) but with continued lower 
taxes  on  capital  and  taxes  on  consumption  in 
Czechia  than  the  EU  average  (19.2%  in  taxes  on 
capital  and  26.9%  in  taxes  on  consumption  in 
Czechia  in  comparison  with  21.9%  and  30.4% 
respectively in the EU). 

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

Low  rates  of  business  taxation  seem  to 
contribute  to  the  competitiveness  of  the 
Czech economy, but the complexity of the tax 
system  could  still  be  reduced.  The  statutory 
(19%)  and  effective  (18.34%)  corporate  tax  rates 
limited  use  of  tax 
are  close,  suggesting  a 
incentives  in  Czechia  and  a  preference  for  direct 
public  financing  of  business  R&D  expenditure. 
Moreover,  110%  of  R&D  expenses  can  be 
deducted  from  taxable  income  if  R&D  expenses 
were  higher  than  the  previous  year.  This  regime 
has 
and 
be 
to 
administratively  burdensome 
(see  Annex  3 
Innovation  to  Business).  In  some  cases,  green 
investments 
in  Czechia  can  benefit  from  a 
favourable  depreciation  regime.  As  an  example, 
fleets 
emission-free  vehicles 
acquired  and  put  in  use  between  1 January 2024 
and  31 December 2028 
from 
accelerated depreciation over two years. However, 
Czechia  faces  some  challenges  in  relation  to  the 
labour  market  and  the  country’s  high  dependency 
on fossil fuels as explained in other sections.  

can  benefit 

corporate 

complex 

found 

been 

for 

ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Czechia’s  tax  system.  It  includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance.  

revenue  has 

Czechia’s  tax  revenue  is  relatively  low  in 
relation  to  its  GDP.  Table  A2.1  shows  that 
Czechia’s tax revenue as a percentage of GDP was 
considerably below the EU average in 2023. Total 
tax 
increased  by  about  2.5 
percentage  points  (pps)  of  GDP  since  2010,  but 
remains below the EU average (34% in Czechia in 
2023  compared  with  39%  in  the  EU;  see  Table 
A2.1). Tax revenue in all categories remains below 
the  EU  average  except  for  revenue  raised  by 
corporate  income  tax  (which  was  equivalent  to 
4.2% of Czechia’s GDP in 2023, compared with an 
EU  average  of  3.2%.  Revenue  from  labour  taxes 
has  increased  since  2010  (by  2 pps  of  GDP  to 
17.1% in 2023), while  revenue from consumption 
taxes  fell  in  2022  and  2023,  dropping  below  the 
2010 level (by 0.3 pps to 10.3% of GDP in 2023).  
Revenue  from  capital  taxes  increased  to  6.5%  of 
GDP in 2023. Revenue from environmental taxes is 
below the EU average (at 1.6% of GDP, compared 
with  an  EU  average  of  2.0%)  and  revenue  from 
property  taxation  (including  recurrent  property 
taxation)  remains  very  low,  both  expressed  as  a 
percentage of GDP and expressed as a percentage 
of  total  tax  revenue 
(see  Table  A2.1  and 
Graph A2.1).  These  low  taxes  on  property  will 
slightly increase in the coming years as laid down 
in the Act on the Consolidation of Public Budget(37) 
(Consolidation  Package)  explained  in  Annex  19  of 
the  2024  Country  Report.    Real  estate  tax  in 
Czechia  is payable  annually  by the  owner  of  land 
or  buildings.  The  amount of  the  real  estate  tax is 
dependent on area, location, and usage of the land 
or  buildings.  Effective  from  2025,  the  calculation 
of  property  tax  will  be  affected  by  an  inflation 
coefficient.  In  addition,  a  mortgage  tax  credit 
allows  taxpayers  to  deduct  interest  paid  for  their 
income-tax  base. 
housing  needs  from 
However,  concerns  arise  in  relation  to  both  the 
distributional effect of this tax-deductibility regime 
and the effective support it gives to construction. A 
significant  share  of  this  tax-deductibility  scheme 
has  been  found  to  be  directed  towards  high-
income  households.  In  relation  to  the  shares  of 

their 

(37)  Act No.349/2023 Coll. Of 8 November 2023, entered into 

force on 1rst January 2024. 

36 

51.226.921.950.430.419.2Tax revenue shares in 2023, Czechia (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital 
 
 
 
     
 
 
 
Table A2.1:  Taxation indicators 

(1) Forward-looking effective tax rate (KPMG).       
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2023. For more details on the VAT gap, see European Commission, Directorate-General for Taxation and 
Customs Union, VAT gap in the EU - 2024 report,  https://data.europa.eu/doi/10.2778/2476549.  
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 

Czechia  has  a  high  tax  burden  on  labour  at 
low earnings levels. Czechia’s labour tax burden 
is  less  progressive  than  the  EU  average.  The  tax 
wedge  (38)  for  single  workers  earning  50%  of  the 
average  wage  (36.8%  in  2024)  was  high  as 
compared to the EU average (31.8%), while it was 
below the EU average at high earnings levels (see 
Graph  A2.2).  The  tax  wedge  at  high  earnings  is 
lowered  also  by  the  fact  that  social  contributions 
are  capped  above  a  certain  earnings  level.    The 
ability  of  Czechia’s  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 A2.1).  

in 

‘consolidation 

latest  measures  approved 

The 
the 
package’  may 
country’s 
increase  the  progressivity  of  the  tax  ad 
benefit  system.  A  higher  personal  income  tax 
rate  of  23%  now  applies  to  income  above  a 
specific  threshold  (the  threshold  is  equal  to  three 

times the average monthly wage or an annual tax 
base  up  to  1  450  000  CZK  (39).  The  taxation  rate 
applying  to  earners  in  the  first  income  bracket 
remains at 15%.  

In  addition,  taxation  for  self-employed 
people  is  significantly  lower  in  Czechia  than 
taxation  of  traditional  employment.  Taxation 
of self-employed people is unequal and regressive 
given  that  it  is  possible  to  deduct  between  40% 
and  80%  of  gross  annual  income  as  business 
expenses, with only the remaining share of income 
being subject to personal income tax. Alternatively, 
self-employed  people  earning  up  to  2  million 
CZK(40)  a  year  may  also  opt  to  pay  a  lump  sum 
grouping  their  income  tax,  pension  and  health 
insurance  liabilities.  This  lump  sum  can  in  some 
cases  be  significantly  lower  than  the  tax  that  a 
conventional  employee  earning  a  similar  amount 
would pay. 

(38)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
social-security 
taxes  and  employee  and  employer 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

(39)  Equivalent to 57 927 euros as of the exchange rate in effect 

on 21rst March 2025. 

(40)  Equivalent to 79 820 euros as of the exchange rate in 

effect on 21rst March 2025 

37 

CZMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)32.534.834.034.037.840.239.739.0Taxes on labour (% of GDP)16.918.417.217.119.820.520.120.0of which, social security contributions (SSC, % of GDP)14.316.015.315.312.913.012.712.7Taxes on consumption (% of GDP)10.611.110.810.310.911.210.910.5of which, value added taxes (VAT, % of GDP)6.57.37.67.56.87.37.47.1Taxes on capital (% of GDP)5.05.36.06.57.18.58.78.5Personal income taxes (PIT, % of GDP)3.73.63.53.78.69.69.49.3Corporate income taxes (CIT, % of GDP)3.23.64.04.22.22.93.23.2Total property taxes (% of GDP)0.50.30.30.31.92.22.11.9Recurrent taxes on immovable property (% of GDP)0.20.20.20.21.11.11.00.9Environmental taxes (% of GDP)2.21.81.41.62.52.42.12.0Effective carbon rate in EUR per tonne of CO2 equivalentsNA66.1NA65.0NA86.0NA84.8Tax wedge at 50% of average wage (single person) (*)35.735.435.135.836.833.931.831.531.531.8Tax wedge at 100% of average wage (single person) (*)42.140.039.940.240.940.939.939.940.240.3Corporate income tax - effective average tax rates (1) (*)18.517.818.118.321.319.319.118.9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)8.07.26.16.28.68.27.97.7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)28.820.435.532.6VAT gap (% of VAT total tax liability, VTTL) (**)6.74.23.26.67.0Progressivity & fairnessTax administration & complianceBy tax baseSome tax typesCzechiaEU-27 
 
 
 
  
 
The  tax  system’s  effect  on  work  incentives 
for  second  earners  has  improved.  The  tax 
wedge  for  second  earners  earning  67%  of  the 
average  wage  was  38.9%  was  equal  to  that  of 
single  earners and close to the EU  average. A tax 
credit  is  granted  to  dependent  spouses  whose 
household  partner  earns  an  annual  gross  income 
not  exceeding  a  certain 
threshold.  As  of 
1 January 2024, the conditions for benefiting from 
this  tax  credit  have  been  tightened,  and  the  tax 
credit is now only granted to households caring for 
a  child  under  the  age  of  three.  However,  this 
measure is to some extent counterbalanced by the 
removal  of  the  tax  credit  helping  parents  to  pay 
for pre-school facilities. 

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

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

E-commerce  sales 
in  Czechia  declined 
between  2019  and  2022,  although  VAT 
revenue  grew  by  15.8%,  and  the  VAT 
compliance gap continued to shrink, reaching 
4.2%  in  2022.  The  VAT  compliance  gap  is 
expected  to  fall  further  in  2023.  The  VAT 
compliance gap has continued its downward trend, 
falling by a further 2.5 percentage points to 4.2% 
in  2022  compared  with  6.7%  2021.  Since  2019, 
the  VAT  compliance  gap  –  expressed  as  a 
percentage  of  GDP  –  has  fallen  each  year  and  is 
expected  to  fall  by  a  further  percentage  point  in 
2023  to  3.2%(41).  The  stability  of  this  trend 
suggests that there were no major issues with VAT 
compliance.  E-commerce  growth 
in  Czechia 
declined  between  2019  and  2022,  with  online 
sales  falling  from  31.7%  to  29.9%  of  business 
turnover, and the share of businesses engaging in 
e-sales dropping from 29.8% to 24.7%. Moreover, 
online  retail  sales  decreased  from  8.8%  to  8.5% 
over  the  same  period.  The  decline  in  e-sales  has 
the potential to increase VAT non-compliance risks. 
VAT  revenue  in  Czechia  grew  by  15.8%  in  2022. 
Meanwhile,  the  VAT  compliance  gap  fell  sharply 
between 2019 and 2022.  

Finally,  as  part  of  its  budgetary  and  public 
health  strategy,  the  Czech  government  is 
progressively  increasing  excise  duties  on 
alcoholic beverages. A 10%  increase is planned 
in  2024  and  2025,  and  a  further  5%  increase  is 
planned in 2026. 

to 

tax 

tax 

and 

improved 

compliance 

could  help 
changing 

through 
Increasing 
tax 
digitalisation 
increase 
administration 
revenue  without 
rates. 
Technologies like advanced data analytics can help 
to reduce tax avoidance and tax evasion, ensuring 
a  fairer  distribution  of  the  tax  burden.  It  can  also 
reduce  Czechia’s  cost  of  tax  collection,  which  is 
currently  one  of  the  highest  in  the  EU.  Although 
there 
in 
implementing  e-filing  for  corporate-income  tax 
and VAT (more than 90% of returns for these two 
tax categories are now filed electronically), there is 
still  room  to 
increase  the  e-filling  rate  for 
personal-income-tax  returns:  in  2021,  this  rate 
was just above 30%, one of the lowest rates in the 
EU.  In  addition,  about  17%  of  tax  arrears  are 
collectable  but  remain  uncollected  in  Czechia, 
although this is on the lower end when compared 
with the average for the EU’s 27 Member States.  

significant 

progress 

been 

has 

(41)  European Commission: VAT Gap in the EU – 2024 Report; 

Figure 42 

38 

36.838.940.942.638.92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - CZSingle earner - EU averageSecond earner -  CZSecond earner -  EU average 
     
 
 
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

In  2024,  Czechia  continued  to  be  deemed  a 
‘moderate 
innovator’,  with  performance 
below  the  EU  average.  According  to  the  2024 
European Innovation Scoreboard (42), its innovation 
performance  remains  below  the  EU  average 
(89.7%), but has grown faster than the EU average 
since  2017.  In  2023,  R&D  intensity (43)  stood  at 
1.83%  and  experienced  a  third  year  of  decline 
after enjoying annual  growth since 2016, peaking 
at almost 2% of GDP in 2021. This is below the EU 
average  of  2.24%  and  might  not  be  sufficient  to 
achieve  the  national  target  of  3% (44)  by  2030. 
Czechia’s  fragmented  research  and  innovation 
(R&I)  system  lacks  strong  coordination,  requiring 
more  defined  and  determined  governance.  Direct 
and  indirect  support  for  innovative  companies 
could  be  better 
targeted  and  effectively 
implemented to boost the ability of domestic firms 
to  pursue  advanced  innovations  and  support  the 
creation  of  start-ups  and  spin-offs.  Czechia  also 
has  significant  scope  to  improve  its  performance 
in 
its 
the  digitalisation  of  businesses  and 
contribution to the EU’s Digital Decade targets.(45). 

Science and innovative ecosystems 

Despite  continuous 
improvements,  more 
attention  to  quality  and  performance  is 
needed  for  public  research  to  reach  its  full 

(42)  2024  European 

Innovation  Scoreboard,  Czechia.  The 
scoreboard  provides  a  comparative  analysis  of  innovation 
performance in EU countries, including the relative strengths 
and  weaknesses  of  their  national  systems.  European 
innovation scoreboard 2024 - European Commission. 

(43)  Defined as gross domestic expenditure on R&D as a 

percentage of GDP. 

(44)  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). 

(45)  The  EU's  Digital  Decade  policy  programme  sets  ambitious 
targets  for  2030  to  drive  Europe's  digital  transformation. In 
the realm of business digitalisation, the programme aims for 
75%  of  EU  companies 
to  utilize  advanced  digital 
technologies  such  as  cloud  computing,  artificial  intelligence, 
or big data. Additionally, it targets more than 90% of small 
and  medium-sized  enterprises  (SMEs)  to  reach  at  least  a 
basic level of digital intensity. These objectives are designed 
to  enhance  the  competitiveness  and  innovation  capacity  of 
European businesses in the global digital economy - Europe’s 
digital decade: 2030 targets | European Commission 

potential in the R&D ecosystem. Even though it 
has  been  decreasing  over  the  past  three  years, 
public R&D expenditure as a percentage of GDP is 
not far from the EU average (0.63% vs EU average 
of  0.72%  in  2023)  and  has  been  relatively  high 
compared  to  peer  countries.  Nevertheless,  the 
quality  of  research  outputs,  as  measured  by  the 
share of scientific publications within the top 10% 
most cited publications worldwide as a percentage 
of  total  publications, is  significantly below  the  EU 
average  (5.4%  vs  9.6%).  This  could  point  to 
lagging  efficiency  and  impact  of  public  R&D 
expenditure (see also Graph A3.1).  

Graph A3.1: Top 10% most cited publications in 
relation to public R&D expenditure 

Source: Eurostat / Science-Metrix 

has 

The  governance  of  R&I  in  Czechia  is  quite 
complex and the system fragmented. Over the 
last few years, Czechia has invested heavily in its 
research  infrastructure.  It  was  supported  by  both 
the cohesion policy and the recovery and resilience 
plan,  which  has  helped  modernise  facilities.  While 
this 
research 
strengthened  Czechia’s 
capacities, more effort such as better cooperation 
among  research  teams  is  needed  to  achieve 
critical mass. A total of 180 research organisations 
receive institutional support for research, including 
26  public  universities,  2  state  universities,  54 
institutes  of  the  Czech  Academy  of  Sciences  and 
institutes (46).  As 
22  sectoral  public  research 

(46)  Background report, Policy Support Facility Support Czechia. 
Czechia on the reform of the Technology Transfer Offices 
sector - Publications Office of the EU (see p. 9) and Czech 
research cooperation in the EU is growing only slightly, AVUni 
is doing well | RMU – Asociace výzkumných univerzit. 

39 

BEBGCZDKDEEEIEELESFRHRITCYLVLTLUHUMTNLATPLPTROSISKFISE24681012141600.20.40.60.811.2Top 10% highly-cited publications, 2021-2023Public expenditure on R&D (as % of GDP), 2023 
 
 
 
 
   
 
 
previously  observed (47),  stronger 
institutional 
governance  of  R&I  policy  and  collaboration 
between  ministries, 
funding  agencies  and 
stakeholders  is  necessary.  The  National  Research 
and  Development  Policy  holds  a  prominent 
position, as it is explicitly referenced in the Act on 
the  Support  of  Research  and  Development. 
the  concurrent  existence  of  other 
However, 
strategies 
research  and 
that  also  address 
innovation,  combined  with  the  often  ambiguous 
relationships  among  them  and  their  outcomes, 
lead  to  a  lack  of  clarity  regarding  the  strategic 
research, 
vision 
development, and innovation (RDI) community (48) . 

for  policymakers  and 

the 

The  potential  of  female  scientists  remains 
untapped.  The  total  number  of  people  employed 
in  R&D  almost  doubled  between  2005  and 
2022 (49).  However,  the  proportion  of  women  fell 
slightly  over  the  same  period  (32.6%  (full-time 
equivalents/FTEs  in  2005  versus  28.7%  FTEs  in 
2022),  the  least  in  the  EU.  A  recent  study (50) 
monitoring the representation of female scientists 
between 2002 and 2022 concludes that Czechia is 
not making enough use of the potential of skilled, 
highly  educated  women  in  science (51)  in  the  long 
term. While the recovery and resilience plan entails 
among others the creation of a national excellence 
excellent 
programme 
researchers,  specific  actions  to  strengthen’  the 
position  of  female  scientists  are  also  needed  to 
ensure  that  Czechia  continues  to  build  a  strong 
research.  Looking  ahead,  a 
foundation 
potential  way  to  address  this  issue  could  be 

support 

better 

for 

to 

(47)  Country 

report  Czechia,  2020,  see  pp.  34-35:  eur-
lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:52020SC0
502. 

(48)  Panel of experts, 2025, From fragmentation to synergy and 
impact:  A  review  of  the  knowledge  transfer  system  in 
Czechia  (Final  report,  Policy  Support  Facility),  see  p.12: 
Support to Czechia on its reforms of the Technology Transfer 
Offices sector | Research and Innovation   

(49)  The  2022  Monitoring  Report  on  the  position  of  women  in 
Czech  science  provides  an  overview  of  current  statistical 
indicators between 2005 and 2022 based on data from the 
Czech Statistical Office (CSO), the Ministry of Education and 
Culture (MEYS), and data from individual institutions. 

(50)  Třísková,  Hana.  2024.  The  Position  of  Women  in  Czech 
Science 2022. Monitoring Report, web page: The Position of 
Women in Czech Science 2022. Monitoring Report - Institute 
of Sociology of the Czech Academy of Sciences. 

(51)  Czechia 

ranks  bottom 

the 
representation  of  women  in  research  positions  (source: 
Analysis of the state of RDI in the Czech Republic and their 
international comparison in 2022). 

terms  of 

the  EU 

in 

in 

targeted 

through 
initiatives  such  as  newly 
introduced  ‘return  grants’.  These  enable  scientists 
who have taken a career break, for example due to 
parental leave, to plan their return to science.  

Business innovation  

The number of Czech companies that are able 
to  implement  advanced  innovations  remains 
low, while the integration and contribution of 
multinationals  into  the  R&I  ecosystem  could 
be  improved.  Czechia  has  a  large  share  of 
industrial production (52) of GDP within the EU, but 
the industrial sector’s level  of innovation and role 
in  value  chains  lags  behind.  In  2023,  domestic 
applicants  filed  465  inventions  or  new  technical 
solutions  for  patent  protection  with  the  national 
Industrial  Property  Office (53),  which  is  the  lowest 
number since 1995. Compared with other Member 
States,  patent  applications  filed  under  the  Patent 
Cooperation Treaty also remain well below the EU 
average  (0.7  per  billion  euro  of  GDP  in  2022 
versus  EU  average  of  2.8).  Czechia  could  benefit 
from participation in the unitary patent system (54).  

Business  enterprise  expenditure  on  R&D  as  a 
percentage  of  GDP  was  below  the  EU  average  in 
2023  (1.19%  vs  1.49%)  but  has  experienced  a 
consistent rise for over 10 years. These increases 
have  been  driven  to  a  large  extent  by  foreign 
affiliates (55).  These  account  for  around  65%  of 
total  R&D  business  expenditure,  highly  correlated 
with 
knowledge-intensive 
industries (56)  in  Czechia (57).  This  has  opened  a 

structure  of 

the 

(52)  www.eurostat.eu datasets on GDP and industrial production 

by country. 

(53)  Data source: Czech Statistical Office, V Česku bylo nejméně 
patentových přihlášek od roku 1995 - Vědavýzkum.cz. 

(54)  The country is expected to join by ratifying the Unified Patent 

Court Agreement, which it has already signed. 

(55)  The  amount  of  R&D  spending 

in  foreign  controlled 
companies  has  increased  more  than  threefold  in  nominal 
terms since 2010. 

(56)  The majority of business expenditure on R&D is spent in the 
manufacturing sector (54%), with a visible pattern of growth 
also  in  the  ICT  sector  (20%)  (source:  Policy  Support  Facility 
background report). 

(57)  Pazour  Michal,  2024,  Support  to  Czechia  on  the  reform  of 
the  Technology  Transfer  Offices  sector  (Background  report, 
Policy Support Facility). Web page: Support to Czechia on the 
reform  of 
the  Technology  Transfer  Offices  sector  - 
Publications Office of the EU. 

40 

 
 
 
gap  between  the  knowledge  intensity  of  the 
domestic  business  enterprise  sector  and  that  of 
foreign-owned companies. Czech companies often 
have  limited  ability  to  integrate  cutting-edge 
research into their business activities (58). This can 
hinder  the  effective  transfer  of  knowledge  from 
public  research  to  the  business  sector.  On  the 
other hand, the size of the ICT sector in Czechia is 
slightly  above  the  EU  average,  contributing  5.1% 
in  2021.  Business 
to  gross  value  added 
expenditure on R&D in the ICT sector accounts for 
26.37%  of  total  R&D  expenditure,  indicating  a 
in  this 
relatively  strong  focus  on 
sector (59).  Furthermore, 
the  Czech  start-up 
ecosystem 
as 
dynamically 
developing 
highlighted  by  a  2024  study (60),  despite  ongoing 
challenges (61)  such  as  difficulties  in  securing 
initial financing, a shortage of skilled workers and 
complex  bureaucracy,  particularly  on  employee 
stock option plans. 

innovation 

is 

the 

The adoption of digital technologies by firms 
in  Czechia  remains  below  the  EU  average, 
despite 
implementation  of  several 
supporting  measures.  In  2023,  AI  adoption  in 
Czech  firms  stood  at  11.26%  (vs  EU  average  of 
13.48%),  cloud  uptake  stood  at  35.23%  (vs 
38.86%)  and  data  analytics  adoption  at  19.49% 
(vs  33.17%).  While  the  adoption  of  AI  has 
increased  significantly  (+14.5%  from  2022  to 
2023),  cloud  uptake  declined  between  2021  and 
2024, in contrast to an overall increasing trend at 
EU 
  Czechia  has  allocated  significant 
funding,  notably  EUR  575  million  under  the 
Recovery  and  Resilience  Facility, 
to  support 
business  digitalisation,  as  well  as  additional 
cohesion  funding.  Moreover,  the  National  Artificial 
Intelligence  Strategy  has  been  updated  through  a 
detailed  Action  Plan,  focusing  specifically  on  AI 
development  and  deployment.  Its  implementation 
is guided by a series of KPIs and encompasses 69 
targeted  projects,  including  subsidy  programmes, 
business  manuals,  retraining  courses,  and  the 
innovative  AI  solutions,  fostering 
rollout  of 

level. 

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

Technologická agentura ČR. 

(59)  Eurostat, ICT sector size and R&D in ICT sector, all data from 

2021.  

(60)  StartupJobs, J&T Bank, Vodafone, 2024. Smart Market 

Report 2024: sj-smart-market-report-en.pdf. 

(61)  Deloitte, 2022, Start-up Survey by Deloitte: Jak se v Česku 

daří startupům | Deloitte Česká republika and source under ft 
120 (see p. 59). 

41 

collaboration  between  the  public  and  private 
sectors. 

Direct  and 
indirect  public  support  for 
innovative  companies  could  be  better 
implemented.  According  to  a  recent  report (62), 
public  funding  for  innovation  in  Czechia  primarily 
benefits  large,  established  industrial  firms,  but 
lags  behind  other  countries  in  supporting  small 
innovative  firms.  In  2023,  indirect  support  in  the 
form  of  R&D  tax  incentives  accounted  for  0.04% 
of GDP, well below the EU average of 0.10%. Less 
third  of  companies (63)  consistently 
than  a 
engaged  in  R&D  use  this  kind  of  support,  with 
small and young firms using these incentives even 
less  frequently (64).  The  scheme  is  criticised  by 
companies as being complex and bureaucratic. The 
innovation 
be 
examined  and  possibly  redesigned  to  be  more 
inclusive  of  young  innovative  companies.  This 
effort should be combined with initiatives to make 
the  R&D  tax  deduction  more  attractive  for 
companies and less burdensome. 

programmes 

support 

could 

are 

linkages 

and 
remains 

still 
Business-science 
research 
underdeveloped, 
commercialisation 
subdued. 
Collaboration  between  private  businesses  and 
academia  remains  limited,  as  underlined  by  the 
level  of  contractual  research,  illustrated  by  public 
R&D  expenditure 
the  business 
enterprise  sector  (national)  as  a  percentage  of 
GDP being significantly lower than the EU average 
(0.024 vs 0.050 in 2023). Additionally, there is not 
much diffusion from research to entrepreneurship, 
with  the  number  of  spin-offs  in  the  country  still 
low (65).  This  could  be  caused  among  other  things 
by the inconsistent support and variable quality of 
technology transfer offices as well as bureaucratic 

financed  by 

(62)  Martin  Srholec,  Národohospodářský  ústav  AV  ČR,2024 
IDEA_Studie_06_2024_Nedotovani_inovatori_tisk_0926.pdf 
Which Innovative Firms Do/Do Not Receive Public Support for 
(ne)čerpají  veřejnou 
inovativní  firmy 
Innovation?,  Jaké 
podporu na inovace?). 

(63)  A number that has been gradually decreasing (by more than 
40%)  since  2015.  Background  report  2024,  Policy  Support 
Facility (see p. 33). 

(64)  IDEA_Studie_06_2024_Nedotovani_inovatori_tisk_0926.pdf 
Which Innovative Firms Do/Do Not Receive Public Support for 
Innovation? (IDEA, 2024). 

(65)  Background  report  2024,  Policy  Support  Facility  (see  page 
61)  Support  to  Czechia.:  Czechia  on  the  reform  of  the 
Technology  Transfer  Offices  sector  -  Publications  Office  of 
the EU. 

 
 
 
or 

the 

that  complicate 

low  motivation 

obstacles 
transfer  of 
intellectual  property  rights  for  researchers  and 
entrepreneurs 
among 
universities  to  support  activities  other  than  core 
education  and  research.  As  a  result,  researchers 
are  mainly  encouraged  to  produce  publication 
outputs  without  trying  to  commercialise  their 
research results. Czechia is currently engaged with 
the  Horizon  Europe  Policy  Support  Facility  and 
received  expert  recommendations  on  how  to 
improve support for science-business linkages, and 
more specifically on the reform of the technology 
transfer  offices (66).  Moreover,  the  government 
approved  a  new  draft  Act  on  Research, 
Development, Innovation and Knowledge Transfer, 
which  is  now  part  of  a  legislative  procedure.  The 
draft act aims to improve the commercialisation of 
research 
results,  boost  cooperation  between 
different bodies and provide better legal certainty. 

Financing innovation  

investors 

institutional 

Venture  capital  levels  have  improved  but 
remain  small  compared  with  other  countries 
worldwide.  The  average  value  of  venture  capital 
investment  as  percentage  of  GDP  went  up  from 
0.004%  in  2012  to  0.029%  in  2023  but  is  still 
much  lower  than  the  equivalent  EU  average 
(0.078%  in  2023)  moreover,  the  participation  of 
in  providing 
domestic 
funding for start-ups and venture capital investors 
is  low,  further  contributing  to  an  underdeveloped 
local  risk  capital  market. There  is  a  financing  gap 
for early-stage innovative firms in need of capital 
with  high-risk  tolerance  throughout  their  lifecycle. 
Some  policies  have  been  put  in  place  to  promote 
start-up  funding,  also  via  the  Czech  recovery  and 
resilience plan. These include a recent amendment 
of  Czechia’s  employee  stock  option  framework, 
applied  since  1  January  2024.  However,  it  may 
need  further  adjustments  to  improve  its  usability 
and  attractiveness 
to  EU  and 
international  peers.  For  further  details  on  these 
topics, see Annex 5.  

compared 

Innovative talent 

The  shortage  of  skilled  workers  affects 
Czechia’s innovation capacity. The demand for 
tertiary  education  graduates  has  outpaced  the 
available  supply  (67)  and  at  the  same  time,  the 
number of tertiary education graduates in science 
and  engineering  continue  to  decrease  (14.2  per 
thousand  population  aged  25-35  in  2012  versus 
10.3 in 2022), on this topic read more in Annex 12: 
Education  and  skills.  Labour  shortages  have 
prompted  Czech  employers  to  look  for  workers 
from  abroad,  but  the  current  labour  migration 
policy  does  not  seem  to  be  sufficiently  geared  to 
foreign  workers.  While 
attracting 
immigration has been rising steadily, close to 90% 
of foreign workers from non-EU  countries work in 
low- to medium-skilled jobs. Conditions in terms of 
permit duration, family reunion and labour market 
mobility  in  Czechia  for  highly  skilled  workers  are 
less  favourable  than  in  peer  countries (68).  For 
bottlenecks  in  domestic  workers,  see  also  Annex 
10. 

skilled 

of 

for 

planning 

education 

development 

The 
entrepreneurship 
education  in  Czechia  is  in  its  early  stages, 
strategic 
and 
calling 
monitoring. 
is 
 Entrepreneurship 
anchored  in  the  school  curricula  as  one  of  the 
eight  key  competences  that  should  be  developed 
in  compulsory  education.  While  some  new 
initiatives 
including 
supporting  entrepreneurial  skills  of  students  and 
new  entrepreneurs  via  the  CzechInvest  Agency 
under  the  national  recovery  and  resilience  plan, 
entrepreneurship  is  not  among  the  priorities  for 
educational  policy.  Czechia  lacks  a  dedicated 
strategy for its development and data on students’ 
participation  and  on  the  quality  and  outcomes  of 
the existing entrepreneurship education.  

launched, 

been 

have 

(66)  PSF Country | Research and Innovation. 

(67)  OECD (2025), OECD Economic Surveys: Czechia 2025, OECD 

Publishing, Paris, https://doi.org/10.1787/7a70af5c-en. 

(68)  OECD  (2023), OECD  Economic  Surveys:  Czech  Republic 
2023,  OECD  Publishing: https://doi.org/10.1787/e392e937-
en. 

42 

 
 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year with the highest number of country data. 
Source: Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

43 

R&D intensity (gross domestic expenditure on R&D as % of GDP)1.761.751.951.931.891.83:2.243.45Public expenditure on R&D as % of GDP0.820.640.750.710.670.63:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 4.64.65.15.4:::9.612.3Researchers (FTE) employed by public sector (Gov+HEI) per thousand active population3.53.64.14.34.44.4:4.1:International co-publications as % of total number of publications36.242.451.152.853.756:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.931.11.191.211.211.19:1.492.70Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.40.320.320.340.350.35:0.40.3Researchers employed by business per thousand active population2.93.94.34.95.25.3:5.8:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)1.10.80.910.7::2.8:Employment share of high-growth enterprises measured in employment (%):16.8610.86::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::68.0:70.872.9:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::19.5:33.2:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::40.0:35.2:38.9:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::4.5:5.911.313.5:Public-private scientific co-publications as % of total number of publications5.96.677.57.98:7.78.9Public expenditure on R&D financed by business enterprises (national) as % of GDP0.0190.0280.0240.0230.0220.024:0.050.02Total public sector support for BERD as % of GDP0.2270.1530.150.1530.1440.126:0.2040.251R&D tax incentives: foregone revenues as % of GDP0.0480.0490.0360.3900.0440.036:0.1020.141BERD financed by the public sector (national and abroad) as % of GDP 0.1790.1040.1140.1140.1000.090:0.1000.110Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.0040.0030.0090.0230.0270.029:0.078:Seed funding (market statistics) as % of GDP 028.817.18.99.38.6:7.3:Start-up and early-stage funding (market statistics) as % of GDP 73.270.953.469.360.148.8:44.0:Later stage and scale-up funding (market statistics) as % of GDP 26.80.429.521.830.642.6:48.7:New graduates in science and engineering per thousand population aged 25-3414.811.910.610.510.3::17.6:Graduates in the field of computing per thousand population aged 25-342.92.82.62.92.9::3.6:Financing innovationInnovative talentScience and innovative ecosystemsR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaborationPublic support for business innovationHeadline indicatorCzechia2012201720202021202220232024EU average (1)USA 
 
 
 
 
  
 
ANNEX 4: MAKING BUSINESS EASIER 

in  key 

Czechia’s business environment is challenged 
by  high  energy  prices,  administrative  and 
regulatory  burdens  and 
labour  market 
shortages  that all  require  faster progress  in 
addressing  barriers  so  that  Czechia  remains 
competitive  in  the  long  term.  High  energy 
prices  are  the  crucial  factor  affecting  the  general 
condition  of  the  Czech  industrial  sector.  Low 
(especially 
demand 
Germany) is weighing on industrial production and 
exports. Urban planning and the procedure for the 
granting of construction permits is one of the main 
obstacles  to  economic  growth.  Progress  has  been 
made in enhancing the business environment and 
reducing administrative and regulatory burden, but 
additional  efforts  are  still  required  in  order  to 
improve  competitiveness  and  investment.  Labour 
shortages  persist  across most  industries,  with the 
construction sector being particularly affected.  

trading  partners 

Economic framework conditions 

in 

Czechia’s  business  environment  remains  one 
of the least favourable in the EU. According to 
the  Prosperity  and  Financial  Health  Index (69), 
Czechia  has  the  sixth  worst  conditions  for  doing 
business 
the  EU.  Businesses  have  been 
burdened  by  a  significant  increase  in  electricity 
prices,  which  have  more  than  doubled  in  the  last 
three  years.  Underperforming  capital  market  is 
limiting financing for companies and start-ups and 
hindering  company  growth  (see  the  Annexes  on 
Innovation  to  Business  and  on  Capital  markets, 
financial  stability  and  access  to  finance).  The 
corporate income tax rate increased from 19% to 
21% as part of the consolidation package in 2024, 
weighing on business activity and investments.  

Private  net investment  remained  unchanged, 
but  public  net  investment  declined  in  2024. 
Private net investment (expressed as a percentage 
of GDP) stayed at the same level  as in 2023 and 
above the EU average (4.43% in Czechia vs 3.44% 
in the EU). According to Czech Founders, the total 
amount  of investment in Czech start-ups grew by 
174% to  EUR 588.6 million in 2024.  A closer look 
nevertheless  suggests  that  59%  of  this  (EUR 
350.6  million)  was  raised  by  two  unicorns,  while 

only  the  remaining  41%  (EUR 238 million)  was 
invested  in  the  rest  of  the  market  –  resulting  in 
only a slight increase of 11.1% in total investment 
in  Czech  start-ups.  Government  net  investment 
declined in 2024 after strong growth in 2023. The 
main  reason  for  this  (apart  from  last  year’s  high 
base)  was  the  government’s  budget  consolidation 
efforts.  Accelerating 
transport 
infrastructure  is  one  of  the  pro-growth  measures 
outlined  in  the  government’s  strategic  document, 
based  on  the  proposals  of  the  government’s 
National Economic Council. 

investment 

in 

Energy  costs  remain  the  main  investment 
obstacle  for  businesses.  Czechia  ranks  last  in 
the  EIB  Investment  Survey (70)  regarding  high 
energy  prices.  Czech  businesses’  difficulties  with 
energy  prices  have  further  worsened  compared 
with  2023  and  this  has  affected  95%  of  firms  – 
the highest share of firms since 2022 (vs 77% in 
the EU as a whole).  

to 

changes 

Czechia  continues  to  experience  difficulties 
with  urban  planning  and  construction-
permitting  processes,  despite  some  steps 
that  it  has  taken  in  the  right  direction.  The 
new Building Act, which gradually came into effect 
in  2023-2024,  reduces  the  deadlines  for  building 
permit  procedures  and 
their 
enforceability.  It  also  established  a  specialised 
Transport  and  Energy  Construction  Authority. 
remain 
However,  urban  planning  processes 
unreformed  and  are  holding  back  development  in 
large  cities,  where  they  take  over  a  decade  to 
complete. A new digital system for issuing building 
permits that was initially planned for launching in 
July 2023 was launched in July 2024. Its purpose 
is to simplify applications, expedite processes and 
improve  transparency.  However,  the  system’s 
its 
introduction  was  not 
malfunction  caused  the  government  to  postpone 
many  digitalisation  elements  until  2027.  This 
setback  affects  not  only  the  construction  and 
energy sectors but also the whole economy.  

successful,  and 

Investing  in  automation  and  robotisation 
could  be  a  key  element  in  resolving  labour 
shortages,  enhancing  productivity,  and  GDP 
and  wages  growth.  Czechia  faces  persistent 
challenges  linked  to  labour  and  skills  shortages. 
Availability  of  skilled  staff  is  the  third  most 

(69)  Česká spořitelna, the Europe in Data portal and the Institute 
of  Sociology  of  the  Czech  Academy  of  Sciences,  The 
Prosperity and Financial Health Index, December 2024. 

(70)  European  Investment  Bank,  EIB  investment  survey  2024, 
based on interviews carried out between April and July 2024. 

44 

 
 
 
 
 
it 
jobs 

that  51%  of 

in  Czechia  and 
advancements, 

significant barrier to investment. Labour shortages 
are still reported in most sectors, but especially in 
manufacturing  and  construction  (see  the  Labour 
the  structure  of 
market  Annex).  Based  on 
forecasts  of 
employment 
been 
has 
technological 
estimated 
could  be 
automated (71). Business could therefore overcome 
these labour shortages by increasing investment in 
automation  and  robotisation 
in  order  to  fill 
workforce  gaps,  maintain  operational  efficiency 
and  drive  economic  growth.  Reducing  skills 
shortages and mismatches requires reform of the 
VET  and  broadening  of  access 
to  general 
education  (in  order  to  reduce  over-specialisation) 
and  promotion  of  work-based  learning  as  well  as 
reskilling  and 
expanding  opportunities 
upskilling.  

for 

Graph A4.1: Making Business Easier: selected 
indicators. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Source: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

Further efforts are needed on late payments 
and  insolvencies  in  order  to  increase  SMEs’ 
resilience.  The  public  sector’s  payment  delays 
decreased  in  2024  compared  with  2023  and  are 

(71)  Deloitte, Automatizace práce v ČR, 2018. 

slightly  below  the  EU  average.  By  contrast,  the 
business-to-business gap has widened and is now 
above  the  EU  average (72).  Czechia  has  the  third 
highest share of SMEs in the EU experiencing late 
payments  from private  entities  in  the  current  and 
previous  quarters  (62%  -  compared  with  the  EU 
average  of  47%) (73).  This  increases  SMEs’  risk  of 
disrupted  cash  flows.  Some  of  the  life  events  of 
companies,  such  as  those  surrounding  insolvency, 
have  received 
less  attention,  and  could  be 
streamlined and digitalised (74). 

in  mobile 
Czechia  has  made  progress 
connectivity,  but  challenges  remain  in  fixed 
infrastructure  deployment.  5G 
coverage 
accelerated  from  83%  in  2022  to  nearly  95%  in 
2023  (above  the  EU  average  of  89.3%).  The 
national target for 5G coverage is 100%, which is 
close to the EU’s target. 50.5% of households are 
currently  covered  by  very  high  capacity  networks 
(VHCN),  so  Czechia  has  significant  scope  to 
improve its contribution to the EU’s Digital Decade 
target. The prompt implementation of investments 
supported  by  the  Recovery  and  Resilience  Facility 
and the Connecting Europe Facility is crucial in this 
regard.  Fibre-to-the-premises  (FTTP)  coverage  is 
36.1%  (well  below  the  EU  average  of  64%)  and 
the roll-out is not progressing fast enough to meet 
the  2030  target.  Contributing  factors  include 
lengthy  building-permit  procedures;  coordination 
difficulties between local and regional  authorities; 
and the high cost of deployment in smaller towns.  

than 

the  area  of 

In 
cybersecurity,  Czech 
enterprises  report  a  higher  incidence  of  ICT 
the  EU 
incidents 
security-related 
average.  The  percentage  of  Czech  enterprises 
affected  by  cyber  incidents  decreased  slightly 
from  4.67%  in  2022  to  4.49%  in  2024  but 
remains  well  above  the  EU  average  of  3.43% (75). 
Security  measures  and  staff  awareness  are 
gradually 
improving,  but  further  efforts  are 
needed  in  order  to  strengthen  resilience  against 
cyber threats (76). 

(72)  Intrum, European Payment Report 2024. 
(73)  2024 Survey on the Access to Finance of Enterprises (SAFE), 

January 2025. 

(74)  The  mid-term  evaluation  is  undertaken  by  the  OECD  in 
collaboration  with  Czechia’s  Ministry  of  Industry  and  Trade 
and  with  financial  support  from  DG  REFORM,  within  the 
framework  of  the  2024  Technical  Support  Instrument  (TSI) 
cycle (project code: 24CZ02), June 2024 – June 2025. 

(75)  Eurostat, isoc_cisce_ic. 
(76)  Eurostat, isoc_cisce_ra. 

45 

62.413.824.646.11.847.916.61041.624.5010203040506070from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27CZ 
      
 
 
Regulatory and administrative 
barriers 

with  the  share  decreasing  from  63%  in  2023  to 
57%  in  2024(81).  This  trend  was  also  echoed  in 
labour  regulations,  which  fewer  businesses  (46%) 
saw as an obstacle to investment in 2024 (52% in 
2023). 

the 

and 

obstacles 

(including 

The  Czech  business  environment  faces 
significant 
the 
complexity  and  uncertainty  of  policy 
burdensome 
decisions, 
administrative  and  regulatory  requirements 
that accompany them). Business regulations are 
only  a  major  obstacle  to  investment  for  a  small 
share  of  companies  (see  Graph  A2.1),  but  the 
complexity of administrative procedures and fast-
changing  legislation  remain  the  most  important 
challenges  when  doing  business  in  Czechia (77). 
72%  of  companies  identified  the  complexity  of 
administrative  procedures  as  a  problem  when 
doing  business  –  above  the  EU  average  (66%). 
There  is  a  heavy  administrative  burden  on  all 
sectors  of  the  economy.  According  to  estimates 
from  the  Chambers  of  Commerce,  businesses 
spend 
on 
administrative tasks – equivalent to an estimated 
loss of CZK 72 billion (EUR 2.9 billion).  

thousands 

annually 

hours 

of 

and 

improvements 

Efforts to improve the business environment 
are  underway,  several  initiatives  are  being 
implemented 
are 
beginning  to  appear.  Following  the  introduction 
of  the  first  two  ‘anti-bureaucratic  packages’  in 
2022  and  2023,  the  Czech  government  approved 
a  third  package (78)  of  29  measures  in  May  2024 
to alleviate the excessive administrative burden on 
businesses.  Under  the  oversight  of  the  Expert 
Group for Reducing Bureaucracy (79), another set of 
22 measures was prepared in August 2024 to help 
businesses  reduce  costs  and  save  time.  The 
Licenced Trade Portal (80) already makes it possible 
fully  online.  The 
to  set  up  a  business 
Entrepreneurial  Portal (a measure  of  the  recovery 
and  resilience  plan)  that 
is  currently  under 
development will provide a single digital place for 
electronic  communication  with  institutions.  The 
perception  of  business  regulations  as  a  barrier  to 
investment improved among the Czech businesses, 

(77)  Eurobaromoeter,  Businesses’  attitudes  towards  corruption  in 

the EU in 2024, July 2024. 

(78)  Vláda  schválila  třetí  antibyrokratický  balíček  připravený 
ministrem  Michalem  Šalomounem  |  Vláda  České  republiky, 
May 2024. 

(79)  Expert  Group  for Reducing  Bureacracy  within  the  Ministry of 

Industry and Trade of Czechia. 

(80)  Licensed Trades Portal. 

46 

to 

tacit  agreement 

first’  principles  could 

Further  enhancements 
the  business 
environment  and  SME  policies  are  needed  in 
order  to  foster  competitiveness  and  attract 
investment. The ‘think small first’, ‘once only’ and 
‘digital 
feature  more 
prominently in future regulations in order to create 
a  more  favourable  business  environment  for  SME 
development.  Implementation  of  measures  such 
as  better  regulatory  impact  assessments,  regular 
and ad hoc ex post evaluations (see the Effective 
institutional  framework  Annex)  offers  significant 
potential  for 
improvement.  Czechia  does  not 
systematically request insights and feedback from 
stakeholders during the consultation process. Also, 
streamline 
introducing 
administrative  procedures  to  obtain  licences  and 
permits  could  enhance  the  business  environment. 
Several 
been 
have 
improve  access  to 
implemented 
finance.  These  include  new  legislation  on  the 
employee  stock  option  plan  (ESOP)  that  was 
adopted in 2023 and should help to attract talent 
and  motivate  employees.  However,  start-up 
representatives (82)  state that 91% of start-ups in 
Czechia  do  not  use  this  ESOP  regime  because  it 
does  not  reflect  the  real  needs  of  tech  start-ups. 
Amendments  to  the  ESOP  (e.g. more  flexible 
conditions,  simplified  corporate  governance  and  a 
review  of  the  tax  framework  according  to  the 
principle of ‘no tax before cash’) would strengthen 
the start-up ecosystem.  

regulatory  measures 
in  order  to 

to 

Single market  

Czech  businesses  are  well  integrated  into 
both  the  single  market  and  global  value 
chains.  Czechia  has  one  the  highest  integration 
rates  in  the  EU  for  goods:  the  trade  volume  of 
goods  represented  38%  of  its  GDP  in  2024 
(compared  to  the  EU  average  of  27%).  The  share 
of Czech businesses reporting that they are facing 
material  supply  constraints  in  building  activity  is 

(81)  EIB investment survey 2024, EIB Investment Survey 2023. 
(82)  Za  lepší  ESOP  -  Czech  Founders,  April  2024,  Předali  jsme 
návrh na lepší ESOP Ministerstvu financí - Czech Founders. 

 
 
 
some 

Czechia  could  benefit  more  from  the  single 
the  second  highest 
market.  Czechia  had 
proportion of incorrectly transposed single market 
directives  in  the  EU  over  the  last  five  years, 
although its performance has improved in the last 
year  (1.7%  in  2023  vs  1.1%  in  2024  and  above 
the EU average of 0.9% in 2024). Czechia has also 
made 
its 
transposition  deficit.  The  percentage  of  single 
market  directives  not  transposed  decreased  from 
0.9%  in  2023  to  0.7%  in  2024  (so  slightly below 
the EU average of 0.8% in 2024). In 2024, Czechia 
resolved 88.9% of the SOLVIT cases it handled as 
the  lead  centre (the  EU  average  was  84.9%).  The 
number of its pending  single market infringement 
cases  decreased  to  26  in  2024  from  29  in  2023 
but was still above the EU average of 24. 

addressing 

progress 

in 

Public procurement  

in 

Competition 
the  public  procurement 
system  could  be  improved.  Czechia’s  overall 
performance  on  public  procurement  is  below  the 
EU  average,  because  it  attracts  too  few  bidders, 
and  the  procedures  can  be  lengthy  and  costly 
(particularly  for  the  public  procurement  review 
system).  The  new  Public  Procurement  National 
Strategy  (PPNS)  and  its  action  plan,  which  was 
adopted in 2024, have started to be implemented, 
but  it  is  still  too  early  to  see  the  impact  on 
competition  in  the  public  procurement  markets. 
The  data  indicate  that  public  procurement  is  still 
suffering  from  the  low  number  of  companies 
submitting  tenders.  The  proportion  of  single  bids 
has been high for several years (40% in 2024 and 
41% over the last five years, compared with 27% 
and  26%  in  the  EU  accordingly).  Improving  the 
in  public 
expertise  of  professionals 
procurement is crucial in order to make the public 
procurement  system  more  efficient  and  cost-
effective.  Developing  central  purchasing  and 
collaboration  at  regional  level  could  provide  more 
targeted support to smaller contracting authorities 
in  order  to  optimise  the  efficiency  of  regionally 
centralised  purchases.  The  PPNS  includes  this 
measure,  but  its  implementation  seems  to  trigger 
practical problems that undermine it. 

involved 

the highest in the EU (24.5% in Czechia vs 10% in 
the  EU) (83),  making  Czechia  vulnerable  to  supply 
chain disruptions. The 2024 rate was slightly lower 
than that of 2023 (26.9%) but was still more than 
double  the  pre-COVID  level.  This  may  be  due  to 
Czechia’s  significant  trade  dependence  on  the 
German  economy,  and  the  concentration  of  its 
industrial  sector 
industries 
(e.g. automotive and machinery).  

few  key 

in  a 

are 

barriers 

to 
Market 
regulations 
competition  and  market  entry 
in  some 
sectors.  With  around  360  professions,  Czechia 
has  the  second  highest  reported  number  of 
regulated  professions  in  the  EU(84).  This  presents 
challenges  for 
individuals  seeking  to  provide 
services  in  Czechia.  The  European  Commission’s 
data(85)  and  the  OECD’s  PMR  figures(86)  suggest 
that  restrictions  on  regulated  professions 
in 
Czechia  are  higher  than  the  EU  average  for 
lawyers,  civil  engineers,  architects  and  real  estate 
agents. 

their 

Recognition  of  qualifications  is  a  significant 
barrier  for  some  groups  wishing  to  enter 
Czechia’s labour market. Approximately 60% of 
Ukrainian  refugees  in  Czechia  (about  180 000 
level  of 
people)  are  working  below 
qualification(87).  Disproportionately  high  formal 
requirements  are  creating  additional  burdens  for 
individuals  seeking  to  provide  services  in  Czechia. 
is  crucial  to  have  a  clear  and  common 
It 
assessment 
regulating 
professions in order to avoid unjustified barriers in 
the  single  market  and  to  facilitate  access  to 
regulated  professions(88).  Czechia  would  benefit 
from  an  audit  and  revision  of  the  certification 
requirements, followed up by the establishment of 
a system of departmental supervision(89). 

framework 

before 

(83)  ECFIN BCS. 
(84)  European Commission, Regulated professions database, 

December 2024. 

(85)  European Commission, 2021, Communication on updating 
the reform recommendations for regulation in professional 
services, COM(2021)385, 9/7/2021. 

(86)  OECD Product Market Regulation, July 2024. 

(87)  https://www.paqresearch.cz/post/dva-roky-pote/. 

(88)  The Commission decided to refer Czechia to the Court of 

Justice of the EU for failing to correctly transpose EU rules on 
proportionality of professional regulations (Directive (EU) 
2018/958) in April 2024. 

(89)  National Economic Council (NERV). 

47 

 
 
 
 
 
 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**Data on single bids for 2024 is provisional and subject to revision. Due to missing data, the EU average of direct awards data is 
calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports; target = 100%, (5) Intrum Payment Report, (6) 
SAFE survey, (7) OECD, (8) (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space 
(PPDS). 

48 

POLICY AREA20202021202220232024EU-27 average11.435.646.726.924.610.018.922.723.619.714.320.26.86.46.04.74.12.35.85.46.21.21.913.4-52.553.250.5-78.8-35.837.436.0-64.0-49.482.694.6-89.3Regulatory environment21.714.610.73.61.824.53.411.59.414.816.015.6-1.09.89.217.414.815.1from public or private entities in the last 6 months55.862.361.164.5--from private entities in the previous or current quarter----62.447.9from public entities in the previous or current quarter----13.816.645.748.350.247.146.141.60.0440.0440.0440.0440.0500.0501.52.41.40.90.70.82.02.32.11.71.10.992.082.494.976.088.984.931.033.030.029.026.024.44140424041-910101097.0CzechiaINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
        
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

Until  recently,  the  domestic  private  and 
public  sectors  have  been  absorbing  the 
above-average  and  growing  net  private 
savings in Czechia. However, capital markets 
remain at a very early stage of development 
and  do  not  contribute  sufficiently  to  the 
financing  of  Czech  companies.  Banks,  which 
dominate  the  financial  sector,  are  robust,  both  in 
terms  of  capital  and  liquidity,  and  are  well 
prepared  to  tackle  future  risks.  Direct  retail 
participation in capital markets remains low, while 
indirect  participation  through  investment  funds  is 
growing. At the same time, the investment policies 
of  domestic  institutional  investors  are  also  quite 
conservative. This leaves internal  financing  as the 
main  alternative  to  bank  funding  for  Czech  firms, 
which  is  a  limiting  factor  for  the  setting  up  and 
subsequent  scale-up  of  innovative  start-ups  with 
no or limited profitability. Moreover, Czechia’s less-
developed capital markets reduce the exit options 
for  private-equity  and  venture-capital  investors. 
The less-developed capital markets also contribute 
to  a  less-developed  local  venture-capital  and 
growth-capital  market,  compounding  the  lack  of 
funding  sources  for  innovation,  which  is  a  key 
factor of competitiveness. 

Availability and use of domestic 
savings 

The growing net private savings of the Czech 
economy  have  been  supporting  domestic 
private investment and public finances. As of 
end-2023,  the  private  savings  ratio,  net  of  fixed 
capital  consumption,  which  has  been  on  a 
persistently  rising  trend,  reached  11.9%  of  GDP, 
i.e. almost double its ten-year average of 6.2% of 
GDP (see Graph  A5.1).  The net private investment 
ratio,  which  measures  the  net  contribution  of  the 
private  sector  to  capital  accumulation  in  the 
country,  did  not  exhibit  such  a  growing  trend  and 
averaged 4% of GDP, with a maximum of 7.6% in 
2022.  At 
the 
government budget  has  no  longer  been  balanced, 
which  resulted  in  an  average  ten-year  deficit 
equivalent  to  1.7%  of  GDP.  As  a  result  of  these 
trends and structural changes, the Czech economy 
turned out to be a creditor to the rest of the world 
for  about  0.5%  of  its  annual  GDP  during  2014-
2023.  Thus,  while  the  net  private  savings  have 
been  absorbed  domestically  until  recently,  their 

time,  since  2020 

the  same 

future  growth  could  result  in  the  Czech  economy 
becoming a more pronounced lender to foreigners. 

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

its 

Consistent  with  its  regular  position  as  a 
small  annual  net  creditor  to  the  rest  of  the 
world,  the  Czech  economy  managed  to 
improve 
international 
(negative)  net 
investment position. As of Q3 2024, total assets 
on  foreigners  reached  115%  of  GDP,  down  from 
127% in 2017, while liabilities to foreigners stood 
at 123% of GDP, down from 152% in 2017. As a 
result,  the  negative  net  international  investment 
position  (NIIP)  came  down  from  -25%  of  GDP  in 
2017 to -8% of GDP as of Q3 2024, showing that 
the  Czech  economy  remains  nevertheless  a  net 
borrower  from  the  rest  of  the  world  in  terms  of 
outstanding  net  foreign  assets  (see  Graph  A5.2). 
The increase in the NIIP is structural and concerns 
all  forms  of  investment.  During  2017-2024,  the 
net  stock  of  foreign  direct  investment  grew  by 
circa 12 percentage points of GDP, the net stock of 
portfolio  investment  increased  by  11  percentage 
points  of  GDP,  and  the  net  stock  of  other 
investments expanded by 14 percentage points of 
GDP. However, the overall impact in NIIP was more 
limited,  with  an  increase  of  only  17  percentage 
points of GDP, because the stock of official foreign 
reserves declined by 19 percentage points down to 
43% of GDP as of Q3 2024. Thus, lately, the Czech 
economy,  which appears to be comparatively well 
integrated in  international  capital  flows,  has been 
accumulating  more  private  assets  on  foreigners, 
improving its still negative NIIP position. 

49 

-10-5051015202530352017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world 
 
   
 
Graph A5.2: International investment position 

Graph A5.3: Capital markets and financial 
intermediaries 

Source: ECB. 

Structure of the capital markets and 
size of the financial sector 

Source: ECB, EIOPA, AMECO. 

in 

Czechia. 

Capital  markets  are  at  an  early  stage  of 
development 
The  market 
capitalisation of listed equity reached 9.8% of GDP 
at end-2023, which is much below the EU average 
(see  Graph  A5.3).  Non-financial 
of  67% 
corporations  accounted  for  three  quarters  of  that 
capitalisation.  The  outstanding  volume  of  debt 
securities  reached  54.7%  of  GDP  at  end-2023, 
which  is  almost  three  times  lower  than  the  EU 
average. General government bonds accounted for 
two  thirds  of  the  outstanding  amounts.  The 
remainder  was  distributed  between  banks  (23%), 
non-financial corporations (7%) and other financial 
intermediaries  (4%).  Thus,  the  contribution  of 
capital markets in Czechia to the financing of the 
domestic economy appears to be rather limited. 

While the financial sector in Czechia remains 
dominated  by  banks,  investment  funds  have 
gained  in  importance  lately.  After  peaking  at 
141%  of  GDP  in  2021,  the  size  of  the  banking 
sector declined to 127% of GDP in 2023, which is 
significantly  below  the  EU  average  of  253%. 
Foreign  banks  control  83%  of  the  sector’s  assets. 
Banking  concentration  appears  to  be  higher  than 
the  EU  average  of  54%,  with  the  top  five  MFIs 
controlling  more  than  65%  of  the  sector.  The 
insurance  sector,  with  total  assets  that  declined 
from 8% of GDP at end-2020 to less than 6% of 
GDP  at  end-2023,  stays  much  behind  the  EU 
average  of  55%.  From  all  non-bank  financial 
intermediaries,  only  investment  funds  have  been 
growing  lately,  reaching  the  equivalent  of  16.7% 
of GDP at end-2023, up from 11.7% at end-2020, 
based on ECB data. 

50 

Resilience of the banking sector 

levels  of  capital.  Historically, 

The  Czech  banking  sector  exhibits  good 
resilience  to  risks  despite  declining  but  still 
robust 
the 
aggregate  capital  adequacy  ratio  in  Czechia  has 
been  comparatively  higher  than  elsewhere  in 
Europe. However, the overall capital ratio has been 
declining since 2020, when it reached 22.1%, and 
stood at 20.5% in Q3 2024, slightly above the EU 
average  of  20.1%  (see  Table  A5.1).  During  the 
same  period  the  CET1  ratio  declined  from  20.3% 
to  18.5%,  remaining  however  significantly  above 
the  EU  average  of  16.5%  as  of  Q3  2024.  The 
2023 latest supervisory solvency stress tests, that 
the  Czech  National  Bank  is  conducting  every  two 
years, and which cover 91% of the sector’s assets, 
showed  no  capital  shortfall  even  under  the 
scenario.  Czech  banks’  aggregate 
adverse 
Minimum Requirement for Own Funds and Eligible 
Liabilities  (MREL)  rate  stood  at  28.7%  of  risk-
weighted  assets  at  the  end-2023,  which  was  2.9 
percentage points above the required level. 

In  addition  to  showing 
improved  asset 
quality,  banks’  balance  sheets  are  well 
prepared  for  future  risks.  With  an  aggregate 
non-performing loan (NPL) ratio of 1.2% as of Q3 
2024,  which  is  below  the  EU  average  of  1.9%, 
credit  quality  remains  robust.  At  the  same  time, 
the corporate NPL ratio declined to 2.8% in 2023, 
below the 3.5% EU average. So far, the tightening 
cycle  of  interest  rates  has  not  deteriorated  asset 
quality. Moreover, banks’ aggregate coverage ratio 

-200-150-100-5005010015020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIPNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsInsurance corporationsInvestment funds020406080100120140Listed equity                        Bonds                         Assets by sector% of GDP 
   
   
them 

of  NPLs  by  existing  provisions  reached  50.5%  as 
of Q3 2024, well above the EU average of 42.1%. 
This  suggests  that  Czech  banks  have  applied  an 
extra degree of caution when accounting for non-
performing 
in  a 
loans,  which  puts 
comparatively better position, should asset quality 
deteriorate  in  the  future.  In  acknowledgment  of 
banks’  preparedness  for  cyclical  risks,  the  CNB 
progressively  decreased 
counter-cyclical 
capital  buffer  from  2.5%  in  October  2023  to 
1.25%  as  of  July  2024.  However,  to  strengthen 
banks’  resilience  amid  deglobalization  and  rising 
introduced  a 
geopolitical 
systemic risk buffer of 0.5% for local banks as of 
January 2025. 

the  CNB 

tensions, 

the 

liquidity 
Czech  banks  maintain  strong 
positions. Banks in Czechia are exposed to a low 
liquidity funding risk and show a satisfactory term 
adequacy between assets and liabilities. As of Q3 
2024,  the  liquidity  coverage  ratio  stood  at  162%, 
in  line  with  the  EU  average.  As  of  end-2023,  the 
net  stable  funding  ratio  reached  159%,  i.e.  23 
percentage  points  above  the  EU  average.  Czech 
banks’  structural  position  has  been  further 
strengthened  by  a  declining  loan-to-deposit  ratio, 
which fell from 103.9% in 2019 to 91.4% at end-
2023, below the EU average of 94.7%. Considering 
the  importance  of  euro-denominated  loans  and 
their  high  share  in  Czech  banks’  assets,  and  to 
tackle  the  related  specific  foreign  exchange  risk, 
the  banking  sector  improved  its  average  euro 
liquidity coverage ratio, which reached 125% as of 
Q1 2024, up from 72% a quarter earlier. 

and  non-life 
insurance  segments  are  highly 
profitable,  with  the  combined  cost  ratio  for  non-
life  insurers  standing  at  89%,  well  below  the 
European  Economic  Area  average  of  96%.  Based 
on an assessment by the European Insurance and 
(EIOPA),  while 
Occupational  Pension  Authority 
floods  and  wildfires  are  relevant  risks  for  Czech 
insurers,  there  are  no  significant  protection  gaps. 
Going  forward,  the  risk  of  asset  repricing  of 
domestic  government  bonds,  which  are  the  main 
investment class for insurance companies, remains 
relevant. However, it is less pressing in the current 
environment of declining interest rates. 

Voluntary  pension  funds  are  well  prepared 
for  potential 
liquidity  risks  related  to 
ongoing reforms in the sector. Pillar 3 pension 
funds  have  been  growing  since  their  introduction 
in 1994 and reached 8.4% of GDP as of end-2023. 
The  legacy  so-called  “transformed”  funds,  which 
are closed to new entrants since the 2013 reform, 
are  bound  to  guarantee  the  invested  amounts, 
which  results  in  very  conservative  and  often 
economically inefficient allocation strategies. As a 
result of that, the number of participants in these 
legacy  funds  has  been  declining  and  it  further 
dropped by 12% in 2023. These divestments may 
give  rise  to  additional  liquidity  needs.  The  CNB, 
which is monitoring this risk closely, assesses that 
i) legacy funds’ aggregate liquidity is sufficient to 
cover  any  outflow  of  participants,  and  that  ii) 
pension  management  companies  in  general  have 
improved  their  liquidity  resilience  in  2023,  in 
preparation for a potential outflow of clients. 

Resilience of the non-bank financial 
intermediaries 

Sources of business funding and the 
role of banks 

is 

to 

sector 

risks.  The 

The  Czech  insurance  sector,  which  remains 
small  and  highly  concentrated,  appears 
very 
resilient 
concentrated,  with  two  insurers  accounting  for 
about half of all premiums written in both the life 
and  non-life  segments.  Its  overall  solvency  is 
adequate  although  it  has  slightly  deteriorated  in 
recent months, with the average solvency ratio at 
solo  level  falling  from  229%  at  end-2023  to 
208% in September 2024 (90). Both life (circa 30% 
of the market in terms of gross premiums written) 

(90)  Source: EIOPA Insurance Statistics 

51 

Firms  in  Czechia  rely  less  than  the  EU 
average  on  funding  from  banks  or  capital 
markets.  More  specifically,  at  the  end  of  2023 
loans  constituted  only  22.9%  of  all  funding 
sources  for  Czech  non-financial  corporations 
(NFCs), while listed shares and bonds represented 
only  6.6%  of  funding  sources.  The  equivalent 
figures for the EU average are 27.2% and 23.8%. 
EU firms also have overall funding levels that are 
substantially higher as a share of GDP than Czech 
firms,  as  the  overall  level  of  NFC  funding  was 
167.4%  in  Czechia  but  230.3%  of  GDP  in  the  EU 
on average (see Graph A5.4). 

 
 
Graph A5.4: Composition of NFC funding as a % of 
GDP 

(1) Reference period is end-2023. 
Source: Eurostat. 

that 

their 

As a result, Czech businesses depend more on 
internal financing than their European peers. 
75% of Czech firms’ investment needs are covered 
by internal funding, compared with an EU average 
of  66%  (91).  At  the  same  time,  88%  of  surveyed 
Czech  firms  believed 
investment 
activities  over  the  last  three  years,  i.e.  in  2021-
2023,  were  at  about  the  right  amount,  a  level  of 
confidence  that  was  higher  than  the  EU  average 
(80%),  suggesting  that  there 
is  no  material 
financing  gap  relative  to  investment  demand. 
However, this high level of overall satisfaction with 
their  funding  situation  may  not  be  the  case  for 
Czech firms with no or limited capacity for internal 
funding,  such  as  innovative  start-up  firms  (see 
below). 

its  relative  small  size  by  EU 
Despite 
standards, Czechia’s banking sector plays an 
important role in financing the economy. Most 
banks  are  foreign  controlled,  and  the  sector  is 
relatively concentrated (92). Given the resilience of 
the  sector  (see  above),  businesses  are  unlikely  to 
face challenges in accessing stable and affordable 
bank loans in the near term.  

As interest  rates  gradually  ease,  some timid 
signs  of  recovery  in  credit  demand  and 
therefore  credit  growth  are  appearing  in 
Czechia.  Credit  growth  has  been  on  a  general 
downward  path  since  August  2022,  albeit  with  a 

(91)  See p.29 of the 2024 EIB Investment Survey. 

(92)  Based  on  the  share  of  the  total  assets  of  the  five  largest 
credit institutions, see EU structural financial indicators | ECB 
Data Portal. 

52 

more volatile pattern for NFCs. However, as policy 
rates gradually decline, there are some signs of a 
recovery  in  credit  growth,  which  is  expected  to 
continue  in  2025.  For  households,  the  annual 
credit-growth  rate  for  adjusted  loans  gradually 
edged  up  from  4.1%  in  April  2024  to  5.1%  in 
September 2024. For NFCs, following a temporary 
rise  at  the  end  of  2023  and  a  subsequent  steep 
fall from December 2023 to July 2024 (from 8.1% 
to  3.2%),  annual  credit  growth  has  started  to 
recover, reaching 4.2% in September 2024.  

Credit demand from firms is also rebounding, 
further  supporting  credit-growth  prospects. 
The latest bank lending survey by the central bank 
of Czechia showed that demand for loans, by large 
companies  and  for  longer-term  loans,  rose  in  Q3 
2024  in  comparison  to  the  previous  quarter.  Q3 
2024  also  saw  the  first  increase  in  demand  for 
investment-financing  loans  since  early  2022.  This 
was  due to  the  gradual  fall  in  lending  costs  from 
previous highs, as the average interest rate on the 
stock of company loans in Czech koruna fell from 
7.42% in September 2023 to 5.73% in September 
2024,  with  a  much  less  pronounced  fall  in  the 
average interest rate on company loans in euro.  

Retail investment in capital markets 

Exchange 

The  Czech  capital  markets  remain  under-
developed. The main stock exchange in Czechia is 
the  Prague  Stock 
(PSE).  Both 
capitalisation  and  trading  volumes  are  very  low. 
The use of equity by SMEs is also very limited, as 
only  3.6%  of  Czech  SMEs  indicated  in  the  2023 
SAFE  survey  that  equity  is  relevant  for  them, 
compared  with  an  EU  average  of  10.1%  (93). 
Although  Czechia’s  SME-focused  START  market 
has  expanded  listing  opportunities,  initial  public 
offerings (IPOs) remain rather limited and small in 
the proportion to the economy.  

Czechia  had  a  national  strategy  in  place  for 
the  development  of  its  capital  markets  for 
this 
2019–2023.  Certain  key  measures 
strategy  have  now  been  adopted,  such  as  the 
introduction  of  a  long-term  investment  product 
and a new type of alternative participation pension 

in 

(93)  Data  and  surveys  -  SAFE  -  European  Commission,  2023, 

Results by country, T27. 

050100150200250CZEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
     
 
 
fund  (see  below).  However,  these  measures  have 
only been recently implemented and need time to 
reach their full potential. Since 2024, there has not 
been  an  updated  strategy  to  develop  Czechia’s 
capital markets.   

Czech  households’  above-average  savings 
are 
invested  conservatively,  despite  a 
gradual change in investment behaviour over 
the  past  15  years.  The  degree  of  direct  retail 
investment  (i.e.  investment  by  non-professional 
investors)  in  the  Czech  capital  markets  is  low. 
Nevertheless,  the  assets  of  the  investment-fund 
industry  continue  to  grow,  and  now  account  for 
almost  10%  of  total  financial-sector  assets,  with 
72%  of  assets  under  management  belonging  to 
retail clients (94). Household financial assets held in 
pension, 
(or 
directly  in  financial  investment  instruments)  as  a 
percentage  of  total  household  financial  assets 
rose  from  17.8%  in  2008  to  24.1%  in  2023,  but 
this is still substantially below the EU average for 
2023 of 45.4% (see Graph A5.5). 

investment  funds 

insurance  and 

Graph A5.5: Composition of household financial 
assets per capita and as a % of GDP 

(1) Reference period is end-2023. 
Source: Eurostat. 

There is still significant scope to increase the 
level of direct and indirect retail investment 
in Czechia. This is evidenced by: (i)  the stronger-
than-average savings rate of Czech households in 
recent years, with positive median saving rates for 
all  quintiles  of  the  household  income  distribution; 
and (ii) the fact that cash and deposits account for 
a  higher  share  of  household  assets  than  the  EU 
average (42.7% vs 32.3%).  

(94)  See Table A.8 in EFAMA Asset Management in Europe, facts 

and figures December 2024. 

Recent  policy  initiatives  in  Czechia  aim  to 
promote  retail  participation  in  the  country’s 
capital markets. To boost household investment 
via  the  capital  markets,  a  long-term  investment 
savings  account  has  been  made  available  since 
to  other 
2024. 
government-supported 
savings 
products,  e.g.  pension  funds  and  life  insurance 
products. The new account, which is very flexible in 
terms of asset allocation and investment strategy, 
shares the same tax-relief features as these other 
long-term products, subject to a cumulative cap on 
tax advantages that applies to all of them.  

It  offers  an  alternative 
long-term 

to  assess 

However,  further  policy  action  may  be 
needed to promote retail investment in Czech 
capital  markets.  More  work  may  be  needed  to 
raise  public  awareness  of  the  new  long-term 
investment  product. 
take-up  has  shown 
Its 
encouraging early signs, with CZK 2.4 bn (EUR 96 
mn) invested by 116 544 investors in its first year 
of  operation  (95).  But  this  take-up  needs  to  be 
monitored  closely 
the  product’s 
attractiveness for new savers and its ‘additionality’ 
compared to other long-term savings products (i.e. 
the extent to which it is attracting new investment 
from retail investors rather than diverting existing 
investment  that  would  otherwise  have  gone  into 
other  government-supported  long-term  savings 
products).  Other  aspects  of  the  product  may  also 
need 
the 
competitiveness  of  the  fee  structures  associated 
with  this  product;  or  (ii)  the  extent  to  which  its 
design  sufficiently  supports  the  withdrawal  of 
savings  in  the  form  of  an  annuity  rather  than  a 
lump-sum.  The  Czech  government  could  also 
consider  both:  (i)  a  wider review  of the incentives 
in place to promote retail participation in financial 
markets;  and  (ii)  possible  steps  to  increase  the 
availability of low-cost, well-diversified investment 
products  suited  for  retail  investors.  It  will  also  be 
crucial  for  the  government  to  further  strengthen 
retail investor trust, in part through: (i) maintaining 
an  effective  framework  of  corporate  governance 
and  protection  of  shareholder  rights;  and  (ii) 
reducing cases of fraud and malpractice (96). 

to  be  assessed, 

such  as: 

(i) 

(95)  See relevant Press release AKAT. 

(96)  For  examples  of  past  cases  of  malpractice,  see  p.  7  in  this 
private  survey  (in  Czech)  on  the  Czech  market  for  unlisted 
corporate bonds. 

53 

0501001502002500102030405060708090CZEUCZEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
  
 
 
The role of domestic institutional 
investors 

The  country’s  growing  fund-management 
industry tends to invest more in the domestic 
capital markets than EU peers invest in their 
capital  markets.  Czech 
own  domestic 
investment-fund  industry  assets  grew  by  circa 
34% in 2023 compared with 2022 and continued 
to grow by another 26% in 2024. As of end-2024, 
the  assets  invested  in  domestic  and  foreign 
investment funds offered in Czechia amounted to 
CZK  1 653  bn  (i.e.  equivalent  to  circa  21.7%  of 
2023  GDP  or  EUR  66  bn)  allocated  as  follows:  (i) 
11.5%  in  equity  funds;  (ii)  26.4%  in  bond  funds; 
(iii)  12.1% in mixed funds; (iv) 18% in real  estate 
funds; and (v) 31.9% in other funds (97). According 
to 
the  Czech  Capital  Market  Association, 
approximately  69%  of  the  country’s  investment-
fund  assets  are  invested  in  domestic  assets  and 
31%  in  foreign-domiciled  assets  (98).  In  2023, 
Czech  asset  managers  allocated  about  50%  of 
their equity and bond holdings to domestic bonds 
and  equities,  a  substantially  greater  home  bias 
than the EU average (99).  

The investment portfolio of Czech insurers is 
mostly composed of bond holdings. The Czech 
insurance  sector  mainly  invests  in  government 
bonds,  mostly  domestic.  Government  bonds 
account  for  44.2%  of  total  assets  held  by  Czech 
insurers  (compared  with  19.5%  for  the  EU  as  a 
whole)  (100),  with  another  6.6%  held  in  cash  and 
deposits.  Equities  accounted  for  7.7%  of  total 
insurance  fund  assets,  and  corporate  bonds  for 
11.2%.  Investment  funds  accounted  for  another 
21%  of  Czech  insurers’  investment  portfolio,  of 
which 45.5% was in equity funds but only 0.5% in 
private-equity funds.  

The  domestic  pension-fund  industry  has  an 
even  more  conservative  investment  profile 
than  the  insurance  industry,  with  a  greater 
focus on Czech government bonds. As of end-
of  2023,  67.3%  of  the  assets  of  the  voluntary 

(97)  Source: ČNB ARAD. 

(98)  Source: Czech Capital Market Association (AKAT ČR). 

(99)  See  Exhibits  4.4  and  4.5  in  EFAMA  Asset  Management  in 

Europe, facts and figures December 2024. 

(100) Source: EIOPA Insurance Statistics. 

invested 

funds  were 

for  another  6.8%. 

pillar  3  pension 
in 
government  bonds.  Bank  deposits  are  the  second 
largest investment asset held by pension funds, at 
16.9%. Equities account for only 4.6% of pension-
fund  assets,  investment  funds  for  4.2%  and 
This 
corporate  bonds 
conservative  investment  policy  is  due  to  the 
investment  guarantee  provided  by  the  legacy 
funds 
so-called 
“participation,”  funds  are  growing  rapidly  and  are 
more  dynamic 
investment 
strategies,  with  only  31%  of  their  assets  in 
government  bonds,  as  of end-2023.  However,  the 
new  funds  accounted  for  only  about  27%  of  the 
overall sector as of end-2023. 

in  terms  of  their 

above). 

new, 

(see 

The 

Domestic institutional investors provide little 
in  the  way  of  funding  for  start-ups  and 
venture-capital investors. A recent paper by the 
Centre  for  European  Policy  Studies  showed  that 
pension funds in Czechia accounted on average for 
only  1%  of  private-equity  and  venture-capital 
funds  raised  annually  in  the  country  over  2007-
2023, a figure that falls substantially short of the 
19%  for  the  Baltic  states  or  +20%  shares  for 
Nordic Member States (101).  

Recent  policy  changes  may  facilitate  a  shift 
towards  the  new  pension  funds  and  less 
conservative  investment  strategies.  This  shift 
could  include  pension  funds  taking  direct  or 
indirect  positions  in  unlisted  equity.  The  recent 
policy changes included: 

i) 

ii) 

the  abolition  of  the  state  contribution  for 
persons receiving a retirement pension and 
an overall increase in the lower and upper 
limits  to  obtain  the  state  contribution 
when investing in pension funds;  

improved  mobility  allowing  people  to 
switch  their  pension  investments  more 
easily  between  legacy  and  new  pension 
funds;  

iii)  the creation of an alternative participation 
fund,  the  fee  policy  and 
investment 
strategy  of  which  can  be  set  more  freely 
than the existing funds, making it easier to 
invest 
in  private-equity  funds,  among 
others. 

(101) Source: Closing the gaping hole in the capital market for EU 

start-ups – the role of pension funds – CEPS.  

54 

 
 
 
The depth of venture and growth 
capital 

The local  venture-capital  and growth-capital 
markets  are  not  developed  enough  to  meet 
the  financing  needs  of  innovative  firms.  A 
large part of the innovation in Czechia is driven by 
foreign-owned  companies  and  relies  on  funding 
from  abroad  (102).  The  average  value  of  annual 
private-equity  investment  in  Czechia  relative  to 
nominal GDP went up to 0.2% in 2021-2023 from 
0.1%  in  2015-2020,  but  this  is  still  much  lower 
than  the  equivalent  EU  average  of  0.6%.  The 
average 
venture-capital 
investment relative to nominal GDP  also went up, 
rising  to  0.03%  in  2021-2023  from  0.01%  in 
2015-2020,  but  this  too  is  still  much  lower  than 
the  equivalent  EU  average  of  0.08%.  Given  the 
limited  venture-capital  and  private-equity  activity 
in Czechia, there is a financing gap for early-stage 
innovative  firms  in  need  of  capital  with  high  risk 
tolerance, throughout their life-cycle. 

annual 

value 

of 

Czechia  has  put  in  place  some  policies  to 
promote  start-up  funding.  To  address  this 
issue,  Czechia  formulated  an  innovation  strategy 
for 2019-2030 and a strategy to support SMEs for 
the  period  2021–2027.  The  Czech  recovery  and 
resilience  plan  (RRP)  also  includes  measures  to 
support the financing of start-ups (103), while start-
up  support  is  also  provided  by  CzechInvest,  an 
entity  under  the  Ministry  of  Industry  and  Trade. 
The recent amendment of the Income Tax Act (104), 
which  postpones  the  moment  of  taxation  of 
employee stock options, is a first effort to improve 
the  attractiveness  of  Czechia’s  employee  stock-
option  framework  relative  to  EU  and international 
peers (105).  

(102) Source: Supporting FinTech Innovation in the Czech Republic, 

OECD (2023). 

(103) Namely:  (i)  three  pilot  co-investment  funds  to  develop  pre-
seed investments, strategic technologies and university spin-
offs; and (ii) the new quasi-equity instruments by the Czech 
National Development Bank. 

(104) Section 6(14) of the Income Tax Act initially applicable as of 

1 January 2024 and later further amended as of 
1 July 2024. 

(105) According  to 

rankings  provided  by  the  Not  Optional 
campaign,  Czechia’s  framework  for  employee  stock  options 
scores much lower than countries such as France, the Baltic 
states or the UK.  

However,  further  policy  action  may  be 
needed  in  the  future.  Additional  measures  may 
be  needed  to  ensure  the  employee  stock-option 
framework  is  flexible  enough  to  be  used  by  most 
Czech  start-ups  (see  Annex  3  and  4).  Moreover, 
there is still no comprehensive legal framework in 
Czechia  to  facilitate  the  creation  and  growth  of 
start-ups as in other Member States, on the basis 
of a clear definition of what is an eligible start-up. 
Further  measures  to  promote  and  facilitate  IPO 
activity could also improve the ability of successful 
start-ups  to  scale-up,  while  offering  an  attractive 
exit  option  to  venture-capital  and  private-equity 
investors.  Moreover,  the  limited  venture-capital 
financing  in  the  country  is  partly  driven  by  the 
already-low participation of institutional investors, 
including pension funds (see previous section).  

Financing the green transition 

The  financing  needs  for  Czechia’s  green 
transition  pose  a  challenge,  especially  when 
it  comes  to  mobilizing  private  capital  to 
close  the  financing  gap.  The  Czech  economy 
has  above-average  emissions  intensity  and  the 
necessary investment costs for decarbonisation by 
2050 are estimated at about CZK 3.5 tn (EUR 140 
bn), of which only about CZK 1–1.2 tn (EUR 40-48 
bn) are identified from public sources including EU 
funds  (106).  Between  now  and  2030,  Czechia  aims 
to  help promote  green  finance  to  bridge  this  gap. 
Despite this goal, Czechia’s issuance of bonds with 
environmental,  social,  and  governance  objectives 
as a share of total bond issuance was lower in H1 
2024  than  its  three-year  average  of  circa  10% 
and  is  low  compared  to  most  EU  peers  (107). 
Therefore,  it  will  be  crucial  to  mobilise  private 
investment  through  stable  regulatory  frameworks 
and  appropriate  risk-sharing  instruments.  Public 
resources  need  to  be  deployed  in  a  targeted  and 
cost-effective  manner,  with  a  clear  focus  on 
maximising 
leverage  and  ensuring  value  for 
money. 

(106) See p. 31 of Czech Republic IMF 2023 Article IV Consultation. 

(107) Source: AFME CMU Key Performance Indicators, Seventh 

Edition, November 2024. 

55 

 
 
 
Table A5.1:  Financial indicators 

(1) Annualised data 
Credit growth and pension funds EU data refer to the EA average. 
Source: ECB, ESTAT, EIOPA, DG FISMA CMU dashboard, AMECO. 

Financial literacy 

included 

Financial  literacy  in  Czechia  is  still  slightly 
below  the  EU  average,  despite  initiatives  to 
promote  financial  education.  Financial  literacy 
is  crucial  for  both  encouraging  retail  investors  to 
participate  in  capital  markets  and  familiarising 
SMEs with alternatives to bank financing. Financial 
education  has  been 
in  educational 
programmes  in  Czech  elementary  schools  since 
2008,  but  the  level  of  financial  literacy  in  the 
lower  than  the  EU 
country  remains  slightly 
(108) 
average.  A  2023  Eurobarometer  survey 
showed that only 17% of Czech citizens displayed 
a  high  level  of  financial  literacy,  66%  a  medium 
level, 
level,  and  the  remaining  16%  a 
compared with the EU average of 18% for a high 
level of literacy, 64% for a medium level, and 18% 
for  a  low  level.  This  leads  to  an  overall  financial-
literacy  indicator  for  Czechia  of  44.5  vs  an  EU 
average  score  of  45.5.  The  2024  edition  of  the 
Czech  Banking  Association’s 
financial-literacy 
index  showed  that  the  weakest  scores  are 

low 

(108) Source: Monitoring the level of financial literacy in the EU - 
July 2023 - Eurobarometer survey, Section 1.4, Graph F3 

56 

achieved by the 18-34 age group and people with 
only  a  primary  education  or  an  apprenticeship-
level  education.  A  national  strategy  for  financial 
education  has  been  implemented  since  2010  and 
was  updated  (version  2.0)  in  2021.  The  Czech 
Ministry of Finance also manages an informational 
website about financial literacy for consumers and 
a  national  registry  of  ongoing  financial  education 
projects.  

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)141.1134.0131.0138.9140.8129.4126.7135.7248.4Common Equity Tier 1 ratio16.817.118.220.319.818.718.818.516.6Total capital adequacy ratio18.118.319.722.121.220.320.620.520.1Overall NPL ratio (% of all loans)2.82.11.71.91.71.41.21.21.9NPL (% loans to NFC-Non financial corporations)7.55.44.34.84.33.62.72.83.5NPL (% loans to HH-Households)2.92.31.92.01.71.41.41.52.2NPL-Non performing loans coverage ratio45.353.155.450.652.252.852.550.542.1Return on equity113.013.313.96.710.614.413.715.410.0Loans to NFCs (% of GDP)20.620.019.419.619.618.017.417.930.0Loans to HHs (% of GDP)30.630.130.032.333.531.028.629.244.5NFC credit annual % growth6.16.33.9-0.68.16.88.14.20.8HH credit annual % growth8.47.96.66.810.26.64.85.10.7Stock market capitalisation (% of GDP)---9.813.39.39.89.569.3Initial public offerings (% of GDP)0.000.010.000.000.040.010.00-0.05Market funding ratio48.347.246.146.141.841.039.8-49.6Private equity (% of GDP)0.030.360.110.130.320.200.15-0.41Venture capital (% of GDP)0.000.010.010.010.050.030.02-0.05Financial literacy (composite)------44.5-45.5Bonds (as % of HH financial assets)2.51.91.91.91.72.62.7-2.7Listed shares (as % of HH financial assets)2.33.02.92.82.92.32.5-4.8Investment funds (as % of HH financial assets)6.76.67.16.98.18.510.7-10.0Insurance/pension funds (as % of HH financial assets)11.210.610.49.89.58.98.2-27.8Total assets of all insurers (% of GDP)9.48.67.88.07.86.25.96.254.81-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.Banking sectorNon-banks sector 
 
 
 
 
 
 
 
 
  
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

burden, 
remain. 

administrative 
challenges 

Czechia’s  institutional  framework  influences 
its competitiveness. Trust in central government 
remains below the  EU  average.  Despite  efforts  to 
regulatory 
reduce 
governance 
Structural 
weakness  of  local  government,  coordination,  and 
implementation  are  key  hurdles  for  Czechia’s 
public administration. The country lags in provision 
of digital public services, though the share of users 
has increased. A civil service reform is undergoing, 
but  challenges  in  attracting  and  retaining  skilled 
professionals persist.  

Public perceptions 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

(1) EU27 from 2019; EU28 before 
Source: Standard Eurobarometer surveys 

Trust  in  public  institutions  remains  near  the 
EU  average  but  varies  significantly  (Graph 
A6.1).  Trust  in  local  and  regional  authorities,  as 
well  as  in  the  justice  system  is  relatively  strong. 
However,  trust  in  the  central  government is much 
lower at 0.24, below the EU average of 0.33. 58% 
of  citizens  believe  that  reducing  bureaucracy 
in  public  administration, 
would  boost 
compared to 52% across the EU. Additionally, 43% 

trust 

want  the  administration  to  engage 
communication with the citizens (EU: 31%) (109).  

in  more 

level 

remains  below 

The  perceived  quality  of  government  at 
the  EU 
regional 
average (110).  Czechia  has  the  most  fragmented 
municipal  structure  in  the  EU,  with  the  highest 
number  of  municipalities  per  capita.  Strong 
coordination is needed, particularly in areas where 
municipalities  have  greater  competences,  e.g. 
building  permits,  non-tertiary  education  and  care, 
and  social  services.  A  new  model  for  municipal 
collaboration  (community  of  municipalities)  was 
introduced in 2024. (111). It allows municipalities to 
share staff and perform jointly tasks. However, the 
interest remains limited (112). 

Quality of legislation and regulatory 
simplification 

assessments 

is  below 
impact 
in  the 

Performance  in  developing  and  evaluating 
the  EU  average. 
legislation 
Regulatory 
are  well 
embedded 
legislative  process.  Recent 
updates  to  law-making  rules  have  incorporated 
assessments  related  to  sustainability  and  gender 
balance.  However,  there  are  many  exceptions  to 
the  overall  application  of  the  rules  for  impact 
assessment  and  quality  is  often  low.  The  use  of 
tools  like  stakeholder  engagement  and  ex  post 
evaluation  of  legislation  shows  a  visible  gap  with 
respect  to  the  EU  average  due  to  weaker 
methodology,  transparency,  and  quality  controls 
(Graph  A6.2).  To  address  the  outstanding  gap, 
Czechia  is  intending  to  introduce  new  uniform 
requirements  for  ex  post  evaluations  in  2025  to 
ensure  policy 
reviewed  more 
impacts  are 
comprehensively (113).  

(109) Understanding Europeans’ views on reform needs - April 

2023 - Eurobarometer survey. 

(110) Inforegio - European Quality of Government Index 

(111) https://spolecenstviobci.gov.cz/  

(112) Community overview | spolecenstviobci.gov.cz 

(113) Review of regulatory effectiveness from 2025 | ria.vlada.cz 

57 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system CZRegional or local public authorities EU27Regional or local public authorities CZGovernment  EU27Government  CZ 
 
       
 
 
 
 
Table A6.1:  Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

a backlog of 200 proposals were transferred from 
the previous to the new mandate (114).  

burdens 

administrative 

Simplification  efforts  have  focused  on 
reducing 
and 
enhancing  transparency.  The  government  has 
adopted  its  third (115)  ‘anti-bureaucratic’  package 
to  reduce  regulatory  burden  and  is  currently 
preparing  a  fourth  package  (see  Annex  4).  The 
introduction  of  tools  for  real-time  data-sharing 
across  ministries  and  the  launch  of  the  ‘e-Sbírka’ 
digital  legislative  collection  in  2024  were  other 
positive  steps.  However,  there  remains  room  for 
Czechia  to  further  strengthen  its  mechanisms  for 
illustrate,  when 
simplifying 
evaluating  primary 
is  no 
there 
requirement 
the  consistency  of 
regulations  and  address  areas  of  duplication, 
quantify  or  assess  administrative  burdens  and 
substantive 
such 
legislation.  Moreover,  periodic  ex  post  evaluation 

regulations.  To 

compliance  of 

to  consider 

legislation, 

costs  of 

(114) https://www.irozhlas.cz/zpravy-domov/vetsine-cechu-

snemovni-obstrukce-vadi-nejvice-volicum-piratu-vladnich-
stran-ale_2501220500_jgr  

(115) https://vlada.gov.cz/cz/clenove-vlady/pri-uradu-

vlady/michal_salomoun/aktualne/dalsi-uleva-od-byrokracie--
vlada-schvalila-treti-antibyrokraticky-balicek-pripraveny-
ministrem-michalem-salomounem-213338/  

58 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

Parliamentary  rules  of  procedure  can  be 
improved to ensure higher legislative quality. 
Laws  initiated  by  parliament  –  which  account  for 
some  22%  of  new  laws  –  are  not  bound  by 
mandatory 
broad 
stakeholder  involvement.  The  right  to  extended 
debate  on 
legislative  proposals  has  affected 
negatively the work of the Chamber of Deputies – 

assessments 

impact 

or 

0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsCZ_StakeholderengagementCZ_Regulatory ImpactAssessmentCZ_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are r qu r d to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
     
 
 
   
 
Table A6.2:  Key Digital Decade targets monitored through the Digital Economy and Society Index 

Source: State of the Digital Decade report 2024 

of  existing  regulations  is  not  mandatory  (table 
A6.1). 

regulation 
The  OECD  product  market 
indicators  show  that  Czechia’s 
licensing 
system is aligned with some, but not all, best 
practices. For example, although the government 
keeps an up-to-date online inventory of all permits 
and  licences  required/issued  to  businesses  by 
public  bodies,  there  is  no  requirement  for  the 
government  to  regularly  assess  whether  such 
licences and permits are still required or should be 
withdrawn (see also Annex  4). Unlike 19 other EU 
Member States, Czechia does not have a dedicated 
institution for promoting pro-productivity policies. 

Social dialogue 

has 

dialogue 

in  Czechia 
an 
Social 
institutional  basis 
in  the  form  of  the 
Tripartite  Council.  The  Council  of  Economic  and 
Social Agreement of the Czech Republic (RHSD ČR) 
is  a  voluntary  negotiation  body  uniting  the 
government, trade unions, and employers to reach 
consensus  on  key  economic  and  social  issues. 
While employers’ association membership remains 
stable  or  growing,  trade  union  membership  is 
declining.(116) 

(116) For an analysis of the involvement of Czechia’s social 

partners at national level in the European Semester and the 
Recovery and Resilience Facility, see Eurofound (2025), 
National-level social governance of the European Semester 
and the Recovery and Resilience Facility. 

59 

In  2024,  social  partners  opposed  their 
classification  as  lobbyists  and  pushed  for 
greater  involvement  in  investment  planning, 
criticising  policy  transparency.  Despite  active 
participation  that  followed  in  some  policy  areas, 
disagreements  over  the  consultation  processes 
persisted. 
Programme 
Employment has launched two calls for proposals 
worth  EUR  28  million  to  support  employer-
employee  collaboration  on 
relations, 
workplace safety, and collective bargaining.  

Operational 

labour 

The 

Digital public services 

Czechia  has  made  slight  progress  with 
provision  of  digital  public  services  yet  stays 
below the EU average (Table A6.2) Performance 
for  digital  services  to  citizens  is  76.3%  (EU  79%) 
and for businesses 83.8% (EU 85%). Access to e-
health  records  remains  a  significant  challenge, 
with  Czechia  scoring  just  51.1  out  of  100,  the 
second  lowest  in  the  EU,  compared  to  the  EU 
average of 79.1.  

The  share  of  e-Government  users  stands 
around  the  EU  average  (76.7%  vs.  75%),  while 
that  of  e-ID  users  lags  behind  (28.5%  vs.  41.1%) 
(117). The country successfully rolled out a national 
eID  system  under  the  eIDAS  regulation.  However, 
Czechia  has  not  yet  set  up  and  notified  eID 
systems  for 
legal  persons  under  the  eIDAS 
regulation.  This  means  that  Czech  businesses 
cannot  authenticate  themselves  to  access  public 

(117) Digital Decade 2024: Country reports | Shaping Europe’s 

digital future 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services175767679100Score (0 to 100)20212022202320232030281848485100Score (0 to 100)202120222023202320303na475179100Score (0 to 100)20212022202320232030CzechiaEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
  
 
services  provided  by  other  Member  States, 
the  Once-Only 
including 
Technical System (118). 

those  enabled  by 

Czechia 
is  advancing  towards  seamless, 
automated exchange of authentic documents 
and  data  across  the  EU.  It  has  developed  the 
necessary  infrastructure  and  is  beginning  the 
process  of  connecting  the  first  authorities  to  the 
Once-Only Technical System, part of the EU Single 
Digital Gateway (119).  

Civil service  

The  civil  service  is  undergoing  significant 
reform  to  enhance  professionalism  and 
capacity.  Amendments  to  the  State  Civil  Service 
Act  have  introduced  limits  on  career  tenure  and 
streamlined  hiring  processes  for  senior  civil 
servants.  These  amendments  have  made  the 
recruitment of new civil servants more flexible by 
extending  the  validity  period  of  shortlists  and 
opening up recruitment for specific profiles (e.g. in 
IT)  to  persons  with  only  a  secondary  education 
(120).  An  entrance  examination  was  introduced 
under  an  amendment  to  the  Act  on  Officials  of 
Territorial  Self-Governing  Units 
(regional  and 
municipal)  (121).  Both  laws  (national  and  regional) 
are  intended  to  adjust  HR  management  practices 
individual  authorities.  As 
to 
responsibility 
for  state  officials  and  self-
government  officials  (regional  and  municipal)  is 
divided  between  different  government  entities, 
stronger  coordination  is  needed  to  streamline 
attractiveness  and  resource  efficiency.  Although 
the  potential  of  these  reforms  is  promising, 
Czechia  has  not  established  adequate  monitoring 
to evaluate its effects.  

the  needs  of 

Despite  these  advancements,  challenges 
remain  in  attracting  and  retaining  skilled 

(118) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(119) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(120) Ministry of the Interior of the Czech Republic. Legislation - 

Civil service 

(121) Education in territorial units - amendment to the Act on Civil 
Servants and Implementing Regulations as of 1 January 
2025 - Ministry of the Interior of the Czech Republic 

professionals,  particularly  for  specialised 
positions. While the Czech civil service is younger 
than  the  average  of  the  EU,  the  share  of  staff 
under  the  age  of  50  is  declining.  Moreover,  the 
proportion  of  civil  servants  with  higher  education 
qualifications fluctuates below the EU average (CZ 
45.8%, EU 54% in 2024(122). The participation rate 
of civil servants in adult learning has increased to 
the  EU  average  (CZ  18.6%;  EU  18.9%).  At  the 
same time, in  2024,  no  specific  steps  were  taken 
to  further  develop  the  skills  of  civil  servants.  the 
human  resources  policy  is  still  fragmented  and 
achieve 
lacks 
comprehensive  reform.  In  2024,  an  initial  survey 
of  21 243  state-level  civil  servants,  representing 
some  30%  of  all  civil  servants,  provided  useful 
input  for  a  forthcoming  HR  action  plan,  financed 
under the recovery and resilience plan (123). 

necessary 

data 

the 

to 

While  women  account  for  a  significant  proportion 
of the public sector workforce, they continue to be 
underrepresented in senior management positions 
(only  28.1%),  placing  Czechia  among  the  bottom 
four  EU  Member  States  for  gender  parity(124). 
Implementing  comprehensive  strategies  to  attract 
and retain a diverse talent pool will be  crucial for 
enhancing the effectiveness and responsiveness of 
Czechia's public administration. 

Integrity 

Companies  consider  corruption  to  be  a 
problem when doing business, while there are 
In 
concerns  regarding  high-level  cases. 
Czechia,  67%  of  companies  consider 
that 
corruption is widespread (EU average 64%), while 
43%  consider  that  corruption  is  a  problem  when 
doing  business  (EU  average  36%) (125).  Moreover, 
only  26%  of  companies  believe  that  people  and 
businesses  caught  bribing  a  senior  official  are 
appropriately  punished  (EU  average  31%) (126). 
High-level  corruption  cases  remain  a  point  of 
attention  due  to  delays  in  some  proceedings. 

(122) Eurostat, 2025, EU Labour Force Survey. 

(123) Survey Official's View - Civil Service 

(124) European Institute for Gender Equality, 2024. link 

(125) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024).   

(126) Ibid. 

60 

 
 
 
administrative  cases,  are  already  available. 
However,  the  introduction  of  an  e-file  system  in 
courts 
judicial 
independence, no systemic deficiencies have been 
reported (132). 

faces  delays.  As 

regards 

Nevertheless, a number of investigations involving 
both  former  and  current  high-level  officials  are 
ongoing, and additional cases have been detected 
(127). Enforcement in foreign bribery cases remains 
limited  despite  the  legal  framework  being  in 
place (128).  Furthermore,  public  procurement 
is 
seen  as  an  area  at  high  risk  of  corruption  in 
Czechia (129). 29% of companies (EU average 27%) 
think  that  corruption  has  prevented  them  from 
winning  a  public  tender  or  a  public  procurement 
contract  in  practice  in  the  last  three  years  (130).  A 
methodology  for  measuring  corruption  risks  has 
been developed, under which the key risk areas for 
corruption  were  identified  as  foreclosures  and,  to 
some extent, sport, construction and health (131). 

In  March 2024, 

Czechia  is  about  to  adopt  legislation  for  a 
public  register  for  lobbyists,  it  being  one  of 
the  few  Member  States  not  to  have  already 
done  so. 
the  government 
approved  a  draft  law  on  lobbying  –  now  entered 
into  the  legislative  procedure  –  which  would 
introduce  lobbying  rules,  including  a  transparency 
register  with  obligations  for  both  lobbyists  and 
lobbied persons to register their contacts.  

Justice 

The  justice  system  is  performing  efficiently. 
The disposition time in civil and commercial cases 
at  first  instance  decreased  from  134  in  2022  to 
126 days in 2023 and is one of the lowest in the 
EU.  While  the  clearance  rate  of  administrative 
cases  at  first  instance  dropped  from  126%  in 
2022  to  111%  in  2023,  the  estimated  time 
needed to resolve such cases decreased from 225 
days in 2022 to 212 days in 2023. The quality of 
the justice system is considered to be good overall, 
with an advanced level of digitalisation. Procedural 
rules  enabling  digital  tools  in  courts  are  in  place 
and  some  digital  solutions  to  initiate  and  follow 
proceedings,  especially  in  civil,  commercial  and 

(127) See the 2024 country-specific chapter for Czechia of the 

Rule of Law Report, p. 11. 

(128) Ibid, pp. 11-12 

(129) Ibid., p. 17. 

(130) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024).   

(131) See the 2024 country-specific chapter for Czechia of the 

Rule of Law Report, p 17. 

(132) For more detailed analysis of the performance of the justice 
system  in  Czechia,  see  the  upcoming  2025  EU  Justice 
Scoreboard (forthcoming) and the 2024 Rule of Law Report. 

61 

 
 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

net 

industry 

supporting 

transition  and 

for 
in  particular  on  batteries. 

its 
Czechia’s  faces  challenges  regarding 
clean 
climate 
mitigation: Czechia has not yet capitalised on its 
zero 
opportunities 
manufacturing, 
Its 
automotive sector is in a profound transformation, 
and  energy-intensive  industries  have  been  facing 
challenges linked to high energy prices and global 
competition,  while  its  manufacturing  industry  is 
relatively  greenhouse  gas  emissions  intensive. 
reliant  on 
is  heavily 
Czech  manufacturing 
importing  critical  raw  materials. 
Its  resource 
productivity  remains  well  below  the  EU  average, 
and  its  circular  economy  framework  is  still  to  be 
fully implemented. Much of Czechia’s reusable and 
recyclable  waste  is  still  being  incinerated,  and  its 
industry continues to release large amounts of air 
and water pollutants. This annex reviews the areas 
in  need  of  urgent  attention  in  Czechia’s  clean 
industry  transition  and  climate  mitigation,  looking 
at different dimensions. 

Strategic autonomy and technology 
for the green transition 

Czechia’s  manufacturing  capacity  across  all 
net  zero  technologies  remains  limited,  even 
though the batteries sector holds substantial 
potential.  Czechia’s  manufacturing 
capacity 
currently  amounts 
to  between  1 000  and 
1 100 MW/y  for  battery  and  storage  technologies 
(a  negligible  share  of  total  EU  capacity)(133).  As 
home  to  one  of  the  largest  hard  rock  lithium 
deposits  in  Europe,  Czechia  has  potential  to 
become a key player in the lithium market. Mining 
and production of lithium hydroxide is expected to 
commence in 2026. Opportunities arise also from 
Czechia’s  strong  automotive  sector 
the 
transition  to  electric  vehicles.  Czechia’s  coal-
transitioning  regions  present  an  opportunity  for 
net  zero  manufacturing 
investment  and  skill 
transfers. These regions have available brownfield 
sites  and  benefit  from  EU  funds  support.  Czechia 
could  also  benefit  from  regional  cooperation  with 
other  Member  States  from  central  and  eastern 

in 

(133) European Commission: Directorate-General for Energy, The 
net-zero manufacturing industry landscape across the 
Member 2025, https://data.europa.eu/doi/10.2833/2181110. 

Europe,  both  in  the  field  of  batteries  and  in  heat 
pumps.  Alongside  Poland  and  Slovakia,  Czechia  is 
emerging  as  a  key  actor 
in  heat  pump 
manufacturing  and  is  home  to  12  specialised 
factories. 

revised 

to  support 

in  July  2024 

Czechia  has  committed  to  supporting  net 
zero  manufacturing  through  some  proposals 
and  policy  measures,  but  these  do  not 
sufficiently  and  coherently 
leverage  all 
opportunities.  The  new  overarching  economic 
strategy(134)  considers  clean  and  sustainable 
technologies as one of the most important sectors 
of  the  future.  The  Czech  hydrogen  strategy(135) 
the 
was 
development  of  a  renewable  hydrogen-based 
ecosystem  in  Czechia.  The  Czech  Battery  Cluster 
founded  in  2022  has  facilitated  the  cooperation 
to 
between  public  and  private  stakeholders 
support the development of a battery economy. In 
terms  of  financial  incentives,  a  new  programme 
supporting  strategic  investments  was  endorsed  in 
December  2024.  It  promotes  key  investments  in 
clean technologies such as batteries, solar panels, 
wind  turbines,  heat  pumps  and  electrolysers. 
However,  while  the  national  public  procurement 
highlights 
strategy 
environmentally responsible public procurement as 
a priority,  no further incentives or structures have 
been put in place to foster the scale-up of net zero 
manufacturing  capacity,  either  by  streamlining 
permitting  processes  or  by  fostering  resilience 
criteria  in  auctions  for  instance.  The  lack  of  a 
relevantly  skilled  workforce  represents  also  an 
important  bottleneck.  The  policy 
framework 
remains  scattered  and  thus  does  not  provide  a 
comprehensive support. 

2024-2028 

for 

Transforming the car industry 

Czechia’s  automotive  industry  –  its  largest 
industry sector - is facing strong competition 
and significant challenges in the transition to 
electric vehicles. The sector, representing around 
9%  of  Czech  GDP,  26%  of  the  Czech  industrial 
is 
production,  and  23%  of  Czech  exports, 
undergoing  a  profound  transformation,  driven  by 

(134) Hospodarska-strategie_shrnuti-priorit-a-klicovych-oblasti.pdf, 

October 2024. 

(135) Czech Ministry of Industry and Trade,  Vodíková strategie ČR 

aktualizace, July 2024. 

62 

 
 
 
 
 
 
 
from 

digitalisation,  automation,  and  the  shift  towards 
internal 
electric  vehicles  and  away 
combustion  engines.  As  part  of  these  trends,  the 
least  skilled  workers  are  being  replaced  with 
robots,  while  the  educational  requirements  for 
medium  and  highly  skilled  employees  are 
constantly  increasing.  The  automotive  industry 
directly  employs  over  180 000  people  in  Czechia, 
while up to half a million are in associated sectors. 
In  light  of  projected  changes  to  the  Czech  labour 
market(136),  it  would  be  beneficial  for  Czechia  to 
work  with  carmakers  and 
to 
implement  continuous  reskilling  and  upskilling 
measures  for  current  employees,  and  to  put 
measures 
in  place  to  attract  foreign  skilled 
professionals to fill emerging skill gaps. 

trade  unions 

Critical raw materials 

Czech  manufacturing  depends  heavily  on 
imports  of  critical  raw  materials  needed  for 
the  green  and  digital  transitions.  Czechia  is 
among  the  top  three  EU  producers  of  critical  raw 
materials(137)  such  as  coking  coal  and  feldspar. 
However, it is heavily reliant on imports of critical 
raw  materials  needed  for  the  green  and  digital 
transition.  With  32.4%  of  material 
inputs 
stemming  from  imports  in  2023,  compared  to  an 
EU  average  of  22%,  Czechia 
is  particularly 
vulnerable  to  supply  chain  disruptions.  In  2023, 
the  main  critical  raw  materials  imported  by 
Czechia  from  non-EU  countries,  in  terms  of  trade 
values, were coking coal (primarily from the United 
States  and  Canada),  vanadium  (from  the  Russian 
Federation),  phosphorus  (from  Kazakhstan),  and 
titanium 
import 
(from  Ukraine).  Czechia’s 
concentration(138)  was  the  fourth  highest  among 
EU  Members  in  2023.  This  presents  significant 
challenges  for  sustainability  and  resilience,  such 

(136) A study of the Boston Consulting Group predicts that by 
2030, the Czech labour market will undergo significant 
changes, resulting in approximately 330 000 employees 
losing their jobs due to the elimination of their positions, 
while over half a million new jobs will be created. Boston 
Consulting Group, Aspen Institute, 2022, Budoucnost českého 
pracovního trhu. 

(137) European Commission, Raw material Information System, 

country profile Czechia. 

(138) The import concentration index measures how much a 

country relies on a limited number of sources for a basket of 
critical raw materials. Source: COMEXT. 

as  supply  chain  risks,  environmental  degradation 
and social concerns. 

In  connection  with  the  EU  Critical  Raw  Materials 
Act,  a  programme  for  the  national  exploration  of 
critical  raw  materials  deposits  was  approved  by 
the  government.  The  aim  of  the  programme  is  to 
complete  a  full  review  of  the  country’s  strategic 
raw  materials  reserves  by  May  2026.  Regarding 
the  circular  use  of  materials  as  a  way  to  reduce 
dependence  on  imports,  a  positive  shift  towards 
more  sustainable  materials  management  can  be 
observed in Czechia. Its circular materials use rate 
has almost doubled over the last decade and has 
been around the EU average since 2020. 

lithium  project  and 

Czechia’s reserves of strategic raw materials 
such  as  lithium  and  manganese  create  a 
significant  opportunity  for  its  industry.  The 
Cínovec 
the  Chvaletice 
manganese  project  can  benefit  both  Czechia  and 
the  EU,  if  proven  to  be  economically  viable.  The 
Cínovec  lithium  deposit  is  one  of  the  largest  in 
Europe  and  represents  3-5%  of  the  world’s  total 
reserves(139).  Production  could  start 
lithium 
between  2026  and  2028.  The  Chvaletice 
manganese  project,  for  the  re-processing  of  a 
deposit  of  a  million  tonnes  of  manganese,  was 
approved at the environmental impact assessment 
stage and testing started in 2024. According to the 
project  promoter,  construction  could  start  in  the 
second half of 2026, and full operation in 2028 or 
2029. 

of 

as 

The  Czech  government  and  the  European 
Commission  declared  the  lithium  deposit  in 
Cínovec  and  the  manganese  deposit 
in 
Chvaletice 
strategic 
deposits 
importance. This would enable faster approval of 
the  projects,  attract  investors  and  speed  up 
permitting procedures. Since both projects provide 
key  raw  materials  for  the  production  of  batteries 
for  electric  cars,  Czechia  can 
leverage  this 
advantage  to  create  jobs,  diversify  the  economy, 
secure  its  energy  supply,  and  become  a  leader  in 
the  European  battery  industry.  Furthermore,  the 
country could benefit from the untapped potential 
of  smaller  deposits  of  graphite,  tin,  tungsten, 
copper and other raw materials. 

(139) GEOMET s.r.o, České lithium pro čistou energii. 

63 

 
 
 
Czechia’s  waste  management  plan  with 
outlook  to  2035(140),  the  Circular  Czechia 
2040  strategy(141)  and  the  raw  material 
policy  for  minerals  and  their  resources(142) 
cover issues linked to critical raw materials. 
Czechia  focuses  on  key  products  that  contain  a 
high  level  of  critical  raw  materials,  such  as 
responsibility, 
batteries 
raw 
collection  systems, 
materials);  electrical  and  electronic  equipment 
producer 
(repair, 
responsibility, 
vehicles 
(extended  producer  responsibility);  construction 
and  demolition  waste  (recycled  materials);  and 
mining waste (recycling critical raw materials). 

refurbishment, 
collection 

extended 
systems); 

recovery  of  critical 

(extended 

producer 

It 

Czechia  scores  well  in  the  recycling  of  e-
waste  and  end-of-life  vehicles. 
is  a 
frontrunner  in  the  recycling  of  e-waste,  a  key 
source  of  critical  raw  materials,  with  a  recycling 
rate  of  92,8  %  in  2022  compared  to  the  EU 
average  of  80,7  %.  It  is  a  top  performer  in  the 
reuse and recycling of end-of-life vehicles, with a 
rate  of  117.2%  in  2022  compared  to  the  EU 
average of 89.1%. 

Climate mitigation 

Industry decarbonisation  

in 

A  rather  high  share  of  greenhouse  gas 
emissions 
Czechia’s  manufacturing 
industry  comes  from  industrial  processes. 
17% of Czechia’s total  greenhouse gas emissions 
come  from  industry (143).  With  340 g  CO2eq  per 

(140) Czech Ministry of Environment, 2022, Plán odpadového 

hospodářství České republiky pro období 2015 – 2024 s 
výhledem do roku 2035. 

(141) Czech Ministry of Environment, 2021, Strategický rámec 

cirkulární ekonomiky České republiky 2040. 

(142) Czech Ministry of Industry and Trade, 2017, Raw Material 

Policy for Minerals and Their Resources. 

(143) In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat. 

euro  of  GVA,  the  emissions  intensity  of  Czechia’s 
manufacturing  production  is  about  25%  higher 
than  the  EU  total  (270 g/€).  Since  2017,  the 
emissions  intensity  of  Czechia’s  manufacturing 
production  improved  by  10%,  less  than  in  the  EU 
on  average  (20%).  A  major  share  of  Czechia’s 
manufacturing  greenhouse  emissions  –  58%  – 
comes from industrial  processes and product  use, 
and the remainder primarily comes from industrial 
processes.  In  the  EU  overall,  these  shares  are 
inverse, with 57% related to energy use. 

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

Source: Eurostat. 

Both  for  energy  and  industrial  process-
related  emissions,  greenhouse  emissions 
intensity  in  Czechia  has  improved  less  than 
in  the  EU  on  average (144).  Between  2017  and 
2022, 
the  energy-related  greenhouse  gas 
emissions  intensity  of  Czechia’s  manufacturing 
industry increased by 8 %, while in the EU overall, 
it improved by 16%. The rise in the energy-related 
greenhouse  emissions  intensity  of  manufacturing 
production started in 2020, with a peak in 2021. In 
the  same  period,  the  share  of  electricity  and 
renewables 
in 
manufacturing  was  broadly  stable,  around  39%, 
while  the  energy  intensity  of  manufacturing  saw 
variations  between  1.4  and  1.7  GWh/€  of  GVA, 
about 20% or more above levels in the EU overall. 
The  emissions  intensity  from  industrial  processes 
and  product  use  saw  a  decrease  by  5%  between 

final  energy  consumption 

in 

(144) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF.1.A.2 –  fuel combustion in manufacturing 
industries and construction and CRF.2  – industrial processes 
and  product  use.  The  CRF.1.A.2  data  broadly  correspond  to 
the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 
sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section. 

64 

0510152025C-C19C17C20C23C24KG CO2eq / €CzechiaEU-27 
 
      
 
2017 
below 
and  2022,  much 
improvements, with an average of 23%. 

EU-wide 

High  energy  prices  and  global  competition 
put  pressure  on  energy-intensive  industries 
and  their  decarbonisation  plans.  While  having 
eased  since  2023,  electricity  prices  for  industries 
remain  high  in  the  EU  compared  to  non-EU 
countries.  in  Czechia,  they  are  above  the  EU 
average  and  have  increased  by  145%  since 
2019 (145)  (see  Annex  8).  Production  of  these 
industries  has  declined  by  more  than  12%  since 
2021. 

Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

energy  and  climate  plan  are  projected  to  achieve 
further reductions of 8.9 percentage points. Hence 
Czechia  is  projected  to  overachieve  its  effort 
sharing  target  of  a  26%  reduction  by  9.8 
percentage points (147). 

Swift  action  on  decarbonising  transport  and 
buildings  appears  particularly  exigent 
in 
Czechia.  Between  2005  and  2023,  greenhouse 
gas  emissions  from  road  transport  increased  by 
21% in Czechia, while decreasing by 5% in the EU 
overall.  From  buildings,  they  decreased  by  22%, 
much  less  than  the  33%  decrease  in  the  EU 
overall.  Speeding  up  climate  mitigation  in  these 
sectors would help protect households, businesses 
and transport users in Czechia from the impact of 
the forthcoming carbon price.  

Supporting  high-speed  rail 
infrastructure 
deployment in Czechia could be an avenue to 
promote a modal shift from road to rail and 
cut transport emissions. The deployment of the 
high-speed  rail  is  a  prime  transport infrastructure 
objective in Czechia having a support of the whole 
political  spectrum.  Czechia  has  a  very  ambitious 
plan  covering  all  main  transport  axes.    The 
construction  of  the  first  sections  is  starting  this 
year. 

Source: Eurostat 

Reduction  of  emissions  in  the  effort  sharing 
sectors  

Czechia is projected to reach its 2030 target 
for  the  effort  sharing  sectors  with  the 
in 
climate  mitigation  policies  currently 
place (146).  GHG  emissions  from  Czechia’s  effort 
sharing sectors in 2023 are expected to have been 
5.7%  below  the  level  of  2005.  By  2030,  current 
policies  are  projected  to  reduce  them  by  26.9% 
relative 
levels;  additional  policies 
considered  in  Czechia’s  final  updated  national 

to  2005 

(145) Eurostat, Electricity price for non-household consumers. 

(nrg_pc_205). 

(146)The national greenhouse gas emission reduction target is 
set  out  in  Regulation  (EU)  2023/857  (the  Effort  Sharing 
Regulation).  It  applies  jointly  to  buildings  (heating  and 
cooling);  road  transport,  agriculture;  waste;  and  small 
industry (known as the effort sharing sectors). 

(147)The  emissions  from  effort  sharing  sectors  for  2022  are 
based on approximated inventory data. The final data will 
be  established  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  final  updated  national 
energy and climate plan. 

65 

7075808590951001052017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of other non-metallic mineral productsManufacture of basic metals 
           
 
 
 
innovation;  education  and  knowledge;  economic 
instruments;  circular  cities  and  infrastructure.  The 
action  plan  identifies  initiatives  for  each  priority 
area,  ranging  from  awareness  raising  to  financial 
support. 

More can be done to divert reusable products 
and  recyclable  waste  from  landfilling  and 
incineration.  With  570 kg  of  municipal  waste 
generated per capita in 2021, Czechia is above the 
EU average (see Graph A7.4). With a recycling rate 
of  43.3%  in  2021,  Czechia  remains  below  the  EU 
average for municipal waste recycling. It is at risk 
of not meeting the 2035 target of maximum 10% 
of  municipal  waste  being  landfilled.  At  45%  in 
2021,  Czechia’s 
for  plastic 
recycling 
packaging  waste  was  above  the  EU  average.  In 
2022, 72.2% of construction and demolition waste 
was recycled in Czechia, which remains well below 
the  EU  average.  Czechia’s  material  footprint  in 
2023  was  18.6  tonnes per  capita,  which  is  above 
the EU average. 

rate 

Investment  in  the  circular  transition  has 
been  insufficient.  Czechia  is  estimated (149)  to 
need  total  additional  investment  of  at  least 
EUR 470 million per year for the circular economy 
transition,  including  for  waste  management.  To 
close  the  circular  economy  gap,  an  additional 
EUR 108  million  is  needed  for  recent  initiatives, 
such  as  eco-design  for  sustainable  products; 
packaging  and  packaging  waste;  labelling  and 
digital  tools;  critical  raw  materials  recycling;  and 
measures  proposed  under  the  amended  Waste 
Framework  Directive.  Another  EUR 304  million  is 
needed  in  further  investment  to  unlock  Czechia’s 
circular economy potential. 

Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

Source: European Environment Agency 

Sustainable industry 

Circular economy transition 

Despite  positive  trends,  there  is  room  for 
accelerating  Czechia’s  circular  transition.  At 
12.8% in 2023, Czechia’s circular material use was 
above  the  EU  average  but  far  behind  that  of  EU 
leaders.  Czechia’s 
resource  productivity,  with 
EUR 1.21  per  kg  of  material  consumed  in  2023, 
remained well below the EU average. Even though 
improved 
Czechia’s  resource  productivity  has 
slightly over the past decade, the gap between its 
results  and  the  EU  average  has  not  decreased.  It 
would  be  beneficial  for  Czechia  to  redouble  its 
to  minimise  negative  environmental 
efforts 
impacts  and  reduce  dependence  on  volatile  raw 
material markets. 

In 2021 Czechia adopted Circular Czechia 2040, a 
strategic framework for its transition to a circular 
economy by 2040, as part of a reform introduced 
by the Czech recovery and resilience plan (148). The 
implementing  action  plan  for  2022-2027  was 
adopted  in  June  2023.  The  plan  specifies  the 
measures to be rolled out by 2027 to achieve the 
strategic  goals  of  Circular  Czechia  2040  in  10 
priority  areas:  products  and  design;  industry,  raw 
materials,  construction,  energy;  bioeconomics  and 
food; 
consumers;  waste 
management;  water;  research,  development  and 

consumption  and 

(148)Czechia’s updated recovery and resilience plan, 2023, 

https://www.planobnovycr.cz/ke-stazeni. 

(149)European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

66 

01020304050607020052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
           
 
 
Graph A7.4: Municipal waste treatment 

Source: Eurostat 

Zero pollution industry 

Czechia  has 
reduced  air 
significantly 
pollution,  which  is  now  decoupled  from  GDP 
growth,  but  more  can  be  done  to  reduce 
industrial air pollution damage and intensity 
and  industrial  releases  to  water  and  their 
intensity.  In  2023,  no  exceedances  above  the 
limit values established by the Ambient Air Quality 
Directive (150) were registered in Czechia. However, 
the  target  values  for  ozone  concentrations  were 
not  met  for  several  air  quality  zones,  and  the 
target value for benzo(a)pyrene concentration was 
exceeded in three air quality zones (151). The 2020-
2029  emission  reduction  commitments  under  the 
national  air  pollution  control  programme  have 
been  met,  and  Czechia  is  on  track  to  meet  the 
commitments for 2030 onwards as well. 

Czechia’s industry continues to release large 
amounts  of  air  and  water  pollutants.  As 
regards industrial air pollutants, Czechia comes in 
fourth  place  for  emissions  intensity  in  the  EU 
(above  the  EU  average  of  EUR 27.5  /  thousand 

(150) Directive 2008/50/EU on ambient air quality and cleaner air 

for Europe. 

(151) European Environment Agency, Eionet Central Data 

Repository. 

to  health  and 

EUR  of  gross  value  added  (GVA))  and  it  has  the 
the 
sixth  highest  damage 
environment.  The  main  contributors  to  emissions 
to  air  are  the  energy  sector  for  nitric  oxide  (NOX), 
sulfur  dioxide  (SO2)  and  heavy  metals;  and  the 
waste  sector  for  dioxins.  As  regards  industrial 
emissions of heavy metals to water,  Czechia is in 
tenth  position  in  the  EU  for  emission  intensity 
(above  the  EU  average  intensity  of  0.864 kg  / 
billion  EUR  GVA)  and  also  has  the  tenth  highest 
amount  of  emissions.  The  main  contributors  to 
emissions  to  water  in  Czechia  are  the  energy 
sector for heavy metals; the pulp, paper and wood 
sector  for  total  phosphorus  and  total  organic 
carbon; and the chemical sector for total nitrogen. 

The costs of pollution remain far higher than 
investment 
in  pollution  prevention  and 
control.  Based  on  2022  data,  6 900  deaths  in 
Czechia are attributed each year to fine particulate 
matter  (PM2.5);  730  deaths  to  nitrogen  dioxide 
(NO2);  and  1 800  deaths  to  ozone  (O3) (152).  The 
costs  related  to  all  industrial  air  pollutants  in 
Czechia  are  estimated  at  EUR 17.8 billion (153).  In 
contrast,  to  meet  its  objectives  for  pollution 
prevention  and  control  and  to  address  the  health 
and economic costs of pollution, Czechia needs an 
additional  EUR 1  billion  per  year  (0.38%  of  GDP), 
mostly for air pollution control. 

(152)Latest available annual estimates by the European 

Environment Agency. In terms of years of life lost (YLL), 
this implies 70 700 years for PM2.5, 7 500 for NO2, and 
18 500 for O3. 

(153)The latest available data (Value of Statistical Life (VSL) 
methodology) from Czechia are from 2020. Source: 
European Environment Agency, 2024, The costs to health 
and the environment from industrial air pollution in Europe 
– 2024 update, Link. 

67 

5005435700100200300400500600700201920202021Kg per capitaMaterial recyclingComposting and digestionLandfill/disposalTotal incineration (incl. energy recovery)Waste treatment unspecifiedEU-27 total waste per capita 
           
 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Czechia 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

68 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW-- Electrolyzer, MW0- Wind (b: blade, t: turbine, n: nacelle), MW700-750 (t)- battery, MWh1000-1100Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %522540554576579582597539561New zero-emission vehicles, electricity motor, %0.140.280.311.651.542.133.091.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %32.832.731.133.232.932.424.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.380.390.360.380.40.340.330.340.27Share of energy-related emissions in industrial GHG emissions61.760.061.461.459.055.457.144.842.5Energy-related GHG emissions intensity of manufacturing173.4166.5154.5180.5226.4186.8-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption37.838.139.338.538.339.941.843.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€1.561.521.441.611.691.461.291.291.09Share of energy-intensive industries in manufacturing production9.37.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)0.530.530.540.480.470.500.43-0.730.68- chemicals and chemical products (NACE C20)3.833.653.522.835.233.933.73-1.251.26- other non-metallic mineral products (NACE C23)1.661.601.601.661.561.541.62-2.532.24- basic metals (NACE C24)4.606.205.055.4512.4322.2613.07-2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % -5.3-6.7-5.7- domestic road transport8.59.52.19.111.820.71.45.2- buildings-8.9-12.8-14.5-11.2-19.4-21.521.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %65.061.560.661.2-26.00.99.8Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person17.817.316.018.319.518.614.715.0Circular material use rate, %10.5      10.6      11.5      11.0      11.3      12.8      11.611.1Resource productivity, €/kg1.3        1.3        1.4        1.5        1.7        1.9        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants1,048    708      621      794      972      -702571Air pollution damage cost intensity, per thousand € of GVA    75.0          27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    1.0   0.9CzechiaEU-27CzechiaEU-27CzechiaEU-27 
 
 
 
 
 
            
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while advancing the transition to net zero. It 
examines  the  measures  and  targets  proposed  in 
the  final  updates  to  the  national  Energy  and 
climate plans (NECPs) for 2030. 

The deployment of renewable energy sources 
and flexibility of the grids remain low. This is 
especially  due  to  the  lack  of  support  instruments 
and  slow  roll-out  of  smart  meters.  However, 
important  legislative  steps  have  been  taken  to 
streamline  permitting  and  empower  consumers 
(LEX RES I, II and III).  Progress in energy efficiency 
in  buildings  remains 
limited,  despite  various 
programmes  supporting  the  decarbonisation  of 
heating.  

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

EU averages of 15,4% and 11,6% respectively). On 
the other hand, network costs, higher than the EU 
average, accounted for 21,2% of the final price for 
electricity (compared to 15,5% at EU average) and 
9,4%  for  gas  (compared  to  7,7%  at  EU  average) 
for  non-household  consumers.  Retail  prices  for 
household consumers also remained above the EU 
average,  and  this  was  particularly  true  for 
electricity,  where 
to 
increase. While network costs as well as taxes and 
levies were below the EU average for both gas and 
electricity,  the  energy  and  supply  component  of 
retail prices for household remained slightly higher 
than  the  EU  average  (49.1%  compared  to  47.8% 
for  electricity  and  65,4%  compared  to  53,9%  for 
gas).  

retail  prices  continued 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) CEE and CWE respectively provide average prices in the 
central-western European (Belgium, France, Germany, 
Luxembourg, the Netherlands and Austria) and central-
eastern European (Poland, Czechia, Slovakia, Hungary, 
Slovenia and Romania) markets. 
Source: S&P Platts and ENTSO-E 

With an average of 85 EUR/MWh in 2024 (154), 
prices 
Czechia’s  wholesale 
electricity 
remained 
line  with  the  EU  average 
in 
(84.7 EUR/MWh).  Overall  prices  declined  early  in 
the  year  amid  falling  natural  gas  costs,  but  they 
picked up in the spring/summer and surged in the 
winter,  outpacing  increases  in  broader  Central 
Western European (CWE) markets. In the summer, 
prolonged  and  more  intense  heatwaves  led  to 
higher  consumption  (+1%  in  summer  2024  vs 

(154) Fraunhofer (ENTSO-E data). 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

retail  energy  prices  dropped 
Czechia’s 
slightly  in  2024,  remaining  above  the  EU 
average,  except  for  household  electricity 
price, which were the 5th highest in the EU. On 
the  one  hand,  taxes  and  levies  (excluding  VAT), 
skewed  toward  electricity,  made  up  9,9%  of 
electricity  prices  and  2,4%  of  gas  prices  for  non-
household consumers (significantly lower than the 

69 

 
 
 
 
 
 
 
increased 

summer  2023), 

summer  2023)  while  lower  coal  output  (-11%  in 
summer  2024  vs  summer  2023)  driven  by  rising 
CO₂  costs  and  limited  non-fossil  flexibility  further 
tightened the supply-demand balance in a context 
of 
increasing  wholesale  gas  prices.  However, 
growing  solar  production (+37%  in  summer  2024 
vs 
hydropower 
(+3%(155)  in summer 2024 vs summer 2023) and 
from 
imports  of  cheaper  electricity 
higher 
Germany(156)   (and,  to  a  lesser  extent,  Austria) 
helped stabilise prices and prevented Czechia from 
diverging  as  much  from  CWE  markets  as  other 
Central  Eastern  European  (CEE)  countries.  In  the 
winter,  an increased load (+3% in winter 2024 vs 
winter  2023)  due 
colder-than-expected 
to 
temperatures,  reduced  regional  renewable  output 
(157) ,  and  diminished 
from  the  Dunkelflaute 
nuclear  power  in  Czechia  (-4%  in  winter  2024  vs 
winter  2023)  led  to  ramped-up    and  expensive 
natural gas-fired generation (+64% in winter 2024 
vs  winter  2023).  These  conditions  triggered  price 
spikes (especially during peak demand hours, when 
solar  output  declined  but  demand  remained  high) 
that  exceeded  those  observed  in  CWE  markets. 
Despite these trends, Czechia’s average electricity 
price  over  the  year  still  declined  compared  with 
2023.  There  was  an  even  greater  difference  in 
average  daytime  prices,  probably  due  to  the 
uptake in solar output both domestically (+38% in 
2024) and in neighbouring markets (158). 

Flexibility and electricity grids  

Czechia  is  well  interconnected  with  most  of 
its neighbours and has a high level of cross-
border  trade,  but  challenges  persist  at 
grid 
in 
distribution 
deployment.  Czechia  is  in  the  Core(159)    capacity 

terms 

level 

of 

(155) ENTSO-E. 

(156) Net imports increased by 58% in summer 2024 vs 2023. 

(157) In November-December 2024, electricity generation from 

wind power decreased by -51% in Austria, -29% in Czechia 
and -45% in Germany compared to the same period in 2023. 

(158) Yearly electricity data, Ember (generation and consumption 

data throughout the paragraph). 

(159) Core is the capacity calculation region (CCR) which covers 
Belgium, Czechia, Germany, France, Croatia, Hungary, the 
Netherlands, Austria, Poland, Romania, Slovenia and Slovakia 
(and, once connected, Ireland). A CCR is a group of countries 
that calculate cross-border electricity trade flows together. 

70 

is  pursuing  electricity 

calculation  region (CCR) and is market-coupled on 
all its borders with other members of this CCR. The 
average  wholesale  prices  show  a  high  level  of 
convergence  with  the  average  regional  electricity 
prices.  Member  States  should  ensure  that  a 
technical  cross-border 
minimum  of  70%  of 
capacity  is  available  for  trading  and  Czechia 
complied  with  this  requirement  for  100%  of  the 
hours(160)   –  the  only  country  in  this  region  to 
achieve  this.  The  interconnection  rate  reached 
27% in 2024. To further support interconnectivity, 
Czechia 
interconnection 
projects  with  Germany  and  Slovakia.  Internal 
infrastructure was upgraded in 2024 with the new 
400  kV  Vernerov-Vitkov  line,  which  was  also 
included  in  the  first  PCI/PMI  list  under  the  new 
TEN-E  Regulation.  However,  further  efforts  to 
strengthen  the  grid  infrastructure  are  needed  – 
especially on the distribution grid level, where the 
number of refused connection agreements due to 
insufficient  connection  capacity  or  supply  security 
reasons  rose  significantly  between  2022  and 
2023(161) . With regard to hydrogen infrastructure, 
Czechia adopted an updated hydrogen strategy in 
Czechia’s 
mid-2024,  which 
participation  in  the  Central  European  Hydrogen 
Corridor. 

acknowledges 

Progress  regarding  streamlining  permitting 
for  energy  infrastructure  remains  uncertain. 
Since  January  2024,  Czechia  has  significantly 
reformed  the  Construction  Act,  by  introducing  the 
Transport  and  Energy  Authority  (which  covers 
strategic  infrastructure  projects  –  including  in  the 
energy sector) and a portal (the Builder’s Portal) to 
digitalise  the  construction-permitting  procedure. 
This digitalisation process is not on track, however, 
and  could  be  delayed  until  2027.  This  raises 
concerns  about  prolonging  the  current  system, 
which  continues  to  hinder  construction  timelines 
for grid infrastructure and affects performance on 
climate  and  energy  goals.  Spatial  planning  also 
remains unreformed (see also Chapter 2).  

Lack  of  grid  capacity  remains  a  key 
bottleneck,  because  a  significant  backlog  of 
unmaterialised renewable energy   projects is 
preventing  the  connection  for  others.  To 
address  this  challenge,  the  recently  adopted  LEX 

(160) ACER market monitoring report. 

(161) Monitoring of the Czech NRA, available at Monitoring 

připojování výroben elektřiny do distribuční soustavy v České 
republice 2021-2023 | eru.cz. 

 
 
 
RES  III  includes  a  binding  maximum  timeline  for 
RES  project  grid  connection  to  be  ensured  within 
the  connection  agreement 
required  by 
Czechia’s recovery and resilience plan (RRP)). 

(as 

led 

Constraints  on  grids  resulted  in  increased 
occurrence  of  negative  prices.  ACER  data 
indicate that these represented 134 hours in 2023. 
interest  from  energy 
This 
distributors  in  installing  ‘energy  dissipators’  to 
consume  surplus  electricity  (particularly  electricity 
from  solar  sources),  with  a  potential  capacity  of 
1 000 MW.  

to  a 

rising 

(LEX RES III) 

legal  framework 

Challenges  remain,  but  Czechia  has  taken 
some  steps  to  support  non-fossil  flexibility. 
Czechia  has  made  a  commitment  to  further 
promote 
the  development  of  demand-side 
response  and  energy  storage  in  order  to  increase 
the flexibility of its energy system. It has adopted 
that  allows 
a 
aggregation  (including  independent  aggregation) 
on  wholesale  markets.  In  terms  of  storage,  the 
deployment  of  batteries  remains  however  at  an 
early  stage  (0,04  GW  operating).  A  state  aid 
scheme  of  EUR  279  million,  approved  in  March, 
will  help  accelerate  the  roll-out  by  an  additional 
1.5GWh  of  energy  storage  projects.    In  addition, 
Czechia  is  also  putting  in  place  a  new  entity 
responsible  for  data  provisions  and  exchange  in 
the  electricity  market:  a  central  Electricity  Data 
Centre  (EDC).  This  platform  should  further  enable 
services  such  as  aggregation,  and  energy  sharing 
full 
for  energy  communities.  However, 
implementation  of  the  EDC  functionalities 
is 
currently delayed.  

the 

legislation 

renewable 

An  incomplete  legislative  framework  and 
slow  smart  meter  roll-out  are  hampering 
consumer engagement, which remains rather 
limited (despite recent steps). In 2024, Czechia 
adopted 
energy 
on 
communities and citizen energy communities. This 
provided a clearer framework, leading to a positive 
trend  in  the  development  of  energy  communities. 
However, secondary legislation to enable their full 
participation  in  the  energy  market  has  not  been 
adopted  yet.  Most  consumers  are  on  fixed-price 
retail  contracts  and  supplier-switching  was  below 
EU average (only 4.2% in 2023(162) ). Both the roll-
out  of  smart  meters  (below  10%)  and  the 
percentage of prosumers households (3%) remain 

(162) Report by ACER and CEER. 

71 

low.  This  indicates  limited  consumer  engagement 
in  the  energy  market.  Czechia  recently  adopted 
legislation (LEX RES III), which should strengthen it 
(especially  as  regards  demand  response,  energy 
communities, dynamic pricing and smart grids) as 
well as comparison tools that allow consumers to 
easily  find  a  better  offer.  However,  without  a 
completed  smart  meter  roll-out,  customers  are 
facing  difficulties  in  providing  flexibility  services, 
even  though  wholesale  markets  will  be  open  for 
demand  response  (by  independent  aggregation  in 
the  near  future).  A  postponed  tariff  reform  is 
further  delaying  the  implementation  of  dynamic 
pricing.  

,  partly  due 

In  2023,  electricity  accounted  for  21.1%  of 
Czechia’s  final  energy  consumption  (FEC) 
(below  the  EU  average  of  22.9%)  and  this 
share  has  remained  largely  stagnant  in  the 
last  decade(163) 
to  an 
unfavourable  electricity-to-gas  price  ratio 
that  disincentivizes  electrification  and  cost-
effective  decarbonization.  Electricity  accounts 
for  20.7%  and  32.9%  of  households’  and 
industry’s  FEC  respectively  (see  also  the  Clean 
Industry  and  Climate  Mitigation  Annex).  For  the 
transport  sector,  this  share  remains  negligible  at 
2.2%.  Further  progress  in  electrification  across 
sectors  is  required  in  order  to  cost-effectively 
decarbonise the economy and bring the benefits of 
affordable renewable generation to consumers.  In 
2024’s  second  semester,  household  electricity 
prices  in  Czechia  were  among  the  highest  in  the 
EU, with electricity costing 2.9 times more per unit 
than  gas  before  taxes  and  3.2  times  more  after 
(EU  average:  2.3).  Taxes  and  levies  made  up 
25,4% of electricity prices (vs. 19,3% for gas). For 
energy-intensive  industries,  prices  were  slightly 
above the EU average (€0.18/kWh vs. €0.17/kWh), 
with  electricity  costing  2.9  times  more  than  gas 
before  taxes  and  3.1  times  more  after,  further 
discouraging  the  electrification  of  industry  and 
heating.(164)  

(163) The CAGR (compound annual growth rate) was 0.6% 

between 2013 and 2023. The minimum/maximum shares 
were 19.8% and 21.1% respectively. Source: Final energy 
balances, Eurostat. 

(164) Analysis based on Eurostat data for the first semester of 

2024. For household consumers, consumption band is DC for 
electricity and D2 for gas, which refer to medium-sized 
consumers and provide an insight into affordability. For non-
household consumers, consumption band is ID for electricity 
and I4 for gas, referring to large-sized consumers, providing 

 
 
 
 
Renewables and long-term contracts 

Renewables deployment progresses at a slow 
pace.  In  2024,  renewable  energy  accounted  for 
17%  of  Czechia  electricity  mix.  This  was  a  slight 
increase  from  15%  in  2023(165)   but  remains  still 
far  below  the  EU’s  overall  RES  share  of  47%. 
Installed  renewables  capacity  grew  by  16,6%  in 
2024,  the  total  renewable  energy  capacity  thus 
reaching  6.453  MW(166)    (see  Graph  A6.1)  in 
Czechia.  As  regards  the  steady  acceleration  of 
solar  deployment,  the  total  installed  capacity  in 
2024 represented 4159 MW (+908 MW, an almost 
28% increase on 2023). In contrast, wind installed 
capacity  in  Czechia  grew  modestly  (+13  MW, 
representing  a  3,7%  increase),  reaching  356  MW 
in 2024.  

Graph A8.3: Czechia's installed renewable capacity 
(left) and electricity generation mix (right) 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

Czechia has made some progress in speeding 
up RES permitting in 2024, but further steps 
are  needed.  Czechia  is  expected  to  adopt    a 
decision on renewables acceleration areas for wind 
and  solar  PV  by  Spring  2025.  This  needs  to  be 
complemented  with  an  update  of  the  national 
spatial  planning,  which  is  currently  facing  strong 
resistance  at  the  local  and  regional  levels.  The 
Single Environmental Opinion Act also streamlines 
the  environmental  permitting  procedures.  The 
Transport  and  Energy  Construction  Authority 
(DESU)  has  been  established  to  deal  with  the 
permitting  of  major  energy  infrastructure  and 

an insight into international competitiveness (price used for 
the calculation excludes VAT and other recoverable 

(165) Yearly electricity data, Ember. 

(166) IRENA 2025: Renewable Energy Capacity Statistics 2025 

72 

renewable  projects.  Czechia  has  also  taken  steps 
increase  the  digitalisation  of  the  permit-
to 
granting  procedure  through  the  Builder’s  Portal, 
but  this  does  not  yet  cover  the  whole  permitting 
procedure.  The  Commission  has  an  ongoing 
infringement  proceeding  against  Czechia  for  non-
transposition 
legislation  of  the 
permitting  provisions  of  Directive  2023/2413  on 
the promotion of energy from renewable sources. 

into  national 

Czechia  has  not  set  more  ambitious  targets 
for  renewables  in  its  final  NECP.  Czechia’s 
proposed contribution to the EU’s 2030 renewable 
energy target is still 30%, below the value of 33% 
arising  from  the  formula  set  in  the  Governance 
Regulation.  By  2030,  Czechia  aims  to  have 
installed  1.2  GW  of  onshore  wind  capacity  and  8 
GW of solar PV capacity.  

Czechia  made  little  progress  in  terms  of 
support  to  renewable  energy  sources  in 
2024,  especially  when  it  comes  to  auctions, 
contracts  for  difference  (CfDs)  and  power 
purchase  agreements.  However,  as  part  of  the 
European Wind Power Action Plan, Czechia made a 
commitment  to  have  70 MW  installed  onshore 
wind  capacity  by  2026.  No  auctions  took  place  in 
2024,  but  annual  auctions  for  330 MW  of  wind 
power  are  planned  for  2025,  2026  and  2027. 
Further  solar  rooftop  deployment  is  foreseen 
within  the  framework  of  the  RRP.  Despite  some 
recent  progress,  PPAs  are  not  very  common  in 
Czechia  (the  very  first  corporate  PPA  in  Czechia 
was concluded in 2021). In 2024, a large PPA was 
concluded (a 10-year contract for the construction 
of a 37 MW PV plant).  

Energy efficiency 

In  2023,  both 

Czechia  has  made  progress  towards  helping 
to  achieve  the  EU’s  2030  energy  efficiency 
targets. 
its  primary  energy 
consumption  (PEC)  and  final  energy  consumption 
(FEC)  decreased  on  2022  levels  (by  8.1%  and 
5.9%  respectively).  FEC  decreased  especially  in 
three  main  sectors  (in  industry  by  9.4%,  in  the 
residential  sector  by  11.7%  and  in  services  by 
7.2%)  but  increased  in  transport  by  3.0%.  The 
recast  Energy  Efficiency  Directive  (EED)  requires 
Czechia to try to reach a PEC of 29.18 Mtoe and a 
FEC  of  20.35 Mtoe  by  2030.  According  to  NECPR 

 
 
 
2023,  Czechia  achieved  new  annual  energy 
savings of 120 ktoe/year. 

of  supported  sectors, Czechia’s  RRP  covers  widely 
the building sector, including residential and public 
buildings as well as industry. 

target  of 

Climate-corrected  final  energy  consumption 
of  households  in  Czechia  decreased  by  only 
1.26% between 2018 and 2022. This indicates 
some progress but highlights the need for Czechia 
to  significantly  intensify  its  efforts  to  achieve  its 
reducing  building  energy 
2030 
consumption  by  8%  compared  with  2020  (as 
outlined  in  its  long-term  renovation  strategy). 
Czechia is actively supporting energy-efficient and 
deep  renovations  through  its  New  Green  Savings 
(Nová  Zelená  Úsporám),  which 
Programme 
provides 
for  households 
(including  vulnerable  households)  to  invest  in 
energy-saving  measures. The  2024  reform  of the 
programmes  ensures  a  more  targeted  approach 
that  focuses  on  more  complex  renovations,  but 
20%  of  the  cost  is  not  covered.  Renovation  of 
public buildings also remains a challenge. 

incentives 

financial 

In  2022,  heating  and  cooling  represented 
85%  of  Czechia’s  residential  final  energy 
consumption. Approximately 56 000 heat pumps 
were  sold  in  2023,  a  decrease  of  11%  on  the 
previous  year.  One  of  the  main  barriers  has  been 
the  fact  that  electricity  in  Czechia  was 2.8 times 
more  expensive  than  gas  in  2023  and  this 
difference  increased  to  3.1 times  in  the  first  half 
of  2024  –  so  end  users  save  energy  but  do  not 
make  any  considerable  financial  savings  if  they 
choose a heat pump for heating. When it comes to 
the  decarbonisation  of  district  heating,  which 
covers  40%  of  households,  support  provided  by 
the  RRP  and  Modernisation  Fund  includes  support 
for the shift from coal to energy-efficient CHP and 
renewables (HEAT Programme). 

Czechia has an effective supporting national 
financing  framework  which  mobilises  energy 
efficiency 
investments  that  are  mainly 
composed  of  grants  (79%)  and  blended 
schemes  (4%).  The  use  of  financial  instruments 
dedicated to energy efficiency accounted for 17% 
of  its  RRP.  Czechia  continued  the  implementation 
of  several  relevant  financing  measures,  such  as 
the  New  Green  Savings  Programme.  In  2024, 
Czechia  launched  Energy  Savings II  (a  subsidy 
scheme  with  the  aim  of  reducing  the  energy 
demand  of  business  buildings,  production  and 
technological  processes)  and  also  a  grant  which 
focuses  on  support  for  the  reconstruction  and 
modernisation of public lighting systems (with the 
option  of installing innovative  elements).  In  terms 

73 

Security of supply and diversification  

in 
Czechia  made  substantial  progress 
addressing  its  reliance  on  Russian  oil.  The 
completion  of  the  TAL  Plus  pipeline  in  January 
2025  means  that  Czechia  is  on  track  to  be 
independent from Russian oil supply by mid-2025.  

Despite  progress  on  renewables,  Czechia’s 
overall energy mix in 2023 remained heavily 
reliant  on  fossil  fuels.  Coal  accounted  for 
27.3% of gross inland consumption, oil for 24.5% 
and  natural  gas  for  14.7%(167).  Nuclear  and 
renewables  (together  with  biofuels)  contributed 
19.3%  and  13.4%(168)  respectively.  This  reliance 
underscores  the  importance  of  Czechia’s  ongoing 
efforts to diversify its energy sources, to phase out 
coal and strengthen its energy security.  

securing  energy 

Nuclear energy has a key role to play (along 
with  renewables)  in  decarbonising  the  Czech 
supply  and 
economy, 
providing  affordable  energy  for  consumers. 
The government plans to further expand the share 
of  nuclear  in  Czechia's  energy  mix  by  up  to  25-
33%  (currently  15%)  in  primary  energy  sources 
and up 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)  are 
planned.  In  July  2024  the  Korean  consortium  (led 
by  KHNP)  was  selected  to  build  two  nuclear 
reactors  in  Dukovany,  however  the  signature  of 
the  contract  is  still  pending.  A  second  phase  of 
power  upgrades  in  Dukovany  was  completed  in 
2024, increasing the power output of the plant to 
512  MWe.  This  is  expected  to  boost  annual 
production  by  approximately  300 000 MWh.  The 
government  has  also  approved  a  strategic 
partnership  with  Rolls-Royce  to  develop  SMRs. 
Czechia  has moreover  secured  alternative  nuclear 
fuel  supplies  by  concluding  supply  contracts  with 

(167) Electricity and heat are excluded to avoid double counting 

focusing on primary energy sources. 

(168) Gross Inland Consumption 2023, Energy Balances - Eurostat 

 
 
remains  amongst 

Westinghouse  and  Framatome.  While  these  steps 
will  reduce  reliance  on  nuclear  fuel  originating  in 
Russia,  Czechia 
the  most 
dependant  Member  States  with  Russian-designed 
VVER  reactors.  It  is  important  for  Czechia  to 
develop  a  national  plan  to  fully  phase  out  its 
dependency  on  Russian  nuclear  fuel,  as  foreseen 
by  the  REPowerEU  Roadmap  adopted  on  6  May 
2025. 

Fossil fuel subsidies 

In  2023,  environmentally  harmful(169)  fossil  fuel 
subsidies  without  a  planned  phase-out  before 
2030 represented 0.09%(170) of Czechia’s GDP(171), 
below  the  EU  weighted  average  of  0.49%.  Tax 
measures  accounted  for  73.1%  of  this  volume, 
while income/price support and direct grants  

represented  25.1%  and  1.8%, 
respectively. 
However,  Czechia’s  2023  Effective  Carbon 
Rate(172)  averaged  EUR  65.00  per  tonne  of  CO₂, 
below the EU weighted mean of EUR 84.80(173). 

(169) Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

(170) Numerator is based on volumes cross-checked with the 

Czech authorities. For all Member States, it includes public 
R&D expenditures for fossil fuels as reported by the IEA 
(Energy Technology RD&D Budgets) and excludes, for 
methodological consistency, excise tax exemption on 
kerosene consumed in intra-EU27 air traffic. 

(171) 2023 Gross Domestic Product at market prices, Eurostat. 

(172) The Effective Carbon Rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(173) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

74 

 
 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

75 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.1828          0.2091              0.3139              0.3327          0.2314             0.2649          0.2877          0.2879          Energy & supply [%]53.6%58.9%58.9%49.1%36.6%54.3%55.6%47.8%Network costs23.2%21.0%22.9%27.0%26.7%25.3%24.8%27.2%Taxes and levies including VAT23.2%20.1%18.2%23.9%36.7%20.3%19.6%25.0%VAT14.9%23.3%17.6%17.3%14.5%13.4%13.8%14.6%Household consumer - Gas retail price0.0562          0.0883              0.1115              0.1052          0.0684             0.0948          0.1121          0.1128          Energy & supply76.5%68.0%70.7%65.4%43.7%61.0%64.5%53.9%Network costs8.5%14.6%11.9%17.2%22.5%17.3%17.1%18.3%Taxes and levies including VAT14.9%17.4%17.4%17.4%33.8%21.7%18.4%27.8%VAT14.8%17.3%17.3%17.3%15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.0944          0.1688              0.1757              0.1735          0.1242             0.1895          0.1971          0.1661          Energy & supply50.5%66.9%67.7%53.4%43.0%66.5%63.0%55.8%Network costs24.7%12.1%14.3%21.2%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT11.9%4.4%0.7%9.9%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail price0.0320          0.0820              0.0702              0.0551          0.0328             0.0722          0.0672          0.0517          Energy & supply72.7%76.2%74.9%71.2%66.2%77.3%77.3%68.7%Network costs9.7%5.1%6.1%9.4%7.7%3.8%5.3%7.1%Taxes and levies excluding VAT4.1%1.6%1.9%2.4%12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)100.4246.6101.185.1111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)87,056          88,038              87,035              81,525          85,016             84,851          77,004          -Combustible Fuels52,783       52,338           50,474           44,933       47,677          47,346       39,458       -Nuclear28,340       29,921           30,246           30,043       30,731          31,022       30,410       -Hydro3,040         2,679             3,175             3,437         3,620            3,083         3,427         -Wind591             609                700                699             602                641             702             -Solar2,199         2,365             2,316             2,294         2,250            2,626         2,892         -Geothermal-              -                 -                 -              -                 -              -              -Other Sources103             125                124                118             136                132             115             Gross Electricity Production [%]Combustible Fuels60.6%59.4%58.0%55.1%56.1%55.8%51.2%-Nuclear32.6%34.0%34.8%36.9%36.1%36.6%39.5%-Hydro3.5%3.0%3.6%4.2%4.3%3.6%4.5%-Wind0.7%0.7%0.8%0.9%0.7%0.8%0.9%-Solar2.5%2.7%2.7%2.8%2.6%3.1%3.8%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources0.1%0.1%0.1%0.1%0.2%0.2%0.1%-Net Imports of Electricity (GWh)-13,037-13,907-13,097-10,153-11,075-13,529-9,184-As a % of electricity available for final consumption -21.4%-22.7%-21.4%-17.2%-17.8%-22.6%-16.0%-Electricity Interconnection [%]19.3%21.7%25.4%27.5%24.3%28.6%25.3%27.0%Share of renewable energy consumption - by sector [%]Electricity13.7%13.7%14.0%14.8%14.5%15.5%16.4%-Heating and cooling19.7%20.6%22.6%23.5%24.3%25.8%27.8%-Transport6.6%6.6%7.8%9.4%6.7%6.2%5.7%-Overall14.8%15.1%16.2%17.3%17.6%18.1%18.6%-20202021202220232020202120222023Import Dependency [%] 38.8%40.0%41.8%41.7%57.5%55.5%62.5%58.3%of Solid fossil fuels 12.8%13.9%14.1%14.9%35.8%37.2%45.9%40.8%of Oil and petroleum products 101.2%96.9%99.9%99.4%96.8%91.7%97.8%94.5%of Natural Gas 86.0%92.1%113.4%100.1%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 100.0%100.0%79.4%8.1%41.0%40.9%20.7%9.3%of Crude Oil48.8%50.0%56.0%58.2%25.7%25.2%18.4%3.0%of Hard Coal10.1%4.3%1.2%0.0%49.1%47.4%21.5%1.0%2017201820192020202120222023Gas Consumption (in bcm)8.7                 8.3                     8.7                     8.8                 9.5                    7.6                 6.8                 Gas Consumption year-on-year change [%]2.8%-5.3%5.0%1.6%7.2%-19.4%-11.3%Gas Imports - by type (in bcm)8.9                 8.0                     9.5                     7.6                 8.7                    8.6                 6.8                 Gas imports - pipeline8.9                 8.0                     9.5                     7.6                 8.7                    8.6                 6.8                 Gas imports - LNG0.00.00.00.00.00.00.0Gas Imports - by main source supplier [%]Norway0.8%0.5%0.3%0.0%0.0%17.2%87.0%Russia99.2%99.5%99.7%100.0%100.0%79.4%8.1%CzechiaEU 
 
 
 
   
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Czech  ecosystems,  with  26.5%  of  the  country 
severely  affected  by  drought  in  2018.  The  health 
impacts  of  extreme  heat  have  become  more 
pronounced, with heat-related mortality increasing 
from  an  average  of  16  deaths  per  100 000 
inhabitants  between  2003-2012  to  28  deaths 
between 2013-2022. These challenges underscore 
the  need  for  cohesive  adaptation  strategies  to 
boost resilience against such extreme events. 

but 

faces 

Czechia's  adaptation  policy,  defined  by  its 
national  strategy  and  action  plan, 
is 
implementation 
developing, 
challenges  due  to  unclear  responsibilities 
among ministries. Czechia’s  adaptation  policy is 
embedded  in  two  key  documents:  the  national 
adaptation  strategy  and  the  national  action  plan 
on  adaptation.  Czechia  is  in  the  process  of 
conducting  a  national  climate  risk  assessment, 
with a significant focus on drought risk. While  the 
individual  environmental 
policies  focusing  on 
aspects  (such  as  the  protection  of  soil,  water, 
forests  or  air)  are  well  established  in  the  key 
ministries,  implementation  of  a  comprehensive 
adaptation policy is not yet at that stage. The two 
key  documents  form  a  comprehensive  adaptation 
policy, but implementation often consists of a sum 
of  separate  policies  (see  above),  rather  than 
mutually reinforcing measures based on a climate 
risk assessment. The division of responsibilities for 
implementing the adaptation policy is neither clear 
within  the  Ministry  of  the  Environment,  nor 
between  the  Ministry  of  the  Environment,  the 
Ministry  of  Agriculture  and  other  authorities.  At 
sub-national  level,  some  self-governing  regions 
have  drafted  climate  change  adaptation  plans  or 
strategies.  Implementation  is  generally  at  the 
initial phase, with further action needed. Only 29% 
of  the  Czech  population  live  in  areas  covered  by 
the  EU  Covenant  of  Mayors.  Several  local  action 
groups  have  worked 
to 
implement adaptation measures since they are not 
limited  to  individual  municipalities  and  can  work, 
for  instance,  at  river-basin  level.  This  work merits 
further  support.  Climate  adaptation  at  landscape 
level  also  merits  support  as  it  enables  action  to 
tackle  all  key  aspects  at  the  same  time  (soils, 
water  retention,  forests,  biodiversity,  etc.)  to 
deliver tangible results. The educational and social 
aspects  of  climate  change  adaptation  should  be 
promoted.  

rather  efficiently 

Czechia  faces  significant  challenges 
in 
climate adaptation, particularly in developing 
a comprehensive climate adaptation strategy 
and  enhancing  water  resilience.  It  has  well-
established  specific  environmental  policies,  such 
as policies for soil, water, forests and air. However, 
the  overall  approach  to  adaptation 
is  often 
fragmented.  Responsibilities  are  shared  across 
the 
ministries, 
Environment  and  the  Ministry  of  Agriculture, 
lacking clarity. Improving water resilience is a key 
priority, especially to tackle forms of pressure such 
as industrial emissions and untreated wastewater. 
Action  to  improve  natural  water  retention  and 
implement  nature-based  solutions  is  crucial  to 
boost  resilience  against  floods,  droughts  and 
erosion and to support climate change adaptation 
more broadly.  

the  Ministry 

including 

of 

Climate adaptation and preparedness 

Czechia  faces  significant  climate  adaptation 
challenges and substantial economic impacts 
from  weather  and  climate-related  extreme 
events  such  as 
floods,  droughts  and 
heatwaves.  Between  1980  and  2023,  economic 
losses  reached  EUR 18.5  billion,  with  only  12% 
covered  by 
insurance.  Flood  events  were 
particularly  damaging,  accounting  for  EUR 10.2 
billion  of  these  losses (174).  The  risk  of  floods 
caused  by  a 
combined  effect  of  heavy 
precipitation  and  low  water  retention  of  soils  has 
significantly  increased  (in  terms  of  exposure  of 
both  the  population  and  property).  During  the 
floods  of  summer  2024,  Czechia  demonstrated  a 
very  good  level  of  preparedness  in  terms  of 
prompt  weather  forecasts,  an  efficient  early 
warning  system  and  effective  cooperation  under 
its Integrated Rescue System. However, the floods 
showed that some key causes of the fatalities and 
damage  still  need  to  be  tackled.  For  example, 
current  conventional  agriculture  and  forestry 
practices  deteriorate  the  quality  of  soil,  decrease 
water  retention  in  soils  and  prevent  forests  from 
becoming  resilient.  These  practices  not  only 
exacerbate  the  impacts  of  floods,  but  also  of 
water  and  wind  erosion,  landslides,  heatwaves, 
droughts,  etc.  Droughts  pose  a  major  threat  to 

(174) EEA, 2024, Economic losses from weather- and climate-

related extremes in Europe, Link. 

76 

 
 
 
 
 
Water resilience 

protection, 

prioritising 

Czechia’s  action  to  improve  flood  resilience 
should continue. The major floods of September 
2024, which caused significant damage in several 
regions,  demonstrate  the  urgency.  The  economic 
losses  caused  by  floods  in  the  country  between 
1980 and 2023 are estimated at EUR 10.2 billion. 
Improving  sustainable  water  management  and 
flood 
nature-based 
solutions and restoring rivers is crucial to maintain 
the  competitiveness  of  many  economic  sectors.  
Specific  measures  are  in  preparation  or  ongoing 
under Czechia’s 2nd flood risk management plans, 
which  now  include  nature-based  solutions  and 
cross-reference  work  on  floods  under  Czechia’s 
updated  climate  change  adaptation  strategy. 
Czechia  is  not  one  of  the  EU  Member  States 
to  major  water  stress.  The  Water 
subject 
Exploitation  Index  Plus  (WEI+)  was  3.2  in  2022. 
Manufacturing  (40%)  and the  public  water  supply 
(35%) were the sectors accounting for the highest 
shares  of  water  consumption  in  2022.  Czechia’s 
water  productivity  is  above  the  EU  average  at 
EUR 159 per m3 of abstracted water in 2022. 

The water quality of Czechia’s surface water 
and  groundwater  bodies  is  on  a  downward 
trend  in  terms  of  ecological  and  chemical 
status.  Czechia’s  third  river  basin  management 
plans,  covering  2022-2027,  show  a  decrease  in 
the number of surface water bodies with good (or 
better)  ecological  status/potential  from  18.8% 
(under  the  second  plan)  to  only  5.9%  (third  plan). 
Even  if  this  partly  due  to  better  monitoring,  it  is 
also clear that the country severely struggles with 
eutrophication, particularly in lakes. The sources of 
pressure  are  industrialised  large-scale  agriculture, 
which  makes  heavy  use  of  fertilisers,  and  waste 
waters  polluting  rivers  and  lakes  with  nutrients 
causing  eutrophication.  In  terms  of  the  chemical 
status of surface water bodies, there has been an 
even  greater  deterioration  between  the  2nd  and 
the 3rd RBMPs, falling from 70% to only 38.9% of 
surface  water  bodies  in  good  chemical  status. 
Again,  this  is  partly  due  to  better  monitoring,  but 
also  due 
to  ubiquitous  and  persistent  bio-
accumulative  and  toxic  substances,  which  are 
difficult  to  tackle.  The  sources  are  discharges  not 
connected to the sewerage network, pollution from 
agriculture and urban waste waters.  

77 

Although  93.7%  of  Czechia’s  groundwater  bodies 
are  reported  to  be  in  good  quantitative  status  in 
the third plan, 13% are at risk of failing to achieve 
good  quantitative status  by  2027.  The  sources  of 
pressure are water abstraction for the public water 
supply,  industrial  and  agricultural  uses.  Czechia is 
one  of  the  EU  Member  States  with  the  highest 
share  of  groundwater  bodies  (72.4%)  failing  to 
meet  good  chemical  status.  This  is  mainly  due  to 
pollution from agriculture (pesticides, nitrates and 
ammonium). Non-agricultural pollutants have been 
on  a  sustained  upward  trend,  including  arsenic, 
nickel,  cadmium,  nitrates  (from  burning  fossil 
fuels) and aluminium. 

Czechia’s  wastewater  treatment  remains  a 
cause  for  concern.  Despite  improvements  in 
compliance  over  the  years,  in  particular  thanks  to 
EU funding, Czechia has experienced difficulties in 
implementing  the  Urban  Wastewater  Treatment 
Directive.  Incomplete  implementation  forced  the 
Commission to take legal action against Czechia in 
2020  and 
issue  a  reasoned  opinion.  These 
identified  agglomerations  failing  to  provide  a 
collecting  system,  or  failing  to  provide  secondary 
treatment,  or  failing  to  ensure  more  stringent 
treatment (175).  The  infringement  proceeding  is 
ongoing.  Overall,  Czechia’s  compliance  rate  in 
2020  was  78%.  The  Directive  was  revised  in 
2024 (176),  bringing  in  new  requirements  such  as 
additional  treatment  of  micropollutants  in  urban 
wastewater.  Czechia  has  until  31 July  2027  to 
transpose it into its legal system. 

To meet the environmental targets under the 
EU  water  legislation,  Czechia  has  a  gap  in 
investment  in  water  of  EUR 498  million  per 
year  (0.18%  of  GDP),  with  over  half  related 
to  waste  water  (338  million  per  year). 
Czechia’s annual water investment needs reach an 
estimated  EUR 1.56  billion  (in  2022  prices),  see 
Graph A9.2. This comprises both the water industry 
and  water  protection/management.  The  largest 
part  of  the  total  annual  need,  EUR 958  million,  is 
for  wastewater  management,  including  additional 
costs to implement the revised Directive. Czechia’s 
current  annual  water  investments  for  the  2021-
2027  period  are  estimated  to  be  around  EUR 1 
billion  per  year  (in  2022  prices).  Of  the  total 

(175) Czechia responded to the reasoned opinion in 2020, 

presenting its views on the various compliance issues raised 
by the Commission. 

(176) Directive 2024/3019, of 27 November 2024. 

 
 
is  provided  by 

financing,  11.2% 
the  EU 
multiannual  financial  framework  (mostly  through 
cohesion  policy),  with  a  further  4.8%  from  the 
Recovery  and  Resilience  Facility,  reaching  16% 
combined.  European  Investment  Bank  financing  is 
around  0.7%  of  the  total,  while  the  bulk  of 
financing 
sources 
from 
(83.4%) (177). 

national 

comes 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems  in 
Czechia  remains  under  pressure,  affecting 
long  history  of 
climate  resilience.  With  a 
industrialisation,  Czechia  has  one  of  the  most 
fragmented landscapes in the EU. According to the 
latest  available  data  (2018),  only  19.4%  of 
Czechia’s habitats have a good status, higher than 
the EU average of 14.7%. Data show only a slight 
improvement  since  the  previous  reporting  period. 
Similarly,  the  conservation  status  of  species,  with 
30%  reported  as  having  a  good  status  (higher 
than the EU average of 27.5%) shows only a slight 
improvement. 
severe 
implications for Czechia’s climate resilience, as the 
loss  of  biodiversity  impairs  ecosystems’  ability  to 
provide  services  that  help  mitigate  the  effects  of 
climate  change,  such  as  regulating  water  cycles, 
maintaining soil health and sequestering carbon. 

situation 

This 

has 

(177) Water investment levels are estimated by tracking EU funds, 

EIB projects and national expenditure (EPEA accounts, 
Eurostat). 

78 

Graph A9.1: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

Nature  degradation  creates  significant  risks 
to  the  economy  and  to  competitiveness  as 
Czechia  is  one  of  the  Member  States  with  a 
high 
level  of  dependency  on  ecosystem 
services.  44%  of  Czechia’s  gross  value  added  is 
highly  and  directly  dependent  on  ecosystem 
services, equal to the EU average. Several sectors 
such  as  agriculture,  forestry,  fisheries,  mining, 
construction, water utilities and healthcare delivery 
(see  Graph  A9.1)  are  particularly  dependent  on 
ecosystem  services.  100%  of  the  gross  value 
added  generated  by  these  sectors  is  directly 
dependent on ecosystem services. This means that 
failure  to  maintain  the  capacity  of  ecosystems  to 
deliver  services  could  entail  significant  costs  or 
even  stop  production  in  these  sectors.  Protecting 
and restoring key ecosystems would help maintain 
the long-term competitiveness of these sectors. 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
 
   
Focused  action  on  nature  protection  and 
restoration  is  necessary  to  meet  Czechia’s 
nature  restoration  targets.  Czechia’s  most 
recent  biodiversity  strategy  (2016-2025)  was 
adopted in 2016. It sets out four priorities for the 
protection and sustainable use of biodiversity (178). 
Czechia is currently  in the process of updating its 
national  biodiversity  strategy  and  action  plans.  In 
July  2024,  it  uploaded  into  the  online  reporting 
tool 
Biological 
Convention 
Diversity (179) two preliminary new national targets 
(on  protected  areas  and  on  ecosystem  integrity, 
connectivity and management). In 2021, 21.9% of 
the country was protected (including Natura 2000 
and  other  nationally  designated  protected  areas), 
below the EU average of 26%. 

the 

on 

of 

for  biodiversity  and 

Czechia’s  investment  needs  for  biodiversity 
and ecosystems are estimated to be EUR 1.3 
billion  per  year  (in  2022  prices)  for  the  2021-
2027 period (see Graph A9.2). The current level of 
financing 
ecosystems 
conservation in Czechia is around EUR 1 billion per 
year.  The  investment  gap  (EUR 251  million  per 
year,  corresponding  to  0.09%  of  Czechia’s  GDP) 
undermines  the  country’s  commitment  to  global 
biodiversity  agreements  and 
long-term 
economic and social development. 

its 

Graph A9.2: Investment needs and gaps in EUR 
million, in 2022 constant prices 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update. 

Sustainable agriculture and land use 

Czechia’s  carbon  removals  fall  short  of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land-use  change  and 
forestry  (LULUCF).  Carbon  removals  declined 
slowly in recent decades before decreasing sharply 
and  turning  into  emissions  between  2017  and 
2019. To meet its 2030 LULUCF target, additional 
carbon  removals  of  -0.8  million  tonnes  of  CO2 
equivalent  (CO2eq)  are  needed  (180).  The  latest 
available  projections  show  a  gap  to  target  of  0.2 
million  tonnes  of  CO2eq  for  2030  (181).  Therefore, 
additional measures are needed to reach the 2030 
target. 

Czechia’s agriculture is still a notable source 
of  greenhouse  gas  emissions  and  continues 
to  have  a  significant  impact  on  air,  water 
and  soils.  In  2022,  agriculture  generated  8.4 
million  tonnes  of  CO2eq,  accounting  for  around 
7.1%  of  the  country’s  total  emissions.  This 
includes 4 million tonnes of CO2eq from livestock. 

(178) Ministerstvo životního prostředí, 2016, Strategie ochrany 

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

biologické rozmanitosti České republiky 2016–2025, Link. 

Regulation (EU) 2023/839. 

(179) Convention on Biological Diversity Reporting Tool, Link. 

(181) Climate Action Progress Report 2024, COM/2024/498. 

79 

 - 200 400 600 800 1.000 1.200 1.400 1.600 1.800BiodiversityWaterBaselineGap 
 
   
 
The  utilised  agricultural  area  (UAA)  in  Czechia 
remained  stable  between  2012  and  2023  at  3.5 
million hectares.  

production  contribute  significantly 
result 
indicator R.21 – Protection of water quality, where 
25.4% of UAA (895 thousand hectares) is covered. 

to 

threshold 

for  human 

Nutrient  loss  from  agriculture,  mainly  from 
mineral  fertilisers  and  manure,  pose  a 
significant  environmental  concern  and  a 
threat to human health. This is reflected in the 
country’s  nitrogen  balance  of  62.9 kg  of  nitrogen 
per  hectare  of  UAA  (in  2021).  According  to  data 
collected  under  the  Nitrates  Directive,  11.7%  of 
groundwater  monitoring  stations 
in  Czechia 
recorded  average  nitrate  concentrations  above 
50 mg/l  between  2016  and  2019,  exceeding  the 
healthy 
consumption. 
Although  the  livestock  density  index  was  0.47  in 
2020,  below  the  EU  average  of  0.75,  ammonia 
emissions  have  been  on  a  downward  trend 
between  2018  (76.2  thousand  tonnes  annually) 
and  2022  (68.7  thousand  tonnes  annually).  51% 
of  monitoring  sites  in  Czechia  reported  (based  on 
2017-2022  data)  levels  of  pesticides  in  surface 
waters  that  exceed  that  threshold,  significantly 
above the European average of 29% (182). Czechia 
is  transitioning  to  a  sustainable  food  system  by 
implementing policies to reduce the environmental 
impact  of  agriculture.  In  2022,  4.7%  of  its 
agricultural  land  had  landscape  features  such  as 
woods  and  non-productive  grasslands,  below  the 
EU  average  of  5.6%.  Organic  farming,  which 
reduces  the  use  of  synthetic  fertilisers  and 
pesticides, has steadily increased in Czechia since 
2005, making up 16% of agricultural land in 2022. 

Under  its  common  agricultural  policy  (CAP) 
strategic  plan,  Czechia  aims  to  reach  21.3% 
of UAA under organic farming by 2030. This is 
achievable  if  the  current  growth  trend  in  organic 
farming  surface  continues  over  the coming  years. 
According  to the  latest  aid  application  data  under 
2024  CAP  strategic  plan,  the  areas  under  organic 
farming  represents  590  thousand  hectares,  which 
is  25 000  hectares  more  than  in  2023  and 
reaching 16.7% of UAA. Under the result indicator 
R.12 – Adaptation to climate change, Czechia plans 
for  42%  of  UAA 
(1.5 million  hectares  of 
agricultural  land)  to  be  subject  to  environmental 
measures  to  improve  agricultural  adaptation  to 
climate change such as whole-farm eco-schemes, 
grassing  of  arable  land  or  new  title  agroforestry. 
Other measures such as catch crops or integrated 

(182) EEA, 2024, Pesticides in rivers, lakes and groundwater in 

Europe, Link. 

80 

 
 
 
Table A9.1:  Key indicators tracking progress on climate adaptation, resilience and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action, The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, 7th Implementation Report from the Commission to the Council and the European Parliament on 
the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third River Basin 
Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) 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. 
Source: Eurostat, EEA. 

81 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems26.4610.191.740.035.860.276.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)88            88            88            88            88            88            [ha, annual average 2006-2023]Economic losses from extreme events159          -           184          689          80            22            24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.25         1.50         [composite score between 0 and 4]Heat-related mortality (3)28            28            28            28            28            [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action20            21            22            25            27            29            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)4.33.42.42.33.2-4.54.5[total water consumption as % of renewable freshwater resources]Water consumption388          376          348          351          356          -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies---94%---59%Groundwater bodies---6%---93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)19.4-----14.7-[% of habitats having a good conservation status]Common farmland bird index70.668.567.763.5--72.274.42000=100Protected areas---2222--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)10 188     10 690     10 707     11 458     634 378     716 124     [EUR million]Landscape features----5              -[% of agricultural land covered with landscape features]Food waste--91108101-[kg per capita]Area under organic farming14.815.215.315.616.07.99-[% of total UAA]Nitrogen balance94.775.656.962.9--[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)18.017.718.718.5--[mgNO3/l]Net greenhouse gas removals from LULUCF (9)12-            6 493       9 700       6 588       3 378       -           256 077-     240 984-     [Kt CO2-eq]CzechiaEU-27CzechiaEU-27CzechiaEU-27CzechiaEU-27 
 
 
 
  
 
ANNEX 11: SOCIAL POLICIES 

in 

groups, 

Czechia continues to have one of the highest 
employment  rates  in  the  EU  but  faces 
persistent challenges. Labour shortages remain 
significant,  with  job  vacancy  rates  among  the 
the  EU.  Despite  strong  overall 
highest 
employment figures, women encounter barriers to 
employment,  limiting  workforce  participation  and 
inclusivity.  Disadvantaged 
including 
Ukrainian  refugees,  people  of  Roma  background 
and  persons  with  disabilities,  also  struggle  to 
access  jobs.  Job  transition  rates  remain  low  and 
the  tax  system  disproportionately  burdens  low-
income  and  part-time  workers,  exacerbating 
economic  inequality.  Additional  efforts  to  ensure 
reskilling and upskilling could help workers access 
better-paid  jobs,  meet  the  demand  for  new  skills, 
and boost Czechia’s competitiveness. Czechia also 
saw  one  of  the  steepest  declines  in  real  wages, 
which  remain  below  2019  levels  despite  signs  of 
recovery. 

Czechia continues to have one of the highest 
employment  rates  in  the  EU.  In  2024,  the 
employment  rate  for  people  aged  20-64  reached 
82.3.%,  significantly  above  the  EU  average  of 
75.8%, keeping the country on track to meeting its 
target of 82.2% in 2030. Czechia’s labour market 
low 
is  also  characterised  by  a  significantly 
unemployment rate, which stood at 2.6% in -2024, 
one  of  the  lowest  in  the  EU,  and  is  projected  to 
increase only slightly to 2.7% by 2026 (183).  

Graph A10.1: Employment rate by sex 

Source: Eurostat 

Despite  strong  overall  employment  figures, 
women  continue  to  face  barriers  in  the 
labour market. At 12.6 percentage points (pps) in 
2024, the gender employment gap remains one of 
the  widest  among  Member  States  (EU:  10 pps). 
Furthermore,  the  gender  pay  gap  was  18 pps  in 
2023 (EU: 12 pps). Only 7.3% of children under the 
age of 3 were enrolled in formal childcare in 2024, 
an increase of nearly 3pps from 2023 but still far 
below  the  EU  average  of  39.2%.  This 
low 
enrolment  rate  significantly  contributes  to  the 
gender  employment  gap,  as  it  limits  women’s 
participation  in  the  labour  market.  The  European 
Structural and Investment Funds and the Recovery 
and  Resilience  Facility  are  helping 
create 
affordable and accessible childcare, but challenges 
persist  in  ensuring  sufficient  capacity  and  quality 
in  all  regions.  Further  efforts  are  needed  to 
strengthen  data  collection,  scale  up  national 
funding  for  quality  assurance,  and 
improve 
coordination  across  early 
cooperation  and 
childhood education and care services for children 
(184).  

to 

disincentives 

women’s 
Reducing 
employment  is  key  to  addressing  labour 
shortages  and  promoting  a  more  inclusive 
labour market. In 2023, Czechia introduced a 5% 
tax  reduction  in  social  security  contributions  for 
part-time employment of target vulnerable groups, 
including  parents  and  informal  carers.  In  2024,  a 
tax  reform  restricting  the  use  of  the  dependent 
spouse tax credit to households where one spouse 
is  caring  for  a  child  under  the  age  of  three  was 
introduced  to  reduce  financial  disincentives  for 
second  earners.  In  2024,  the  percentage  of  part-
time contracts increased again by 0.8 pp to 7.6% 
(EU  average  17.2%) and  the  gender  employment 
gap declined by 1.3 percentage point (pp.) in 2024. 
Nevertheless, more can also be done in the areas 
of taxation, parental leave (which extends to up to 
three  years),  and  flexible  work  arrangements  to 
overcome  existing  disincentives 
to  women’s 
employment.  An  estimated  200 000-300 000 
people,  primarily  women,  provide  unpaid  informal 
care  to  people  in  need,  and  half  of  them  are 
unable  to  take  up  full-time  employment  because 
of  this.  Addressing  these  systemic  challenges  is 
crucial for reducing labour shortages and ensuring 
that the labour market is more inclusive. 

(183) Economic forecast for Czechia - European Commission 

(184) Consolidated Recommendation Report For the ‘Developing a 
Comprehensive Framework for the Monitoring and Evaluation 
of Early Childhood Education and Care in the Czech Republic’.  

82 

60657075808590951002015201620172018201920202021202220232024TotalMaleFemale 
 
   
 
 
 
 
 
Disadvantaged  groups,  including  Ukrainian 
refugees,  people  of  Roma  background  and 
persons  with  disabilities,  continue  to  face 
challenges in accessing employment. In 2024, 
80%  of  economically  active  Ukrainian  refugees 
were  in  employment  but  50%  reported  that  their 
work  did  not  correspond  to  their  qualification. 
Furthermore,  47%  struggle  with  financial  stress, 
37%  with  unstable  employment  and  33%  with  a 
lack of legal or social protection.(185) Roma citizens 
remain  particularly  vulnerable,  and  only  an 
estimated  45%  of  working-age  Roma  are 
employed,  whereas  the  percentage  of  people  in 
employment in the general population is 82.3% in 
2024.  The same is true for other age groups and 
whereas the share of the general population aged 
15  to  29 that is  not  in  employment,  education  or 
training  in  2024  is  8.6%  (EU:  11%),  the  rate 
among  young  Roma  people  (16-24)  was  47%  in 
2021(186).  The  disability  employment  gap  was 
21.7. pps in 2024 (EU: 24 pps). In December 2024, 
Czechia  set  an  employment  goal  of  45%  for 
persons with disabilities. To achieve this target, in 
2024  Czechia  approved  measures  to  support 
social  enterprises,  cooperatives  and  non-profits 
employing  persons  with  disabilities  by  providing 
access  to  funding  and 
improving  regulatory 
conditions.  

Czechia  faces  high  job  vacancy  rates  as 
companies  struggle  to find  workers  with the 
right  skills.  Over  80%  of  companies  reported 
difficulties finding workers with the right skills (vs 
EU:  77%)  and  reported  labour  shortages  were 
particularly  high  in  the  construction  sector(187).  In 
2023, the job vacancy rate exceeded 3.5% despite 
a  slight  decline  from  previous  years.  The  country 
had one of the highest vacancy rates in the EU in 
manufacturing  (3.4%  vs  EU:  1.8%),  construction, 
(6.5%  vs  3.1%)  and  transportation  and  storage 
(4.5% vs 2.2%). By Q4-2024, the job vacancy rate 
stood  at  3.2%  (EU:  2.3%),  with  industry  (3.0%  vs 
EU: 1.6%), trade and transport (4.1% vs 2.1%) and 
services (4.7% vs 2.5%) all exceeding EU averages. 
By  contrast,  the vacancy  rates  in information  and 
communication  (1.6%  vs  EU:  2.9%)  and  finance 

(185) The Voice of Ukrainians: Integration of Ukrainian Refugees: 
Labour Market, Housing, Czech Language Proficiency, and 
Children's Education 

(186) FRA report 2021 new data available soon 

(187) Eurofound (2024), Company practices to tackle labour 
shortages, Publications Office of the European Union, 
Luxembourg. 

and insurance (0.8% vs 1.7%)  were below the EU 
average (188).  In  2024,  labour  shortages  were 
reported for several occupations requiring specific 
skills  related  to  the  green  transition,  including 
refuse  sorters,  forestry  and  related  workers,  and 
mixed  crop  and  livestock  farm  labourers  (see 
Annex 12). Czechia’s potential to help the EU reach 
ICT  specialists 
its  Digital  Decade  target  for 
remains  untapped  with  only 
limited  progress 
shown. ICT specialists accounted for only 4.5% of 
total  employment  in  2024,  below the  EU  average 
of  5.0%,  marking  an  increase  from  the  previous 
year  (4.3%).  Women  remain  underrepresented, 
comprising  only  13.0%  of  ICT  specialists (189). 
Legal  migration  currently  plays  a  relatively  small 
factor  in  addressing  labour  shortages,  with  only 
about  300  000  foreign-born  workers  in  2023, 
which  represents  about  6%  (vs  14%)  of  all 
employed  people.    The  European  Social  Fund  Plus 
(ESF+)  is  investing  EUR 293  million  to  improve 
access  to  employment  for  jobseekers  with  a 
particular  focus  on  disadvantaged  groups  in  the 
labour market and the recovery and resilience plan 
is  investing  EUR 275  million  for  upskilling  and 
reskilling. 

Graph A10.2: Quarterly job vacancy rates, 
seasonally adjusted 

Source: Eurostat 

limited 

transitions 

labour  market  exhibits 

The 
job 
transition rates. The quarterly probability of job 
changes  or 
is 
approximately  1.5%  (EU:  3.1%).  Some  of  the 
reasons  for  this  are  low  levels  of  unemployment 
support,  which  encourages  quick  job  choices,  the 
fact  that  skills  development  offers  limited  job  or 
wage  benefits  and  limited  regional  mobility.  This 

to  unemployment 

(188) Home Page | Euro indicators dashboard. 

83 

012345672019-Q12020-Q12021-Q12022-Q12023-Q12024-Q1EU-27Czechia 
 
   
 
 
reduces  efficiency  when  allocating  human 
resources,  allowing  low-productivity  sectors  to 
persist  due  to  low  wages,  while  emerging,  high-
productivity  industries  struggle  to  attract  skilled 
labour. The 2025 amendment to the Czech Higher 
Education Act simplifies academic recognition, but 
regulated  professions 
lengthy 
adaptation  periods.  This  can  in  some  instances 
restrict competition and raise barriers to entry into 
necessarily  a 
certain 
corresponding increase in expertise or quality (190). 

professions,  without 

require 

still 

rebounded 

to  pre-pandemic 

in  2024  after 
Real  wages 
significant losses in 2022 and 2023. Nominal 
wages grew by 5.9% in 2024 and are projected to 
grow by 6.5% in 2025. Real wages rose by 3.4% in 
2024  and  are  projected  to  increase  by  4.0%  in 
2025  (191),  driven by  continued  growth  in  nominal 
wages,  combined  with  rapid  disinflation,  from 
12.0%  in  2023  to  2.7%  in  2024.  Despite  this 
recovery, real wages remain below 2019 levels by 
more  than  5%,  one  of  the  steepest  losses  in  the 
EU  compared 
levels.  The 
statutory minimum  wage increased  by more  than 
28%  between  Q1-2022  and  Q1-2025  in  nominal 
terms and only by about 2% in real terms over the 
same  period  due 
inflation.  The 
transposition  of  Directive  (EU)  2022/2041  on 
adequate  minimum  wages  contributed  to  the 
increase in the minimum wage. At the same time, 
the  transposition  removed  guaranteed  wages  for 
workers  in  the  private  sector,  raising  concern 
among  trade  unions.  Concerns  have  grown  about 
deteriorating  cost  competitiveness  for  Czechia. 
Further  efforts  to  increase  productivity  growth 
represent  a  sustainable  way  towards  further  real 
wage  growth  which  could  help 
to  address 
remaining social challenges. 

to  high 

labour 

taxation 

burdens 
part-time 

Czechia’s 
system 
disproportionately 
low-income 
workers 
and 
employees, 
contributing  to  economic 
inequality  and 
tax 
limiting  workforce  participation.  The 
wedge  on  labour  is  relatively  high  for  workers  on 
low wages. Indeed, the Czech personal income tax 
system  tends  to  be  flat,  with  tax  wedges  being 
only  marginally  lower  for  those  earning  less. 
Relatively high tax burdens on low-income earners 
increase  distortions  in  both  labour  demand  and 

(190) navrhy-NERV.pdf. 

social 

taxation 

supply and can complicate the hiring of low-skilled 
workers.  A  recent  study  suggests  that  reducing 
labour 
security 
including 
contributions for low-income workers could lift up 
to  29 000  people  above  the  poverty  line  and 
incentivise  up  to  50 000  employees  to  transition 
from informal or precarious work arrangements to 
standard employment, addressing inefficiencies in 
the labour market (192). 

in 

environmental 

The  share  of  people  working  in  emission 
intensive  industries  remains  significant  and 
sectors 
employment 
limited.  Between  2011  and  2023,  the  emissions 
intensity  of  the  workforce  declined  from  23.1 
tonnes  of  greenhouse  gases  to  16.2  tonnes  of 
greenhouse  gases  per  worker,  but  it  remains  one 
of  the  highest  among  Member  States  (EU:  12.3 
tonnes  per  worker).  Furthermore,  in  2024,  energy 
intensive 
the 
workforce,  one  of  the  highest  rates  in  the  EU, 
whereas  the  environmental  goods and  services 
sector  employed  in  2022  only  2.9%  of  people 
employed (EU: 3.3%). 

industries  employed  7.1%  of 

despite 

exclusion 

Social  conditions 
in  Czechia  exhibit  a 
relatively  low  overall  risk  of  poverty  and 
increasing 
social 
challenges,  particularly  among  children  and 
Roma  communities.  Energy  poverty  remains 
comparatively  low,  but  the  country  grapples  with 
significant issues in ensuring housing affordability. 
Moreover,  the  Czech 
long-term  care  system 
remains  heavily  focused  on  residential  care.  The 
high  level  of  indebtedness  of  many  households 
remains  a  key  social  challenge  and,  for  many 
people,  continues  to  be  an  obstacle  to  accessing 
the  job  market.  Addressing  these  challenges  will 
contribute  to  achieving 
inclusive  growth  and 
enhancing the country's competitiveness. 

The  risk  of  social  exclusion  remains  low  in 
Czechia, despite a slight increase. In 2024, the 
rate of people at risk of poverty or social exclusion 
(AROPE)  remained  well  below  the  EU  average 
(11.3% vs 21%). Poverty and social exclusion tend 
in  specific  regions,  with 
to  be  concentrated 
Ústecký,  Moravskoslezský  and  Karlovarský  kraj 
being 
the  most  affected.  Czechia’s  poverty 
reduction target is to reduce the number of people 
at  risk  of  poverty  or  social  exclusion  by  120 000 

(191)Based on the European Commission Autumn 2024 economic 

(192) Navrhujeme chytřejší danění zaměstnanců. Pomůže 

forecast. 

pracovnímu trhu, rozvoji chudších regionů i omezení chudoby. 

84 

 
 
 
by  2030,  with  a  specific  goal  of  reducing  the 
number  of  children  in  this  category  by  50 000. 
While  the  overall  population  at  risk  of  poverty  or 
social  exclusion  decreased  by  17 000  between 
2019  and  2023,  the  number  of  children  at  risk 
rose  sharply  by  55 000,  highlighting  the  growing 
challenge  to  meet  the  national  target.  In  order  to 
mitigate the impact of poverty on children, Czechia 
is  implementing  the  European  Child  Guarantee 
(ECG)  as  part  of  its  2022  action  plan.  The 
European  Social  Fund  Plus  (ESF+)  is  investing 
EUR 434  million  over  the  2021-2027  period  to 
foster active inclusion and equal opportunities. 

Graph A11.1: Persons at risk of poverty or social 
exclusion by age 

Source: Eurostat 

House  prices  have  increased  steadily,  more 
than  doubling  over  the  last  decade.  Having 
grown  by  19.7%  and  16.9%  in  2021  and  2022, 
house prices decreased by 1.7% in 2023, adjusting 
to  the  higher  interest  rate  environment.  The 
growth  in  house  prices  resumed  in  2024,  with 
recent data signalling an increase of 5.9% in Q3-
2024, year-on-year. As of end-2024, house prices 
were estimated  to be overvalued by  around 20%. 
The increase in mortgage rates had a moderating 
effect on mortgage credit, and house transactions 
stabilised at a low level in 2023. Building permits 
decreased by 7.1% and 16.3% in 2022 and 2023, 
which  is  expected  to  limit  new  housing  supply 
going forward. 

housing 

affordability 

has 
Overall 
deteriorated over the past decade.  The house 
price-to-income  ratio  has  increased  steadily  over 
the past 10 years with a mild decrease in 2023. At 
the end of 2023, the standardised house price-to-
income  ratio  stood  15%  above  its  long-term 
average,  reflecting  a  deterioration  in  housing 
affordability  with  possible  structural  implications 
for  the  domestic  economy.  Borrowing  capacity  of 

its  annual 

households that considers both household incomes 
and  interest  rates  grew  much  less  than  house 
prices.  Considering  the  cost  of  mortgage  funding, 
the  borrowing  capacity  of  households  worsened 
significantly over the past decade as well, since an 
average  household  needs  a  significantly  higher 
share  of 
income  for  mortgage 
payments. While the rental market is rather small, 
the  ratio  of  new  rents  to  incomes  increased  over 
the  last  decade  especially  in  the  city  centres.  The 
rental  affordability  deteriorated  as  well  and  the 
ratio  of  new  rents  to  incomes  is  very  high, 
especially  in  the  cities,  which  has  an  adverse 
impact  on  labour  mobility.  The  ratio  of  dwellings 
per  capita  (housing  stock)  has  increased  by  4% 
since  2015,  as  the  increase  in  the  number  of 
dwellings  outpaced  population  growth  (+8%  vs. 
+4%  since  2015).  However,  this  ratio  remains 
relatively low in EU comparison. The ratio of house 
completions per capita has increased over the past 
years  and  stands  close  to  the  EU  average.  The 
public rental housing sector is one of the lowest in 
the EU, while the construction of affordable rental 
housing has been very low in the last decades. The 
problem  is  exacerbated  by  structural  factors. 
Residential  building  permits  have  decreased  over 
the  past  years,  which  could  indicate  limited  new 
housing  supply  looking  ahead.  Stringent  urban 
planning and inefficient permitting procedures are 
generally  believed  to  be  the  main  reason  for 
insufficient  new  housing  supply,  which  is  also 
reflected  in  a  very  low  and  persistently  declining 
housing transactions. Other issues include planning 
permission  processes, 
insufficient  municipal 
incentives  to  build  affordable  housing,  a  poorly 
targeted  welfare  system  and  suboptimal  tax 
incentives 
taxes,  mortgage 
property 
deductibles,  taxation  of  rent).  This  has  led  to 
limited housing options, rising energy costs and an 
increasing  burden  on  lower-income  households. 
The  housing  cost  overburden  rate  in  Czechia 
increased  by  more  than  2 percentage  points  to 
9.2%  between  2022  and  2024,  bringing  it  above 
the  EU  average  of  8.2%.  In  2024,  the  percentage 
of  the  population 
in  an  overcrowded 
living 
household in Czechia was 16.6%, very close to the 
EU average of 16.9%. There are over 100,000(193) 
homeless  people  in  Czechia.  and  over  200 000 
long-term  unoccupied  dwellings,  7.5%  of  all 

(low 

(193) OECD Country Note: Data on homelessness in Czechia 

85 

05101520201620172018201920202021202220232024Eldery (65+)Children (<18)Working age (18-64) 
   
 
 
apartments  are  unoccupied(194).  While  new 
legislation on affordable housing and construction 
projects  is  being  negotiated,  it  is  unclear  how 
much  impact  this  will  have  for  children  and 
marginalised  groups,  such  as  Roma.  In  January 
2025,  the  European  Committee  of  Social  Rights 
(ECSR)  found  that  Czechia  violated  Article 16  of 
the  1961  European  Social  Charter  by  failing  to 
ensure  adequate  safeguards 
for  vulnerable 
groups,  particularly  Roma  families,  as  regards 
access  to  housing  and  eviction  protections.  The 
ECSR highlighted issues such as insufficient social 
housing,  ineffective  legal  remedies,  and  obstacles 
preventing  low-income  and  disadvantaged  groups 
from  accessing  housing  benefits.  Additionally,  it 
ruled  that  the  State’s  failure  to  provide  adequate 
housing 
protections 
practices disproportionately affects Roma families, 
further violating Article 16 in conjunction with the 
Charter’s non-discrimination clause.  

discriminatory 

against 

of 

debt 

people 

in  addressing 

Despite  some  progress  in  terms  of  total 
numbers,  over 
indebtedness  and  debt 
enforcement  continues  to  push  many  into 
poverty  and  undeclared  work  in  Czechia.  The 
number 
enforcement 
in 
proceedings  has  decreased  from  646 000  to 
615 000  between  2023  and  2024,  reflecting 
indebtedness. 
some  progress 
Additionally,  95 965 
individuals  are  currently 
undergoing  debt  relief.  However,  the  absolute 
numbers  remain  high  and  factors  such  as  high 
repayments,  property  seizure  risks,  bureaucratic 
hurdles,  and  the  challenge  of  surviving  on  the 
minimum living allowance after deductions deters 
many  debtors 
Approximately  400 000  people  in  Czechia  are 
trapped in multiple debt enforcement proceedings 
with no viable path to resolution.  Key measures to 
improve  the  situation  include  making  debt  relief 
more  accessible,  more 
less 
burdensome  coupled  with  increased  efforts  to 
legalise  incomes,  and  improved  State  regulation 
against profiteering from debt enforcement. 

from  entering  debt 

tailored  and 

relief.   

The  Roma  population  faces  severe  and 
worsening risks of social exclusion. The AROPE 
rate  for  Roma  increased  from  58%  in  2016  to 
77%  in  2021.  For  Roma  children,  the  situation  is 
even  worse,  with  85%  at  risk  in  2021,  up  from 

for 

65%  in  2016 (195).  These  figures  underline  the 
importance  of  addressing systemic inequality  and 
social  exclusion  within  Roma  communities.  The 
Roma  population  in  Czechia  is  estimated  at 
250 000 (196)  but  the 
lack  of  specific  data 
collection  for  this  population  makes  targeted 
Introducing  ethnic  data 
measures  difficult. 
collection  would  allow 
targeted  policy 
measures  to  support  this  most  vulnerable  group 
and  would  make  it  easier  to  assess  and  monitor 
the  situation,  including  in  the  context  of  ongoing 
policy  reforms  supporting  inclusive  education.  In 
April 2024, the Czech government adopted a non-
binding  definition  of  ‘antigypsyism,’  or  anti-Roma 
attitudes 
and 
institutional  discrimination  against  Roma  people 
enforcement  measures. 
but  without 
Compliance  with  the  Race  Equality  Directive  is 
essential  to  ensure  equal  treatment  and  prevent 
discrimination  in  all  aspects  of  society,  including 
the 
education.  Effective 
directive  helps  address  structural  inequalities  and 
promotes  inclusive  policies  that  safeguard  the 
rights of all individuals. 

implementation  of 

recognising 

individual 

legal 

both 

integration  of  Ukrainians 

The  social 
in 
Czechia  remains  uneven.  While  80%  of 
economically  active 
individuals  are  employed, 
many  work  below  their  qualifications  and  only 
20% of households have incomes above the Czech 
median.  While most children attend Czech schools 
and  over  two-thirds  demonstrate  good  Czech 
language  skills,  adult  social  inclusion  remains  a 
challenge.  As  more  refugees  plan  to  stay  long-
term, 
job 
opportunities and social inclusion remains key (197). 

improving 

language 

teaching, 

care. 

Public 

long-term 

long-term  care  system 

The  Czech 
is 
characterised  by  a  high  emphasis  on 
care 
residential 
expenditure on residential care in 2022 was 60.2% 
(EU  average:  46.2%)  but  the  percentage  of  home 
care  spending  within  long-term  care  was  only 
The 
8.3% 
deinstitutionalisation  process  in  Czechia  faces 
challenges 
legislative 
implementation,  limited  repurposing  of  existing 

average: 

28.8%). 

slow 

due 

(EU 

to 

a 

(195) Roma in 10 European countries. Main results – Roma Survey 

2021. 

(196) Government of the Czech Republic: Roma national minority  

(194) Ministry for Regional Development: Structure of Vacant 

Dwellings in the Czech Republic and Tools for Their Activation 
Used in OECD Countries 

(197) The Voice of Ukrainians: Integration of Ukrainian Refugees: 
Labour Market, Housing, Czech Language Proficiency, and 
Children's Education 

86 

 
 
 
efficiency  programmes.  However,  the  country’s 
current  policies  primarily  focus  on  social  and 
consumer  protection  measures,  with 
fewer 
targeted 
the  structural 
initiatives  addressing 
causes of energy poverty.  

facilities  and 
insufficient  data  collection.  For 
community-based  services,  there  is  a  deficit  of 
between 15 000 to 30 000 care places (out of the 
current  75 000).  High  reliance  on  residential 
services, a declining capacity of community-based 
services  (from  120 000  in  2015  to  104 000  in 
2023)(198)   which  disincentivises  investments  by 
private  providers,  and  low  salaries  are  further 
challenges  in  the  Czech  care  sector (199)(200).  The 
recovery  and  resilience  plan  (RRP)  and  the  ESF+ 
are 
investing  EUR 365  and  197  million, 
respectively, to improve equal and timely access to 
quality,  sustainable  and  affordable  services  over 
the  2021-2027  period  but  private  investment  as 
well  as  sufficient  national  resources  are  essential 
for their long-term sustainability. A new long-term 
care law, coming into force in March 2025 as part 
of the RRP, aims to integrate healthcare and social 
care,  set  quality  standards,  promote  home-based 
and  community-based  care,  and  ensure  adequate 
funding.  

A  reform  of  the  social  benefits  system, 
consolidating  four  means-tested  benefits 
into one single payment, will come into force 
in 2025. In Czechia, 93.5% of people aged 18-64 
that  are  at  risk  of  poverty  and  living  in  a  (quasi-
)jobless  household  received  benefits  in  2023  (EU: 
83.5%). Nevertheless, the current benefits system 
is complex and has inefficiencies in certain areas, 
with  housing  allowances  that  are  not  aligned  to 
local  rents  and  small  income increases  leading  to 
sharp  benefit  cuts.  The  reform  aims  to  simplify 
processes and boost self-sufficiency through work 
incentives  but  it  is  important  to  monitor  the 
impacts  of  the  reform  on  the  most  vulnerable 
people. 

Energy  poverty  remains  low  in  Czechia.  The 
percentage of the population unable to keep their 
homes adequately warm is significantly lower than 
the EU average (4.9% in 2024 vs 9.2%), although 
this  figure  is  higher  than  in  2022  by  2  pps. 
Structural  issues,  such  as  leaks,  damp  or  rot, 
affect a limited proportion of the population (8.5% 
vs  15.5%  for  the  EU  in  2023).  To  address energy 
poverty,  Czechia  has  launched  national  energy 

(198) Statistical yearbook of the Ministry of Social Affairs.. 

(199) Problémy sociálně-zdravotního pomezí v terénních službách 
– kde brát inspiraci? (Díl 1).Initiative for Effective Healthcare: 
Problems at the Social-Health Interface in Field Services – 
Where to Find Inspiration? 

(200) a4-financovani-terenni-sluzby-2023-final.pdf. 

87 

 
 
ANNEX 12: EDUCATION AND SKILLS 

Czechia’s  potential  to  transform 
into  a 
knowledge  economy  is  limited  by  growing 
inequalities 
low  tertiary 
in  basic  skills, 
educational  attainment,  including  in  science, 
technology,  engineering  and  mathematics 
(STEM)  fields,  and 
levels  of  adult 
learning.  The  education  and  training  system 
needs  to  better  equip  young  people  and  adults 
with  relevant  skills  to  tackle  rapidly  changing 
labour  market  needs  linked  to  the  green  and 
digital  transitions  and  the  increasing  demand  for 
highly  skilled  professionals  in  technical  fields  and 
natural sciences. 

low 

care 

education  and 

low  participation 

in  early 
Persistently 
childhood 
(ECEC) 
negatively  impacts  skills  development  and 
perpetuates  social  inequalities  early  in  life. 
In 2023, 85.3% of children aged three to the start 
of  compulsory  primary  education  participated  in 
ECEC,  which  is  one  of  the  lowest  rates  in  the  EU 
(average: 94.6%) and well below the EU target of 
96%.  Despite their  legal  entitlement  to  a place  in 
ECEC, attendance is particularly low among three-
year-olds  (74.0%,  EU:  89.0%  in  2022),  partly  due 
to insufficient kindergarten capacity as well as tax 
and benefit disincentives. Only a small percentage 
of  children  younger  than  three  participate  in 
formal childcare (7.3%, EU: 39.2% in 2024). Low-
income  families  face  financial  obstacles 
in 
accessing quality ECEC. Many kindergartens do not 
have  the  capacity  to  admit  younger  children,  and 
the alternative children’s groups have higher fees. 
Czechia  has  committed 
increasing  ECEC 
capacity,  and  new  facilities  are  financed  via  the 
Recovery  and  Resilience  Facility  (RRF).  However, 
the  ECEC  system  remains  fragmented,  hindering 
effective 
equal 
foundational learning opportunities for all children. 
the  Technical  Support 
With  support 
Instrument  (TSI),  Czechia  aims  to  improve  data 
collection  to  identify  supply  and  demand  and 
create  a  common  quality  and  monitoring 
framework for all types of ECEC. 

forecasting 

capacity 

from 

and 

to 

Deteriorating  performance  in  basic  skills 
hampers  the  future  workforce’s  innovation 
potential  and  employability.  While  Czech 
in 
students  perform  above  the  EU  average 
mathematics, 
these 
historically  good  results  are  on  the  decline. 
Although  reading  performance  has  remained 
stable  over  the  years,  trends  in  mathematics  and 
science are more worrying. According to the results 

science, 

reading 

and 

of  the  2022  OECD  Programme  for  International 
Student  Assessment  (PISA),  one  out  of  four  15-
year-old  students  (25.5%)  does  not  reach  the 
basic  proficiency  level  in  mathematics,  and  this 
proportion  has  grown  over  the  past  decades.  In 
reading and science, the shares of underachievers 
are  21.3%  and  18.8%  respectively,  below  the  EU 
average, but over the EU level target of 15%. The 
2023  TIMSS  (Trends  in  International  Mathematics 
and  Science  Study)  results  among  the  younger 
generations (fourth and eighth graders) also show 
an  increase  of  the  share  of  pupils  performing  at 
the  lowest  level.  In  September  2025,  a  pilot 
implementation  of  the  revised  curricula  will  start 
in  Czech  schools.  The  reform  is  expected  to 
strengthen,  among  other  things,  the  development 
in 
of  STEM  concepts  and  critical 
education,  and  it  will  introduce  foreign  language 
from  the  first  grade.  To  implement  curricular 
innovation effectively, teachers and school leaders 
could  benefit  from  comprehensive  support  to 
prevent  struggling  students  from  falling  further 
behind. 

thinking 

Czechia  continues  efforts  to  make  the 
teaching  profession  more  attractive,  but 
there  are  still  shortages  in  critical  subjects. 
As  part  of  the  comprehensive  reform  of  initial 
teacher  training,  the  practical  component  of 
teacher education has been strengthened. In 2024, 
the Ministry of Education published a new teacher 
competence  framework  that  has  become  part  of 
the  accreditation  criteria  for  teacher  education 
programmes. As a result of a sectoral agreement, 
the  government  aims  to  increase  teacher  base 
in  2025.  However,  salary 
salaries  by  7% 
progression is slow, especially for less experienced 
teachers.  13.8%  of  teachers  in  primary  education 
the  profession (201).  Among 
intend 
younger  teachers,  the  main  reasons  for  this  are 
related  to  salaries  and  equipment  shortages (202). 
Teacher 
– 
in 
mathematics,  physics,  chemistry  and  computer 
science  –  remain  critical  in  multiple  regions.  In 
2025,  Czechia  plans  to  start  financing  the 
employment  of  school  psychologists,  special 
education  professionals  and  social  pedagogues 
from  the  state  budget,  which  is  a  major  move 
towards  the  institutionalisation  of  these  positions 

shortages 

subjects 

STEM 

leave 

to 

(201) Straková, J. and Simonová, J. (2024), ‘Why do teachers leave 
schools? Evidence from lower secondary schools in the Czech 
Republic’, International Journal of Educational Management, Vol. 38 
No 5, pp. 1 444-1 458. 

(202) Ibid. 

88 

 
 
 
 
 
to  improve  the  inclusiveness  of  the  education 
system.  

Graph A12.1: Isolation of high-achieving students 
(top 25%) in mathematics from all students (PISA 
2022) 

Source: OECD PISA 2022 

The 

difference 

Inequalities 
in  education  are  widening, 
contributing  to  skills  gaps  in  the  workforce. 
While  the  proportion  of  young  people  leaving 
education  without  obtaining  an  upper  secondary 
certificate  is  consistently  low  across  the  country 
(5.4%) and below the EU target of 9%, it remains 
high  (11.6%)  in  regions  affected  by  poverty  and 
the  housing  crisis  (Karlovy  Vary  and  Ústí  nad 
Labem).  Close  to  half  of  disadvantaged  students 
(48.5%)  underachieved  in  mathematics  in  PISA 
2022,  which  is  an  increase  compared  to  2018 
(38.5%). 
in  mathematics 
performance  linked  to  differences  in  social  and 
economic  status  is  the  second  highest  in  the  EU 
(51  points  vs  the  EU  average  of  40.6  points), 
pointing  to  deeply  ingrained  inequalities  that  the 
school  system  fails  to  offset.  There  is  a  great 
difference  between  school  types  and  pathways. 
Almost  60%  of  students  enrolled  in  vocational 
fields not leading to a high school diploma do not 
reach  a  basic  level  of  mathematical  literacy (203). 
Moreover, only half of those students demonstrate 
a  basic  level  of  creative  thinking  (as  opposed  to 
almost  all  students 
in  general  secondary 
education).  At  the  same  time,  students  in  elite 
multi-year  grammar  schools  largely  outperform 
their  peers  in  basic  schools:  over  half  of  eighth 
graders  achieved  high  levels  of  mathematical 
knowledge  according  to  the  2023  TIMSS.  This 
highlights  significant  differences  in  skills  and 
innovative  potential  across  secondary  school 
pathways,  with  negative  implications  for  the  job 
prospects of vocational and technical graduates. 

(203) Czech School Inspectorate, 2023, PISA 2022 National report. 

89 

The  segregation  of  Roma pupils  at all  levels 
of  education  persists  despite  legislative  and 
administrative  changes.  Czechia  has  formally 
abolished  ‘practical’  schools,  which  favoured  an 
overrepresentation  of  Roma  pupils.  However,  it 
continues  to  allow  for  ethnic  segregation  through 
the  disproportionate  and  often  unjustified 
enrolment of Roma students in classes that teach 
a  reduced  version  of  the  curriculum,  which  is 
intended for students with mental disabilities (204). 
In 2024, the Commission sent an additional letter 
of  formal  notice  to  Czechia  for  failing  to  comply 
with the Race Equality Directive. With support from 
the RRF, Czechia is creating a support programme 
for vulnerable schools and is working on a funding 
index  that  accounts  for  disadvantaged  pupils. 
Collecting disaggregated data on Roma pupils will 
be crucial to evaluating the impact of measures on 
desegregation. 

to 

reform  of  secondary 
A  comprehensive 
education aims to better equip students with 
in-demand  skills  and 
reduce  early 
tracking. Czechia tracks students early compared 
to  other  countries,  and  permeability  between 
educational  pathways  is  low.  In  addition,  interest 
among students in general upper secondary tracks 
leading  to  higher  education  has  grown  over  the 
past  decades, but  the  number  of  schools  offering 
such programmes has not kept track(205). In 2022, 
32%  of  students  in  upper  secondary  education 
were  enrolled  in  general  education,  below  the  EU 
average  of  51%.  Announced  in  2024,  a  wide-
sweeping  reform  of  secondary  education,  will 
introduce  a  new,  experimental  educational 
pathway  (lyceum)  combining  general  secondary 
education  with  later  specialisation  in  professional 
subjects. One of the integrated study areas of the 
new pathway is applied STEM education. 

Czechia  has  one  of  the  highest  vocational 
enrolment  rates  in  the  EU,  but  work-based 
experience  is  among  the  lowest.  A  high 
proportion  of  students  in  medium-level  education 
are  enrolled  in  vocational  education  and  training 
(VET)  programmes  (70.7%  vs  52.4%  in  the  EU  in 
2023).  In  2024,  only  13.4%  of  recent  vocational 
graduates  in  Czechia  had  work-based  learning 
experience,  far  below  the  EU  average  of  65.3%. 
Nevertheless, the employment rate for recent VET 

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

(205) OECD (2025), OECD Economic Surveys: Czechia 2025, OECD 

Publishing, Paris 

0.000.050.100.150.200.250.300.350.400.45FIIE*MTDK*ESEESEPTELLV*CYLTFREUATPLITBEHRDESKSINL*CZROHUBG 
   
 
 
graduates  was  high  at  88.3%  (EU  80.0%)  for  the 
same year. Recent VET reforms aim to improve the 
quality  and  labour  market  relevance  of  this  field. 
The strategic measures for improving VET focus on 
making  it  a  more  attractive  career  choice  by 
strengthening STEM education, polytechnic training 
and  career  counselling,  starting  from  primary 
education. Whereas many enter VET after primary 
school,  with  technical  fields,  such  as  technology, 
manufacturing  and  construction,  being  the  most 
popular  choices  (39%),  fields  like  ICT  only  attract 
6.4% of students (206). A key objective is to ensure 
that  at  least  60%  of  VET  graduates  gain  work-
based learning experience by 2025, boosting their 
employability  and  career  readiness.  Efforts  are 
being  made 
educational 
programmes  by  incorporating  labour  market  data 
through initiatives such as ‘Kompetence 4.0,’ which 
focuses  on  aligning 
training  with  emerging 
industry  requirements,  including  digital  and  green 
skills. Additionally, legislative support and financial 
incentives,  such  as  tax  deductions  for  companies 
offering practical training, are being introduced to 
encourage 
between 
employers  and  educational  institutions,  ensuring 
students  are  better  equipped  for  evolving  job 
market demands. 

to  modernise 

collaboration 

stronger 

Persistently  low  tertiary  attainment  and 
weak  student  support  limit  the  supply  of 
highly  skilled  professionals.  By  2026,  a  16% 
increase  is  predicted  in  the  overall  demand  for 
tertiary-educated  workers  and  a  26%  increase  in 
technical  fields,  such  as  civil  engineering,  ICT  and 
natural  sciences (207).  In  2024,  only  33.5%  of 
Czechs  aged  25-34  had  a  tertiary  education 
degree  (EU:  44.2%),  with  particularly  low  rates 
among  men  (26.1%  vs  41.3%  for  women;  the 
average  difference  in  the  EU  is  11.2  pps).  In 
response  to  the  growing  demand  for  high-skilled 
workers  in  the  healthcare  and  education  sectors, 
the  government  provides  targeted  funding  for 
tertiary institutions in these fields, but a long-term 
funding  reform  to  support  a  more  general 
expansion  of  higher  education,  aligned  with 
industry needs, is yet to be developed. 

(206) Ministry of Education, Youth and Sport, 2024, Strategy for 

vocational education. 

(207) OECD (2025), OECD Economic Surveys: Czechia 2025, OECD 

Publishing, Paris 

90 

Graph A12.2: Key skills indicators 

Source: Eurostat 

Financial barriers contribute to high drop-out 
rates.  About  70%  of  students  work  during  term 
time, one of the highest rates in the EU, with two 
thirds working to cover living cost (208). Affordable 
is  a  major  challenge  for  university 
housing 
students.  Just  2%  of  their  income  comes  from 
government  grants,  compared  to  a  12%  average 
according  to  the  Eurostudent  survey.  Students 
from  disadvantaged  backgrounds  therefore  often 
struggle to access and complete higher education. 
23.5% of first-year students drop  out  annually at 
the  programme  level  (2024),  and  13.4%  leave 
higher  education  permanently (209).  Study  success 
rates  are  higher  among  general  education 
graduates  than  among  VET  graduates  (210).  A 
comprehensive  reform  of  needs-based  grants 
would  be  beneficial  to  diversify  the  student  body 
and help students succeed.  

Policy  efforts  to  boost  the  number  of  STEM 
graduates  are  limited  despite  growing  skill 
shortages  in  these  fields.  The  proportion  of 
young STEM graduates (aged 20-29) per 1 000 of 
the  population  is  below  the  EU  average  of  23  at 
15.8. The share of students enrolled in STEM fields 
at  tertiary  level  is  slightly  below  the  EU  average 
(25% vs 27.1%) and has declined since 2017. This 
is  concerning,  especially  given  the  generally  low 
tertiary education attainment rate. In 2023, 42.0% 
of  pupils  enrolled  in  medium-level  vocational 
education  and  training  (VET)  in  Czechia  were  in 
STEM  fields,  compared  to  36.3%  EU-wide.  Under 
its recovery and resilience plan, Czechia will launch 
new accredited study programmes in high-demand 

(208) Hauschildt, Kristina (Ed.), Christoph Gwosć, Hendrik Schirmer, 
Sylvia Mandl, Cordelia Menz, 2024. Social and Economic 
Conditions of Student Life in Europe, EUROSTUDENT 8 Synopsis 
of Indicators 2021-2024. 

(209) Data from Ministry of Education, 2025 

(210) OECD (2025), OECD Economic Surveys: Czechia 2025, OECD 

Publishing, Paris 

01020304050607080Early School LeaversYoung People Not in Employment, Education, or Training (NEET)Adult Participation in Training (12 months), excluding guided on-the-job trainingIndividuals with Basic or Above Basic Digital SkillsCzechia (%)EU Average (%) 
 
   
 
fast-growing 

and 
(such  as  applied 
fields 
informatics,  information  and  network  security, 
quantum  informatics  and  AI)  as  well  as  new 
courses  and  academic  and 
learning 
programmes relevant to the green transition. 

lifelong 

Skills shortages pose challenges to Czechia’s 
competitiveness.  More  than  80%  of  companies 
and  90%  of  small  and  medium-sized  enterprises 
report  difficulties  finding  workers  with  the  right 
skills (211). In 2024, labour shortages were reported 
in  several  occupations  requiring  specific  skills 
needed for the green transition, including electrical 
engineers, electricians, civil engineers, and forestry 
and agricultural workers (212). Moreover, the ability 
of  workers  to  contribute  to  the  green  transition 
varies significantly. While 54% of respondents feel 
they  have  the  skills  to  contribute  to  the  green 
transition,  37%  do  not,  highlighting  substantial 
potential for upskilling to equip more people for a 
sustainable and digital economy (213).  Czechia has 
untapped  potential  to  boost  the  EU’s  Digital 
Decade  ICT  specialist  target  but  lags  with  limited 
progress, as ICT specialists represent 4.5% of total 
employment  in  2024  -  below  the  EU’s  5.0% 
average.  Women  make  up  just  13.0%  of  ICT 
specialists in Czechia - one of the lowest shares in 
the EU. In 2021, 77.0% of businesses struggled to 
fill  ICT  vacancies  (vs  EU:  62.8%)  (214).  Reducing 
these 
skills 
through 
development,  vocational  training  and  workforce 
mobility  measures  is  essential.  Moreover,  aligning 
policies  across  ministries  to  equip  the  workforce 
with  skills  for  fair  twin  transitions  poses  a 
challenge. 

shortages 

targeted 

Czechia  performs  well  in  digital  skills,  but 
some  population  groups  still  require  further 
training. In 2023, 69.1% of the population had at 
least a basic level of digital skills (EU 55.6%). The 
share  is  particularly  high  among  young  people 
(16-19)  at  92.3%.  Data  from  the  International 
Computer  and  Information  Literacy  Study  (ICILS) 
corroborates  strong  digital  skills  among  the 
younger  generations,  as  Czech  eighth  graders 

(211) Eurofound (2024), Company practices to tackle labour shortages, 

Publications Office of the European Union, Luxembourg. 

(212) European Labour Authority, EURES Report on labour shortages and 

surpluses 2024, 2025. 

(213) https://data.europa.eu/data/datasets/s2672_97_4_sp527 

_eng?locale=en. 

(214) ICT specialists - statistics on hard-to-fill vacancies in 

enterprises - Statistics Explained. 

indicating 

ranked 
the  highest  among  participating  EU 
countries. However, 28% of students did not reach 
the baseline proficiency level (EU: 43%). The gap in 
digital  skills  between  students  with  lower  and 
higher  parental  education  is  smaller  than  the  EU 
that  Czechia  has  been 
average, 
successful in narrowing  this gap through targeted 
support  for  vulnerable  pupils,  including  with  RRF 
support.  The  differences  in  digital  skills  among 
adults are greater, with 42.1% of older adults (55-
74)  and  58.6%  of  adults  with  lower  levels  of 
education reporting at least a basic level of digital 
skills, both falling behind the general population. 

in 

lifelong 

Adult  participation 
learning 
remains  low,  limiting  the  development  of 
skills for the green and digital transitions. In 
2022,  only  21.2%  of  adults  aged  25-64 
participated  in  formal  or  non-formal  learning  in 
the  previous  12  months,  compared  to  the  EU 
average  of  39.5%.  This  is  23.8 pps  short  of  the 
national  2030  target  of  45%.  According  to  the 
analysis  of  the  2022  Adult  Education  Survey  by 
the  Czech  Statistical  Office,  formal  education  is 
the least common type of adult learning, with only 
an  8%  participation  rate  (EU  12%) (215).  Non-
formal  learning  is  more  common,  with  40%  of 
adults  aged  18-69  participating  in  at  least  one 
activity,  slightly  under  the  EU  average  of  42%. 
Most  non-formal  learning  is  work-related,  driven 
by employer or legal requirements (57%), followed 
by efforts to improve job performance (51%) and 
personal 
in  acquiring  new  skills  or 
knowledge (18%). In Czechia, 16% of adults score 
at  the  lowest  levels  in  literacy,  numeracy  and 
problem-solving: 25% struggle with basic reading, 
21%  face  difficulties  with  multi-step  arithmetic 
problems  and  29%  struggle  with  complex 
problem-solving.  Only  a  small  share  excels  in 
these areas (216). The Ministry of Labour and Social 
Affairs  is  piloting  individual  learning  accounts 
through  the  ‘Database  of  Re-training  and  Further 
Training Courses’. After the pilot, the database will 
be  managed by  the Labour  Office,  ensuring  long-
term support for reskilling initiatives and signalling 
Czechia's  commitment  to  lifelong  learning  and 
workforce  development.  More  effective  and 
to 
widespread 
increase  engagement  with 
learning 
accounts and adult learning more generally. 

seem  necessary 
individual 

campaigns 

interest 

(215) Education and Training Monitor 2024. 

(216) Education GPS - Czechia - Adult skills (Survey of Adult Skills, PIAAC, 

2023). 

91 

 
 
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Czechia 

(1) Update of 5 May 2025. 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 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

92 

21.25.469.18.612.63.3282.32.60.8121.711.315.440.621.79.27.30.5Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual 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, 2024)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, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Better than averageBest performers 
 
 
 
 
 
  
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

The performance of the Czech health system 
leaves  room  for  improvement,  notably  in 
light of Czechia’s low life expectancy at birth 
linked  to  high 
levels  of  treatable  and 
preventable  mortality.  These  issues  are  being 
addressed  by  the  ongoing  reforms  to  strengthen 
primary  healthcare,  make  health  services  more 
integrated,  and  digitalise  the  health  system  with 
the support of the Recovery and Resilience Facility 
and cohesion funds.  

Graph A14.1: Life expectancy at birth, years 

non-communicable  diseases  prevention  (including 
cardiovascular,  diabetes  and  mental  health), 
health  workforce  planning,  clinical  trials,  medicine 
shortages,  anti-microbial  resistance, the  European 
Health  Data  Space  and  European  Reference 
Networks for rare diseases. In February 2025, the 
Ministry  of  Health  introduced  a  new  National 
Cardiovascular Plan for 2025–2035 to strengthen 
prevention  (219). A  new  screening  for  abdominal 
aortic aneurysms in men aged 65–67 (220) and the 
“Be  Fit  24”  program  for  overweight  children  aged 
6–11  (221)  have  been  launched,  fully  covered  by 
the health insurance funds. The plan also includes 
new guidelines supporting the effectiveness of the 
general practitioners’ preventive examinations. 

Graph A14.2: Treatable mortality 

Source: Eurostat (demo_mlexpec) 

Life  expectancy  at  birth  in  Czechia  remains 
below  the  EU  average  but  has  rebounded 
above  its  pre-COVID-19  level.  In  2023,  life 
expectancy at birth stood at 79.9 years, 1.5 years 
below the EU average. There is a clear gender gap, 
with  women  living  6  years  longer  than  men. 
However,  women  only  live  1.2  years  more  than 
men in good health. In 2022, the leading causes of 
death  were  circulatory  diseases  (‘cardiovascular 
diseases’),  followed  by  cancer  and  respiratory 
diseases. Compared to other EU countries, Czechia 
has room to improve in preventable and treatable 
mortality,  which  is  also  reflected  in  its  relatively 
high  cancer  mortality  rate  (258  per  100 000 
population  in  2022  vs  an  EU  average  of  235). 
Lung  cancer  remains  the  most  frequent  cause  of 
death  by  cancer,  followed  by  colorectal  and 
pancreatic  cancer.  Czechia  also  has  among  the 
(217). 
highest  absenteeism 
Furthermore,  51%  of  Czechs  are  unsatisfied  with 
waiting  times  and  39%  with  pharmaceutical 
shortages (218). Czechia participates in EU4Health-
funded  joint  actions  aimed  at  cancer  and  other 

the  EU 

rates 

in 

(217)https://ec.europa.eu/eurostat/databrowser/view/lfsi_abt_q__c

ustom_15509084/default/table?lang=en 

(218) https://silapacientu.cz/wp-content/uploads/2024/11/NAPO-

KZP-VSE-Studie_2024.pdf 

93 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

Spending  on  health  in  Czechia,  including  on 
capital  formation  in  the  health  system,  is 
low. In 2022, health spending per inhabitant was 
far  below the  EU  average  with  the  largest  shares 
going  to  outpatient  and  inpatient  care  (around 
33%  and  30%  of  total  health  expenditure 
respectively).  The  share  of  healthcare expenditure 
covered  by  public  funds  stood  at  around  85%  of 
overall  health  spending,  above  the  EU  average  of 
81.3%.  Moreover,  Czechia  has  a  relatively  high 
number  of  hospital  beds  (565  per  100 000 
population in 2022, above the EU average of 444). 
Around 52% of all out-of-pocket payments are for 

(219) https://mzd.gov.cz/tiskove-centrum-mz/ministerstvo-

zdravotnictvi-predstavilo-novy-narodni-kardiovaskularni-
plan-pro-obdobi-2025-2035-za-cil-ma-posilit-prevenci-a-
snizit-podil-cechu-s-nemocemi-srdce-a-cev 

(220) https://mzd.gov.cz/tiskove-centrum-mz/cesko-spousti-pilotni-
program-casneho-zachytu-tikajici-bomby-v-tele-screening-
na-casny-zachyt-vydute-brisni-aorty 

(221) https://mzd.gov.cz/tiskove-centrum-mz/bud-fit-24-novy-
program-pomaha-detem-s-nadvahou-ke-zdravejsimu-
zivotnimu-stylu 

79.378.377.279.079.981.380.480.180.681.420192020202120222023CzechiaEU124.2120.3122.9125.9113.291.389.291.793.389.720182019202020212022per 100 000 populationCzechiaEU 
 
          
 
 
 
          
 
 
 
Table A14.1:Key health indicators 

NO  

*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 based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source: Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

retail pharmaceuticals, followed by dental services 
(222). Comparatively high unmet needs for medical 
examination  are  reported  in  rural  areas.  Capital 
formation,  measured  by  capital  expenditure  on 
health  as  a  percentage  of  GDP  is  among  the 
lowest  in  the  EU,  hovering  far  below  the  EU 
average  in  recent  years.    This  is  reflected  in  the 
(medical 
low  availability  of  key  diagnostic 
imaging)  technology.  Under  the  Czech  recovery 
and  resilience  plan  (RRP),  EUR  1.22  billion  will  go 
(i)  setting  up  an 
towards  health,  notably: 
oncological  institute;  (ii)  increasing  training  for 
professionals; 
(iv) 
intensive 
cardiovascular 
diseases; and (vi) research and development. 

(iii)  preventive  screening; 

care  medicine; 

(v) 

As regards public health, Czechia’s high rate 
of  preventable  mortality  is  a  cause  for 
concern.  In  2022,  the  share  of  spending  on 
prevention dropped from its 2021 level of 8.4% to 
5.2%  of  total  spending  on  health,  relatively  close 
to the EU average of 5.5%. In the same year, the 
use  of  antibiotics  in  the  community  and  hospital 
sectors was well below  the EU average. Areas for 
further  improvement  include:  (i)  lowering  alcohol 
use among adults (or by raising taxes, for example 
(223));  (ii)  increasing  the  daily  intake  of  fruit  and 
vegetables;  and  (iii)  increasing  physical  activity 
rates.  Vaping  is  also  a  cause  for  concern,  with 
adult  and  particularly  young  adult  vaping  rates 
(224).  Overall, 
among 
preventable mortality has decreased by 11% over 

the  worst 

the  EU 

in 

the  last  decade  but  is  still  well  above  the  EU 
average (2022). 

in 

4.3 

Czechia 

(around 

Czechia  had  more  doctors  and  nurses  than 
the  EU  average  in  2022.  It  counted  831 
practising  nurses  per  100 000  inhabitants,  above 
the  EU  average  of  756.  For  several  years,  doctor 
per 
density 
1 000 population in 2022) has been just above the 
EU  average  of  4.2  per  1 000.  However,  there is  a 
greater  concentration  of  doctors  in  the  capital 
region and in other major cities than in remote and 
sparsely  populated  regions,  which  contributes  to 
the  high  rate  of  unmet  needs  for  medical  care  in 
rural  areas.  The  number  of  recently  graduated 
doctors is above the EU average. By contrast, only 
18%  of  all  practising  doctors  were  aged  between 
55 and 64 in 2022, which is below the EU average. 
the  number  of  nursing 
Regarding  nurses, 
graduates is among the lowest in the EU and more 
than  a  quarter  of  nurses  are  aged  55  and  over. 
The  number  of  nursing  graduates  per  population 
has  increased  over  the  past  decade,  but  this  has 
been  driven  largely  by  a  growing  number  of 
graduates from training programmes that provide 
lower  nurse  qualifications.  Czech  doctors,  nurses 
and other health workers obtained permanent pay 
rises  in  2021,  2022  and  2024.  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. 
upskilling 
includes 
RRP 
opportunities for health professionals. 

Czechia’s 

(222) OECD/European Commission (2024), Health at a Glance: 

Europe 2024 - State of Health in the EU Cycle, pp. 186-187. 

(223) https://www.paqresearch.cz/post/daneni-alkoholu/ 
(224) Health at a Glance: Europe 2024, Chapter 4. 

Czechia’s  health  system  has  untapped 
potential  to  drive  innovation  and  foster 
industrial  development  in  the  EU  medical 
is  among  the  EU  countries 
sector.  Czechia 

94 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population272.4268.0257.0258.4n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population 529.6 557.8 525.6 505.5n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita2 3232 6663 0212 908n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 84.9 88.2 86.8 85.0 85.081.3 (2022)Spending on prevention, % of current health expenditure 3.23.98.45.2n.a.5.5 (2022)Available hospital beds per 100 000 population** 570 572 575 566n.a.444 (2022)Doctors per 1 000 population*4.14.14.34.3n.a.4.2 (2022)*Nurses per 1 000 population* 8.1 8.2 8.3 8.3n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality16.615.116.015.315.414.3 (2023)Number of patents (pharma / biotech / medical technology)222521112929 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****16.913.413.717.118.120.0 (2023) 
 
 
          
 
 
 
reporting  low  public  spending  on  health  research 
and development  (225). This is reflected in the low 
number of European patents granted:  29 in 2023 
the  combined  areas  of  pharmaceuticals, 
in 
(226), 
biotechnology  and  medical  technologies 
exactly on par with the EU median of 29. Reported 
clinical trial activity is also at an average level (227). 
The RRP will support research and development for 
priority  areas  of  medical  sciences  and  related 
social sciences. 

Czechia aims  to  accelerate  the  digitalisation 
of  its  health  system,  with  extensive  support 
from  EU  programmes.  It  has  among  the  lowest 
shares in the EU of people accessing their personal 
health records online. However, it is above the EU 
average on the use of telemedicine/ online health 
services  (excluding  phone)  instead  of  in-person 
consultations.  Czechia’s  recovery  and  resilience 
plan 
to  enhance  digital 
solutions in the healthcare sector. Additionally, the 
country  intends  to  dedicate  funding  toward  e-
health services and applications, along with further 
investment  in  the  digitalisation  of  healthcare, 
using  resources  from  the  2021-2027  cohesion 
funds. 

includes  measures 

(225) For further details, see Annex 3.  
(226) European Patent Office, Data to download | epo.org. 
(227) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

95 

 
 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  Annex  assesses  Czechia’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. 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 
inequalities  and  tackle  climate 
poverty,  fight 
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 
the EU.  

Czechia  performs  particularly  well  on  SDG 8 
(Decent  work  and 
economic  growth), 
although  it  still  needs  to  catch  up  with  the 
EU  average  on  other  SDGs  related  to 
competitiveness  (SDGs 4  and  9).  Czechia’s 

Graph A15.1: Progress towards the SDGs in Czechia 

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  81.7%  of  the 
population  aged  20  to  64  in  2023  to  82.3%  in 
2024, above the EU average of 75.8%. Additional 
efforts  should  be  made  on 
research  and 
innovation  (SDG9).  The  percentage  of  GDP  spent 
on R&D decreased from 1.95% in 2020 to 1.83% 
in  2023,  well  below  the  EU  average  of  2.24%. 
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.  

While  Czechia  has  improved  on  all  SDGs 
related  to  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  tonnes  per 
in  2022),  while  the  share  of 
capital 

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 
five 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 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

96 

 
 
 
 
 
 
 
renewable  energy 
in  gross  final  energy 
consumption  (18.6%  in  2023)  is  still  below 
the  EU  average  (24.6%  in  2023).  The  circular 
material use rate (SDG 12) improved, from 11.3% 
of  material  input  for  domestic  use  in  2022  to 
12.8% of material input for domestic use in 2023. 
The  average  CO2  emissions  per  km  from  new 
passenger cars (SDG 12) decreased, from 144.9 g 
CO2  per  km  in  2020  to  136 g  CO2  in  2023,  but 
remained  above  the  EU  average  (107.6 g  CO2  in 
2023).  Energy  productivity  (SDG 12)  improved 
slightly,  from  EUR 4.81  per  kgoe  in  2022  to 
EUR 5.23  per  kgoe  in  2023  but  remained  below 
the EU average (EUR 9.84 per kgoe in 2023). On a 
more  positive  note,  the  country  has  continued  to 
decarbonise its energy mix by increasing its share 
of renewable energy (SDG 7; from 15,1 % in 2018 
to 18,6 % in 2023). 

(Reduced 

inequalities),  with 

Czechia performs very well and is continuing 
to  improve  on  a  number  of  SDGs  related  to 
social fairness (SDGs 1 and 10). At the same 
time,  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 
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,  there 
is  some  room  for  improvement,  mainly  on  SDG 5 
(Gender  equality)  as  regards  employment  and 
leadership  positions.  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.  

Czechia  continues  to  improve  on  all  SDGs 
related  to  macroeconomic  stability  (SDGs 8, 
16,  17)  but  still  needs  to  catch  up  with  the 
EU  average  on  certain  indicators  related  to 
SDG 16 
strong 
institutions)  and  SDG 17  (Partnerships  for 

(Peace, 

justice 

and 

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; 43.6% in 
2024), which is significantly below the EU average 
in  2024).  The  official  development 
(81.0% 
assistance  (SDG 17)  which  had  reached  0.38%  of 
GNI  in  2022  due  to  large-scale  support  for 
Ukrainian refugees, has since decreased to 0.24% 
GNI  in  2023  -far  lower  than  the  EU  average  of 
0.56%  GNI-  and  to  0.17%  in  2024(228).  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 4.6% in 2023.  

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

(228) OECD, Preliminary official development assistance levels in 

2024, Paris, 16 April 2025 

97 

 
 
 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

society.  Project  selection  under  the  2021-2027 
cohesion  policy  programmes  is  advanced,  while 
implementation  of  selected  projects  has  also 
gained  momentum, 
substantial 
investment. 

enabling 

The Czech RRP contains 105 investments and 
58  reforms  to  stimulate  sustainable  growth 
and  support  the  digital  transformation  and 
transition towards a low-carbon and climate-
resilient economy. A year before the end of the 
RRF  timespan,  implementation  is  on  its  way  with 
47%  of  the  funds  disbursed.  At  present,  Czechia 
has fulfilled 38% of the milestones and targets in 
its  RRP  (233).  Increased  efforts  are  needed  to 
ensure  completion  of  all  RRP  measures  by 
faces 
31 August  2026.  The 
challenges,  with 
funds 
particularly  constrained  by  limited  administrative 
capacity  at  some  of  the  implementing  bodies  as 
well  as  suboptimal  use  of  financial  instruments. 
This  is  particularly  visible  in  areas  such  as  the 
green and digital transitions.   

implementation 
the  absorption  of 

the 

Czechia  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed  in 
table  A16.1.  Most  notably, 
common 
agricultural  policy  (CAP)  provides  Czechia  with  an 
EU  contribution  of  EUR 5.6  billion  under  the  CAP 
strategic  plan  for  2023-2027  (234).  Operations 
amounting  to  EUR  258.2  million  (235)  have  been 
signed  under  the  InvestEU  instrument  backed  by 
the  EU  guarantee,  improving  access  to  financing 
for riskier operations in Czechia. 

recommendations 

Czechia faces structural challenges in a wide 
range  of  policy  areas  as  identified  in  the 
country-specific 
(CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.  They  refer,  among  other 
things,  to  taxation  policies,  active  labour  market 
policies, the supply of childcare services, education 
and  skills,  business  environment,  quality  of  public 
administration,  research  and  innovation,  housing, 
energy and transport. 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Czechia  to  date  and  the  commitments  in  its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Czechia has made at least  ‘some progress’ 
on 63% of the CSRs (229), and ‘limited progress’ on 
37% (Table A16.2). 

to 

by 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
Czechia 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR 9.2  billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (230) 
are providing EUR 21 billion to Czechia (amounting 
to  EUR 26.7  billion  with  national  co-financing)  for 
2021-2027 (231) to boost regional competitiveness 
and  growth.  Support  from  these  instruments 
combined  represents  around  9.5%  of  2024  GDP 
(232).  The  contribution  of  these  instruments  to 
different  policy  objectives  is  outlined  in  Graphs 
A16.1  and  A16.2.  This  substantial  support  comes 
on top of financing provided to Czechia under the 
2014-2020  multiannual 
framework, 
which  financed  projects  until  2023  and  has  had 
significant  benefits  for  Czechia’s  economy  and 

financial 

(229) 10% of the 2019-2024 CSRs have been fully implemented, 
8% substantially implemented, and some progress has been 
made on 45%. 

(230) In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the Cohesion Fund, the 
European Social Fund Plus and the Just Transition Fund. The 
information on cohesion policy included in this annex is 
based on adopted programmes with the cut-off date of 5 
May 2025. 

(231) European territorial cooperation (ETC) programmes are 

excluded from the figure. 

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

(233) As of mid-May 2025, Czechia has submitted 3 payment 

requests.  

(234) An overview of Czechia´s formally approved strategy to 

implement the EU’s common agricultural policy nationally 
can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/czechia_en  

applicable. GDP figures are based on Eurostat data for 2024. 

(235)Data  reflect the situation on 31.12.2024. 

98 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in Czechia 
by policy field 

programmes,  career  guidance  and  business-
education partnerships.  

are 

fuel 

contributing 

in  Czechia,  for 

inland  waterways; 

infrastructure  and 

to 
Other 
funds 
competitiveness 
instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investments  for 
instance in rail infrastructure and the development 
the 
of  alternative 
modernisation  of 
  energy 
market  integration,  decarbonisation  of  the  energy 
system and security of energy supply, in particular, 
the  diversification  of  natural  gas  sources  and 
routes  in  Czechia;  as  well  as  deployment  of  5G 
connectivity  along 
transport  paths,  enabling 
connected, automated cross border mobility along 
sections  of  the  Munich-Prague  5G  corridor  or 
between the Czechia and Poland along the Baltic-
Adriatic 5G corridor. Horizon Europe has supported 
research 
scientific 
innovation, 
breakthroughs  to  scaling  up  innovations,  with 
Digital,  Industry  and  Space  and  Climate,  Energy 
and  Mobility  as  top  priorities.  The  Technical 
Support 
the 
preparation of the Social Climate Plan for Czechia, 
the mapping out of tax administration reforms and 
to  improve  Czechia’s  administration  and  SME 
support strategy. 

(TSI)  assisted 

Instrument 

from 

and 

in 

to 

the 

Czechia’s  RRP  also  contains  ambitious 
measures 
business 
improve 
environment  and  competitiveness.  As  part  of 
the  measures  covered  by  payment  requests 
submitted over the past year, Czechia made public 
services for citizens and businesses operational via 
the  Single  Digital  Gateway,  increased  the  number 
of  eGovernment  services,  strengthened 
the 
digitalisation of services for the justice system and 
published  a  call  for  projects  to  strengthen  the 
information 
cybersecurity  of 
systems.  Czechia  also 
launched  a  regulatory 
sandbox  to test innovative products of companies 
focusing  on  digital  innovation  in  the  fields  of 
fintech and digital ledger technology. Furthermore, 
Czechia  amended  the  Energy  Act  to  incentivise 
electricity-sharing and the development of energy 
communities. The reform simplified the permitting 
process  for  renewable  energy  by  eliminating  the 
requirement 
small-scale 
permits 
installations  and  streamlining  permits  for  large 
ones. 

critical  public 

for 

for 

(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 circle 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. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Czechia 

Source: European Commission 

Cohesion  policy  funds  aim  to  increase  the 
productivity  and  competitiveness  of  Czech 
firms and improve the business environment. 
The  European  Regional  Development  Fund  (ERDF) 
will contribute to the digitalisation of the country’s 
private  and  public  sectors,  providing  over  500 
businesses,  30 000  households  and  almost  180 
public  institutions  with  enhanced  access  to  very 
high-capacity broadband. The Just Transition Fund 
will support over 2 200 businesses in restructuring 
for  the  transition  to  a  low-carbon  economy  while 
preserving  jobs,  and  for  diversification  of  the 
economy  in  the  Czech  regions  most  affected  by 
the  transition  to  a  climate  neutral  economy.  The 
European  Social  Fund  Plus  (ESF+)  is  investing 
EUR 180  million  to  support  job  transformation 
amid  the  green  and  digital  transition.  ESF+  funds 
corporate 
support 

training, 

digital 

skills 

99 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
   
 
   
 
communities  by 

Promoting  fairness,  social  cohesion  and   
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Czechia.    The  ESF+  allocates  EUR  15  million  to 
promoting 
support  Roma 
community  work,  early  childhood  services,  and 
parental  skills.  It  funds  NGOs  to  enhance  Roma 
participation in elections, combat hate speech, and 
address  domestic  and  gender-based  violence. 
Additionally,  it  strengthens  Roma  and  pro-Roma 
NGOs 
organisational 
development,  and  collaboration  with  public 
authorities.  These  efforts  contribute  to  the  Roma 
Integration 
tackling 
structural  challenges  like  anti-Gypsyism  and  child 
poverty.  The  ERDF  will expand  and  modernise  the 
infrastructure, 
country’s 
affecting 22 177 pupils in their classrooms.  

2021-2030, 

educational 

Strategy 

training, 

through 

system 

Czechia´s  RRP  contains  several  reforms  and 
investments  related  to  fairness  and  social 
policies. To boost digital and green skills, Czechia 
created  a  database  of  reskilling  and  upskilling 
courses, aiming to upskill or reskill at least 65 000 
people  in  digital  skills  and  another  65 000  in 
Industry  4.0,  and  launched  a  call  for  projects 
promoting  green  skills  development  in  curricula. 
Czechia  has  also  supported  4  000  schools  in 
organising  tutoring  programmes  for  pupils  at  risk 
of  school  failure,  to  tackle  inequalities  between 
pupils  and  schools  driven  by  social  or  other 
disadvantages.  The  law  on  pre-school  childcare 
entered  into  force  to  ensure  access  to  affordable 
childcare  for  children  below  three  years  old,  and 
Czechia published  a  call  for  projects  for  providing 
housing  and  care  facilities  for  children  at  risk. 
Moreover,  Czechia  continue  to  expand  eHealth 
services  to  citizens,  awarded  the  public  contracts 
for the construction of new university areas in the 
field of health sciences. 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
green transition in Czechia during the current 
seven-year  EU  budget  (multiannual  financial 
framework).  The  ERDF  and  the  Cohesion  Fund 
are  financing  additional  capacity  for  wastewater 
treatment,  which  will  benefit  over  91 000  people. 
Similarly,  the  funding  will  enable  Czechia  to 
expand its waste-recycling capacity by nearly 175 
000 tonnes/year and thereby make greater use of 
the secondary materials which are key elements in 
the  EU’s  environmental  and  competitiveness 
policy.  Czechia’s  CAP  strategic  plan  allocates 
EUR 756.4  million  (54%  of  rural  development 
funding)  to  environmental  and  climate  objectives 
and  EUR 1.24  billion  (30%  of  direct  payments)  to 
eco-schemes,  supporting  biodiversity,  organic 
farming  and  sustainable  practices.  With  the  help 
of  the  CAP  Plan,  sustainability  objectives  are 
supported  by  promoting  biodiversity  protection 
through  eco-schemes,  such  as  dedicating  7%  of 
arable  land  to  non-productive  areas  and  limiting 
pesticide  use  near  water  bodies,  or  specific  new 
support for landscape features. Moreover, Czechia 
aims  to  grow  its  organic  farming  share  from 
15.6% to 21.3%. 

the 

including  the  REPowerEU 
Czechia’s  RRP, 
chapter, has a comprehensive set of reforms 
and  investments  for  the  green  transition. 
Measures  covered  by  the  payment  requests 
submitted  over  the  last  year  include,  among 
others, 
implementation  of  450  small 
watercourses  and  water  reservoir  projects,  20 
water  retention 
in  forests  projects  and  the 
adoption  of  a  national  and  regional  waste 
management  plan.  Czechia  also  carried  out  an 
assessment  of  the  path  towards  decarbonisation 
of  district  heating  and  trajectories  of  sustainable 
use  of  bioenergy  and  supply  of  biomass  and 
provided  a  concrete  plan  for 
in 
heat/power  generation  facilities  that  do  not  use 
solid  fossil  fuels  as  a  heat  source.  To  improve 
energy  efficiency,  Czechia  renovated  public  and 
the 
residential 
sites 
revitalisation 
(brownfields).  Measures  were  also 
to 
modernise  public  transport  and  make  it  more 
sustainable,  including  the  electrification  of  40 km 
emissions, 
of 
to 
lines 
reconstruction  of  three  existing  railway 
totalling  26 km,  the  renovation  of  eight  station 
buildings  to  improve  their  quality  of  service  and 
energy efficiency performance. 

supported 
industrial 

buildings 
of 

and 
former 

investment 

railway 

reduce 

taken 

lines 

100 

 
 
 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI- Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

101 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)4 174.5RRF loans190.9 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)22 676.221 054.114 248.3European Regional Development Fund (ERDF)12 848.210 346.37 383.0Cohesion Fund (CF)6 143.96 635.44 175.2European Social Fund (ESF, ESF+) and the Youth Employment Initiative (YEI)3 684.02 430.92 108.3Just Transition Fund (JTF)1 641.5 581.8European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 31.1 30.020.2Migration, border management and internal security - AMIF, BMVI and ISF (4) 85.3 153.170.8The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan1 811.8European Agricultural Guarantee Fund (EAGF)1 582.5European Fund for Agricultural Development (EAFRD)229.3Allocation 2023-20275 646.84 236.11 410.6Allocation 2021-2026 8 409.2818.1FisheriesMigration and home affairs 
 
 
     
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

102 

Table 16.2: Summary table on 2019-2024 CSRsCzechiaAssessment in May 2025Relevant SDGs2019 CSR 1Some progressImprove long-term fiscal sustainability of the pension and health-care systems. Some progressSDG 3, 8, 16Adopt pending anti-corruption measures.Some progressSDG 162019 CSR 2Some progressFoster the employment of women with young children, including by improving access to affordable childcare, and of disadvantaged groups. Limited progressSDG 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 progressSDG 4, 8, 102019 CSR 3Some progressFocus investment-related economic policy on transport, notably on its sustainabilitySome progressSDG 10, 11, digital infrastructureSome progressSDG 9, 10, 11, and low carbon and energy transition, including energy efficiency , taking into account regional disparities. Limited progressSDG 7, 9, 10, 11, 13Reduce the administrative burden on investment Limited progressSDG 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 progressSDG 92020 CSR 1Some progressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. No longer relevantSDG 8, 16Ensuretheresilienceofthehealthsystem,strengthentheavailabilityofhealthworkers,primarycareandtheintegrationofcare,anddeployment of e-health services.Some progressSDG 32020 CSR 2Some progressSupport employment through active labour market policies, Some progressSDG 8the provision of skills, including digital skills, and access to digital learning.Some progressSDG 42020 CSR 3Some progressSupport small and medium-sized enterprises by making greater use of financial instruments to ensure liquidity support, Some progressSDG 8, 9reducing the administrative burden and improving e-government. Some progressSDG 8, 9, 16Front-load mature public investment projects andSubstantial progressSDG 8, 16 promote private investment to foster the economic recovery.Substantial progressSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonhigh-capacity digital infrastructure and technologies, Limited progressSDG 9clean and efficient production and use of energy,Limited progressSDG 7, 9, 13andsustainabletransportinfrastructure,includinginthecoalregions.Limited progressSDG 10, 11Ensureaccesstofinanceforinnovativefirmsandimprovepublic-private cooperation in research and development.Limited progressSDG 8, 9 
 
 
  
 
Table (continued) 

(Continued on the next page) 

103 

2021 CSR 1No longer relevantIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.No longer relevantSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.No longer relevantSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition.No longer relevantSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.No longer relevantSDG 8, 162022 CSR 1Substantial progressIn2023,ensurethatthegrowthofnationallyfinancedprimarycurrentexpenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtothe evolving situation.No longer relevantSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.No longer relevantSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.No longer relevantSDG 8, 16Takemeasurestoensurethelong-termfiscalsustainabilityofpublicfinances, including the sustainability of the pension system.Substantial 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 4Some progressReduceoverallrelianceonfossilfuelsanddiversifyimportsoffossilfuel.Some progressSDG 7, 9, 13Acceleratethedeploymentofrenewables,streamlinepermitprocedures and make grid access easier.Some progressSDG 7, 8, 9, 13Increasetheenergyefficiencyofdistrictheatingsystemsandofthebuildingstockbyincentivisingdeeprenovationsandrenewableheatsources.Some progressSDG 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.Substantial progressSDG 8, 16RRP 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. 
 
 
  
 
Table (continued) 

Source: European Commission 

104 

2023 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 4Some progressReduce reliance on fossil fuels.Some progressSDG 7, 9, 13Increasethedeploymentofrenewableswithadditionalinvestmentsin electricity grids and direct deployment of renewable capacity.Some 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 42024 CSR 1Some progressSubmit the medium-term fiscal-structural plan in a timely manner.Full implementationSDG 8, 16InlinewiththerequirementsofthereformedStabilityandGrowthPact,limitthegrowthinnetexpenditurein2025toarateconsistentwith,interalia,maintainingthegeneralgovernmentdeficitbelowthe3%ofGDPTreatyreferencevalueandkeepingthegeneralgovernment debt at a prudent level over the medium term.Full implementationSDG 8, 16Takemeasurestoensurethelong-termfiscalsustainabilityofthepension system.Substantial progressSDG 8Lowertaxandbenefitdisincentivesforparentstoreturntoworktopromote higher female labour market participation.Limited progressSDG 8Improveincentivesforpeopleclosetoretirementtocontinueworking.Some progressSDG 8Take steps to increase revenue from recurrent property taxes.Limited progressSDG 8, 10, 122024 CSR 2Strengthenadministrativecapacitytomanagetherecoveryandresilienceplan,accelerateinvestmentsandmaintainmomentumintheimplementationofreforms.Addressrelevantchallengestoallowforcontinued,swiftandeffectiveimplementationoftherecoveryandresilienceplan,includingtheREPowerEUchapter,ensuringcompletionofreformsandinvestmentsbyAugust2026.Acceleratetheimplementationofcohesionpolicyprogrammes.Inthecontextoftheirmid-termreview,continuefocusingontheagreedpriorities,takingactiontobettermobiliseprivatesectorresources,includingthroughtheuseofinnovativefinancialinstruments,whileconsideringtheopportunitiesprovidedbytheStrategicTechnologiesfor Europe Platform initiative to improve competitiveness.2024 CSR 3Limited progressStrengthenthecapacityofCzechia'spublicadministrationtoattract,retainanddeveloptalent,particularlythosewithanalytical,managerial and IT skillsSome progressSDG 4, 16Reducedepartmentalismandstrengthenstrategicsteeringcapacities to improve consistency across policies.Limited progressSDG 16Supportcooperationamongmunicipaladministrations,includingbyprovidingsupportforadministrativecapacitybuildingtargetedtostructurally affected regionsLimited progressSDG 162024 CSR 4Limited progressBoostinnovationbyimprovingtechnologytransferfromacademiatobusinesses,Limited progressSDG 9supporting the creation of spin-offs and start-ups,Limited progressSDG 8, 9and increasing participation in tertiary education.Limited progressSDG 4Strengthenthecompetitivenessoftheeconomybyaddressingskillsmismatches, simplifying the recognition of foreign qualifications,Some progressSDG 4andbyincreasingthelabourmarketparticipationofunderrepresented groups.Some progressSDG 8, 10RRP 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.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. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

The  regional  disparities  between  the  capital 
region  Praha  and  the  rest  of  Czechia 
continue. This is shown by various indicators that 
are essential for competitiveness. The introduction 
of  targeted  regional  incentives  together  with  the 
stronger role regions play in defining their specific 
needs  could  enable  convergence  towards  the  EU 
average  in  terms  of  GDP  per  head  and  regional 
development. This is particularly relevant for those 
Czech  regions  experiencing  a  talent  development 
trap (236). 

in 

the 
rebounded 
The  Czech  economy 
aftermath  of 
the  COVID-19  pandemic. 
However,  this  recovery  remained  lower  than  the 
EU  average  and  has  been  slowed  down  by  high 
rates.  While  experiencing  a  slight 
inflation 
expansion of the economy of 0.1% in real terms in 
2023, real GDP growth was 1.1% in 2024.  

Czech  regions  have  many  competencies  in 
transport,  education,  healthcare,  social  care, 
spatial  planning,  cultural  development,  and 
assistance  to  municipalities.  The  national 
allocation of tax revenues represents a major part 
of  regional  budget  revenues  (typically  around 
90%)  and  therefore  determines  their  scope  for 
spending (237).  In  the  current  setting,  the  regional 
governments distribute further nationally allocated 
financial  resources.  It  would  be  beneficial  to 
consider adding to the system incentives targeted 
at regions that would motivate them to encourage 
greater  economic  activity  on  their  territory,  make 
strategic  investments,  or  improve  the  quality  and 
efficiency  of  public  services.  Latest  experience 
from  the  territorial  just  transition  plan  for  the 
Czech  Just  Transition  Fund  regions  shows  a 
positive  role  of  regional  strategies  serving  as  an 
instrument 
territorial 
dimension under cohesion policy and other EU and 
selected national resources at regional level. 

coordinates 

that 

the 

Increasing  regional  growth  requires  a  wide 
range  of  policies.  Effective  and  efficient 
spending of available EU funding, including the use 

(236) Regions experiencing a talent development trap are affected 
by a decline in the working-age population and a low and 
stagnating share of people with a tertiary education. See the 
European Commission Communication: COM(2023) 32 final 
‘Harnessing talent in Europe’s regions’ points out to 
Severozápad and Moravskoslezko as regions in the talent 
development trap in Czechia. 

(237) Krajské rozpočty pod drobnohledem: odkud mají příjmy, na co 

jdou výdaje a co přinese změna RUD. 

of  financial  instruments  as  a  repayable  form  of 
support, is an important part of it. The success of 
the  ‘Transformation  loan’  in  three  JTF  regions 
shows the benefits of financial instruments also in 
the less developed regions. 

disparities 

in  Czechia 

Regional 
have 
remained  broadly  unchanged  but  are  still 
significant.  The  country's  capital  region  is  highly 
developed with GDP per head standing at 193% of 
the EU average in 2023. In the rest of the country, 
there  is  a  group  of  three  moderately  developed 
regions, where GDP per head ranges from 77% to 
85%  of  the  EU  average,  four  regions below  75%, 
and a poorer region (Severozápad) where GDP per 
head corresponds to 63% of the EU average. 

Most regions have grown faster than the EU 
average,  albeit  at  different  speeds.  As  a 
result,  Czechia  continued  to  catch  up  rapidly  with 
the  EU  average  (i.e.  convergence),  from  84%  of 
the EU GDP (purchasing power standard (PPS)) per 
head average in 2011 to 95% in 2020. Since then, 
convergence halted and in 2023 Czechia’s GDP per 
head decreased to 90% of the EU average.  

Competitiveness 

The pattern of disparities between regions is 
similar for labour productivity, displaying the 
same  divide  between  the  capital  region  and 
the  rest.  In  2022,  labour  productivity  (GDP  (PPS) 
per hour worked) in Czechia was at 77% of the EU 
average declining from 79% in 2021. It was by far 
the highest in the capital region (121% of the EU 
average) in 2022, compared to 76% in the second 
most productive Czech region (Střední Čechy), and 
58% in the least productive region (Severozápad). 

The  trend  in  labour  productivity  shows  that 
almost  all  regions  are  catching  up  with  the 
EU  average  but  at  different  speeds  (Graph 
A17.1).  Real  productivity  per  hour  growth  was 
highest  in  Praha,  with  an  average  annual  growth 
rate of 2.6% between 2013 and 2022, well above 
the EU rate of 0.9%. The other regions experienced 
lower productivity per hour growth, Severovýchod, 
Střední Čechy and Střední Morava were still above 
the  EU  average.  The  country’s  poorest  region 
Severozápad  experienced  a  negligible  productivity 
decline of 0.09% over the same period. 

105 

 
 
 
 
Table A17.1:Selection of indicators at regional level in Czechia 

(1) University of Gothenburg 
Source: Eurostat and JRC 

Graph A17.1: Labour productivity per hour 

Unit: Real GDP per hour worked (EUR, 2015 prices) 
Source: ARDECO (JRC) 

Several  factors  can  help  explain  these 
disparities.  Human  capital (238)  levels  are 
considerably lower outside the capital region. 
In all Czech regions, except the capital region, the 
proportion  of  the  population  aged  30-34  with  a 
tertiary  degree  is  below  the  EU  average  (44.8%), 
with  the  four  poorest  regions  (Severovýchod, 
and 
Střední 
Severozápad)  scoring  below  30%.  The  Praha 
region  has  by  far  the  highest  proportion  (62.8%). 
Educational attainment is an important factor that 
also  affects  competitiveness.  Higher  levels  of 
rates  of 
education  usually 

Moravskoslezsko 

to  higher 

Morava, 

lead 

employment,  higher  productivity  and  higher 
lifetime earnings for individuals. 

The  concentration  of  skilled  and  educated 
workforce  in  the  capital  region  is  also 
reflected  in  innovation  and  technology.  In 
2022, R&D expenditure was highest in the capital 
region where it corresponded to 2.69% of GDP (in 
Jihovýchod  it  was  also  higher  than  in  the  EU  – 
2.48%). 12.7% of workers were employed in high-
tech sectors in Praha, more than double the rate in 
the  EU.  At  the  other  end  of  the  spectrum, 
employment in high-tech sectors represented less 
than 6% in the other regions, and R&D expenditure 
was  only  0.38%  of  GDP  in  the  least  developed 
region of Severozápad. 

There  is  a  clear  tendency  for  population  to 
cluster 
in  the  most  prosperous  regions. 
Between  2014  and  2023,  average  annual 
population  growth  was  positive  in  all  regions 
except  in  Střední  Morava  and  Moravskoslezsko. 
Moravskoslezko  and  Severozápad  are  also 
considered  as  experiencing  a  talent  development 
trap (239). The net out-migration particularly of the 
young  population  deepens  territorial  disparities 
and  could  be  addressed  with  concrete  measures. 
Activities  of  the  Moravskoslezko  region,  like  the 
talent  management  strategy  may  serve  as  an 
example (240). 

(238) Human capital encompasses knowledge, skills and 

competences, highlighting the importance of education, 
training and experience in building a workforce that drives 
economic growth, innovation and productivity. 

(239) EC Communication ‘Harnessing talent in Europe’s regions’ 

/COM(2023) 32 final/ p. 5. 

(240) The region prepares ‘Talent management’ strategy that 
includes also ‘Compatriots welcome back‘ initiative. 

106 

10152025303540452000200220042006200820102012201420162018202020222015 EUR per hour workedOther NUTS2 regionsCapital regionNational averageEU27GDP per head (PPS)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)Working age population (20-64) growthUnemploy-ment rateEarly leavers from education and trainingHousing cost overburdenAccess to healthcareAccess to alternative fuel infrastructureQuality&accountability pillar of European Quality of Government Index (1)Greenhouse gas emissionsIndex EU-27 = 100Index EU-27 = 100Average annual % changeAverage annual % change% of labour force% of population aged 18-24% of total populationPopulation within 10 minutes by car from nearest hospital  (%)Number of electric vehicles charging points within 10 kmChange 2010 -2024, percentage pointstCO2eq. per person202320222013-20222014-20232024202420242023202220242023European Union (27 MS)1001000.9-0.25.99.38.8522877.1Czechia90771.4-0.52.65.49.2627710.5Praha1931212.60.31.81.318.0944151.103.6Střední Čechy81761.50.21.36.18.957220.5810.2Jihozápad77640.8-0.52.37.95.748230.189.2Severozápad6358-0.1-1.14.111.610.070130.2928.6Severovýchod73661.6-0.72.95.58.561150.5010.9Jihovýchod85690.8-0.52.42.75.454640.487.9Střední Morava73671.4-1.02.64.37.946160.326.7Moravskoslezsko71690.7-1.24.15.110.774380.2610.8 
 
        
 
 
 
   
 
Social fairness 

Praha  was  94%,  compared  to  46%  in  Střední 
Morava and 48% in Jihozápad. 

Labour  market  conditions  are  strong 
in 
Czechia  compared  to  other  EU  Member 
States,  but  disparities  within  the  country 
continue  to  exist  beyond  the  metric  of 
unemployment,  i.e.  poverty  and  healthcare. 
The  unemployment  rate  in  2024  was  remarkably 
low  (2.6%)  and  did  not  vary  widely  between 
regions.  All  regions  had  an  unemployment  rate 
below the EU average (5.9%). The participation of 
women  in  the  labour  market  has  also  been  high 
compared to the EU average. The employment rate 
of women is higher at national level (75.8%) than 
the  EU  average  (70.8%).  Differences  between 
regions  are  small,  between  79.1%  in  Praha  and 
72.8% in Severozápad. 

Many  Czech  households  are  struggling  to 
access  affordable  housing,  especially 
in 
cities.  In  terms  of  housing  affordability,  defined 
as  the  ratio  of  wages  to  the  price  of  new 
apartments,  Czechia  ranked  among  the  bottom 
in  2023 (241).  There  are 
countries 
differences  between  regions,  but  the  housing 
affordability is lowest in Praha. 

in  Europe 

The  share  of  the  population  at  risk  of 
poverty and social exclusion at national level 
is  among  the  lowest  in  the  EU  (see  also 
Annex  11)  but  varies  significantly  between 
the regions. This share was much higher than the 
national  average  of  11.3%  (although  still  below 
the  EU  average  of  estimated  21%)  in  the  less 
developed 
in 
Moravskoslezsko  and  12.5%  in  Severozápad.  The 
population 
in  Severozápad  has  also  been 
significantly affected by foreclosures and personal 
bankruptcies.  In  Q3-2024,  more  than  12%  of 
people  were 
in  Severozápad 
in  foreclosure 
compared to the country’s average of 7% (242). 

standing  at  16.3% 

regions, 

Access  to  healthcare  varies  widely  between 
the less developed and transition regions on 
the one hand and Praha on the other. In 2023, 
the  share  of  the  population  living  within  a  10-
minute  radius  by  car  from  the  nearest  hospital in 

Sustainability 

Map A17.1:  Greenhouse gas emissions per capita, 
2023 

Source: Eurostat and JRC 

Czechia's  annual  greenhouse  gas  emissions 
per person in 2023, with an average of 10.5 
tonnes  of  CO2  equivalent,  exceeded  the  EU 
average of 7.1 tonnes of CO2 equivalent, with 
significant  disparities  between  regions.  The 
coal mining region of Severozápad was the highest 
emitter  with  28.6  tonnes  per  person.  At  the  other 
end,  the  capital  region  of  Praha  was  the  lowest 
emitter  with  3.6  tonnes  per  person  in  2023.  The 
other regions were closer to the national average, 
with between 6.7 and 10.9 tonnes per person. The 
low level of emissions in the capital region can be 
explained  by  the  high  percentage  of  employment 
in  the  services  sector  (25%  in  financial  services 
and  21%  in  other  services).  Particulate  matter 
(PM2.5)  concentration  was  slightly  above  the  EU 
average in Czechia (12 compared to 10.1), with a 
peak of 16 in Moravskoslezsko. 

On  green  transport  infrastructure,  Czechia 
lags behind the EU with an average of about 77 
electric  vehicle  charging  points  within  10 km, 
(243). 
against  287  on  average 
Unsurprisingly,  the  Praha  region  performs  best  in 

the  EU 

in 

(241) Deloitte Property Index, 13th edition, August 2024. 

(242) Podíl osob v exekuci po krajích (Q3 2024) / Mapa zadlužení. 

(243) Indicators of access to alternative fuel infrastructure are 

based on calculations by DG REGIO and the JRC, using data 
from the European Alternative Fuels Observatory (EAFO), 
Eurostat, TomTom and Eco-Movement. 

107 

 
 
 
 
 
 
this  category  with  415  charging  points,  which  is 
still  below  the  EU  average  for  more  developed 
regions (539). 

108