Public Sector Employment in the Czech Republic after 1989: Old Legacy in New Realities?
Public Sector Employment in the Czech Republic after 1989: Old Legacy in New Realities?

Summary/Abstract: The relationship between the public and private sectors in post-communist countries was shaped under different circumstances when compared to the old EU countries: ‘non-productive’ occupations like health care, education and social services, which form the core of the public sector, were disadvantaged under the communist regime. In this paper we address the question of how the public sector developed in terms of size and structure of employment and salary levels between 1989 and 2010 (in the long-term and in times of crisis) in the Czech Republic and how these changes can be explained. The trends which we have identified in the developments of public sector employment in the Czech Republic mirror the legacy of communism, the processes of transformation and privatization and the political preferences of the governments. We do not find many changes in overall public sector employment during the period of 1989–2010, except for the privatization of state-owned companies resulting from a strategy by government to prevent unemployment. The dynamics of wages in the public sector document the legacy of the communist past, when the salaries in non-productive sectors like education, health and social care were traditionally low relative to the productive branches. The resistance of public sector employees to their increasing disadvantage regarding salaries has been successful only to a limited extent. In the rare cases of highly specialized professional categories (like doctors) it was possible to profit from a specific bargaining position. These developments may be best explained by the protest avoidance strategy of the post-communist governments and the political business cycle in its short-term outlook. In the long-term, the drivers which boost the development of social services generally do play a role, contrary to political manipulation.

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