Czech government slows or freezes pay increases to narrow budget gap

PRAGUE, December 29 (Reuters) – The new center-right Czech government to freeze civil servants’ salaries and cut previously announced salary increases for others as it seeks to narrow the budget gap amid inflation , the ministers announced on Wednesday.

The government, appointed earlier this month, has pledged to reduce the central government deficit in 2022 to less than 300 billion crowns ($ 13.66 billion), from 380 billion envisaged by the previous government .

“We are freezing the salaries of public administration employees (…) and for ourselves,” Labor and Social Affairs Minister Marian Jurecka said at a press conference.

“We have found a compromise so that key frontline professions such as social and health services, teachers, the military, still have some increase.”

The reduction is a signal of the intention to save money, but is only a fraction of the overall savings ambition, with the freeze reducing central government spending by around SEK 4.7 billion compared to previous shots.

Teachers will get a 2% pay hike and health and social workers exposed to the coronavirus pandemic will get a 6% hike. The military and police will receive a monthly salary increase of 700 crowns.

The government will also prepare a law to freeze the salaries of politicians for next year.

Inflation climbed to 6% in November and is expected to hit around 8% by early 2022, as rising energy prices are accompanied by supply chain disruptions and a tight labor market .

Jurecka said the government had agreed to expand aid programs to help households hardest hit by rising energy prices.

The country will start 2022 on a provisional budget, and the cabinet plans to prepare its new project in the first quarter.

The finance ministry last forecast in November 2022 a public sector deficit of 4.4% of gross domestic product.

($ 1 = 21 9620 Czech crowns)

Reporting by Jan Lopatka; Editing by Giles Elgood

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