The employee is an expensive toy?

Posted by bara 12/03/2014 at 14h14

In the Czech Republic without a doubt yes! Staff costs are due to the secondary costs among the highest in the world. Additional costs mean that employers have of their "pocket" go beyond the costs of salaries and other remuneration of employees have significant additional amount in the form of social security and health insurance, which go to the state budget. Social insurance should be synonymous with security of current and future retirees. Unfortunately Retirement Account makes a growing deficit and the situation will not be sustainable. It is only a few options to resolve the situation and that is raising (increase) the retirement age or reducing the amount of retirement. In the Czech Republic, the employer pays premiums more than they contribute to their security by the employee. This system is relatively rare, because in the most countries is opposite situation.
Premiums paid by the employer are equal to 34 % of gross wage. Czech employers must consider whether take on new people or raise wages, because every crown is for employers three times more expensive. Czech employers pay on their employee’s one of the highest insurance.
Where secondary costs are causing problems?
The first issue is the development of Schwarz system, which means hiring business with a trade license for certain jobs. For these workers, the employer does not pay the above-mentioned 34 % of the gross wage. It is not surprising that a business license is desired commodity for employers and for employees who do Schwarz system. Much of the entrepreneurs pay minimum payments in the amount of CZK 1,752 for health insurance and 1894 crowns for social insurance for the year 2014. However, while the low down payments are not reflected on the quality of health care, they get significantly lower pensions. These entrepreneurs must the retirement age to save otherwise. 
Some employers paid only official minimum wage (currently 8,500 crown) and the remainder in cash (untaxed!). This is big problem too. These "half black" employees should therefore also have to postpone some of the savings at a time when not employed. The secondary costs influence foreign investors in deciding the location of new investment projects. Czech Republic has advantage in terms of location in the heart of Europe. But high labour costs are big disadvantage and investors often choose another state.

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