“They fatally misunderstand each other.” What is the future of pension reform

The Minister of Labor and Social Affairs, Marian Jurečka, will present the pension reform proposal to the government on Tuesday. For example, she reckons that retirement should be delayed according to the life expectancy. But the opposition led by the ANO movement does not agree with the government reform. Can the warring parties still find common ground?

What will you also hear in today’s 5:59 episode?

The government will probably be left alone on the pension reform, which will probably be one of the most fundamental reforms of the cabinet of Petr Fiala (ODS). The opposition movement ANO has announced that it will not participate with the government in strategic decisions in the economic and social sphere.

Czech Television journalist Petr Vasek points out that two points of the reform proposed by the government have become the bone of contention: the increase in retirement according to life expectancy after 2030 and the reduction of pensions after 2026.

The government sees a way to make significant savings in these two points. According to analyzes by the Ministry of Labor and Social Affairs, these savings should reach roughly 1.5 percent of GDP by 2050, which is roughly 185 billion crowns in today’s prices. According to Vašek, these parts of the proposed reform are unpopular in society at the same time, but without them the reform would have no economic sense.

“This is also why the debate is so politically heated, because without them the government cannot say that it is carrying out any kind of pension reform that is supposed to ensure at least partial sustainability of the pension system,” says a journalist who has been dealing with budget and finance topics for a long time.

But the government ran afoul of the opposition. At first, it looked like both sides could come to an agreement. After all, after the March meeting at Prague Castle, which was called by President Petr Pavel precisely because of the upcoming pension reform, many people got the impression that an agreement was possible.

President Pavel himself said at the press conference, among other things, that there is agreement between the government and the opposition represented by the ANO movement that interventions, such as extending the retirement age, are absolutely necessary for the sustainability of the pension system. “This is an absolutely necessary parameter,” said the president.

Even the ANO movement did not reject this during the briefing. The head of the ANO parliamentary club, Alena Schillerová, hinted that the ANO movement would follow a different path, but at the same time spoke about the fact that it needs additional documents and that everything must be discussed at the next planned meeting at the end of April.

A few tens of minutes later, she spoke more clearly in an interview with journalists. “When we then asked: Is there an agreement or not? So she said: There is no agreement, that is simply an indisputable fact,” the journalist describes. Later, ANO representatives allegedly explained to him that neither Alena Schillerová nor ANO vice-chairman Karel Havlíček wanted to bang on the table at the Castle and say no to the president.

And since then, the dispute has escalated. Coalition politicians, such as the head of the Chamber of Deputies and the chairwoman of TOP 09, Markéta Pekarová Adamová, talk about the fact that the opposition cannot be trusted. Meanwhile, the ANO movement backed away from debates on pension reform and at the end of last week even announced that it no longer intends to discuss these changes with the government of Petr Fiala.

“I think the main reason that those negotiations broke down is—and I don’t want to take sides, because I think each of those sides understood it the way they wanted to understand it—that those sides have a fatal misunderstanding, ” describes Vašek.

Another factor may be the period in which changes in pensions are discussed. The proposal comes in a year when the Czech Republic is facing three elections – for the European Parliament, regional councils and a third of the Senate. “Politicians just act like politicians. This means that their task is to somehow fulfill their program, but they want to be re-elected. It’s a bit cynical, but that’s just the way it is. (…) In such an atmosphere, it is quite difficult to find a society-wide agreement on an unpopular topic,” says Vašek.

In the 5:59 podcast, you will also learn how the YES movement would approach the necessary changes in pension settings or how big a problem it would be if the opposition and the coalition did not finally agree on the reform. Listen in the player at the beginning of the article.

Podcast 5:59