Trains, Buses Halted in Nationwide Czech Transportation Strike
Czech transportation workers went on a one-day strike today to protest against government plans to overhaul public finances with measures including a value-added tax increase, snarling railway and road traffic.
The nationwide work stoppage began at midnight and comes a day after thousands of Greeks rallied against public wage cuts and tax increases. Czech air travel isn’t affected by the strike, the biggest transportation protest in the country that shed communism in 1989, according to Lubos Pomajbik, the head of the Transportation Trade Unions.
“We wanted to, and we want to stop reforms that are unjust and anti-social,” Pomajbik said.
The unions also oppose a plan to allow people to redirect part of their compulsory pension payments into personal accounts as the Cabinet tries to boost private savings for retirement and are against a plan to raise the retirement age. The goals, which are the centerpieces of Prime Minister Petr Necas’s agenda, helped Czech bonds outperform German debt in the past year.
The Czech Republic is the last of the four largest post- communist economies in the European Union to boost private savings for retirement as the government expects an ageing population to reduce the number of workers paying for pensions of the retired. The Cabinet wants to avoid the difficulties suffered by Hungary and Poland, where pension changes widened budget gaps, forcing a reversal of their overhauls.
The government approved last month a plan to raise the lower VAT bracket to 14 percent from 10 percent next year, while the upper bracket will stay at 20 percent. The VAT rate will be unified at 17.5 percent from 2013.
“The strike will increase political tensions,” Necas told reporters yesterday. “Economic damage will be in the billions of koruna.”
The economic impact of the strike should be less than 10 billion koruna ($587 million), depending on the extent of production restraint and length of the protest, Raiffeisenbank AS analysts in Prague wrote in a report June 10.
To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net
To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net
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