“The Czech Republic MUST CHANGE”
Tomáš Prouza is the President of the Confederation of Trade and Tourism of the Czech Republic, and Vice President of the European association EuroCommerce. Since July 2020, he has also performed the function of Vice President of the Czech Chamber of Commerce. He previously served as Deputy Minister of Finance of the Czech Republic, State Secretary for European Affairs in the Office of the Government of the Czech Republic, and Coordinator of the Digital Agenda of the Czech Republic. He also worked at the World Bank, and as a senior expert in Washington, D.C.
Small and medium-sized enterprises are considered the backbone of the economy. Last spring, Czech and Slovak Leaders Magazine published an interview with Swiss Ambassador Dominik Furgler regarding compensation for damage caused by the pandemic. The proverb “He gives twice who gives quickly” applies especially during the crisis. At the time, I was a little jealous of my Swiss colleagues, but I hoped that the situation in the Czech Republic would soon improve. It hasn’t improved. Thank you Tomáš for fighting for us, the self-employed…
We’ve commemorated the first anniversary of Covid. It’s often pointed out that, in comparison with other EU countries, Czech children have been studying online the longest. I believe that, in a similar comparison, Czech self-employed people are also on the top rungs in terms of the number of days in lockdown.
Nobody could have predicted the extent of the pandemic that began a year ago. That wasn’t any government’s fault. However, what it is completely responsible for is the total underestimation of the waves that followed the first one in the spring of last year. With all the consequences, including thousands of people dead, tens of thousands with long-term health damage, and many companies and entrepreneurs devastated. Nobody but the government of the Czech Republic, and its marketing approach to functioning, is responsible for the fact that, for a number of weeks, we’ve truly been“Best in Covid”. If it wasn’t for the strong motivation to appeal to voters before last year’s regional elections and the Christmas holidays, if it wasn’t for the inability to set out a clear plan to fight the pandemic, including a legislative framework and a functional system of compensation for entrepreneurs, and the inability to establish a testing, tracing and vaccination system, we wouldn’t be where we are today. In a state of catastrophic burden on the health service, paralysed restaurant, tourism and business sectors, and a population that lacks confidence in the government’s ability to manage the crisis.
More and more measures affect the lives of companies, self-employed people and every citizen. It’s therefore no surprise that nobody can orient themselves in all this, and that the government is losing the trust that’s necessary to manage the crisis. More and more bureaucratic rules are being created that have no effect on managing the crisis, while only burdening entrepreneurs and hindering the future restart of the Czech economy.
And unfortunately we know that the issue of compensation also offers a sad comparison. We know that neighbouring countries paid support amounting to 60-80% of income. How does the Czech Republic fare in this regard?
Austria managed the compensation system excellently. From the first moment, it established the system so that the maximum number of entrepreneurs could avail of it, and help was fast and effective. We came up with dozens of programmes with dozens of complicated forms, the only result being that many entrepreneurs don’t fit any of their criteria, and those who finally receive support often wait several months for it to be paid. In times of crisis, these are time horizons by which an entrepreneur can be bankrupt. And thousands of small entrepreneurs, who have to take care of all the requirements regarding compensation themselves, understandably come out of it even worse off than the large companies. Last year, entrepreneurs saw less than ten percent of the one billion crowns in aid that was promised, while the state budget is expecting most of the programmes to end in June this year, so that we can maintain a record deficit.
In January, a record number of self-employed people ended their trade. Many entrepreneurs saw businesses collapse that they had spent 30 years building. Do you have any ideas in this regard?
This isn’t sad or tragic, this is absurd. Today, the entire developed world is based primarily on the functioning of small and medium-sized enterprises. They bring the greatest added value, and they provide services that improve people’s quality of life. And even a year after the outbreak of the crisis, we’re not able to take care of them.
The domestic economy suffered a significant slump in the past year, and the prospects for the future definitely aren’t rosy. Both self-employed people and companies are encountering existential problems due to restrictions connected with the fight against the coronavirus. Last year, almost 100,000 self-employed people suspended their business activity on the basis of the lockdown. By the way, this January it was over 25,000, which is the most ever in the history of the independent Czech Republic. They include those who built their businesses over a long period, in some cases since the 90s. Family businesses, where father, son and grandson worked side by side. It’s probably no great surprise that they’re primarily in the areas of production, trade, services and catering. Dramatic increases manifested themselves mainly in the second half of last year, with Prague faring the worst in this regard. And many entrepreneurs waited for a long time, investing their own savings or selling property to overcome the biggest crisis, because they believed that, just like other governments in the civilised world, the government wouldn’t let them fall. It’s sad that our politicians weren’t able to learn a lesson from last spring and summer. Today it’s just about putting out a huge, and moreover unnecessary, fire. And zero thinking by the government on how to quickly restart the Czech Republic…
And now from a different perspective. The self-employed people who haven’t given up yet often suffer from depression, because they can’t practice the profession they love. This applies primarily to women working in services. By the way, Covid has shown how easily we forget some sections of society. For example, pedicurists often provide a service for the elderly, who simply cannot perform this activity themselves. My son, who is in puberty, needs mail braces, because the only alternative is a painful surgical procedure. Why aren’t rules established under which these people can do business? For example limiting the number of people in establishments, etc.?
This question needs to be posed to the responsible ministers. A number of strategies can be used to fight this type of crisis. In the Czech Republic, we chose the path of mathematical modelling. As if the virus behaved according to formulas in Excel. But, to the theoretical modellers’ great surprise, the virus behaves like a biological entity, and couldn’t care less what a team of intelligent, but unilaterally-oriented people, models. In February this year, professor Šerý, a renowned expert in the field of neurobiology and a specialist in DNA diagnostics, performed an analysis of the occurrence of the coronavirus on frequented surfaces in shopping centres. Of the 52 samples, all were negative. And this analysis involved cash registers, lift buttons and toilet handles. The consequence of the government ignoring these results is a huge number of bankruptcies, economic problems, and a total loss of confidence in it. At the same time, all we have to do is learn from neighbouring countries, which have far fewer dead and rules that are nowhere near as nonsensical.
They said about the economic crisis in 2008 that if Lehman Brothers had been Lehman Brothers and Sisters, the crisis wouldn’t have happened. I have a feeling that if more women worked in factories and more men in services, factories would be closed and services open. What do you think?
I like the story about Lehman Brothers and Sisters. And to a certain extent it also applies to the situation in the Czech Republic, in that the old generation of politicians still encourages only industrial assembly plants, and considers education, services and trade (often dominated by women, whether they be entrepreneurs or employees) something dispensable. It’s clear that the communist ideology is very deeply ingrained in them. When I compare dealings with the current government coalition and both opposition groupings, then on the government side I see people with a mentality from the second half of the last century, and on the side of the current opposition, people who understand how the Czech Republic must change, and how we’ve been missing the train in recent years. The coronavirus situation sheds very clear light on this, and shows the deep crisis the obsolete perception of the world got us into. In many cases, we forgot to use common sense, judgement and empathy, and we’ll be recovering from this damage for a long time to come.
Were you surprised by the relatively low social solidarity with the self-employed? I’ll use Israel as an example. Large companies mentioned the need to support smaller ones, in order for the entire ecosystem to function. People offered their balconies and terraces for rent so that restaurants, for example, could function under epidemiological measures. I have the feeling that, in the Czech Republic, not many apart from journalists are interested in the fate of self-employed people. I hope I’m mistaken.
It’s true that greater industry activity was only brought about by debates about whether, just like services, it should be closed. Unfortunately, the short-term thinking of many companies, who view the world through a lens of one to two years, is manifesting itself. That’s why there’s such a strong rejection of a green transformation in the Czech Republic, that’s why Czechs have greater success abroad than at home with many smart digital ideas, and that’s why there’s an ongoing fight for burning coal as long as possible, while even Poland is looking further ahead, to new technology. Just like I spoke about the need for a generational change of politicians, there must also be a generational change of business representatives. It can’t be normal to make a long-term living from cheap labour in assembly plants and pouring concrete into the landscape.
If the Czech Republic really is to be a country for the future, as the government slogan says, we must undergo an extensive transformation. But many companies that are based only on cheap labour will be seriously hurt by that – and like everyone else, they try to avoid any pain. Moreover, it’s not an easy-to-grasp media topic, so it doesn’t even receive public attention. But such an approach is a road to hell.
My favourite question: what are you getting ready to promote when Covid-19 is no longer an issue?
I consider Covid an episode, albeit a very intensive one. My priorities of course remain the same. I intend to continue to promote transparent and equal conditions for business in the area of trade. I’ll work on the reputation of trade, and support collaboration with related fields such as agriculture and food production. In the future, we can expect Czech trade to change. The path towards online trade awaits us, which will definitely be interesting. I don’t think it’s going to be a revolutionary change; nevertheless, many traders have learned to function in this environment, and that will undoubtedly have an effect on how trade, especially in non-food goods, will look.
The last question is traditionally open, and offers space for sharing not only a final word, but perhaps also a different perspective, or to emphasise an already known fact. What will you choose?
I’m pleased with the wave of solidarity that arose in connection with the coronavirus situation, whether it was the sewing and donation of masks, or other help for those in need in the area, for example with shopping, dog walking and transportation. Czechs began to provide more specific material assistance to an institution, or to support a particular person. Many work as volunteers or helpers. In the autumn, due to the increasing number of people in difficulty, food bank stocks were completely depleted – and despite truly difficult conditions, the next food collection became the most successful in history, thanks to both people and retail chains. So we’re all hanging in there, and we’re not forgetting the people around us.
Czech and Slovak Leaders Magazine has long supported Czech businesses and their owners by sharing their stories and experiences. Do you have an interesting business story that you want to share? Did you manage to get through the pandemic successfully? Write to us.