Final Word from Tuesday, May 18, 2004

Premier Vladimír Špidla told F1 radio that everything in the CR that can be measured is improving. The jobless rate is the only thing he's not happy with. The Wall Street Journal wrote that the CR is so concerned about losing its competitive advantage that it paid Jan Švejnar for a report on how to avoid investment flight. His conclusion: The CR needs to grow out of its low-wage niche and attract jobs that require greater investment and highly skilled workers. In other words, the CR needs to become more like Western Europe. Under Švejnar's scenario, the CR would still enjoy a wage advantage, but it would eventually evaporate, and the CR would end up with the same kind of endemic unemployment as in Western Europe. The better solution, as most businesspeople will tell Špidla for free, is to lower non-wage labor costs so that wages can rise without driving investors away. social security


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