7.1 Overview of the Welfare System and Main Migration Features in the Czech Republic

7.1.1 Main Characteristics of the National Social Security System

The modern Czech social security system finds its origins in Taafe’s reforms since 1880s that applied to the whole Austro-Hungarian Monarchy, including the Czech lands. The Czech social security system is therefore part of the Bismarkian model of social security, with big emphasis on social insurance. Czechoslovakia, established in 1918, adopted the Austro-Hungarian legislation. Already in the 1920s, a modern unified system of social security was adopted through Act No. 221/1924. The social insurance of that time included almost all employees in all branches and through it, social security benefits in case of old-age, invalidity and sickness (including maternity) were provided. In 1948, Act No. 99/1948 Coll., on national insurance was adopted. Inspired by the British Beverigean model, this act was substantially changed in the 1950s, due to requirements of the communist society. The whole social security system was centralized and etatized, and the social insurance principle was practically abolished. As of beginning of 1990s, Czechoslovakia and from 1993, the Czech Republic, have been undergoing many reforms, including social security reforms. One of first steps was to rebuild the social insurance system and to establish the health insurance, which did not exist before. In 1995, a modern unified system of family benefits (state social support) was introduced and the social assistance reform was adopted only in 2006. In 2011, new systems of health care services and benefits for people with disabilities were introduced. The Czech Republic is still waiting for a real pension reform, which is difficult to adopt due to political tentions.

The subjective right to social security in the Czech Republic is declared in the Charter of Fundamental Rights and FreedomsFootnote 1 as a component of the constitutional system of the country and in international conventions and treaties ratified by the Czech RepublicFootnote 2 (see also Pichrt and Koldinská 2016). The European Social Charter adopted in 1961 was ratified by the Czech Republic only in 2000,Footnote 3 whereas the European Social Security Code had to wait even longer, being adopted in 2001.Footnote 4 The European Union (EU) law also represents an integrated part of the Czech legal system, and so several parts of EU primary law form a source of law regulating social security issues in the Czech Republic.

The conditions and forms under which citizens may claim their constitutional right to social security are set out in implementing acts. These acts define individual forms of social security, including the form of security, its personal and material scope, the eligibility conditions, levels of benefits and their duration, the sources of funding, and the benefit procedure and administration.

The social security system in the Czech Republic comprises the pension, sickness and health insurance systems, as well as the national employment policy system and the non-contributory social benefits systems - state social support (basically, family benefits) and social assistance. The health insurance system is financed via health insurance funds. Other components of the system are financed from the state budget. Contributions to social insurance systems (pensions and sickness insurance) are paid by employers, employees and self-employed persons. These are income of the state budget.

The health insurance, pension insurance and national employment policy system are mandatory for every economically active individual. Some groups are considered insured without having to pay any premiums (students, women on maternity leave, etc.). The pension system covers old-age, invalidity, and survivors pensions, being managed by the Czech Social Security Administration. The calculation of benefits is based on solidarity of insures and amount of contributions. Solidarity however prevails. The sickness insurance scheme is obligatory for employees and voluntary for self-employed. It covers sickness benefits, financial aid for maternity and compensatory allowance for pregnancy and maternity, paternity benefits, care benefits and long-term care benefits. The health insurance is compulsory for anyone who resides permanently or is working for an employer based in the Czech Republic. EU citizens who are employed or self-employed in the Czech Republic are also covered. For certain categories (children up to 26 years old with no financial resources, pensioners, recipients of parental allowances, women on maternity leave, jobseekers, etc.), the insurance premiums are paid by the state.

The employment policy system provides earnings-related benefits, although, de facto, this is still a non-contributory system. There is a small part of social insurance contributions dedicated to state employment policy, although unemployment benefits are not dependent on this amount.

The state social support system is a non-contributory system financed from the state budget and administered by the assigned state bodies. By means of the social support system, the state contributes in particular to families with dependent children that are unable to provide for themselves. The tax-financed social assistance benefits include benefits provided to persons with disabilities and the system of assistance in material need. The later targets people with insufficient income, thus trying to ensure the basic needs for living and housing. The social insurance system is financed by contributions from employees and employers. The healthcare system is funded by contributions and taxation (insurees insured by the State), whereas family benefits and social assistance are financed from the state budget through general taxation (Koldinská and Lang 2017; Koldinská and Tröster 2018).

7.1.2 Migration History and Key Policy Developments

As Blahoutová (2013) argues, Czech lands have historically been characterised as emigration country, whose inhabitants were attracted to other parts of Europe and of the world by promising economic opportunities. The picture of migration inflows and outflows has rapidly changed after 1989 with the democratisation process of the country.

The number of foreigners residing in the country has been steadily increasing. According to the latest statistical data from the Czech Statistical Office,Footnote 5 there were 524,142 foreigners residing in the Czech Republic in 2017, out of which 219,708 were EU citizens. Each year, approximately 45,000 people come to the Czech Republic, whereas approximately 18,000 individuals emigrate from the country. Foreigners represent not even 5% of the overall Czech population, which makes the Czech society one of most homogeneous in Europe. This might be one of the most important reasons for the generally closed and hostile attitude of the Czech population towards foreigners.

Regarding intra-EU migrants, the largest groups of foreigners residing in the Czech Republic originate from Slovakia (almost 112,000 individuals), followed by Germany (21,000) and Poland (20,000). The most numerous groups of third-country nationals come from Ukraine (117,000), followed by Vietnam (60,000) and Russia (36,000). The high numbers from the above-mentioned countries can be explained by historical determination (collaboration of socialist Czechoslovakia of that time with Vietnam since 1970s) and cultural and language proximity (Ukraine, but also Russia to a certain extent).

As for non-resident nationals, around 115,000 Czech citizens live and work in other EU Member States, the most popular countries of destination being the United Kingdom (UK), Germany and Austria. In general, the Czech Republic is not a very much migratory nation.

The crucial legal norm regulating the entry and stay of migrants in the Czech Republic is the Aliens Act (Act No. 326/1999 Coll., on the Residence of Foreign Nationals in the Territory of the Czech Republic). This Act regulates the conditions of entry of foreigners in the Czech Republic and their departure from the country. Generally speaking, the Czech Republic has a quite restrictive migration policy.Footnote 6 Especially for third-country nationals, it is crucial to have a long-term residence permit in order to access social benefits. According to Sec. 42 of the Act No. 326/1999 Coll., an application for a long-term residence permit may be filed by a foreign resident who holds a visa for over 90 days and intends to stay temporarily for more than one year in the Czech Republic with the same purpose of residence. The Foreigners Act envisages several sitations in which the long-term residence permit can be claimed, including family reunification (Sec. 42a), studies (Sec. 42d), investment (sec. 42n) or research (Sec. 42f).

Foreigners’ employment in the Czech Republic is regulated especially by Act No. 435/2004 Coll., on employment and Act No. 262/2006 Coll., Labour Code (see also Tomšej 2019). EU citizens have the right to free movement and therefore need only to register with the foreign police. Third-country nationals can get the employee card or a blue card. The employee card was introduced in 2014 as a new type of long-term residence permit for foreigners residing for more than three months in the Czech Republic for the purpose of employment. In most cases, it already includes both the residence permit and the work permit in the Czech Republic. The employee card is most often issued for the duration of the employment relationship, but for a maximum of two years, with the possibility of repeated renewal. It is possible to apply for an employee card only for a job registered in the central register of job vacancies that can be occupied by an employee card holder - these are jobs that are primarily offered to Czech citizens. The employee card is always linked to the specific job position for which it was issued.

Highly qualified third-country nationals who are looking for a job can apply for work in the Czech Republic with a blue card that is issued only for jobs requiring high qualifications. As in the case of the employee card, the blue card can be requested at a locally accessible embassy of the Czech Republic or at the Czech Ministry of the Interior.

7.2 Migration and Social Protection in the Czech Republic

The Czech social protection system is quite open to individuals in situation of international mobility, especially mobile EU citizens. The EU coordination rules are correctly applied and, in general, there is no problem for non-national EU citizens to access the Czech social protection system under the same conditions as resident nationals or for Czech citizens to keep their social rights if they decide to move to another EU Member State.

The situation is slightly different for third-country nationals. The Czech social protection system is open to non-EU foreigners who permanently reside in the Czech Republic or work for an employer based in this country. Third-country nationals who do not hold the status of permanent or long-term residents are generally excluded from the social protection system. Gainful activity is decisive for participation in social insurance systems, especially for the sickness and pension insurances. Health care insurance requires either permanent residence or a gainful activity. Non-contributory systems generally require permanent residence. Possibilities to export benefits abroad, or aggregate periods of insurance in the Czech Republic, vary depending on the bilateral social security agreements signed with third countries.

7.2.1 Unemployment

Unemployment benefits are regulated by Act No. 435/2004 Coll. on employment. Unemployment benefits are calculated based on past earnings, with some ceiling. If there were not taxable earnings prior to unemployment, a theoretical previous earning (settled by the law and modified according to the economic development) applies. There is only one scheme, and even if within the social insurance contributions, a small part is called “contribution to state employment policy”, this is not a social insurance contribution as such.

According to Sec. 3 of the Employment Act, “a citizen of another Member State of the European Union and his family member have the same legal status in the legal relations regulated by this Act as a citizen of the Czech Republic. Family members of a citizen of the Czech Republic who are not nationals of the Czech Republic or of any other Member State of the European Union shall have the same legal status as a citizen of the Czech Republic.” Sec. 25 also stipulates that “a person seeking employment may be only a natural person who has his/her residence in the Czech Republic”. Employment services are provided to people who reside in the Czech Republic, regardless of their nationality.

Unemployment benefits are payable for up to five months (eight months for those aged 50–55, 11 months for those over 55 years old). All Czech nationals and EU citizens are eligible for this benefit, as long as they are not working or studying; register as jobseekers with the Regional Labour Office and are not eligible for old-age benefits; and have 12 months of basic pension insurance in the past two years. Jobseekers who fail to comply with certain conditions (mainly cooperation with the Regional Labour Office) are suspended from the Labour Office register and must return all benefits that were wrongly paid. They may register again after six months.

EU nationals have access to unemployment benefits under same conditions as resident citizens. Non-EU nationals have access to the system only upon a decision of the Labour Office, which authorises them to seek work in the Czech Republic. This authorisation is based on the possibility to reside legally in the Czech Republic. According to Sec. 89 of the Employment Act, a foreigner may be recruited and employed if he/she holds a valid employee card, an employee transfer card or a blue card, or a valid work permit issued by the Regional Labour Office and a valid residence permit in the Czech Republic. Non-EU foreigners shall request the work permit in writing to the Regional Labour Office prior to their arrival in the Czech Republic. The request can be submitted by foreigners themselves, their employers in the Czech Republic, or through the person with whom foreigners concluded their respective contracts. Nationals residing abroad in EU countries can access unemployment benefits from the Czech Republic, if conditions settled by EU coordination rules are met. Those receiving unemployment benefits from the Czech Republic can temporarily leave the country in search for a job abroad. However, moving abroad on a permanent basis leads to the loss of unemployment benefits, except for nationals who move to another EU Member State who can benefit from a limited export of unemployment benefits for a period of three months.

7.2.2 Health Care

All permanent residents, employees of companies registered in the Czech Republic and self-employed persons who are subject to the Czech law are compulsorily insured and eligible for public healthcare (Sec. 2 of Act No. 48/1997 Coll., on health insurance). Foreigners who do not meet these conditions can access health care only via private insurances. This is particularly problematic for non-EU foreigners as the requirements of permanent residence or employment in the Czech Republic are strict.Footnote 7 Nationals residing abroad can access health benefits in kind from the Czech Republic if conditions settled by coordination rules are met.

Insured persons are entitled to free choice of a primary healthcare physician who has a contract with his/her insurance company. There are no restrictions on the patient’s choice of the healthcare provider. Patients have direct access to health care, except for non-urgent treatments covered by the public health insurance. In this case, the provider must have a contract with the health insurance company of the person concerned. There is free choice of contracted hospitals after referral by a primary doctor or a specialist.

Sickness insurance is part of the compulsory social insurance scheme for employees whose income from gainful activity is taxable in the Czech Republic (Act No. 187/2006 Coll., on sickness insurance). This part of the insurance scheme is voluntary for self-employed. Sickness benefits are paid subject to the claimant’s inability to work as certified by a doctor (from the 4th to the 21st day, a wage compensation is paid by the employers, whereas the benefit is paid from the 22nd day of illness). There is no requirement of a qualifying period of work or residence in the country. To qualify for the benefit, self-employed persons who are insured voluntarily and have selected the amount of the premiums paid for sickness insurance, must have been participating in a sickness insurance scheme for a minimum of three months before the temporary inability to work arose.

Since 2018, two new sickness benefits have been introduced – the paternity benefitFootnote 8 and the long-term care benefit.Footnote 9 The paternity benefit is granted to a father or husband of the mother of a child, if he takes care after the child and mother for one week during the first six weeks after birth. The long-term care benefit is granted for maximum three months as a compensation of loss of income to a relative of a person in need of care after hospitalisation.

Sickness benefits are granted per calendar day, for a maximum of 380 days from the beginning of the inability to work. To apply for the sickness benefit, claimants need to submit a form certified by a doctor from the first day of illness. Employees whose employment contract has ended but who are still in the “protection period” have the right to receive sickness benefits. The protection period lasts seven days from the day when employment ended. For people employed for a shorter period than their last period of employment, the protection period lasts only for the number of days actually worked. This applies also to people who leave the Czech Republic, if the Czech Republic remains their competent state according to EU coordination rules. Nationals abroad can claim sickness benefits from the Czech Republic if they meet the conditions for export of benefits settled by the EU coordination rules or bilateral agreements. EU and non-EU foreign residents can access sickness benefits in cash from the Czech Republic under exactly the same eligibility conditions as those applied for national residents.

Invalidity benefits are part of the pension insurance (Act No. 155/1995 Coll., on pensions). Access to the system is guaranteed to all employed or self-employed persons who are tax-residents in the Czech Republic. This condition, which is similar to the one for the sickness insurance, does not dependent on residence or citizenship. However, to become tax-resident, one must have the possibility to be legally employed/self-employed in the Czech Republic. Three degrees of invalidity are recognised. The third degree means that the ability to perform any economic activity is reduced by at least 70%. For the second degree, the ability to perform any economic activity is reduced by 50–69%, and by 35–49% for first-degree invalidity. Coverage is granted until the person reaches 65 years old. When a disabled person reaches retirement age, he/she can apply for old-age pension, which will be paid if its amount is higher. Average earnings and the period of insurance determine the amount of the invalidity pension. This pension has two components: a basic amount per month, to which is added a percentage amount related to earnings, and calculated from the personal assessment base and the number of years of insurance. The personal assessment base is based on the average gross earnings over the years preceding the occurrence of invalidity. The formula varies according to the type of pension. The invalidity pension from the Czech Republic can be accessed by nationals residing abroad in EU or non-EU countries if the conditions for exportability settled by the EU coordination rules or bilateral agreements are met.

7.2.3 Pensions

Access to the Czech pension system is guaranteed to all employed and self-employed persons (either national citizens or foreign residents) who are paying taxes in the Czech Republic based on their gainful activity. The system is based on a compulsory social insurance scheme financed by contributions from employers and employees and providing earnings-related benefits according to the length of insurance. Participation is mandatory for employees, assimilated groups (unemployed, people caring for children/the disabled, people in military service, etc.), and the self-employed. The Pension Insurance Act lists those required to join the pension insurance scheme. Most people become members in the insurance scheme by law, without having to sign up. There is no public non-contributory pension scheme in the Czech Republic. Self-employed individuals must inform the Social Security Administration for the district in which they reside permanently (or, if they do not have a permanent residence in the Czech Republic, the Social Security Administration for the district where they are self-employed) that they have (re)commenced self-employment or cooperation in the self-employment of another person, or that they have terminated their self-employment.

There is also a possibility of voluntary insurance for certain groups, such as individuals older than 18 years who enacted a gainful activity abroad, worked in the Czech Republic for a foreign employer based in a country whith which there is no bilateral social security agreement in place – for maximum two years, spouses or registered partners of a civil servant sent abroad, if they followed him/her. In case of a gainful activity abroad, premiums may be paid retrospectively for a period equivalent to up to two years before the application to join the insurance scheme was submitted. Up to ten years of pension insurance may be acquired in this way. Applications are submitted to the Social Security Administration for the district where the applicant resides permanently.

The retirement age in the Czech Republic is currently being prolonged, to reach 65 years as of 2036. The qualifying period of contribution to access a contributory pension is 35 years. There are some credited periods taken into account (maximum three years of unemployment, taking care after a child, etc.). Foreigners generally have to comply with the same regulations as nationals for accessing a pension. Nationals residing abroad in EU and non-EU countries can access the old-age pension from the Czech Republic if the EU coordination rules or bilateral agreement envisage the export of these benefits and conditions are met.

7.2.4 Family Benefits

In addition to pre-natal and post-natal care, including free confinement and hospital care, the social security system offers cash benefits for maternity and paternity.

To receive the maternity benefit, employees must have contributed to the sickness insurance fund for at least 270 calendar days within the two years preceding the birth. Self-employed persons must have paid the premiums for sickness insurance and, for at least 180 days, the contributions to the self-employed individuals’ sickness insurance scheme during the year preceding the birth. The maternity compensation benefit is granted to pregnant employees or to mothers until the ninth month after birth, if they have been transferred to a position with lower earnings because of the pregnancy; or self-employed and women whose employment came to an end while they were pregnant, the protection period is always six months. EU and non-EU foreigners must meet the same eligibility conditions as resident nationals for accessing maternity benefits from the Czech Republic. Non-resident nationals can claim these benefits from the Czech Republic only if they reside in another EU Member State or in third countries with which there is a bilateral agreement in place covering access to family benefits.

According to the Sickness Insurance Act, the paternity benefit is available for fathers with sickness insurance. Fathers are entitled to up to 70% of their salary for seven calendar days of leave, which can be taken at any time in the six weeks following the childbirth.

Non-contributory family benefits (child allowance, parental allowance, and the birth grant) are regulated by Act No. 117/1995 Coll., on state social support. Sec. 3 of this Act stipulates that state social support benefits are subject only to a natural person if he/she (and dependents) are registered in the Czech Republic for permanent residence, if they are Czech nationals or have permanent residence in the Czech Republic if they are foreigners (the condition is that they have the domicile in the Czech Republic). These family benefits can be provided also when the claimant and his/her family are foreigners who find themselves in specific different situations such as: reported to the Czech Republic for residence or born in the Czech Republic and registered in this country for residence; minors entrusted in the Czech Republic to care which substitute parental or institutional care; those holding a permanent/long-term residence permit; those granted supplementary protection; foreigners holding an employee card; those working in the Czech Republic or who have worked in the Czech Republic for at least six months and are registered as job seekers if they have been granted a long-term residence permit in the Czech Republic; or persons whose entitlement arises from directly applicable EU legislation or self-employed persons. In all these situations, foreigners must have their domicile in the Czech Republic in order to access these benefits.

However, the State Social Support Act stipulates that the child and parental allowances shall be provided even if claimants do not have permanent residence in the Czech Republic if they are dependent children of foreigners who have been issued for at least nine months the card of an internally transferred employee or a card of an internally transferred employee of another EU Member State and are transferred to a business corporation or branch plant based in the Czech Republic, provided that these dependent children and their jointly assessed persons have the domicile in the Czech Republic.

The child allowance is a universal scheme financed by general taxation, providing means-tested, income-related benefits to all residents whose children reside in the Czech Republic. All children who are residents are eligible for this allowance, the benefit is however exportable. The benefit may be paid until compulsory education is completed and entitlement for the child allowance is limited to families with an income under 2.7 times the family’s living minimum.

The parental allowance aims to assist parents who provide full-time and regular care for their children. This is a universal system financed by general taxation and provides a flat-rate benefit to persons who are subject to the Czech law or reside in the Czech Republic.Footnote 10 Parental benefits are granted until the child is 4 years old. EU and non-EU foreign residents can access these benefits under the same conditions as those applied for national residents. The benefits are exportable only to other EU Member States. Nationals residing in non-EU countries are thus excluded from accessing parental benefits from the Czech Republic.

Family benefits are administered by the Labour Office, its regional offices, and their contact points.

7.2.5 Guaranteed Minimum Resources

Guaranteed minimum resources are provided within the social assistance system regulated by Act No. 111/2006 Coll., on aid in material need and Act No. 110/2006 Coll., on minimum subsistence. The living allowance and the supplement for housingFootnote 11 are granted to: residents who are registered for or have the permanent residence in the Czech Republic; residents granted asylum or supplementary protection; foreigners without a permanent residence in the Czech Republic, but whose rights are guaranteed by an international treaty; EU nationals with more than three months of residence (and their family members) if they do not qualify for social benefits (excluding unemployment benefits) from the directly applicable EU legislation in the Czech Republic; foreigners who were previously issued a long-term residence permit in another EU country and later moved to the Czech Republic and their family members, if they have been granted a long-term residence permit in the Czech Republic and they reside in the territory of the Czech Republic.

Act No. 111/2006 Coll. provides also for a legal definition of residence/domicile as follows: “A person is domiciled in the Czech Republic, especially if he or she is long-term resident, performs a gainful activity there, lives here with his or her family, fulfills compulsory school attendance or is constantly preparing for future profession, or there are other important reasons, activities, the interconnection of which shows the connection of this person with the Czech Republic”. Due to this link between the guaranteed minimum resources and residence/domicile in the Czech Republic, the benefit is not exportable and national citizens residing abroad are not eligible to claim it under the Czech law.

Social assistance is organised centrally, but benefits are paid by the regional Labour Offices and their contact points. The benefit is means-tested and the willingness to work is the basic condition for being considered in material need. Unless they are in employment or a similar relationship, social assistance recipients must register with the Labour Office as jobseekers, actively search for a job, accept any employment (even short-term or less paid), and participate in active employment policy programmes, public works, public service, etc. Certain persons are excluded from work activities due to age, health status or family situation. Moreover, social work with individuals or families precedes the granting of benefits and social investigations and home visits are an integral part of the evaluation. The guaranteed minimum resources can be granted for an unlimited duration, until the end of need.

Another important aspect regarding the link between migration and access to social benefits in the Czech Republic is related to the bilateral social security agreements signed with third countries. There are 19 such agreements currently in place and all of them are proportional (they offer access to social benefits to foreigners residing in the country and Czech citizens residing in the contracting state). However, not all bilateral agreements cover all the social security areas discussed here. A wide material scope is covered by the agreements with Montenegro, Israel, Macedonia, Russia, Serbia, Tunisia and Ukraine. These agreements cover maternity, sickness benefits, pensions, accident benefits, family benefits and birth grants. However, other agreements cover only pensions, such as the ones signed with the United States, Québec, Moldova, Korea, Canada, Japan, India, Chile or Australia. As explained above, the three most important non-EU countries of origin of foreigners residing in the Czech Republic are Ukraine, Vietnam and Russia. With Ukraine and Russia, there are bilateral agreements (No. 29/2003 Coll.int.agr. with Ukraine and No. 57/2014 Coll. int.agr. with Russia) and both of them have a wide material scope. There is no bilateral agreement with Vietnam. On the other hand, the United States, Canada and Australia are most important countries of destination for Czech nationals residing abroad. The Czech Republic has signed bilateral agreements with all three countries (No. 85/2008 Coll.int.agr. with the United States, No. 1/2003 Coll.int.agr. with Canada and No. 58/2011 Coll.int.agr. with Australia) and all three agreements cover only pensions.Footnote 12

7.3 Conclusions

Generally speaking, the Czech social security system is quite open to EU nationals, due to EU coordination rules. Third-country nationals have access to social security in the Czech Republic especially if they work in the country or have permanent residence. On the other hand, Czech nationals can usually quite easily export their benefits to other countries, especially to EU countries and to non-EU states with which the Czech Republic has bilateral agreements. In case there is no bilateral agreement with a non-EU country, migrant workers are not covered (like in case of Vietnam – see above).

Currently, there are no serious debates or policy proposals about changing the access of foreign residents or non-resident nationals to the Czech social security system. In the case of non-EU citizens, this might be due to the fact that the Czech Republic welcomes only few refugees. Compared to other countries, the non-EU population is not a sizeable one in the Czech Republic, and there are only few nationals of Ukraine, Vietnam and Russia. What is however quite alarming is the fact that there is no bilateral agreement with Vietnam, even if already second and third generations of migrants originating from Vietnam currently reside in the Czech Republic. Many of them however succeeded to obtain the Czech nationality. In general, there is quite some hostility against foreigners from non-EU countries, especially against people from Arabic countriesFootnote 13 (although this is not a large group in demographic terms); but this has not been translated so far into serious societal or political debates regarding their access to social benefits.