The Czech Republic belongs to European countries with ethnically homogenous population, the over− whelming majority being Czech nationals (94.2% of inhabitants, including individuals declaring a region− al Moravian or Sileasian nationality, in 2001). The last census in 2001 recorded 193.2 thousand ethnic Slovaks, 52.0 thousand Poles, 39.1 thousand Germans and only 11.7 thousand Roma people; however, experts estimate that currently more than 250 thousand Roma people live in the Czech Republic.
The 2001 census also examined population structure according to religion. Almost one third of the inhabitants of the Czech Republic were religious people (3.3 million, i.e. 32.2%). On the other hand more than 6 million people were without denomination, these made up three fifths of the population (59.0%). The remaining part (8.8%) did not answer the question on religion (in 1991 this number was 16.2%). During 1991−2001 the number of religious people declined by more than 1.2 million and the number of people without denomination increased by more than 1.9 million. Among religious people 83.4% were Roman Catholics, 3.6% belonged to Czech Evangelic Brethern, 3.0% to the Czechoslovak Hussites and the remaining 10.0% to other churches.
Fig. 6: Population with tertiary and secondary education with GCSE (as of March 1, 2001)
Velehrad near Uherské Hradiště is one of the most frequented Christian pilgrimage sites in the Czech Republic. (Photo: Dušan Gavenda) Velká synagoga
(Great synagogue) in Plzeň, the second largest in Europe. (Photo: Irena Smolová)
ECONOMY
In the Czech Republic the 1990s are connected with the transition from the centrally planned econo− my to the market one. The integrated synopsis of the economic reform was finished and approved in September 1990, i.e. already in the period of the federal state of the Czechs and Slovaks. The whole conception of the reformation strategy called for a complex approach, which included a succession of wide spectrum of measures focused on price deregulation, foreign trade liberalization, introduction of internal inner convertibility of the currency, and privatisation. The cornerstone of the economic reform was the price deregulation. For the first time after several decades the Czech firms had the opportunity to set the prices of their products by themselves. Most prices were deregulated since the beginning of 1991 and price regulation was preserved at that time only in monopolized branches. A decision con− cerning the internal convertibility of the Czech crown (CZK) was a very important step in the reform, which was very significant for the foreign trade liberalization. Before the internal convertibility of the crown was introduced a considerable devaluation had been carried out, which should have preserved the fixed exchange rate of the crown. By this conscious undervaluation of the crown made the reorien− tation of the country´s foreign trade (with the break up of COMECON) “from the East to the West” was easier for the wide range of products.
The territorial reorientation of the export had an immense effect on the structure of goods. Each indus− trial branch faced decline (the greatest decline was registered at the traditional export of machines and equipment). In 1991 import and export with planned economies dropped, compared to the previous year, to the half. This decline was only partly compensated by the increase of trade with countries with mar− ket economies. A number of firms, however, re−oriented their export very successfully. The reason for their export successes was firstly an advantageous exchange rate and lower labour costs in the Czech Republic than in developed countries. After basic macroeconomic stability had been achieved one of the main issues of the reform programme was represented by the private sector development, which was based on an extensive programme of privatisation of state firms and support of the medium and small− scale enterprises. The Czechoslovak privatisation process was based on the combination of restitution of assets and property to the previous owners and their heirs, of sale of the assets and property to the domestic and foreign investors, and of the “handing out” state assets and property to the population via investment coupons. The process of privatisation (except for restitutions) was divided into two parts: a “small−scale” privatisation, i.e. privatisation of small−scale enterprises mainly belonging to the service sector, and a “large−scale” privatisation concerning former state firms (particularly industrial, to a far less− er extent construction, trade, and agricultural firms).
From the point of view of the quality of the owners the means of direct sales of the smaller firms and plants was unproblematic. This method faced difficulties when applied to large firms since new owners paid off their share purchase debts from the income of a firm, and sometimes they even put it into the accounts of the privatised firm. Moreover, not having their own resources they abandoned further devel− opment and the much expected boom of these firms did not occur. The law regulation large−scale pri− vatisation approved a spectrum of privatisation methods, including direct sale, public tenders, sale via capital markets, or free transfer of property to the towns and villages. Privatisation via investment coupons became the most important form of the privatisation of industrial enterprises. It was organized in two waves (the first was finished in January 1993 and the second one in December 1994). A total of 785 industrial enterprises offered shares of their assets in the Czech Republic. In the first privatisation wave there were mainly firms in industrial branches that were characterised by the competitive markets (such as the manufacture of machinery and the production of metal or food products as well as textiles
or building materials), while the second wave put more stress on the privatisation of the monopolized industrial branches (energetics, metallurgy or chemical production).
Having finished the coupon privatisation by the end of 1994 the Czech Republic reached in compar− ison with other post−communist countries the highest proportion of the private ownership. Quick privati− sation was quick only in the sense that state was replaced in the owner role by new private owners, who were the millions of “coupon” shareholders and newly founded investment privatisation funds, that had nor abilities nor ambitions to manage and restructure firms. The most coupon shareholders sold their shares and the control blocks of shares were gained mainly by investment funds, which (although most of them were controlled by respected institutions, mainly existing banks) did not manage their property rights effectively. No one in the economy did enforce authentic restructuring of the firms in practice. Funds were focused on financial transactions (sometimes not favourable to their shareholders), they were content only with a vague firm strategy and did not ask for the dividend proceeds from their invest− ments. A large group of investment funds sold the shares of industrial firms later and in a not small num− ber of cases abused imperfect laws for the “tunnelling” of firms. A part of privatisation funds even left the capital market, whilst fund shareholders were often harmed in this process. These facts were the great− est weaknesses of the “Czech way” of privatisation.
Today, in hindsight, we can claim, that foreign strategic investors were not sufficiently involved in the privatisation of the Czech economy, especially when we consider that at the beginning there was no pri− vate sector participation in the creation of domestic product in the Czech Republic. This is evident in comparison with Hungary that had both a high initial proportion of “real” owners and relatively high level of investments of foreign investors in their firms.
The Czech economy was afflicted by the economic recession starting in the second half of 1997 and lasting till the end of 1999. It resulted from accumulated and insufficiently solved problems. The means of privatisation, insufficient corporate capital resources and low managerial skills led to slow restructur− ing, particularly of large crucial industrial companies. The situation was worsened by frequent legislative changes and insufficient law enforcement (passivity during bankruptcy and support to the unprofitable companies). An important role was played also by slow privatization of large commercial banks and by weakened world markets, particularly in the EU. Economic development in the Czech Republic shows that strict macroeconomic policy does not lead to required results unless it is supported by structural reforms, privatisation and modernisation in the business sector and in banking, which would lead to high− er efficiency of productive resource utilization and to higher economic productivity.
The town of Ústí nad Labem in northern Bohemia grew predominantly thanks to industrial production development. (Photo: Daniel Neuwirth)