Czech Government approves welfare revision, Platform for Social Housing criticizes it
The four housing-related benefits which currently exist in the Czech welfare system could be replaced in July 2025 by one new form of housing support. Instead of the housing contribution, the housing subsidy, the subsistence contribution and the per-child contribution, Labor Offices could start disbursing a new state social aid benefit. Applicants would use just a single form for processing. Applicants' assets and incomes would also be assessed more closely to establish their eligibility to get money from the state. The amount received could be increased through a bonus for work. The draft law on the state social aid benefit was approved by the Government last week. Ministries, the ombudsman, Regional Authorities, municipal associations, organizations assisting the needy, the Platform for Social Housing and unions all have reservations about the bill. The Platform for Social Housing warns that the proposed revision may lead to lowering benefits for some households, especially in Prague and in regional capitals. A total of 142 objections to the bill were submitted.
“All of the parties in the governing coalition are convinced that this is a step in the right direction, that this is the direction we have to head in, and we have to do so within this term in office. We will do all that we can to resolve minor discrepancies as much as possible and reach a quick agreement so as to meet all the deadlines and bring this fundamental transformation to welfare benefits to life,” Czech Prime Minister Petr Fiala (Civic Democratic Party – ODS) said at the post-cabinet meeting press conference. He described the proposed revision to the welfare system as revolutionary.
According to the Labor Ministry, the new support will be more targeted and will motivate people to work and to address their unfavorable situations, in addition to relieving the Labor Offices of work through the digitalization of the process and reducing the amount of administration. Labor Minister Marian Jurečka (Christian Democrats – KDU-ČSL) said that the reforms will be “adjusted” through debate in the Chamber of Deputies. “There are matters here which we have to keep discussing and to subsequently adjust during the second reading,” the minister said.
The new benefit is meant to be composed of four parts – money for children, for housing, for subsistence and a bonus for work or looking for work. The amount should be graduated by income and labor activity. The breaking point where people lose state aid if their incomes are just one crown over a certain limit is meant to be eliminated. Support should differ for households with incomes up to 1.43 times the living minimum and above it. A household would be able to own two real estate properties, two cars, or savings between CZK 200,000 [EUR 8,000] to CZK 400,000 [EUR 12,000], according to the number of people in the household, and still qualify for these benefits.
The subsistence part would be awarded just to households whose members have incomes below 1.43 times the living minimum. For vulnerable persons, i.e., invalids, minors, pensioners or people over 68, the subsistence part would supplement their incomes up to the living minimum. For other adults, the benefit would vary from supplementing their incomes to either the existential minimum or the living minimum, depending on the adult applicant’s efforts to improve his or her own situation.
Housing support should continue to be provided to people who pay more than 30 % of their income to live in an apartment or residential hotel. The amount would be based on normative costs and deposits on energy payments which would be annually established. Income would play a role in those calculations.
Per-child money would be accessed by families whose incomes are four times lower than the minimum instead of the current 3.4 times lower. The conditions for receiving this benefit would be adult household members holding a job or looking for one, and minors in the household attending compulsory schooling. A household with an income up to 1.43 times the minimum would receive CZK 500 [EUR 20] per minor, and those with incomes up to three times the minimum would receive CZK 1000 [EUR 40] per minor. That higher amount is meant to motivate people to earn money and work, according to the ministry. For those with incomes between three and four times the minimum, the support would gradually be reduced.
The new benefit would be increased overall by a work bonus. A household whose income is 1.6 times the minimum would also be given an amount equivalent to two-fifths of the incomes of its family members by the state. For higher incomes, the bonus would be reduced.
According to the calculations of the ministry, the reform would reduce current expenditures by CZK 2.46 billion [EUR 98 million] and increase revenue by CZK 7.37 billion [EUR 290 million]. The highest possible estimates predict a savings of CZK 8.69 billion [EUR 346 million] and a revenue increase of CZK 26.06 billion [EUR 1 billion]. The applications and digitalization should cost the state approximately CZK 130 million [EUR 5 million]. Jurečka previously said the aim of these changes is not to save money. He stated that the more people who start to work thanks to this revision and the work bonus, the more the state will see revenue from employer contributions and income tax.
Platform for Social Housing: After these revisions, some people’s benefits will decline by thousands of crowns
After the proposed revision to the welfare system, many people could lose part of the support that they currently receive from the state. Low-income households in Prague and in regional capitals, single parents of schoolchildren, and families with a parent on parental leave could lose several thousands of crowns in state support. That is the calculation of the Platform for Social Housing. The group has reservations about the new rules for receiving state aid and the setup. However, its representatives do say that the reform is headed in the right direction.
“This system will yield a new wave of welfare benefit restrictions and will decrease the value of those benefits for many recipients. That is absolutely inadequate given the current economic situation,” said Barbora Bírová, director of the Platform for Social Housing.
According to the Platform, if the reform is implemented, many households currently on welfare would lose several thousand crowns of that support. Representatives of organizations aiding the needy said the changes will affect low-income persons living in Prague and in regional capitals.
According to analyst Jan Klusáček, a four-member family who falls into the quarter of households with the lowest incomes who makes a total of CZK 50,000 [EUR 2000] per month and who pays at least CZK 20,000 [EUR 800] for rental housing would receive between CZK 3000 [EUR 120] and CZK 4000 [EUR 160] less from the state. Families with one parent on parental leave would fare similarly. For the single parents of schoolchildren, the loss could be more than CZK 4000 [EUR 160], the analyst said.
Representatives of organizations aiding the needy are criticizing the setup of the amounts for housing, the terms of the work bonus, and the rules for supporting people who have declared bankruptcy. They also have reservations about restricting welfare when minors fail to attend compulsory schooling. The representatives believe they will manage to adjust the new benefit scheme in the Chamber of Deputies.
Daniel Prokop, a member of the Czech Government’s National Economic Council (NERV), assesses the proposed revision as progressive. According to him, it would result in better-targeted benefits, higher motivation to work, and a simplification of the system. However, he believes the amounts for housing should be adjusted to correspond to local rents. The setup of aid to applicants paying off debt should also be changed, as should the list of vulnerable groups, Prokop said.
Ministries, the ombudsman, Regional Authorities, municipal associations and unions also have reservations about the bill. According to the Labor Ministry, their comments most frequently concerned benefits for bankrupted persons, assets testing, the setup for per-child support and the work bonus.
