Czech Supreme Audit Office reveals that billions of crowns in social inclusion spending have yielded just limited results, Labor and Social Affairs Ministry rejects the criticism
The impacts of projects to improve the situations of people from socially excluded localities in the Czech Republic have been just limited and short-term. The supported projects have usually had merely a weak influence on the overall state of affairs in the municipalities where such localities exist.
Those are the findings of the Czech Supreme Audit Office (NKÚ), which has issued a press release on the conclusions of audits focused on money from the Czech budget and the EU intended to support social inclusion. The Labor and Social Affairs Ministry (MPSV) said it considers the criticism unjustified.
According to the ministry, its projects for disadvantaged people have significantly contributed to the prevention of social exclusion. “The people living in socially excluded localities struggle with longterm unemployment, material deprivation and homelessness, collections proceedings, indebtedness and low levels of education. To solve these problems and increase the labor market prospects of such persons, the Labor and Social Affairs Ministry expended CZK 2.8 billion [EUR 112 million] from Operational Programme Employment. From 2016 to 2023, more than 23,000 participants were supported in 418 projects,” the NKÚ press release states.
The NKÚ found that just 24 % of participants in those projects managed to enter the labor market in a more permanent fashion. The average cost to support one participant through such a project was CZK 110,208 [EUR 4,000].
The audited years were 2020-2022, as well as the preceding and following periods in cases of factual overlap. According to the NKÚ, the Labor Ministry stressed the drawing down of such money above all else in its management.
According to the auditors, the ministry defined the purpose of this spending very generally and did not make sure the program just supported projects with clear, measurable targets. The NKÚ also said it has been highlighting the flaws of OP Employment repeatedly over the years.
The Labor Ministry, according to the auditors, has not systematically tracked whether its support has eliminated some of the basic causes of social exclusion, such as homelessness, material deprivation, indebtedness or collections proceedings. “The ministry did not even track whether its support contributed to persons with low qualifications applying themselves on the labor market. That is one of the groups most at risk of social exclusion,” the NKÚ reported.
MPSV rejects criticism, defends its projects
The Labor Ministry has responded that it disagrees with the conclusions drawn by the NKÚ on the expenditure of Czech state and EU money on social inclusion. According to the MPSV, its projects targeted not just employment, but also support for social services or for ameliorating debt.
“The projects, therefore, contributed to preventing social exclusion in a significant way,” the ministry claimed. It also rejected the idea that it stressed the drawing down of the money as the objective.
“The projects are regularly assessed from an effectiveness standpoint, the purpose of the subsidy is clearly defined and upheld,” the ministry said. The NKÚ, however, says that what is essential for social inclusion are what are termed “coordinated approach projects” for socially excluded localities.
A total of CZK 1.8 billion [EUR 72 million] was meant to be spent on coordinated approach projects. They ultimately aided just 18 % of their originally inactive or unemployed participants with finding jobs.
Such projects aided just 10 % of people age 54 and older with finding employment and include some that completely failed to assist participants with finding jobs, the NKÚ reported. As an example, it mentioned a project called “We’re not afraid to work” that cost CZK 2.5 million [EUR 100,000].
“The aim of that project was to place 110 persons on the legal job market, or at a minimum to increase their chances of succeeding there. However, according to the NKÚ, none of the 58 participants in the project were employed six months after their participation in the project ended,” said the press release.
The MPSV has objected that the point of the support for the coordinated approach projects in the socially excluded localities was not primarily employment. The ministry believes the purpose of the subsidy was also fulfilled by projects which did not result in their participants finding jobs.
“The support for the project targeted increasing competencies and therefore increasing the chances of a participant succeeding on the labor market. Whether a participant was hired was influenced per se by the low number of available relevant jobs at the time,” the ministry said.
The development of social enterprises remains far below expectations
Those coordinated approach projects were also meant to contribute to the development of social enterprises in places where there are socially excluded localities. The NKÚ audit has now shown that during the entire programming period, just two such social enterprises were created.
The contribution of such projects to the development of social enterprises was minimal, therefore. Most (68 %) of the resources provided for coordinated approach projects were used by the recipients for their own personnel costs, i.e., the wages of coordinators, instructors, advisors, social workers, etc.
Another 20 % of such expenditures covered “indirect costs”, i.e., the administration and overhead. Approximately just 3 % of those expenditures, therefore, were intended for direct support of the target group (e.g., through wage contributions).
Of the 104 municipalities total where such coordinated approach projects were realized, almost 56 % of them (58 municipalities) were still burdened by higher levels of social exclusion in the year 2023. Despite the partial contributions from the projects, the root causes of social exclusion were not eliminated in those municipalities.
That had a direct impact on state expenditures. Between 2016-2023, the MPSV spent CZK 14.2 billion [EUR 600 million] on housing and subsistence benefits disbursed to residents of those 58 municipalities.
The NKÚ reported that the financing method for the Agency for Social Inclusion (ASZ), which is part of the Ministry for Regional Development (MMR), contributed to these lower outcomes. According to the auditors, the financing method privileges work on short-term solutions which are not systemic and does not make it possible to flexibly respond to current needs in the localities at issue.
Auditors said another cause of these lower outcomes is usually the low qualifications and the weak motivation of some living in the excluded localities, along with legislation that has not been fit for purpose for some time. “The MPSV and the other ministries responded to that by drafting amendments or bills for new laws. The NKÚ believes it will be important to see how these new legislative tools are applied in practice,” the NKÚ said.
MMR: Taking up the social inclusion agenda was demanding, but we succeeded
The MMR identifies with the NKÚ findings stressing the need to guarantee the activity of the ASZ through financing that is systemic. That ministry took up the agenda of social inclusion from the Office of the Government of the Czech Republic on 1 January 2020 and is realizing a project together with that office called “Arranging for social inclusion systemically”, supported by OP Employment.
The project was realized from 2016–22 at a total cost of almost CZK 278 million [EUR 11 million]. Most of it was realized when the ASZ was still part of the Office of the Government.
“The transfer of such an extensive project in the middle of its realization from one institution to another is demanding, generally. As of 2020, the MMR has expended every effort to stabilize the project as well as its realization team,” the MMR said in response to the conclusions of the NKÚ.
According to its press release, the MMR showed that the project had fulfilled its indicators, purpose and target during the NKÚ audit. “Overall, almost 93 % of the projected outcomes were fulfilled, and the lower level of project budget expenditure corresponds to that. The implementation of the project was made more difficult, or in some cases impossible, by the Government measures introduced as a result of the COVID-19 epidemic,” the MMR said.
