Social services of general interest in the Czech Republic: Towards poorly regulated markets

With the accession of the new post-communist member states in 2004, the trend of privatization and liberalization of social services has become even more pervasive in the EU, in these new member states in particular. Considering the more binding character of the economic agenda (Stability and Growth Pact), when compared with the ‘social standards’, this preference was perceived as a necessity due to the productivity lag behind the EU. The question we are dealing with in this chapter is how the EU regulations concerning social services in general interest have influenced the performance of Czech employment services and what the consequences have been for legal and social (in)securities in the labour market. The chapter is structured as follows: first, we explain which aspects of the EU regulations and laws have been the most influential in the Czech Republic; next, we discuss the developments of employment services and agency employment; and then the social consequences in terms of labour market (in)securities are assessed. Lastly, we assess the Czech case in a broader European context. The attitude of the Czech Republic to the EU agendas before, during and after accession has been in favour of economic integration, while social aspects of integration have been somewhat neglected. The general trends in the Czech Republic are apparently towards the marketization of social services. In employment policy, massive outsourcing was made possible by the extensive use of ESF financed projects. Poor regulation implied market failures and inefficiency in the implementation of the measures. Another trend was the increasing role of private agencies in job mediation. Negative market externalities emerged in the form of widespread unregulated social dumping (agency work). The directive on services of general interest did not bring much factual change to these trends. The role of the EU seems to be somewhat hidden; nevertheless, the lack of a clear definition of social services in general interest and regulations on their role as well as the decisions of the ECJ concerning the Directive on Posted Workers contribute to the uncertainties and negative externalities emerging from the poorly regulated performance of the private actors in employment services, including agency work.