The middle class in the Czech Republic is increasingly struggling financially, despite the country maintaining low unemployment and rising wages. This paradox was highlighted by the latest Social Exclusion Index, an analysis conducted by the Agency for Social Inclusion. According to Lucie Trlifajová, an expert at the agency, the systems designed to protect the most vulnerable citizens are failing, leading to greater economic pressure on middle-income households.

The Social Exclusion Index, which has been compiled since 2016, examines indicators such as reliance on living allowances and housing benefits, foreclosure rates, long-term unemployment, and educational outcomes. The findings reveal that financial hardship is intensifying even in areas typically associated with economic stability.

Trlifajová pointed out that the decline in middle-class stability is not linked to rising unemployment, as might be expected, but to a significant fall in real wages. The Czech Republic, while boasting the lowest unemployment rate in the European Union, has experienced one of the steepest declines in real wages. This has contributed to an uptick in the number of people receiving housing benefits, with the most pronounced increases occurring in areas around Prague and other major cities.

Debt is another area of growing concern. According to Barbora Halířová, a debt expert at the agency, foreclosure rates have surged in the Central Bohemian Region. Halířová noted that counseling centers are now seeing more individuals from the lower middle class, including those with higher education, seeking financial guidance—an indicator of the broader economic strain affecting previously stable households.

High inflation, soaring energy costs, and changes to social support rules have further exacerbated the situation. Adjustments to housing benefit eligibility criteria and increased income thresholds have expanded the pool of beneficiaries. However, while the number of recipients of housing and child benefits has grown, there has been no corresponding rise in the number of people receiving benefits for material distress, suggesting that the most disadvantaged are not being adequately supported.

The minimum subsistence level, a key benchmark for determining eligibility for various social benefits, currently stands at CZK 4,860 per individual. This amount was last increased in January 2023 by 5.2%, but inflation has significantly eroded its real value. Trlifajová argued that the minimum subsistence level should have been CZK 7,082 last year to keep pace with inflation. She emphasized that the erosion of this benchmark undermines its ability to provide basic survival support and compromises the effectiveness of social safety nets.

The Social Exclusion Index also highlights a growing disparity among municipalities. In 2023, 241 municipalities were classified with the highest levels of social exclusion, compared to 191 the previous year. Simultaneously, the number of municipalities with minimal exclusion has declined, further reflecting the widening economic divide.

Trlifajová stressed that the middle class’s growing vulnerability signals deeper systemic issues. “If the middle class is struggling, the situation for the poorest must be deteriorating as well,” she said. Without significant policy interventions, the Czech Republic risks exacerbating social inequalities and increasing economic instability, with consequences that will ripple across all levels of society.

Source: CTK

Prague city councillors have approved the first draft of the 2025 budget, proposing revenues of CZK 110.92 billion and expenditures of CZK 113.49 billion. The difference, amounting to CZK 2.6 billion, will be bridged using funds saved for projects like Metro D, which the city has been earmarking for years. The budget now moves to committees for review, with final approval expected at the council’s last meeting of the year on December 12.

The proposed budget allocates CZK 22.29 billion for investments, a record-breaking figure, supplemented by CZK 14 billion from unspent funds from the previous year. However, opposition parties ANO and Prague Sobě have criticized the draft, citing a lack of new projects and insufficient time for city districts to review it.

City Councillor for Finance Zdeněk Kovářík defended the schedule and budget priorities, highlighting that transport remains the largest expenditure, with CZK 30.28 billion allocated, including CZK 15.22 billion specifically for transport investments. Key projects include the construction of Metro D (CZK 6.1 billion), the Libeň Bridge reconstruction, the Smíchov transport terminal, and new tram lines on Wenceslas Square.

Education is the second-largest spending category, with CZK 28.4 billion allocated, followed by health and social services (CZK 6 billion). Significant cultural investments include CZK 1 billion for the ongoing reconstruction of the Industrial Palace and CZK 830 million for repairs to the Vinohrady Theatre.

Opposition leaders have expressed concerns over the lack of visionary projects and new initiatives. Ondřej Prokop, chairman of Prague ANO, criticized the limited scope of investments, claiming the budget overlooks ambitious plans such as the redevelopment of Prague’s main railway station and the completion of the city ring road.

Adam Scheinherrov, leader of Prague Sobě, accused the coalition of focusing solely on inherited projects from previous administrations, such as the Dvorecký Bridge and Wenceslas Square renovations, while shelving plans for future developments. “The coalition has failed to initiate critical projects like the second stage of Metro D or the reconstruction of key city squares,” he stated.

The inclusion of CZK 355 million for an ice bear pavilion at the Prague Zoo drew particular ire. Scheinherr labeled it a misstep, arguing that essential infrastructure projects and affordable housing initiatives are more pressing needs.

With record investments on the table, the proposed budget reflects Prague’s commitment to infrastructure and public services but leaves room for debate on its long-term vision. The final approval will not only determine citywide finances but also enable individual districts to finalize their own budgets, ensuring alignment with Prague’s broader objectives.

As the December 12 deadline approaches, the balance between fiscal responsibility, strategic investments, and meeting public expectations will remain a focal point of discussions.

Source: CTK