Wage and Non-Wage Labor Cost in the Czech Republic: The Impact of Fringe Benefits

Abstract

The paper discusses the development of non-wage benefits in the Czech economy during the transition from a planned to a market economy. It shows a slowly increasing importance of such instruments of attracting best employees as social insurance or subsidized goods and services. Following an initial discussion of the benefit system in the pre-transition Czechoslovak economy, the second section discusses the evolution of the national insurance scheme since the transition. The third section presents some econometric evidence regarding the current extent of non-mandatory fringe benefits provided by individual employers, as well as a discussion of why we believe such benefits are likely to become increasingly important in the coming years.