The Czech situation
During the 1920s and 1930s, the Czech Republic stood at the cutting edge of global manufacturing and technology. We are confident that it can regain this position.
After 1989, our economy underwent a first transformation, thanks to which it was able to join the ranks of developed countries and become an integral part of the contemporary developed world. That 1990s transformation, which drew on the country’s advantageous geographical position, cheap yet highly qualified workforce, and sufficient – at that time – infrastructure, has now run its course.
Key pillars of the second
economic transformation
Czech Value Added
Up till now, the Czech economy has more or less stood on one leg, which is its subcontracting sector, with low-cost labour. It’s time it had another leg to stand on. We want the Czech economy to have its grounding in companies that, regardless of their ownership, not only manufacture but also develop and sell within the Czech Republic. We want these companies to send their products and services out into the world under their own brands and with high value added. We want our economy to be built on technologically advanced companies that manage their capital flows within the Czech Republic and also reinvest at home.
Open Society
We want the Czech Republic to be a free, modern and secure country that is an integral part of Europe. A country where entrepreneurism and creativity are the foundations on which the nation’s permanent wealth is built. A country that is open and attractive to people who share our values and want to come to study, work or do business here, bringing with them valuable skills and experience. The public sector must of course also undergo a transformation, so that the state provides effective and transparent support to its citizens and companies on their journey to prosperity.
Sustainability
We want our society and economy to be built on sustainable foundations, not on cheap labour or on work that damages the environment. We are convinced that a well-negotiated “Green Deal” is not a threat but an opportunity and impulse to change and to modernize our country. A societal contract, i.e. a set of shared and respected rules and values, will serve as a starting point for better national cohesion and resilience. Education and good leadership are crucial for the development of such a contract. An education system that prepares people for new and emerging world challenges must therefore be a top priority for our society.
Stairway to growth and wealth
Second Economic Transformation builds its efforts to achieve particular changes and measures on six foundational pillars. In certain areas, we set up working groups; in others we support organizations that are already engaged long-term in working towards the necessary measures.
Talent matters to us. We need to connect skills and know-how across sectors; from engineers to managers and experts with in-depth knowledge of customer industries. Improving the quality of education in the Czech Republic is critical to firms’ future success. But this will take years, and so we also need intelligent migration, which will enable us to bring talented people in from abroad. We are working with the relevant public authorities to improve the process of recruiting foreign students into the Czech Republic.
- working group: Foreign students, Martin Wichterle
To build a knowledge-based economy we need sources of innovation, which can come via start-ups or from the academic sector. Start-ups need an environment that attracts entrepreneurial talent and risk capital – for example, with the possibility of employee shares as already tested in other “start-up states”. We also need universities and businesses to learn to work together, and we need to increase businesses’ motivation to engage in research and innovation. This is why we are working to identify and overcome barriers that will truly help to kick-start collaborations between Czech researchers, businesses and new entrepreneurial initiatives.
- working group: Research and innovation, Alexandra Kala
An efficient public sector is essential for managing today’s problems. The public sector must be run competently and with minimal bureaucracy. Throughout the public sector, politicians and civil servants currently face ineffective processes and systems that prevent them from working efficiently. That is why we support changes to the management of public institutions, eliminating unnecessary procedural obstacles and modernizing care for the state’s employees. We are also helping to identify barriers to the transformation of the Czech economy, for example where permissions procedures and motions to local government are concerned, and in relation to green transformation.
- working group: Green transformation, Martin Vohánka
- working group: Functional public sector, Honza Školník, Libor Winkler, Diana Rádl Rogerová
To develop new businesses and transition smoothly to an economy with higher value added, we need risk and growth capital. There is sufficient growth capital in the Czech Republic at present – what is missing is the risk capital. Investors in green technologies, whose long-term returns are uncertain, have difficulty obtaining funding for their investments in the Czech Republic. The weak capital market and stock exchange make it difficult for Czech companies to obtain capital. As part of the 2ET initiative, we are pursuing ways to improve access to capital for Czech companies, from activating resources held in pension funds to creating a unified European capital market.
- working group: Capital availability, Tomáš Salomon
The Czech brand – or the Czech Republic’s reputation abroad – is important for attracting new investors and talent from elsewhere in the world, as well as for the ability to sell Czech products and services with higher margins. And a brand is not just a logo! It is a set of artifacts and methods for self-presentation both internally and externally. All the components of this set must be bound to a single concept that embodies the image we wish to present to the world. In our working group we have invested in methodical materials for building the “Czech brand” and are supporting a project run by relevant public bodies that seeks to achieve a unified presentation of the Czech Republic abroad.
- working group: Czech brand, Martin Wichterle
Visualization of the 2ET strategy
Business and community
- Increase municipalities’ participation in tax revenues from local business, providing motivation for active connections between local government and the private sector.
Sufficient capital
- Strengthen the capital market through reforms to pension investments.
- Implement a system of tax support for residents’ share investments in small and medium-sized publicly-traded firms.
Pro-export policy
- Strengthen support for exports via a reformed EGAP (Export Guarantee and Insurance Corporation), Czech Export Bank and other state infrastructure at a level equivalent to the most advanced European economies.
Intelligent immigration policy
- Speed up and simplify administrative procedures connected with immigration.
- Establish clear criteria reflecting the needs of the labour market and national security.
- Adopt a set of integration programmes to maximise the positive effects of labour migration.
Talent influx and retention
- Create scholarship programmes for talented foreign students in the Czech Republic and for Czech students at cutting-edge universities abroad, with a commitment to return to the Czech Republic.
Modernization of the state
- Establish a central authority for digitalization in the public sector, with sufficient competencies and capacity to put into place and facilitate the necessary administrative changes.
- Develop data-based governance with a long-term perspective and clearly-defined goals – a basic prerequisite for efficient state administration.
International collaboration
- Create effective public communication tools to raise citizens’ awareness of the importance and benefits of the Czech Republic’s membership in international institutions, especially the EU and NATO.
Labour and capital
- Adjust legal and tax frameworks for employee shares, encouraging employees to participate in companies’ capital yields, increasing motivation and building social cohesion.
Green Deal as an opportunity
- Negotiate specifications that reflect the Czech Republic’s conditions and capabilities.
- Create a competence centre responsible for the efficient execution of the Green Deal and coordination of government institutions, know-how sharing, and subsequently informing the business sector.
Grounding in Education
- Modernize primary and secondary education in line with the “Strategy for the Education Policy of the Czech Republic up to 2030”.
- Raise the quality and competitiveness of higher education through changes to its management and governance, including strengthening the powers and responsibilities assigned to Rectors and governing boards.
- Provide systemic support for requalification programmes within lifelong learning, enabling adaptation to fast-changing global conditions.
In 2023, the Second Economic Transformation association was formally established. Its members – ambassadors – take active roles in pushing for implementation of the initiative’s key priorities within the business sector.
The Executive Board is the collective body authorised to act on behalf of 2ET. It is comprised of five members, who are elected by the Assembly of Ambassadors for a 3-year term. The board members decide on key matters relating to the fulfilment of 2ET’s mission, formally represent the association, manage its assets, and decide on the admission and exclusion of its members.
The Second Economic Transformation initiative began in 2021 as a call from 32 figures in Czech business. They, along with others who support their call, are the initiative’s signatories.
We are not responsible for the opinions or actions of the companies, institutions or individuals associated with our initiative. We reserve the right not to include a given company, institution or individual among those supporting our initiative. Supporting companies, institutions or individuals are not permitted to use the Second Economic Transformation (2ET) brand in any context whatsoever besides written declaration that they support this initiative. The Second Economic Transformation (2ET) logo must not be used other than with the express consent of the Executive Board of Druhá ekonomická transformace z.s. (2ET).
Our call is open to further signatories from the business sector and to further ideas supporting the key principles of our second economic transformation.