E61 - Policy Objectives; Policy Designs and Consistency; Policy CoordinationReturn

In the post-covid world, governments explore options to enhance their policies so that corporations can act as successful motors of recovery and sustainable growth. Countries select various objectives related to global value chains (GVC), such as participation, value capture, inclusiveness and resilience, yet might be unaware of the position of corporations they are supposed to motivate. In this paper, we aim to (re-)investigate the position of Visegrad Four (V4) suppliers within the regional automotive value chains and to compare results with suppliers in other EU member states using the trade in value added (TiVA) statistics. We set two research questions: How does the position of V4 in automotive GVCs differ from the positions of other EU member states and significant other automotive-producing countries? What is the link between the domestic value added in gross exports of final automotive products and the selected policy variables? A multiple linear regression model is run with TiVA in the automotive industry as the dependent variable and independent variables embodying proxies of GVC-oriented policy consequences. The analysis identifies significant differences in value-added levels between V4 countries and other EU countries, and other large automotive-producing economies. Labour costs, productivity, investment in R&D and innovation support are among the factors where V4 countries fall behind.
Implications for Central European audience: The results of our research might be helpful for respective authorities and governments in V4 and other Central and Eastern European countries. They can be of use when setting goals and implementing policies targeted at promoting innovation, upgrading within existing GVCs and in cooperation between universities and research centres on the one hand and the automotive industry on the other.

This paper aims at describing the issue of undeclared work in the Czech Republic and to explain the burdens it represents for the national economy. It also describes what measures can be undertaken in order to tackle undeclared work and uses some real-life examples to illustrate their outcomes. Undeclared work and the so-called "švarc systém" (the employer-employee relations with a person exercising the employer's normal activities not being an employee in legal terms but acting as an independent entrepreneur) are among the biggest issues on the Czech labor market nowadays. According to some estimations, the Czech state loses about five billion CZK annually in the form of uncollected taxes, unpaid revenues and health and social insurance payments. New changes to the Czech labor legislation that came into force in 2012 were envisaged to tackle undeclared work, reduce tax evasions, fight shadow practices on the labor market, and to prevent social deprivation and other threats for the society by shifting the competences to conduct random checks, and controls of firms and businesses were transferred to the State Labor Inspection Offices (SLIO). The changes in the legislation facilitated the identification of the undeclared work and penalizing of its bearers, which minimized the losses from the illegal employment.

The situation of Poland's public finances has been improving. Helped by solid economic growth in 2011, Poland has reduced its budget deficit in line with the Commission's recommendations. However, contrary to earlier forecasts, in 2012 it was still well above the ceiling of 3% of GDP. As a result, the excessive deficit procedure was extended by two years, by 2014. The deficit should be further reduced to reach, in 2015, the level of 1% of GDP in terms of structural deficit. The slowdown of the economy in 2012 and probably in 2013 will not make this task easy. Public debt has risen steadily over the past few years but in recent times, the level has still been well below the 60% of GDP ceiling. The national reform program and the convergence program were adopted by Poland's Council of Ministers on 25 April 2012. The convergence program outlined in an integrated manner the fiscal consolidation efforts, the key structural reforms and the reforms that underpin macroeconomic stabilization. In the medium- to long-term, Poland is faced with a number of challenges. A very low labor force participation rate, in particular of women, and the poor quality of vocational training and education are major concerns given an ageing population. The low level of public and private R&D spending, weak links between science and industry and poor innovation performance call for improvements. Apart from the program of national reforms, crucial for future sustained economic growth and good performance of public finances, an additional factor stimulating activities towards fiscal improvement should be Poland's participation in strengthened economic governance architecture recently introduced in the EU. Euro adoption remains an important goal of the Polish government. The uncertain situation in the euro zone has, however, postponed adoption of a clear timetable of joining the euro zone. The government decided that an additional condition to join the euro zone, apart from meeting the nominal convergence criteria (and legal conditions not discussed here), is stabilization of the euro area situation.