The reduction of the extraordinary increase in pensions from last year, which was approved last spring and pushed through the parliament by the government of Petr Fiala, is not unconstitutional. That’s what the Constitutional Court decided, and the ANO movement, according to which it was “a theft in broad daylight”, lost the legal dispute with Fialo’s cabinet. What facts decided the widely watched and passionate fight?
Unconstitutionality not found
Basically, the dispute was about a simple question. Did the government violate the constitution when, contrary to previous practice, it suspended the growth of pensions and explained it by the deteriorated economic situation of the Czech Republic? According to domestic law, every government cabinet must increase pensions exceptionally whenever inflation exceeds five percent for five consecutive months. It is a tool to ensure the same standard of living for retired people, even if everything around them is getting significantly more expensive.
At the beginning of last year, however, the government of Petr Fiala found out that the aforementioned extraordinary valorization would cost the budget much more, according to the rules then in force, than it had always been until now and than the cabinet had anticipated. Pensions would have to be increased by an average of 1,770 crowns for each pensioner instead of the expected 700-1,000 crowns. So, in an attempt not to increase the already high budget deficit, the ministers sent an amendment to the law to the lower house, which later allowed for a reduction in the one-time increase in pensions. On average, the pension for seniors was 760 crowns higher.
The ANO movement challenged the constitutionality of this amendment at the Constitutional Court shortly after its approval, in May of last year. ANO MPs had three arguments. First, according to them, the government majority abused the state of legislative emergency as an instrument to enforce laws more quickly in parliament. Secondly, they complained that in the state of legislative emergency, the speaking times of politicians are limited and the deadlines for discussions are shorter than normal, which, according to ANO, the government purposefully limited their right to thoroughly comment on the proposed change. Thirdly, by adjusting pensions, Fial’s cabinet interfered at the last minute with the legitimate expectations of Czech senior citizens, who were counting on a higher pension increase from January 2023. The original rules for calculating the amount of valorization were thus impermissibly modified by the government retroactively, which the opposition perceives as an unconstitutional step. However, the majority of the Constitutional Court (twelve judges out of fifteen) did not agree with the opposition.
Let’s start with how the Constitutional Court approached the assessment of the state of legislative emergency. The Minister of Finance Zbyněk Stanjura and his colleague from social affairs Marian Jurečka argued during oral proceedings before the Constitutional Court that the government had no other option. At that time, the ministers first offered the opposition a more standard way of rapid legislative change, the so-called discussion in just one, i.e. the first reading. The ANO movement and the SPD rejected this option. Only then did the government proceed to declare a state of legislative emergency. The fulfillment of the conditions for its announcement was considered borderline from the beginning, because the government claimed that otherwise the Czech Republic would be at risk of “significant economic damage”, as the law refers to it. However, whether the threat of future fluctuations in public finances fulfills this condition was not clear before the court’s decision.
In the opinion of the constitutional judges, practical arguments prevailed in the end: increased inflation was already expected in the fall of 2022, however, no one could make a qualified estimate of the actual increase until the beginning of February of the following year, when Fial’s government began to act (in December 2022, inflation was 3.1 percent, in January 2023 already 11.5 percent, which none of the economic institutions estimated). This was also confirmed by economic experts, whose opinions were requested by the judges.
