Czech upper house passes pension, sick pay reforms

PRAGUE, July 17 (Reuters) - The Czech Senate approved pension and state health insurance bills on Thursday, major parts of the government’s efforts to overhaul public services under pressure from a rapidly ageing population.

Although widely expected, the approvals are a victory for the fragile centre-right coalition, which holds just half of the 200 seats in the lower house and has had to rely on backbenchers to push through laws.

The pension bill is a first step by the three-party cabinet’s reform plans. It will gradually raise the age of retirement, extend the minimum working period required to draw a pension and introduce tougher conditions for retiring early.

The health insurance bill is aimed at cutting one of Europe’s highest workplace absentee rates by abolishing state-paid sick pay for the first three days of a worker’s illness.

Closely resembling a law struck down by the high court as unconstitutional this year, it will also shift some of the sick pay burden to employers instead of being paid only by the state.

It is a companion bill to health reforms introduced earlier this year in which patients must pay small fees to visit doctors or for prescriptions -- measures met with hostility by many Czechs brought up with free healthcare under communist rule.

The government’s thin majority has been exacerbated by attacks from the opposition, legal challenges and in-party squabbling that has hurt efforts to reach deeper reforms, which analysts say are needed to help reign in long-term spending in the country of 10.4 million people.

The Senate, controlled by the ruling Civic Democrats, voted 43 to 10 to pass the pension bill and 45 to 17 for the sick pay bill, a senate official said. They now only await the president’s signature.

The pension bill will raise the age of retirement to 65 years for men and women -- or earlier for women with more than one child -- by 2030, from around 62 and 59 now. It will also extend the minimum required working period to 35 years, from 25.

The government plans to take further steps in pension change before its term ends in 2010, including setting up new pension funds and partially phasing out the “pay-as-you-go” system in which workers’ contributions are paid directly to current pensioners. (Reporting by Jason Hovet; Editing by Janet Lawrence)