Employment, Entrepreneurship, and the “Švarc-system” from the Social Development Point of View

Abstract

Economic activity based on producing goods and services is essential for the development of any society. Individuals can carry out this economic activity in dependent activities (employment) or entrepreneurship (self-employment). A third way is the so-called „Švarc-system,” which is not legal in the Czech Republic. It is a situation where persons performing normal activities for the entrepreneur in a dependent relationship are not his employees but formally act as self-employment. There are currently discussions about the legalization of the system among politicians and experts. This article introduces how labor and tax law regulations influence attitudes toward economic activity and development. The research methods to achieve this aim include description, critical analysis, and synthesis. The findings described in this article are that the Švarc-system based on self-employment allows greater freedom for employers and employees and smaller payments to public budgets than forms of dependent activities. A high level of autonomy increases development in various areas and helps social development. The implication falls into practical rather than theoretical fields. Therefore, regulation in this area should be lowered to support further development. This article’s originality is that it reflects on the academic impacts of the legalization of the system from legal and economic points of view. These conclusions should help reflect on the regulation of legislation in this field.