Slovakia: Latest developments in working life Q1 2019

The introduction of a recreation allowance for workers, positive wage growth and an increase to the material needs benefit are the main topics of interest in this article. This country update reports on the latest developments in working life in Slovakia in the first quarter of 2019.

Changes in Labour Code good news for employees

Two amendments to the Labour Code came into effect on 1 January 2019. The first change affects the social policy of employers by introducing a new employee benefit: the recreation allowance. All employers with 50 employees or more must provide a recreation allowance in the form of a contribution to the expenses of employees having more than 24 months of service. If the employer has less than 50 employees, it can provide the benefit on a voluntary basis. The benefit should cover 55% of the eligible expenditures of the respective recreation and should be at least €275 per year. Employee recreation allowance can be provided for activities in Slovakia only as a way to support domestic tourism.

The Confederation of Trade Unions of the Slovak Republic (KOZ SR) supported the introduction of this benefit, although it felt the allowance should be available to all employees, regardless of the size of the company. Employer organisations supported the benefit in principle, but had reservations because it implies increased expenses and a greater administrative burden for companies.

The second amendment to the Labour Code concerns the general provisions regarding the disclosure of wage levels by employees. According to the amendment, employers must not restrict employees from discussing their working conditions, including wages. [1]

The implementation of this measure was initiated by the civic association Pracujúca chudoba (Working Poor People). KOZ SR supported this change because it limits the actions of unions in relation to demanding higher wages and reinforces the barriers against social dumping. [2]

Employer organisations did not support implementation of this amendment.

Wage growth rising steadily since changeover to euro

According to the Slovak Statistical Office, wages in Slovakia exceeded €1,000 gross per month in 2018, with the average monthly wage reaching €1,013. The nominal wage increased by 6.2% and the real wage increased by 3.6%. The fact that the minimum wage was raised from €435 to €480 also contributed to this increase. [3]

As well as involving increased income for employees, the higher average wage has also had a positive impact on the pension of working pensioners.

In the 10 years since Slovakia adopted the euro on 1 January 2009, the average gross monthly wage has increased by almost 36%. The minimum wage has increased by more than 60% in the same period. In 2018, the highest wages were in the financial and insurance sector (€1,857), and the information and communication sector (€1,849). The highest increases were in the art, entertainment and recreation sector (9.5%), and the mining and quarrying sector (9.3%). These sectors were followed by public administration, defence and compulsory social security (7.9%); wholesale and retail trade (7.7%); information and communication (7.6%); health and social activities (7.2%); and manufacturing (7%).

Wages in the education sector only increased by 4.7%. The lowest average wages were in the accommodation and food service sector (€595) – 3.5% increase in 2018. The smallest increases were in the administrative and support service sector (1.5%), and the real estate sector (2.9%).

Increase in material needs benefit

A measure to increase the material needs benefit has been under preparation for some time. The original proposal was discussed at a meeting of the tripartite Economic and Social Council in November 2017. KOZ SR criticised the low level of the existing benefit, which was defined in 2013 and which was below the minimum subsistence level. The confederation also criticised the gap between the minimum wage and the material needs benefit, which has been increasing over the years.

As the state budget was insufficient to accommodate an increase in the material needs benefit, the government decided instead to increase the minimum wage as a means of reducing the risk of poverty, while also looking into ways of encouraging people living below subsistence level to get into employment.

An amendment to the act on the assistance in material need was introduced from 1 April 2019. This amendment has increased the level of the basic material need benefit by 5% for each category of beneficiaries and has also increased some of the other components of the material need benefit by 5% (e.g. the protection allowance, the activation allowance and the allowance for a dependent child).

To better motivate people in material need to work, the activation allowance is divided into two levels. A higher allowance is provided to people earning at least the monthly minimum wage.

Commentary

The wage increase is a direct result of the good performance of the economy after the 2008 economic crisis and particularly in the last four years. Considering the positive trends in the economy, discussions on increasing the minimum wage again in 2020 have already started. According to the Minister of Labour, Social Affairs and Family, the minimum wage could be increased to €600 in 2020, while KOZ SR is pushing for €635.

In response to the 2019 European Semester country report on Slovakia, the Ministry of Finance issued the National Programme of Reforms 2019 on 29 March 2019. The social partners and other actors were invited to provide their feedback in the period 1 to 12 April 2019.


Footnotes

  1. ^ Glob.sk (2018), Náhubkový zákon končí. Od nového roka môžete slobodne hovoriť o svojej mzde , 17 December.
  2. ^ KOS SR (2018), Z rokovania Hospodárskej a sociálnej rady SR , 8 October.
  3. ^ Slovak Statistical Office (2019), STATdat: Priemerná mesačná mzda podla odvetví , 7 March.

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