2002 Annual Review for Slovakia

This record reviews 2002's main developments in industrial relations in Slovakia.

Political developments

A general election was held on 20 and 21 September 2002, with the opposition Movement for Democratic Slovakia (Hnutie za demokratické Slovensko, HZDS) winning most seats. However, it was unable to form a workable coalition in parliament and the the Slovak Democratic and Christian Union (Slovenská Demokratická a Krestanská Únia, SDKÚ), led by the previous Prime Minister Mikuláš Dzurinda, had the opportunity to form a new coalition government. The new government is a coalition of three parties which had been in the previous government - SDKÚ, the Hungarian Coalition Party (Magyar Koalíció Pártja/Strana Madarskej Koalície, MKP/SMK) and the Christian-Democratic Movement (Krestansko Demokratické Hnutie, KDH) - plus the New Civic Alliance (Aliancia Nového Obcana, ANO). The principal difference is that two parties in the former government - the Democratic Left Party (Strana Demokratickej Lavice, SDL) and the Party of Civil Understanding (Strana Obcianskeho Porozumenia, SOP), both located more to the left of the political continuum - are not members of the new coalition, pushing the government towards the right. The new administration characterises itself as centre-right. The first actions of the new government were focused on the implementation of a more 'rational' economic policy, especially with regard to more effective utilisation of the public resources. It should be noted that in the election the Communist Party of Slovakia (Komunistická strana Slovenska, KSS) won parliamentary representation for the first time since 1989.

Regional and local elections took place in early December 2002 and the ruling coalition parties reinforced their positions to some extent, even in regions where HZDS previously dominated. Nevertheless, the opposition parties performed reasonably well.

Apart from the results of the elections, two other very important events took place during the year. In November, at the North Atlantic Treaty Organisation (NATO) summit in Prague, the Slovakia was invited to become a NATO member. Then, in December, the European Council decided on EU enlargement (EU0301201N), inviting 10 new Member States, including Slovakia, to join the Union in 2004.

Collective bargaining

In general, the numbers of collective agreements at all levels negotiated in 2002 were similar to 2001. According to statistics covering the number of collective agreements concluded at sector or branch level and registered by the Ministry of Labour, Social Affairs and Family, 62 agreements (including supplements) were concluded in 2002 (SK0210102F). Around half of the workforce are covered by sector/branch level collective agreements.

A new element influencing the collective bargaining process in 2002 was the implementation of new labour legislation (see below under 'Legislative developments'). Accordingly, as of 1 April 2002, the scope for collective bargaining on employment conditions was completely liberalised in the private sector, which means that the social partners can bargain on any issues of common interest. New legislation also introduced sectoral bargaining in the civil and public service sectors (though the scope of bargaining remains limited to a certain extent) (SK0206102F). Thus, in August 2002, the previous government and trade unions concluded the first sectoral collective agreement on employment conditions for public service employees, covering 2003 (SK0209101N). This provides for a pay increase, a reduction in working hours, one extra week of paid leave (with the exception of teachers, directors and deputy directors in kindergartens), higher redundancy compensation, discharge benefit (paid to employees after the first termination of their employment, or when they become entitled to a pension) of two months’ pay, a supplementary pension contribution of at least 2% of the wage bill and an obligatory contribution to the social fund (which provides social care to employees) of at least 1%. In November 2002, representatives of the new government and the trade unions concluded the first sectoral collective agreement for the civil service, covering 2003 (SK0212102N). It guarantees a pay increase, a reduction in working time, prolongation of paid leave by one week, and a compulsory contribution of at least 1% to the social fund. Both collective agreements took effect concurrently with the enforcement of the law on the 2003 state budget.

Pay

The average collectively agreed pay increase in 2002 is estimated at 6.5%, up from 6.0% in 2001. The first sectoral agreement for public service employees, signed in 2002 (SK0209101N), increases 'tariff' pay rates from 1 July 2003. The basic scale of pay tariffs (the 'general table') will increase by 8%, and and the specific scale of pay tariffs (the 'pedagogical table') by 5%. This latter scale covers: teachers (with the exception of teachers at universities, who are remunerated according to a more advantageous table); employees with a university education who perform scientific and teaching activities at scientific/research workplaces, or creative fine-arts activities at universities; and employees who perform professional activities in the cultural area, or who work in geology, nature and environmental protection, water protection, air protection and waste management. The first agreement for civil servants, signed in 2002, provides for a 5% increase in pay tariffs from 1 July 2003 (SK0212102N).

From 1 October 2002, the monthly minimum wage was increased by 13.2% – from SKK 4,920 to SKK 5,570 (the government determined the amount of the new minimum wage because the social partners were unable to agree on the issue in tripartite consultations) (SK0210101N). The new minimum wage represents 40.68% of the estimated average monthly wage in 2002 (SKK 13,690). The individual minimum net wage (for a single person without children) has been increased to SKK 4,686 and represents 119.2% of the current legal individual subsistence minimum (SKK 3,930). Sector or branch collective agreements concluded in 2002 also increased minimum rates.

According to the Statistical Office of the Slovak Republic, the average monthly wage in the third quarter of 2002 was SKK 13,146 (in the first and second quarter of 2002 it was SKK 12,924) - up 8.8% on the same period in the previous year. Taking into account consumer price inflation, the real wage increase was around 6.1%, compared with the same period of 2001. This was the highest annual real wage increase in Slovakia for four years (SK0207101N). The level of the average nominal monthly wage was in all sectors higher than in the same period of 2001. The highest relative increase in the nominal wage over the period was in public administration and defence, and compulsory social security (12.8%) and the lowest was in the construction industry and transport, storage, post and telecommunications (5.1%).

Working time

Average collectively agreed normal weekly hours stood at 40.9 in 2001 for workers in single-shift systems (40.18 hours for those in two-shift systems). According to the new Labour Code (see below under 'Legislative developments'), maximum weekly working time is set at 40 hours. Under the previous Labour Code (valid until 31 March 2002) the maximum weekly working time was 42.5 hours. The reduction of 2.5 hours does not mean actual reductions in net working time because these 40 hours do not include former paid breaks for refreshments or meal. According to the new Labour Code, weekly working hours including overtime should not exceed 58 hours, and annual overtime should not exceed 150 hours.

Under the collective agreements for civil and public servants signed in 2002 and covering 2003, weekly working time will be reduced by 2.5 hours, from 40 hours to 37.5 hours (in a two-shift operation to 36.25 hours, and in a three-shift or non-stop operation to a maximum of 35 hours).

Job security

Collective agreements in force in 2002 did not include any fundamental changes in the area of job security. The new agreement for public service employees, which comes into force in 2003, improves redundancy compensation and discharge payments. The new Labour Code (see below under 'Legislative developments') includes some provisions which help employees have their claims met in the event of their employer's insolvency, and provides for the transfer of rights and obligations arising from the labour-management relationship to the legal successor, in the event of an undertaking being transferred or closed, The new legislation on the civil and public service has also contributed to increased job security for public employees.

Equal opportunities and diversity issues

Collective agreements concluded in 2001 and 2002 did not pay special attention to equal opportunity issues. Pay inequalities remain between men and women - in 2001, the average wage for women stood at 74.1% of the average wage for men. No official data for 2002 are yet available, although it is estimated that the figure will remain broadly the same. In March 2001, the government adopted a 'Concept on equal opportunities for women and men'- the country's first comprehensive elaboration of the gender equality issue. The document set out a range of measures, including initiatives relating to equal opportunities in the labour market and reconciliation of work and family life. The first report on the implementation of the programme was submitted in April 2002 (SK0209102F).

Legislative developments

In July 2001 the Parliament adopted three new acts - the Act No. 311/2001 on the Labour Code (SK0207102F), Act No. 312/2001 on the Civil Service and Act No. 313/2001 on the Public Service (SK0206102F). All these new Acts took effect on 1 April 2002. The new Labour Code regulates labour relations for employees in the business sector, which are contract-based, and it concerns approximately 1.5 million employees. It seeks to meet the requirements of the market economy, highlighting the principles of freedom, democracy and the contract-based nature of relationships. It regulates only the basic obligations of employees and employers and minimum standards for social rights.

The new Labour Code introduces the following main changes:

• it enforces the principle of equal treatment of employees and extends the prohibition of any discrimination (employees who believe that they have suffered discrimination can take the case to court);

• it obliges the employer to inform employees in the event of the establishment, alteration and termination of the employment relationship, with the aim of providing employees with better protection against possible breaches of their rights;

• it bases the establishment of the employment relationship exclusively on a written employment contract;

• it comprehensively regulates working time and its structure, and increases the flexibility of the employment relationship by providing employees with a possibility to perform agreed work at home;

• it annuls the previous Act on Wages and directly lays down the principles for employees' remuneration;

• it provides procedures to help employees have their claims met in the event of their employer's insolvency;

• it provides for the transfer of rights and obligations arising from the labour-management relationship to the legal successor, in the event of an undertaking being transferred or closed;

• it increases employees' rights in setting the conditions of their employment and provides greater protection of their personal data;

• it provides for employee participation by means of works councils and/or shop stewards in those companies where there are no trade unions present;

• it abolishes the previous limits on the scope of collective bargaining. Employer and trade union representatives in the business sector can bargain now on any issues of common interest;

• it increases the powers of trade unions in co-decision making and creates better conditions for the activity of employees' representatives by specifying paid time off for trade union officials and works councils to perform their tasks; and

• it introduces a new statutory 'parental leave' entitlement, which applies equally to both parents after a child is born.

The new Act on the Civil Service regulates the employment relationships of approximately 36,000 civil servants. The civil service, for the purposes of the Act, is considered as the performance of state administration tasks or the conduct of state affairs by a civil servant at a 'service office'. The Act does not govern the employment conditions of members of the armed forces, including the police force and customs officers, which are regulated by specific laws. The Act also does not cover some directly appointed or elected positions, such as members of parliament or of the government. The Act lays down rules on basic rules for civil service work, working time, remuneration and employment conditions. With regard to collective bargaining, this is possible only over the sector's collective agreement, which requires parliamentary approval in order to come into force. The content of collective bargaining is defined very closely (unlike private sector bargaining) and the agreements can cover only the following issues: the pay tariff scale; the reduction of weekly working hours; and the amount paid into the social fund. Unlike in the past, under the new law collective agreements may no longer be concluded at the level of individual service offices. Overall, the stricter regime for civil service employment and the bargaining constraints are compensated by certain advantages for employees, for example in terms of health and sickness insurance, pensions, unemployment insurance, additional payments and holidays.

Public service work is defined by the new Act on the Public Service as the performance of work by employees in 'matters of public interest' and activities related to regional self-administration. The scope of the Act is thus extensive, covering more than 400,000 employees - some 19% of all employees in Slovakia. The Act governs the employment conditions of public service employees and relations with their employers. Collective agreements may be concluded both at sector level and in individual service offices. A wider range of issues can be regulated by the public service sectoral collective agreement than by the civil service agreement. Standards exceeding those laid down by law can be agreed in areas such as: reduction of working time; extension of the period of paid holiday (beyond the level guaranteed by the law); increases in pay tariff scales; prolongation of the period of notice of termination of employment; the amount of the employer’s contribution to supplementary pension insurance; and the amount of the contribution to the social fund. Overall, public servants have more freedom for collective bargaining and less favourable compensation than civil servants.

The organisation and role of the social partners

The organisation and the role of the social partners in Slovakia did not change significantly during 2002 (SK0208102F). The Confederation of Trade Unions of the Slovak Republic (Konfederácia odborových zväzov Slovenskej republiky, KOZ SR) remained the largest trade union organisation, organising almost all sector and branch trade unions. In 2002, KOZ SR represented about 90% of all trade union members. Trade union density in 2002 remained almost the same as in 2001, at between 30% and 35%.

The Federation of Employers' Associations of the Slovak Republic (Asociácia zamestnávateľských zväzov a združení, AZZZ SR) remained the leading representative of employers. About 50% of almost 63,000 companies active in Slovakia are members of AZZZ SR. KOZ SR and AZZZ SR are regarded as legitimate social partners by the government for the purposes of tripartite concertation.

Industrial action

No strikes were officially registered in 2002, as in 2001, continuing the trend of the past decade (SK0211103F). The majority of collective disputes between the social partners related to the conclusion of collective agreements, but most were successfully resolved through mediation procedures. Arbitration resolved the majority of the small number of collective disputes which had not been resolved by mediation.

A number of protests and demonstrations were organised by trade unions in 2002, but these were usually related neither to the conclusion of collective agreements nor to the fulfilment of commitments arising from them. These actions were organised by sector or branch trade unions and supported by the KOZ SR union confederation. Three large demonstrations were held. The first was organised in February against an employers ' call to amend the new Labour Code which had already been adopted (about 2,000 participants). The second and third took place in November and December 2002 and were organised against the new government's state budget proposal for 2003 and proposed social security changes (SK0212101N). Approximately 10,000-15,000 trade unionists took part in two demonstrations in the capital, Bratislava.

Employee participation

Under the new Labour Code (see above under 'Legislative developments'), employees are entitled to collective bargaining, co-decision making and negotiations. They also have a right to information and to monitor activities. Trade unions are the usual representatives of the employees. However, under the new Code, in the event that there is no trade union organisation in workplaces with at least 20 employees, works councils ('personnel councils' in the public sector) are to be elected. Such works councils have rights to negotiation, information and monitoring vis-à-vis the employer, but not a right to collective bargaining. In workplaces with fewer than 20 employees but more than five, shop stewards are to be elected. The new provisions also increase the powers of trade unions in co-decision making and create better conditions for the activity of employees' representatives by specifying paid time off for trade union officials and works councils to perform their tasks. The new Labour Code seeks to implement some of the principles of the EU Directive (2002/14/EC) on national information and consultation rules (EU0204207F). It also transposes Directive (94/45/EC) on European Works Councils (EWCs), but these provision will enter into effect only when Slovakia joins the EU in 2004. Nevertheless, employee representatives in some multinational companies operating in Slovakia are already involved in the activities of their EWCs. Finally, no initiatives have yet been taken on national implementation of the Directive (2001/86/EC) on employee involvement in the European Company Statute (EU0206202F).

Telework

The EU-level central social partner' agreement on telework, concluded in July 2002 (EU0207204F), was neither reflected in labour legislation nor applied in collective agreements during 2002. Telework has also not yet been discussed with the social partners. However, in the new Labour Code (see above under 'Legislative developments'), a new provision was introduced allowing employees to work at home on conditions agreed with the employer.

Vocational training

The Ministry of Education has prepared documents which include a general framework for lifelong learning in Slovakia. In addition, the National Action Plan (NAP) on employment for 2002 and 2003 includes concrete measures aimed at supporting employability through vocational training. These measures are in line with approach of the 'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F).

New forms of work

The incidence of part-time work was very limited in 2002 as it was in 2001 (2.3% of all employees). Any form of discrimination against part-time employees is prohibited. However, the low level of current wages is one of the main causes of this limited incidence of part-time work. The incidence of fixed-term, seasonal and occasional contracts is also very limited, covering between 4% and 5% of all employees. There were no activities or changes in the regulation of temporary agency work in 2002. About 35% of employees were seeking flexible working arrangements in 2002, around the same percentage as in 2001.

Outlook

An increase in living costs is forecast in 2003, due to an increase in the price of some goods and services, accompanied by rising inflation and a decrease in real wages. It is also expected that the unemployment rate will remain high. In terms of labour legislation, further changes are expected to the Labour Code, making employment conditions more flexible and placing some limitations on trade union co-decision rights. Finally, amendments to the new Acts on the civil and public services are anticipated, mostly in order to reduce public expenditure. (Ludovit Cziria, RILSAF)