EMCC European Monitoring Centre on Change

Slovakia: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



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Ludovit Cziria
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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

SMEs and self-employment has been long-term supported by public measures in Slovakia. Specific measures were adopted from 2003 to 2005, in particular. Employment in micro firms is supported by measures adopted in order to assist development of SMEs. This support was modified and increased during the economic recession. Measures were mainly aimed at maintaining employment and job creation. Particular measures to support micro firms were, however, not adopted. Disincentives for job creation and business development were not adopted. Programmes of education, training and counselling for selected groups of people interested in entrepreneurship can be mentioned among important public measures.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment

1999

     
Hiring the first Employee    

2000

 
Hiring additional employees/creating additional jobs in micro enterprises  

X

   


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

X

   
Hiring the first employee        
Hiring additional employees/creating additional jobs in micro enterprises

X

X

   

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Since 2003, particular public policy measures were adopted to support the development of self-employment. They pay compulsory contributions to social and health insurance agencies from the assessment base, which is half of the achieved annual income. They also can lower their tax base by lump sum expenses at 40% (in specified cases of handicrafts at 60%). To reduce administrative burden of running business, the use of simplified (single-entry) bookkeeping is allowed to tradesmen, too.

A financial subsidy is provided to job seekers, registered at the employment offices at least for three months, who decided to run an own business as self-employed for at least two years. They may apply for a financial grant from employment offices which can be used for covering their non-wage labour costs.

To simplify business start-up administration, one-stop-shops were introduced in 2007 (in line with the EC Directive on free movement on services). The measure integrates all operations necessary starting to run an own business into one place in a time. Since 2009, electronic communication with the commercial register reduces the administrative burden of self-employed.

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

A financial subsidy to disadvantaged job seekers establishing an own business as self-employer could be provided from the next day after their registration at the employment office. Applied from 1 December 2009 to 31 December 2010.

Additional financial support was provided for job seekers and people in material need to establish an own business as self-employer. They could receive a subsidy to cover compulsory health insurance payments during 22 month, and later on also social insurance payments for four month.

Compulsory contributions to the solidarity reserve fund, paid by self-employers to Social Insurance Agency (SP), were reduced from 4.75% to 2% of the tax assessment base. The measure was applied from 1 April 2009 to the end of 2010.

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Entrepreneurs, who created new jobs for a job seeker registered at the employment office for at least three months, can receive state subsidy for 24 month as a maximum.

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

Entrepreneurs, who created new jobs for disadvantaged job seekers can receive a state subsidy from the next day after registration of the job seeker at the employment office.

Unemployed persons in social need who have found themselves a low paid job, could receive a subsidy amounting to 22% and 11% of the average wage in the economy during 12 month and the rest of 22 month period respectively. The measure was available from March 2009 to the end of 2010.

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Entrepreneurs, who created new jobs for a job seeker registered at the employment office for at least three months, can receive state subsidy for 24 month as a maximum.

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

To cover compulsory contributions to insurance funds during 60 calendar days during the year, state allowances were provided to entrepreneurs who maintained redundant employees for at least 60% of wages, instead of dismissing them. It concerned all entrepreneurs, including micro enterprises.

Entrepreneurs who created new job for disadvantaged job seekers, can receive the above mentioned state subsidy from the next day after the registration of the job seeker at the employment office.

Unemployed persons in social need who have found themselves a low paid job, could receive allowances amounting to 22% and 11% of the average wage in the economy during 12 and 22 month period respectively.

Among other measures adopted due to the recession, a shortened period for VAT reclaim (from 60 to 30 days), simplified fuel records (introduction of lump-sum expenditures in the sum

of 80 % of fuel costs), simplified tax records and bookkeeping can be mentioned.

Usually, large and medium size enterprises gained higher support than micro firms – because of large number of employees threatened by dismissals.

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

No. Before the recession, public measures did not lead to disincentives for self-employment or job creation in one-person or micro enterprises. On the contrary, in order to improve conditions for entrepreneurship and to combat the high unemployment rate in the country, the government adopted particular measures to support/develop self-employment, mainly in 2003-2005. Higher support to self-employed and job creation in one-person or micro enterprises (within the framework of overall support to SMEs), was given.


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

No. During the recession, there were no disincentives for self-employment or job creation in one-person or micro enterprises (within the framework of support to SMEs) implemented by public measures. On the contrary, in order to alleviate impact of the economic downturn on employment, the government adopted supplementary measures supporting self-employment and small enterprises in Slovakia.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes, explicitly - Slovak Craft Industry Federation (SŽZ)

Yes, explicitly - SZŽ

Employees’ organisation

No

No (usually)

Not-for-profit organisations

Slovak Craftsmen Chamber (SŽK)

SŽK

Others

Some professional guilds

Some professional guilds

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

Please indicate ‘national level’ vs. ‘regional/local level’

National

If a specific regional/local are is selected, please provide the following information

Name of region

Bratislava County in Western Slovakia region (by NUTS 2)

Motivation for selecting this region

The GDP per capita is the highest one in the country.

The sum of subsidy provided to:


  • registered job seekers who decided to run an own business as self-employed
  • employers who employ a registered job seeker
  • regionally differentiated.
  • subsidy may reach 35% and 20% respectively of the sum corresponding to 16 times the total monthly labour cost, including average wage in the economy and social and health insurance contributions.

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

Bratislava County includes the Capital Bratislava with developed service and industry sectors. Mechanical engineering, automotive and chemical industries are present there. The unemployment rate is the lowest one in the country – it was about 4.6% in December 2010.

If a specific regional/local are is selected, please provide the following information

Name of region

Trnava, Trenčín and Nitra Counties in the Western Slovakia,

Banská Bystrica and Žilina Counties in the Middle Slovakia and

Prešov and Košice Counties in Eastern Slovakia.

Motivation for selecting this region

The unemployment rate in these regions is significantly higher than in the Bratislava County.

The subsidy provided to registered job seekers who decided to run an own business as self-employed and to employers who employ disadvantaged job seekers may reach 45% and 30% respectively of the sum corresponding to 16 times the total monthly labour cost – including average wage in the economy and social and health insurance contributions.

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

Mix of manufacturing industry, agriculture and service sectors. Manufacturing is however dominating. Unemployment rates were from about 8% in Trnava County to almost 19% Banská Bystrica County in December 2010.

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6: List of recent instruments

Title

Program vzdelávania, školení a poradenstva pre vybrané skupiny záujemcov o podnikanie

Programme of education, training and counselling for selected groups of people interested in entrepreneurship

Aim/objective

To increase competitiveness and survival rate of SMEs and maintain employment and creation of new jobs in regions in Slovakia.

Description of support

Non-returnable grants are provided to SMEs in order to cover (fully or partly) costs of education, training and counselling services.

Target group

SMEs, including micro enterprises and tradesmen.

Initiator and other actors involved

The Ministry of Economy is the initiator.

Provider is the National Agency for the Development of SMEs (NADSME).

Cooperating organisations are: Regional Consultation and Information Centres (RPIC), First Contact Centres (CPK) and Business and Technology Incubators (PI/TI).

Duration (please also indicate whether the measures has been initiated due to the recession)

The programme was not initiated by the recession. Its duration is not limited.

Title

Finančná podpora nezamestnaným ktorí sa rozhodli založiť živnosť.

Financial grant to job seekers who decided to run an own business as self-employed.

Aim/objective

To assist job seekers in running own business and reduce the number of unemployed.

Description of support

Financial grant to a job seeker who decided to run an own business as self-employed can be provided by employment office.

Target group

Job seekers registered at employment offices.

Initiator and other actors involved

Ministry of Labour, Social Affairs and Family (MPSVR SR) was the initiator. Headquarter of Employment, Social Affairs and Family (UPSVAR) and its regional offices are involved in implementation.

Duration (please also indicate whether the measures has been initiated due to the recession)

The scheme is long-term applied on the condition that the job seeker was registered at the employment office for 3 month at least.

From 1 December 2009 to 31 December 2010 this precondition was abolished and the financial grant was available from the next day after the registration of the job seeker.

Title

Zníženie povinných odvodov živnostníkov do rezervného fondu.

Temporary lowering of the compulsory contribution of self-employed to the reserve solidarity fund.

Aim/objective

To decrease operational costs of self-employed during the recession.

Description of support

Temporary reduction of the compulsory contributions to the Solidarity Fund paid by self-employers to Social Insurance Agency - from 4.75% to 2% of the tax assessment base.

Target group

Self-employed.

Initiator and other actors involved

On behalf of the government, Ministry of Finance is the initiator. Social Insurance and Health Care Insurance agencies are involved.

Duration (please also indicate whether the measures has been initiated due to the recession)

The measure was applied from 1 April 2009 to 31.12.2010.

Title

Program na podporu rozvoja malého a stredného podnikania - Mikropôžičkový program.

Programme for the development of SMEs - Micro loan programme.

Aim/objective

To provide for SMEs access to credits at preferential conditions.

Description of support

According to the amendments to the programme, which were launched on 17 February 2010, SMEs may submit the request for the credit to loan from € 2,500 to 50,000. Loans are provided at maturity date from 6 months to 4 years and interest rates depend on applicant's rating and provided guarantees for the loan refund.

Target group

SMEs with less than 50 employees, including micro firms.

Initiator and other actors involved

The Ministry of Economy. Provider is NADSME. Cooperating organisations are assigned RPICs, Counselling and Information Centres (PIC), CPK and Fund of Funds (FF).

Duration (please also indicate whether the measures has been initiated due to the recession)

The duration of the programme was not limited.


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

Program vzdelávania, školení a poradenstva pre vybrané skupiny záujemcov o podnikanie

Programme of education, training and counselling for selected groups interested in entrepreneurship

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

X

X

X

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

 

X

X

Rationale/motivation for the instrument

(please describe)

Small enterprises, including micro firms and self-employed, need professional support for their effective operation. At the same time, financial resources for ordering such services are lacking in SMEs. Therefore, the government decided to support SMEs though the provision of non- returnable grants to cover (fully or partly) costs of required training and counselling services.

Purpose and aims for the instrument (please describe)

The Ministry of Economy launched the programme in order to increase the competitiveness and survival rate of SMEs and maintain employment and creation of new jobs in regions in Slovakia.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

National Agency for the Development of SMEs (NADSME) acts as the provider of the Programme.

Cooperating organisations are: Regional Consultation and Information Centres (RPIC), First Contact Centres (CPK) and Business and Technology Incubators (PI/TI). They administer the requests of SMEs for grants.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

SMEs, including micro enterprises, which are in compliance with EU Directive No. 800/2008 and self-employed.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

The Programme is subsidised from the state budget.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

The entrepreneur who asks for a non-returnable grant should provide information about the number of his/her employees, annual turnover and assets. Education, training and counselling services are provided by cooperating organisations and professional training organisations. SMEs can obtain grant up to €810/per year for counselling. Participation in a training course up to €400 per day.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

In 2009, the scheme was granted by almost €346,200 from the state budget. In 2010, it was €304, 538.

In 2009, 4,639 consultations taking 9,427 hours were provided to clients who were interested in running own business. In total, 3,558 people attended 161 training courses to the amount of 5,461 hours. Provided services resulted in the elaboration of 1,057 business development plans. In 2010, comparable results were achieved.

For comparison:

Before the recession in 2008, the programme was granted by almost €166,000. Provided services resulted in 3,136 consultations taking 6,930 hours; 607 people attended 33 training courses to the amount of 1,145 hours. Provided services assisted in elaboration of 484 business development plans.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome  
Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

According to a NADSME survey on the satisfaction of clients participating in the programme in 2009 and 2010, the assessment of clients indicated excellent results of service which were provided on professional level.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

The implementation of the programme assisted in establishing an own business for 3,264 entrepreneurs, in 2009. The same number of new jobs was created also in 2010.

Before the crisis in 2008, 897 entrepreneurs established an own business and created 887 new jobs through support of the programme.

Please provide link to evaluation documents if possible

Stav malého a stredného podnikania v Slovenskej republike 2008 and 2009 and Výročná správa NARSME 2009 and 2010. www.nadsme.sk

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

Active labour market policy

Additional information

According to the Act No. 463/2009, amending the Act No. 5/2004, on employment services, a financial grant to disadvantaged job seekers who decided to run an own business as self-employed can be provided on the next day after his or her registration at the employment office. The amendment was valid from 1 December 2009 to 31 December 2010.

Previously required at least three-month registration at the employment office also concerned disadvantaged job seekers. It was temporarily suspended by the amendment.

Table 9: Please add any other comments to the EEO national report on self-employment:

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

 

Commentary

No comment.

Ludovit Cziria, Institute for Labour and Family Research.



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