- Observatory: EMCC
- Published on: 02 March 2008
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
A rather negative impact of globalisation was visible in Slovak economy in early 90s when the unemployment rate was rising extremely . Recently, the business environment has improved much in the country and, the globalisation had positive impact on increasing of the employment there in the past 3-4 years. Foreign direct investments contribute substantially to the reduction of very high unemployment. The government as well as social partners support these investments. The government usually provides state aid for foreign direct investments creating new job in regions hit by high unemployment. Presently, the government reassessed the previous privatisation policy and intends to implement a new policy regarding acquisition of domestic companies by foreign-owned firms in certain sectors.
Institutional responses to globalisation
Government action to prevent or reduce the extent of off shoring/relocation
Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?
No. According to the available information there were not registered any examples of direct interventions of the government to prevent or reduce relocations of particular activities from Slovakia to abroad in the last 3-4 years.
As an exception, it can be mentioned the case of reduction of sugar production in EU when Slovak governmental bodies negotiated (together with governmental bodies of neighbour V4 countries concerned) with Eastern Sugar Company about compensation for job cuts and with the European Commission about compensations for reduction of sugar quotas in EU members concerned by the reduction.
Social partner attitudes towards off-shoring/relocation
Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?
According to the trade unions, there were very rare cases of direct relocation of activities from Slovakia to abroad. However, there were some cases when globalisation caused restructuring in companies initiated by loss of orders from their customers. In these cases, the impact on the employment was subject of sectoral or local level collective bargaining. The issues related to dismissal of employees concerned by restructuring, e.g. severance pay. Such cases took place, e.g. in food industry (Eastern Sugar in Dunajská Streda and Friesland in Nitra), chemical industry (Palma Henkel in Nové Mesto n/V), textile industry (Ozeta Neo in Trenčín).
Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?
No. According to the available information from trade unions, there were no cases where trade unions have successfully resisted some relocation plans.
Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?
Yes. According to the information available, trade unions in some companies accepted relocation of part of production abroad as a means of maintaining the competitiveness of the company and/or even its ultimate expanding. However, these cases usually did not have negative impact on the employment in these companies. Volkswagen Slovakia (VW SK) can be mentioned as an example. The production in VW SK plant in Bratislava changed several times over the last ten years. Some of these changes were caused by inward as well as outward relocations concerning types of cars produced there, e.g. Golf, Polo. In these cases, it was not difficult for trade unions to accept the relocations because the employment in the company was more or less stabile and it even increased later on.
Government policy on foreign-owned firms controlling significant sections of the economy
Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?
No. The previous as well as current governments welcome and support foreign investments in the country. The acquisition of domestic companies in Slovakia has emerged mostly via privatisation of previously state owned companies by foreign multinational companies - US Steel, Ruhr Gas/Gas de France, ENEL, Deutsche Telekom, RWE, E.ON and MOL can be mentioned as examples. The previous government tried to privatise state owned companies in all sectors. It considered the privatisation is a good source for the state budged and a way how to improve the management of these companies, too.
The current government decided to reassess this policy and made steps towards stopping some privatisation projects prepared by the previous government. These cases concerned mainly the transport sector. Above mentioned actions indicate that the current government intends to control the acquisition of domestic companies in some sectors. According to the available information, at present the government prepares a new policy in this sphere.
Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?
No. There are no restrictions, in general and specific sectors term, concerning setting up branches or subsidiaries by foreign-owned companies in Slovakia. Foreign investments are welcomed as a good means helping in decreasing the high unemployment rate in the country and, increasing the GDP growth, too. The government supports these investments, usually by providing state aids, considering the unemployment rate in region and the number of new jobs created by the investor.
Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?
Yes, two cases emerged in transport sector in 2006. They concerned cancellation of selling of Bratislava Airport (to Austrian/Slovak consortia) and, cancellation of tender acclaimed for privatisation of Slovak Cargo Railways. According to the government, these companies can effectively operate without their privatisation by foreign-owned company. However, the government admits an effective cooperation between these companies and potential foreign partners.
Social partner responses to the take-over of domestic firms by foreign-owned ones
Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?
No. According to the trade unions representative, there is no information available about such activities. Trade unions accept any foreign investor, which would provide decent working conditions and wages for the employees, regardless to its national origin.
Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?
No. According to the available information, such cases did not emerge. Companies have no legal or any other legitimate reason for doing so.
Attitudes to globalisation
Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
No. Employers did not adopt yet any common stated position regarding the globalisation. Some employers prefer free movement of capital and free access of foreign-owned companies to Slovak economy in accordance with free market rules. According to some other employers, it is necessary to evaluate the impact of globalisation in terms of sectors and regions and, to regulate it when suitable.
Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
No. Trade unions did not adopt yet any official document/stated position regarding globalisation and, its main aspects. However, trade unions have formed their view on this topic. They apply it in practice when commenting individual cases of globalisation regarding their aspects and impact on employment in Slovakia. Sectoral trade unions participate in this process in formal as well as informal way.
Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?
According to the available information, no.
There were several studies elaborated by academic institutions, e.g. Slovak Academy of Science - Institute of Economy and Institute of Prognosis, Economic University, Technical University. The most of these studies dealt with globalisation in world-wide term. Very few of them dealt with its impact on Slovak economy. The study “Globalisation and Slovak Economy” by Outrata, R. et all., can be mentioned as an exception. Authors of the study positively assess present impact of foreign direct investment on reduction of high unemployment in the country. However, they propose- the future foreign investments should bring higher added value to the country, e.g. via business activities in service sector, implementation of more sophisticated technology, extending development and innovative activities requiring highly qualified work force.
Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?
No information is available about such surveys.
Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non- EU companies?
No information is available regarding different treatment concerning the country of origin of the foreign company as well as differentiation between EU-owned firms and non-EU companies.
Ludovit Cziria, Institute for Labour and Family Research.