2005 Annual review
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In 2005 the positive development of economy continued. In the third quarter of 2005 the GDP growth was 6.2%, what is substantially more than in the comparable period of 2004. Foreign investments have continued, especially in the field of automotive industry. Employment has increased by 1.6% in comparison with the same period in 2004. The unemployment rate has been decreasing continuously and it declined to 15.6% (LFS) in the third quarter of 2005 - for the same period in 2004 it amounted to 17.5%. Inflation has followed quite a balanced course and according to the prognosis of Slovak statistical office (Slovenský štatistický úrad, ŠÚ SR) the average inflation rate in 2005 should exceed the 2004 level by 2.7 % and 5.7% GDP growth is expected in 2005.
According to the governmental politicians, except for failing implementation of the schooling system reform (including also the introduction of fees for study), the implementation of the reforms has been successful in 2005. The implementation of the reforms has contributed to good economic results and the standard of living of the generality of the population has improved as well. In the course of the year the reform measures in the social policy have been realized as well, which, however have discontented some, especially poorer citizens. According to the representatives of political opposition and Confederation of Trade Unions (Konfederácia odborových zväzov Slovenskej republiky, KOZ SR) the implemented reforms have not been conceived positively by common citizens and the living conditions of many people has worsened.
The political climate in Slovakia was relatively instable in 2005 and the governmental coalition of four parties has diminished to a coalition of three parties. This was caused by problems, especially personal ones, in some of the political parties, which were members of the governmental four-coalition led by the Prime Minister Mikuláš Dzurinda, the head of Slovak Democratic and Cristian Union (SDKÚ).
The biggest problems appeared in autumn, when it came to the cabinet crisis originated by the recall of the Minister of Economy Pavol Rusko from his function in the governmental cabinet (this minister was the nominee and at the same time the head of the coalition political party New Citizen Alliance- ANO). This fact led to the decision of the ANO to leave the governmental coalition, which has in turn worsened the position of the Government in the Parliament. The arisen situation caused also an internal crisis in political party ANO. Several members on leading positions have been excluded from membership in this party (because of disloyalty), including the remaining ministers from ANO. However, their exclusion from the party did not threaten the functioning of the Government in long term because these ministers have maintained their functions as independent Parliament representatives. One of the excluded representatives of ANO, Jirko Malchárek, has later become the new Minister of Economy.
This situation also led to a temporary malfunction of the Parliament, the meetings of which were several times successfully blocked by the opposition parties. The threat of an early parliamentary elections arose. However, independent Parliament representatives helped to solve the problem and the Government supported also by some opposition members of Parliament, was able relatively easy to approve in Parliament the draft state budget for 2006-8.
The Government announced that it would evaluate implemented reform measures and would make corrections in those spheres where it would be needed. In autumn the Minister of Labour, Social Affairs and Family, Ludovít Kaník (nominated by SDKÚ) resigned from his function and the Government proposed the sociologist Iveta Radicová for the new minister who soon started to realise certain changes in employment policy and social policy. At that time Slovakia entered the EMU ERM II mechanism.
In autumn elections into regional self-governing bodies were held in Slovakia with extremely low participation of voters. Parties of the governing coalition reached relatively good results in the number of elected members of regional parliaments. On the other hand, the opposition parties reached good results in election of heads of the regional governments.
Collective bargaining update
There were no changes in the procedures of the collective bargaining. Sectoral collective bargaining kept its relatively strong positions and sectoral collective agreements have an important influence upon enterprise collective bargaining. The most important was the collective bargaining on wages. During 2005 no cross-sectoral collective agreements on national level were signed.
In February 2005, the representatives of the state and trade unions agreed upon conclusion of a new sectoral collective agreement for civil servants. There were big differences in comparison with the previous sectoral collective agreement for 2004 because several new provisions were not statutory. They set only minimum-maximum framework limits for enterprise collective bargaining in institutions of state administration, eg reduction of working hours, increase of the paid holiday. New collective agreement determined 4% increase of employees´ salary tariffs what was less than the increase fixed in the sectoral agreement for 2004 (7%). Since 1 January new sectoral collective agreement entered into force also for public servants which fixed 5% salary tariffs increase.
In sectoral collective agreements it was agreed that the increase of the nominal wages will be in average by 6 % (in individual branches it was between 4-8%). In the third quarter of 2005 the increase of the average nominal wage was 9.9% in comparison with the same period of 2004. In the same period the real wages increased by 7.6%.
According to the information of the trade unions associated in KOZ SR the range of coverage of employees by collective agreements is assumed from 35-40% what in comparison with the previous year means maintenance of the previous positions, respectively only a small decrease. In total 42 sectoral collective agreements, including supplements to such agreements, were registered by the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny Slovenskej republiky, MPSVR SR) in 2005. It means that compared to 2004 there was only a slight decrease of sectoral collective agreements.
In 2005 MPSVR SR extended only two collective agreements what was four times less than in the previous year. This was influenced also by a need of agreement from the side of the employer concerned by the extension. According to the trade unionists some employers, in order to avoid the extension of the collective agreement, quit their membership in the relevant employers federations. According to available information representatives of KOZ SR informed about their standpoint to this issue also the representatives of ETUC.
The tripartite social dialogue on the national level was no more regulated by the law in 2005 (SK0503101F). At the beginning of the year the new act on illegal work and illegal employment entered into force (SK0505103F) which in a complex and principal way supports the effective fight against the illegal work. Employers and employees who employ or are employed in conflict with the law can get higher fines. In the middle of the year some changes were realised in the way of defining and indexation of new old-age pensions which according to many critics of the pension reform seem to be too high (SK0507101F).
Some changes were realised in legislation regulating implementation of active labour market policy measures, too. Since 2005 the financial benefits for those who decided to run some business as selfemployer have been provided to a wider range of entitled persons. Several thousands of jobs were created in this way (SK0505101N). Enforcement of new active labour market policy measures contributed, although not sufficiently and without support of social dialogue, also to higher employment of people with disabilities (SK0510103F).
Trade unionists associated in KOZ SR assessed the practical enforcement of individual provisions of the new Labour Code amended in 2003 and have some critical comments to them. They proposed various changes in provisions of the Labour Code and they would like to negotiate them with the representatives of MPSVR SR (SK0601101N).
The organisation and role of social partners
In 2005 no significant changes in position or organisational structure of employers or trade unions associations were realised. Trade unions as well as employers were organised in two headquarters. Trade unions in KOZ SR and Independent Christian Unions of Slovakia (Nezávislé krestanské odbory Slovenska, NKOS) and employers in Federation of Employers Associations (Asociácia zamestnávatelských zväzov a združení Slovenskej republiky, AZZZ SR) and National Union of Employers (Republiková únia zamestnávatelov Slovenskej republiky, RUZ SR). During the year only small changes in the membership of employers organisations associated in AZZZ SR and RUZ SR occured.
Since the beginning of the year a new form of tripartite social dialogue started to function (SK0503101F). Economic and Social Concertation Council (Rada hospodárskej a sociálnej dohody, RHSD) was cancelled at the end of 2004 however soon after it was substituted by the Council of Economic and Social Partnership (Rada hospodárskeho a sociálneho partnerstva, RHSP). According to the opinion of the representatives of the Government and some employers (in RUZ SR) tripartism became more flexible and effective. On the other hand, according to the KOZ SR representatives and some employers representatives (in AZZZ SR) the tripartitism became more formal than before and the tripartite social dialogue did not contribute to a real solution of problems. Some problems emerged regarding the position of employers organisations in the RHSP, eg verification of the membership and representativeness of employers organisation, especially AZZZ SR in this tripartite body. Some national level tripartite agreement - Social pact was not concluded in Slovakia.
The year 2005 was relatively quiet from the point of view of protest activities of employees. There was no real strike or lockout. Regarding protest activities organised by trade unions only two more important activities can be mentioned: protest meetings organised by nurses (SK0509101N) and protest meetings organised by policemen (SK0512102N). During these meetings the employees required mainly higher salaries, better employment conditions and social security. The Minister of Interior withdrew the chairmen of police trade unions from his position after the protest of policemen. EuroCOP and the European Parliament were dealing with this situation, too.
In 2005 no substantial changes were made in employees participation. The legislation did not change and the employees participated in management of companies through their representatives that were according to the Labour Code trade unions and works councils or employee trustees. There are no data available about the number of works councils but according to estimations their number is still small. They exist mainly in some companies where no trade union organisation exists.
During the year continued participation of Slovak employee representatives from multinational companies in the activities of European Works Councils (EWCs). Around 100 multinational companies with EWCs, mainly in manufacturing industry have their subsidiaries in Slovakia as, eg Bosch, Panasonic, Siemens, Volkswagen, Whirlpool, Sachs/Boge. However, no comprehensive statistical data are available on number of EWCs where also employees in these subsidiaries are represented. Employees are usually represented in EWCs by local trade union representatives who evaluate their participation in EWCs activities positively. According to unionists EWCs provide useful information for their activities, mainly collective bargaining in the enterprises.
After accession of Slovakia to EU the number of people working abroad rapidly increased. People from Slovakia are working mainly in those countries of EU-15 where the free movement of labour force from the new EU member states was allowed - mainly in Great Britain and Ireland. A considerable number of workers from Slovakia work traditionally in the Czech Republic. However, the statistical data about the number of workers working abroad and especially in EU is not available.
On the other hand, number of workers coming to work in Slovakia from EU is considerably lower and is related mainly with development of subsidiaries of multinational companies in Slovakia - mainly from automotive industry. The new act on illegal work defines also conditions for work of citizens from EU member states in Slovakia.
Corporate social responsibility
At present the corporate social responsibility (CSR) is applied in a relatively small number of enterprises, however in 2005 there was some development in this sphere. Implementation of CSR principles in enterprises in Slovakia supports Pontis Foundation in the framework of their programmes. In CSR Programme it promotes corporate social responsibility and foster corporate philanthropy in particular. It accommodates corporate needs in assisting with corporate donor strategies development and their implementation via outsourcing.
Within the program the Foundation carries out research and training activities, hosts the annual Via Bona Slovakia Award to acknowledge philanthropic activities of corporations and individual business activities, and administers the Business Leaders Forum (BLF) of Slovakia, which was established in 2004 as a informal association of firms that commit themselves to be the leaders in enforcement of CSR principles in enterprises in Slovakia. The constituent members of BLF are representatives of important multinational companies in Slovakia as, eg Slovak Telekom, Citybank, Hewlett Packard, VÚB, TESCO Stores. During 2005 BLF issued the first publication on Corporate social responsibility in Slovakia, supported the EU document defining the model of European entrepreneurship and organised many professional events as conferences and workshops on CSR.
New forms of work
Labour Code enables employers and employees to conclude permanent and fixed-term employment contracts as well as contracts for full-time and part-time work already for a long time. However, the LFS results of Eurostat as well as of ŠÚ SR identically show that number of workers working on the basis of fix-term employment contracts as well as part-time workers is still very low - approximately 2-3 % (SK0510102F). Actually the share of part-time workers is the lowest from all EU member states. However the scope of using flexible working hours increased to 36% (in 2004 it was 34.1%).
In 2005 continued usage of temporary agency work in practice (SK0501103F). The employers were relatively seriously interested in this form of employment because it did not practically present any risks for them in the human resource management as the responsibility for employment laid upon the agencies for temporary work. The number of agencies increased more than twice and according to data available this activity was realised by more than 200 subjects in 2005. However, information about the number of persons employed in this form in 2005 are not available yet. This form of employment was criticised by trade unions because the employers often used the provision of the act that allowed them not to provide the same employment conditions and social protection to temporary agency workers as to the core employees in a case when the agency worker is employed for a period shorter than six months.
Other relevant developments
Immediately after adoption of the new act on illegal work many controls of keeping the ban on execution of illegal work were realised. More cases of illegal work than before were revealed and the auditing bodies levied higher fines to the offenders. The higher sanctions for breaking the law probably contributed to the fact that the employers registered in the Social Insurance Agency (Sociálna poistovna, SP) far more new employees as they have done in the comparable period of the previous year (SK0506101N).
In 2005, real wages significantly increased. In the first half of the year average real wages increased by 5.6% (SK0511101N) and it is expected even a higher increase in the whole year. The minimum wage was increased, too up to SKK 6,900 (since 1 October) although the representatives of employers associated in RUZ SR did not agree with it. In the course of the year the discussion ‘if to use or not’ the institute of the minimum wage in Slovakia has taken place and the pressure of employers upon its abolition in the current form increased. The MPSVR SR prepared conceptual proposals how to solve this problem in the future (SK0511102F).
At the end of the year the new Minister of Labour, Social Affairs and Family unexpectedly decided to withdraw the proposal of the Government on changes in the act on sickness insurance of employees (SK0512104F) from the negotiations in the parliament.
The main political event will be the national elections in September 2006 result of which is expected with high interest. According to the results of several opinion surveys the opposition political party SMER-Social Democracy which is sharply criticizing reforms realised by the current government, has a big chance to win these elections. SMER - SD and trade union centre KOZ SR agreed upon coordination of their activities. However, in order to be able to set up a new government, SMER - SD will need suitable coalition partners. According to their election programme SMER - SD intends to make several changes, eg in the taxation system, old-age pension system after elections and supports also requirements of trade unions for changes in labour legislation. Trade unions in KOZ SR would like some changes in the Labour Code.
In 2006 the Government plans to focus its work mainly upon assessment of implementation of reform measures and to make corrections in order to tune them when needed. The new Minister of Labour, Social Affairs and Family announced that at the beginning of 2006 she would submit to the Government a pack of proposals for changes in the sphere of social policy and employment policy that should modify the reform measures realised there in 2005. (Ludovít Cziria, Bratislava Centre for Work and Family Studies)