Anti-crisis measures help to maintain employment

The global economic crisis has led to increased redundancies in Slovakia in 2009. In May, the number of registered unemployed persons reached nearly 336,000 workers, compared with 235,000 in November 2008. Companies have announced mass dismissals of more than 37,000 employees in that period. However, only 9,147 of these workers have registered at the labour offices so far, due to the implementation of measures adopted in order to maintain employment.

Economic crisis leads to job cuts

The global economic crisis is having a significant impact on employment in Slovakia. The average unemployment rate had declined from 18.1% in 2004 to 9.6% in 2008. However, the economic crisis has stopped this trend and unemployment began to increase at the end of 2008. In September and October 2008, companies started to notice the effects of the economic downturn through fewer orders from their customers, mainly from the EU Member States, and the economic recession has also had an effect on the restructuring of enterprises.

According to European Restructuring Monitor (ERM) data, from 2004 to October 2008 more than 70% of all registered cases of restructuring were business expansion, and internal restructuring and bankruptcy represented 24% of cases. However, from October 2008 to May 2009, this trend changed dramatically. Internal restructuring and bankruptcy cases accounted for 75% of all registered cases in the ERM, and the proportion of business expansion decreased to 25% in that period.

Thus, employers responded to the unfavourable economic situation by internal restructuring and bankruptcies, which were followed by significant job losses. Many companies decided to undertake mass dismissals. From October 2008 to May 2009, employers reported dismissals of more than 37,000 employees to the regional offices of the Centre of Labour, Social Affairs and Family (Ústredie práce, sociálnych vecí a rodiny, ÚPSVaR). The redundancies involved different economic sectors and branches, mainly mechanical engineering, textiles and footwear, and the glass industry.

Implementation of measures to maintain employment

The Slovakian government has adopted more than 60 different measures to alleviate the impact of the economic crisis. Among the provisions that entered into effect by 1 March 2009, some specific instruments aimed to maintain employment during the economic downturn (SK0904019I). The state allowance to employers through temporary payment of their compulsory contributions to insurance funds plays an important role in this regard. The allowance is provided to employers that manage to retain their employees instead of dismissing them. Its provision is, however, limited to a period of 60 days during the calendar year.

According to a ÚPSVaR spokesperson, Peter Zeman, it is realistic to assume that the implementation of this measure helped to retain up to 45,000 jobs. The state has allocated about €35.3 million for its implementation until the end of 2010. According to ÚPSVaR, 142 employers have already used the state allowance. Out of the 37,000 employees originally reported for collective redundancy, only 9,147 workers have actually been dismissed so far (‘Prepúšťajú viac po kusoch’, daily newspaper SME, 15 July 2009).

Flexible working time arrangements

It is interesting that the automotive industry, which is probably the branch most affected by the economic crisis, did not announce significant dismissals of employees. Companies in the industry resolved the decline in car sales in different ways. For example, they cancelled temporary agency work contracts and did not renew fixed-term employment contracts. However, most of the companies implemented anti-crisis measures allowing employers to use more flexible working time arrangements, mainly the so-called ‘flexikonto’. This provision can be applied by employers experiencing difficulties in maintaining employment. As part of the deal, workers take unplanned time-off with full basic wages at least. After the economic difficulties are over, the employees have to work the missing working hours at the employer free of charge.

Views of trade unions

Clearly, the application of such measures has helped to maintain employment in these companies. As the trade unions are concerned about the decline in employment in Slovakia, they support the implementation of mechanisms to maintain employment.

Ludovit Cziria, Institute for Labour and Family Research

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