New measures to combat unemployment in the pipeline

Despite the success of some recent measures taken by the government to alleviate the impact of the economic crisis, employment levels continue to decline and unemployment is still rising. In November 2009, the government and social partners discussed plans to ease the effect of the economic crisis on employment. However, the social partners did not agree on the proposed measures. The government will decide on their implementation subject to financial resources.

Decrease in employment

The Slovakian government has adopted several measures aimed at maintaining employment. According to the information available, these provisions alleviated the impact of the current economic crisis on employment (SK0908019I). Despite this, employment in Slovakia has decreased further and the rate of registered unemployment reached 12.5% in December 2009 – the highest level since 2004.

The well-known Slovakian economist Pavol Kárász has commented on the current labour market situation in a document entitled Impact of the global economic crises on the Slovakian economy with regard to the labour market ( Vplyv globálnej ekonomickej krízy na vývoj hospodárstva Slovenska so zreteľom na trh práce (282Kb PDF)), published by the German Friedrich Ebert Foundation (Friedrich Ebert Stiftung, FES) in Bratislava in October 2009. Dr Kárász argues that, without the implementation of the anti-crisis measures, the unemployment rate in Slovakia would be 2.3 percentage points higher in 2009. Nonetheless, in relation to the present labour market situation, the adoption of new measures to reduce the high unemployment rate is essential.

Mixed reaction to draft measures

Early in November 2009, the Slovakian Prime Minister, Robert Fico, asked some government ministers to prepare proposals for tackling the increasing rate of unemployment. On 23 November 2009, the government proposals were discussed by the social partners in the Economic and Social Council (Hospodárska a sociálna rada, HSR). For instance, the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny Slovenskej republiky, MPSVR SR) proposed to prolong the entitlement period to unemployment benefit from six to eight months. In addition, unemployed people who are not entitled to unemployment benefit should be provided a new social benefit for a period of three months.

The trade union representatives welcomed the government measures and proposed to utilise available resources of the active labour market policy measures for their implementation. However, employer representatives were not satisfied because the government had not specified the financial resources for the implementation of the proposed measures. The President of the National Union of Employers (Republiková únia zamestnávateľov Slovenskej republiky, RÚZ SR), Marián Jusko, is concerned that implementation of the measures could increase the public deficit in 2010.

The Ministry of Finance (Ministerstvo financií Slovenskej republiky, MF SR) intends to collect resources for implementing the proposed measures through savings in the state budget and the re-allocation of planned expenditure. It is assumed that such expenditure would amount to about €118 million (‘Pomoc nezamestnaným je otázna’, daily newspaper SME, 24 November 2009). MPSVR SR also proposed to increase fines for undeclared work, which generates lower revenue for the state budget and smaller compulsory contributions to insurance funds.

Government to seek optimal solutions

The government is also planning measures to maintain employment levels. It will probably continue to support the programme for insulating flat roofs and family homes, which could create about 11,000 to 13,000 new jobs. According to the Ministry of Construction and Regional Development (Ministerstvo výstavby a regionálneho rozvoja Slovenskej republiky, MVRR SR), the programme would require about €100–€120 million annually.

Moreover, the Ministry of Economy (Ministerstvo hospodárstva Slovenskej republiky, MH SR) proposes to allocate €128 million for the provision of state aid to investors, which would create nearly 3,900 new jobs. The government will assess the recommendations and decide on the implementation of new employment-related measures.

Commentary

The anti-crisis measures adopted so far have helped to mitigate the impact of the economic downturn on employment; however, their implementation required significant financial resources from the state budget. Such support to employment cannot be provided for an unlimited period. The priority is the revival of the economy, together with boosting labour demand and creating new jobs. Although some economic growth is expected in 2010, its impact on employment is likely to be very slight. According to Dr Kárász, more significant employment growth in Slovakia requires a 3%–5% increase in gross domestic product (GDP). However, such growth is expected only in 2012.

Ludovit Cziria, Institute for Labour and Family Research

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