Dispute over changes in the Labour Code

Talks on changes to the Labour Code in Slovakia began in October 2010. The Ministry of Labour, Social Affairs and Family is trying to encourage the social partners to reach an agreement, but the two sides have conflicting views. Employers want more overtime work, more flexible forms of employment and easier ways of dismissing workers. The unions want a shorter working week and less overtime. No agreement has yet been reached and the trade unions are threatening protests.

Background

The Labour Code regulates working conditions and the activities of employee representatives, which are mainly trade unions. Trade unions are therefore very sensitive to any changes in the Code. Alterations to it often follow changes in the balance of power of the government coalition. In 2001, the unions succeeded in overturning suggestions that would have established works councils in companies where trade unions already existed (SK0207102F). This meant works councils could be established only in enterprises without trade unions. In 2003, the coalition government, led by Prime Minister Mikuláš Dzurinda (SDKÚ-DS), re-drafted the Labour Code so that works councils could be set up in a company regardless of whether there was a trade union presence. The coalition’s changes also made it easier to dismiss employees, prolong overtime and reduce the competences of trade unions (SK0312103F). Trade unions organised several protests (SK0303101N) over this and their demands were met in 2007, after a new coalition government, led by Prime Minister Robert Fico (SMER-SD), came into power and annulled or modified several of the 2003 changes (SK0709029I).

How crisis sparked demands for new laws

The 2007 Labour Code is still in force. However, it is disliked by employers who argue that the changes caused the loss of many jobs. The Business Alliance of Slovakia (PAS) says that the Code has increased costs for employers. Changes in the Labour Code were also discussed with the British Chamber of Commerce in Bratislava. In 2007–2008, the Slovak economy was flourishing and there were no urgent demands for changes to the Labour Code. However, in 2009, once the economic crisis had begun to take effect, especially on employment, there were growing complaints that the situation had been exacerbated by inflexible labour legislation. In July 2010, a new coalition government, led by Prime Minister Iveta Radičová (SDKÚ-DS), was formed. This government’s ambitious Programme Declaration (in Polish, 417Kb PDF) also included plans for making the laws on employment and labour relations more flexible.

Debate on potential changes

In October 2010, intensive open discussions began on changing the Labour Code. Some employers announced which changes in the Labour Code they would welcome. The representative of KIA Motors Slovakia, Dušan Dvořák, asked for more flexibility. He was backed by Dávid Dereník, an analyst of UniCredit Bank, who said that flexibility is more important for companies in crises than labour costs. The President of PAS, Robert Kičina, said entrepreneurs could benefit by more than €46 million if:

  • the rules on overtime and redundancy pay were revoked;
  • they were given the ability to renew fixed-term contracts more than once;
  • the right to redundancy pay could be cancelled after a period of notification.

It is possible that the employers could use the saved money for the creation of new jobs. However, economist Vladimír Baláž of the Slovak Academy of Sciences (SAV), says this scenario would require the economy to grow at least 4% per annum. He pointed out that flexibility would be irrelevant if the economy were to stagnate (see daily Hospodárske noviny, ‘Minister Mihál a spol. môžu vrátiť biznisu milióny eur’, 26 October 2010). Jozef Kollár of the coalition party Freedom and Solidarity (SaS), said employees should not feel that any changes are against them. However, representatives of the Confederation of Trade Unions (KOZ SR) say the proposed changes are against the workers’ interests and want instead to shorten the working week to 35 hours and reduce annual overtime to 80 hours.

Social partners should agree on changes

The Ministry of Labour, Social Affairs and Family does not want to dictate the changes, preferring instead a dialogue between employers and trade unions. The Minister of Labour, Social Affairs and Family, Jozef Mihál, said in an interview (in Slovak) that his opinion on changes is not significant. ‘I am following the Programme Declaration of the government, which has identified the need to introduce more flexible forms of working time and to reconcile work and family life,’ he said, adding: ‘It will not be possible anymore to work during the two-month notice period and then also receive redundancy pay.’

A tripartite expert working group was set up to encourage the social partners to debate possible changes to the Labour Code. Its members are representatives of the employers, trade unions and MPSVR SR. The ministry wanted to give this group’s talks a wider context by providing the social partners with an analysis of relevant labour standards in other EU Member States. However, at the meeting on 16 December 2010, union representatives walked out. They had expected that the ministry would submit a comprehensive list of concrete proposals for change. The Vice-President of KOZ SR, Vladimír Mojš, explained in an interview (in Slovakian): ‘Promises were not fulfilled. It is not acceptable for us to negotiate gradually about partial provisions of the Act. Everything is interconnected. The ministry expressed in a statement (in Slovakian) its disappointed with the trade unionists’ reaction. It added it does not want to apply a top-down approach and to amend the Labour Code without negotiating with the social partners.

The Vice-President of the Association of Mechanical Engineering (ZSP SR), Juraj Borgula, reacted to the walk-out by saying that the discussion managed in this way would lead nowhere. He added: ‘It was not completely wrong but again, we did not agree upon anything concrete.’ The President of Metal Trade Union Association (OZ KOVO), Emil Machyna, was reported in an article (in Slovakian) as saying that if an acceptable agreement is not reached, trade union protests will continue. It was hoped the expert working group would meet again in January 2011.

Commentary

Employers did not apply any significant pressure for changes in the Labour Code until the economic crisis began to affect employment in 2008. During 2009, restructuring in many enterprises was accompanied with mass dismissals and even closures. This resulted in of tens of thousands of jobs being lost and a big increase in unemployment in Slovakia. Demands were made for rules about the hiring and firing of employees to be simplified. Employers who needed to dismiss redundant employees (even if they had at their disposal anti-crises measures (SK0904019I) allowing for more flexible forms of employment) dismissed them even under current legislation. There is no doubt they had to spend a lot of money on redundancy pay for the dismissed employees. Management at the engineering company PPS Detva, where hundreds of employees were dismissed in 2008–2009, had to use financial resources earmarked for production for redundancy pay instead. According to Eurostat data, in August 2010, Slovakia’s unemployment rate increased to 14.6% – the fifth highest in the EU. The situation in the labour market requires an effective response and the discussion on changes in the Labour Code is legitimate. Attention should, however, be paid to those changes which would really help to improve the employment situation in Slovakia.

Ludovít Cziria, Institute for Labour and Family Research

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