Government schemes support employment

The unemployment rate in Slovakia has been increasing in 2012 and its youth unemployment is among the highest in the European Union. To combat these problems, the Slovakian government has adopted two specific measures. The first will support job creation for young people and those over 50, and the second will help struggling companies maintain existing jobs. There has been some criticism from employers who feel financial help from government could distort the labour market.

Continued increase in unemployment

After a temporary decline in 2011, unemployment in Slovakia is again on the increase. According to Slovakia’s labour offices, registered unemployment reached 14.5% in December 2012. In addition, the unemployment rate among young people has been increasing and it is now one of the highest in the EU Member States. Around 33% of young people under 25 able to work are unemployed.

At the beginning of 2012, the President of the European Commission (EC), José Manuel Barroso, sent a letter to the Slovak government. In the letter he discussed the serious situation of unemployment of young people in Slovakia. The Minister of Labour, Social Affairs and Family, Ján Richter, promised to adopt effective measures to support employment, particularly the employment of young people and the long-term unemployed over the age of 50.

The Ministry of Labour, Social Affairs and Family (MPSVR SR) has prepared two specific projects which should allow the country to meet these objectives.

Employment of young people

The government’s first project is intended to create jobs for young people under 29 who have been registered as unemployed for at least three months. It also targets disadvantaged jobseekers over 50 who have been registered as unemployed for at least six months.

Employers will be offered a subsidy of a worker’s salary if they can create a full-time job for at least 18 months. The subsidy amounts to 95% of the expected minimum monthly labour cost in the country in 2013, set at around €456. The contribution will be paid monthly over 12 months, and the employer is then obliged to keep the worker employed for at least another six months.

The government is putting €50 million into the project, and it is expected to create more than 9,100 jobs.

The second project is similar, and supports the creation of jobs in regional self-governments and their organisations. The target groups are again unemployed young people under 29 and older workers over 50. Over a period of three years, €20 million will be spent on this project and it is expected to create 4,700 jobs.

Maintaining existing jobs

A further measure targets the maintenance of existing jobs. If a company gets into economic difficulties, it has the option of asking the government for a contribution towards saving threatened jobs. The government contribution would cover payments to compulsory insurance funds for employees on short-time work – up to a maximum of 60 days a year. The measure will be available to firms from May 2013.

The MPSVR SR plans to allocate about €380,000 to the scheme to maintain approximately 5,000 jobs in 2013. In 2014 and 2015 it expects to save between 7,300 and 7,500 jobs.

Mixed reaction to the initiative

The government adopted a similar measure during the crisis in 2009–2011. Some employers welcomed the initiative but hoped that this time it would be less bureaucratically difficult for the employers. Other employers criticised the move. According to the Federation of Employers’ Associations SR (AZZZ SR), the measures are likely to distort the labour market, since some companies will receive more help from the state than others.

However, it could be useful for employees in regions with high levels of unemployment. Special committees established at individual labour offices will decide how to allocate the state contributions to maintain jobs. The committees are likely to be made up of representatives from employers’ groups and trade unions from the relevant regions.

Ludovít Cziria, Institute for Labour and Family Research

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