Slovakia: Latest working life developments – Q2 2017
A strike at Volkswagen Slovakia over pay negotiations and the introduction of stricter conditions for the support given to unemployed workers are the main topics of interest in this article. This country update reports on the latest developments in working life in Slovakia in the second quarter of 2017.
Strike at Volkswagen Slovakia
About 8,500 workers at Volkswagen (VW) Slovakia went on strike on 20 June after pay negotiations failed. Modern Trade Unions Volkswagen (MOV), the VW workers' union, had called for a 16% wage rise, while the company had offered a 4% increase in each of the following three years.
A conciliator was brought in after six bargaining rounds failed but, even so, five further negotiation attempts were unsuccessful. On 14 June, Zoroslav Smolinsky, President of MOV, threatened strike action for June 20 after saying that management had refused to discuss a compromise proposed by the conciliator.
Lucia Kovarovič Makayová, spokesperson for VW Slovakia, said the union’s demand for a 16% wage increase was unreasonable and would not be acceptable because it would significantly threaten the competitiveness and stability of the company. The current average monthly wage in VW Slovakia is €1,804, almost twice that of the average wage in the Slovak economy as a whole.
When the last negotiations failed on 19 June, the VW Slovakia workers went on strike the following day, resulting in a dramatic drop in production. On 25 June, a compromise was reached and a collective agreement, valid from 1 June 2017 to 31 August 2019, was signed. The strike ended on 26 June. The agreed wage tariffs will increase step-by-step (by 4.7% from 1 June 2017 and 1 January 2018, and by 4.1% from 1 November 2018). Employees will also obtain a lump sum of €500 in June 2017 and one additional day of paid holiday in 2018–2019.
Stricter conditions for support to job-seekers
On 1 May 2017, Act No 81/2017 Coll. entered into effect. The act amends Act No 5/2004 Coll. on employment services and Act No 417/2013 Coll. on assistance in material need. (The Slovak system of ‘benefits in material need’ requires economically active unemployed people – jobseekers in receipt of unemployment benefit – to spend some time on small jobs. If they do not do this, their benefits in material need will be reduced by a certain amount.)
The amendment is aimed at stricter regulation and specification of the conditions under which a job-seeker can do paid work. It seeks to increase the motivation of job-seekers to accept and retain jobs offered to them by employment offices and to gain on-the-job training. It also seeks to prevent job-seekers being used as cheap labour and to encourage their regular employment.
Specifically, the amendment tightens the conditions for receiving unemployment benefit, while better enabling those who are long-term unemployed to obtain part of their benefit as assistance in material need along with their earnings. The time allowed for receiving unemployment benefit while also doing these small jobs has been cut from a total of six months per calendar year, to 40 days. During this time, the allowed maximum monthly earning has been increased from 75% to 100% of the minimum subsistence wage. If an employee is also receiving benefit in material need, the amount of their earnings not taken into account when assessing this benefit has been increased from 25% to 50%.
The proposed changes in the legislation were discussed at the tripartite Economic and Social Council on 12 December 2016. The changes were approved by the government on 17 January 2017 and the new law adopted by the Parliament of the Slovak Republic on 22 March.
The strike in VW Slovakia has been the most significant strike in a private company in Slovakia to date, and was the first major strike in the 20-year history of the company. Its results could also play an important role in the context of the national labour market. Stricter conditions for the support given to unemployed workers will mainly affect the long-term unemployed who often refuse to accept jobs offered to them by the labour offices.