Labour Market – experiences of the Labour Market – experiences of the Slovak Republic Slovak Republic

National Convention on the EU in Serbia

Mária Nádaždyová, EPPP

Belgrade 16 March 2009

2009 – year of anniversaries

5 years since the accession to the EU

20 years since the fall of Iron Curtain

EU membership: wide support and consensus across the whole social and political spectrum

Positive economic and social achievements of last years disrupted by the global economic crisis

SK-EU development: strongly interlinked, full integration

SK labour market development

Labour market (LM) performance compared to selected MS 2000 -2007

LM performance compared to selected MS 2000 -2007

LM performance compared to selected MS 2000 -2007

SK: development of registered unemployment rate2005-2008

Vývoj miery evidovanej nezamestnanosti

7,0

8,0

9,0

10,0

11,0

12,0

13,0

14,0%

rok 2005 rok 2006rok 2007 rok 2008

Lisbon Strategy (LS) - growth and jobs

• Mid-term review in 2005: Integrated guidelines for growth and jobs (broad guidelines for the economic policies of the MS and the Community and Guidelines for the employment policies of the MS.

• MS invited to take the integrated guidelines for growth and jobs into account in their national reform programmes (NRPs).

• 4 pillars of the renewed LS – 4 priority areas: R&D and innovation business environment employment opportunities integrated energy/infrastructure policy.

Development of selected indicators for monitoring of the Lisbon Strategy

Development of selected indicators for monitoring of the Lisbon Strategy

Development of selected indicators for monitoring of the Lisbon Strategy

Development of selected indicators for monitoring of the Lisbon Strategy

SK success story (National Reform Programme 2008)

„High economic growth, a stable economic environment, employment growth,

unemployment decline in the previous years and a gradual consolidation of the

public finance have created the preconditions for further growth of the

Slovak economy and increased standards of living in the country.“

Sources of GDP growth(INEKO survey among local economists, March 2007)

Tax reform (2004) 21%

Privatisation by foreign investors (1998-2002)

17%

Entry to the EU (2004) 12%

Labour Code Amendment (2003) 10%

Reforms before 1998 10%

Pension reform (2004-2005) 4%

Other sources (including social welfare reform)

26%

Labour Code

Before 2003 2003-2007 After 2007

Firing costs 3+2 months 2 or 3 months 2+2 or 3+3 months

Extension of term contracts No Indefinite Up to 3 years

Overtime yearly 150 hours 400 hours 400 hours

Approval by union for group dismissals and firing workers

Yes No No

Retraining before dismissal Yes No No

Union approval for flexible work time

YesNo within 4-

month period Yes

•Basic features of 2003 reform More flexibility: Less coercive character – setting only basic standards, Weaker trade unions

•Basic features of the 2007 amendments Better protection: improved terms and conditions for decent work, part-time contracts employees protection, protection of dependent work, reduction of gender pay gap.

Employment Services Actextensive amendments – May 2008

• ALMP measures reinforced and extended• Measures better focused on disadvantaged groups

aiming at increasing their employability• Support of LM integration of disadvantaged groups e.g.

school graduates, disabled, mothers, pre-retirement age• Measures to address long-term unemployment e.g.

allowances for training disadvantaged job seekers, to keep employment of low-income groups, allowances for LM education and training for graduates, transportation to work allowance, support for self-employment jobs and social enterprises.

European Economic Recovery Plan

• In the context of the current economic downturn, the European Council in 2008 agreed on a European Economic Recovery Plan (EERP)

• This plan provides for a co-ordinated budgetary stimulus to boost demand and restore confidence.

• It should be accompanied by an acceleration of structural reforms, grounded in the LS, to stimulate the economy whilst boosting the Union's long-term growth potential, notably by promoting the transition towards a low-carbon, knowledge-intensive economy.

• It also presents proposals to stimulate EU labour markets, notably through the implementation of integrated flexicurity policies focussed on activation measures, and skills.

• These are essential in promoting employability and ensuring rapid re-integration into the labour market.

Implementation of the LS reforms in the context of the EERP – SK assessment by EC

• Slovak GDP growth moderated to 7.1% in 2008, down from 10.4% in 2007, mainly as a result of a slowdown in the external demand.

• In 2009 the Slovak economy will grow more slowly. • Inflation increased to 4% in 2008, but will ease in 2009. • The government budget deficit is expected by the EC to

have widened to 2.2% of GDP in 2008. • The current account deficit is estimated to have been 6%

of GDP in 2008, and is expected to remain at that level in 2009.

SK assessment by EC: employment

• Employment grew by 2.3% in 2008, but is expected to slow in 2009.

• Unemployment is likely to stay high, at above 10% in 2009.

• The export-oriented companies, in particular the automotive sector, and employees with atypical contracts will likely be hardest hit by the slowdown.

• Additional measures are needed to improve entrepreneurship, to develop an active ageing strategy and to address youth employment.

SK assessment by EC: medium-term challenges

• to continue reducing unemployment, notably long-term unemployment,

• to improve the quality of the education and training system,

• to enhance the employability of certain groups, • to gradually reduce regional differences in both income

and employment. • to increase the quality of output of R&D and innovation

and private sector involvement • to enhance the focus on fiscal discipline in order to

ensure macro-economic stability and improve the adjustment capacity of the economy

• to implement the energy and climate change package

Main recommendations for SK• to continue implementation of structural reforms • within an integrated flexicurity approach to make

progress in the implementation of the LLL strategy

• to continue the reforms of education and training systems to address the skill mismatch,

• to develop an active ageing strategy and enhances access to employment for the long-term unemployed and disadvantaged groups.

New LM challenges brought by global economic crisis

• protecting employment • promoting entrepreneurship • reinforcing activation schemes • improving skills and jobs matching • supporting creation of demand for labour by

reducing social charges on low income jobs

Message

Nothing can preclude your success on the way towards better future if you have:

Clear vision and strategyPolitical will and courage

Streamlined, transparent and goal-centered policies and resources

Public support and involvement

References

• A European Economic Recovery Plan, COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL, COM(2008) 800, 2008

• Five years of an enlarged EU – Economic achievements and challenges, European Economy 1/2009, 2009, Brussels (graphs: slides 3 -6)

• Implementation of the Lisbon Strategy Structural Reforms in the context of the European Economic Recovery Plan - Annual country assessments: COUNCIL RECOMMENDATION on the 2009 up-date of the broad guidelines for the economic policies of the Member States and the Community and on the implementation of Member States' employment policies, COM(2009) 34/2, 2009, Brussels

• National Reform Programme of the Slovak Republic for 2008 – 2010, 2008, Bratislava (tables: slides 9-12)• Peter Goliaš: Experience of Slovak Labour Market Reform, INEKO – Institute for Economic and Social Reforms,

2007, Belgrade (tables: slides 14-15)• UPSVaR, unemployment statistics, 2008, Bratislava (graph: slide 7)

Thank you for your attention!

Mária Nádaždyová

EPPP-European Public Policy Partnership

Zámocká 36

814 99 Bratislava

e-mail: nadazdyova@eppp.sk