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The economy, not the code, impacts jobs
25 Feb 2013 Beata Balogová Career and HR
Ján Richter is confident that developments in the economy, which is being squeezed by the crisis, and not the revised Labour Code, are negatively impacting employment in Slovakia. While he suggests that the state will not be able to prevent layoffs if the economy is not performing well and businesses’ sales are in decline, the ambition of the state should be to create new jobs. The Slovak Spectator spoke to Labour Minister Ján Richter about the revision of Slovakia’s key labour legislation, changes to the pension system, risky groups in terms of unemployment but also the practical on-the-job training of graduates as well as protected workrooms for disadvantaged groups.
The Slovak Spectator (TSS): The revision of the Labour Code and its impact on the labour market has been discussed extensively for some time. Critics say that changes to the Labour Code will put so much pressure on employers that they will have to resort to mass layoffs. What impact do you expect the revision to have on the market?
TSS: When adopting the Labour Code the government of Robert Fico promised that if it proves to have negative impacts, it would re-evaluate them. When do you plan to review these impacts?
TSS: Unemployment in Slovakia at the end of 2012 reached its highest level in nine years. You have said that the crisis and economic developments in Germany are behind Slovakia’s high jobless rate. What are the options of the Labour Ministry in its fight against unemployment?
We are geared toward modernising employment services at labour offices so that they are oriented to the client, which is the citizen. Apart from that, at the end of last year we launched two national projects to support the employment of young people aged up to 29, which should create 14,000 jobs. We are preparing a project of voluntary military service in cooperation with the Defense Ministry, in which we want to involve the long-term unemployed within the non-military unit.
TSS: Young people are a group threatened by high unemployment rates. How do you assess the measures adopted so far in the fight against unemployment of the young and what other measures do you plan to implement?
In the second project, which we launched in relation to the self-governments, municipalities and self-governing regions, we similarly support the employer, which would hire an unemployed person younger than 29 years of age. There is a relatively high level of interest in the first business project: we can talk minimally about [having received] thousands of applications from businesses. There is less interest in the specific activities of the transport industry and self-governments, but to a certain degree I am attributing this to seasonal factors and the adoption of new budgets. It will be more objective to return to it [their assessment] in a couple of months.
TSS: People aged 50 and older are another group facing the threat of unemployment. What challenges do people in this group face in Slovakia, and is their work experience being sufficiently utilised?
TSS: What challenges does Slovakia’s pension system face, and how do you plan on addressing these issues? How do you view the frequency of changes made to the existing system and its impact on the stability of the whole system? In what stage are the preparations of the constitutional law, which should guarantee the whole pension system’s stability?
Within systemic changes and equalising different existing types of employment relations, we have included in the circle of those with social insurance also temporary employees, with specific changes also for students and old-age pensioners along with physically disabled pensioners. With this move we want to provide them with social security similar to what regular employees have. Within the pension reform we also would introduce as of next year the so-called minimal pension, which would secure for each pensioner at least a minimal income. We want to make a clear distinction between someone who worked for several decades and someone who has never joined the work force or has only worked for a few years.
As far as the opening of the second pension pillar is concerned, we did it to give people the option to decide whether, even after the changes we introduced, they are interested in staying in the second pillar. However, in the future it would not be good to open it too frequently or at all, but now it is in the hands of the pension fund management companies, who are in charge of increasing the value of the invested funds.
We are ready to talk about the constitutional law, which would guarantee certain things that are already embedded in the [existing] law. We are now involved in a more intense debate with representatives of the opposition deputy factions, while we have prepared six points for them: the first two concern the second pillar, while we are dealing with the gradual increase of payroll taxes to the accounts of savers from 4 percent to 6 percent, and under what conditions we are willing to reflect the development of the economy and again increase the percent share. The next point suggests that we do not wish to cut the share below 4 percent. The additional two points pertain to the first pillar and the way we intend to increase the retirement age. We also want to guarantee that the ownership rights of the saved funds are untouchable and agree on defining the span of the pension savings, which we propose to stretch from 15 to 20 years.
TSS: How do you view the proposal for a provision on quotas for the number of females in high managerial positions? How do you view the current number of females in general who are in high managerial positions in Slovakia?
TSS: People with health disabilities worry that the revision to the law on employment services that the government approved will worsen the conditions under which they look for employment, since the state plans to limit payments that help people with severe health disabilities find jobs or start businesses. It will also be more difficult to set up protected workrooms for disadvantaged groups. How do you view these concerns? What was the ministry’s intention with this revision?
TSS: The Employment Institute proposes in its comments on the law on employment services to introduce inclusive companies and improve the practical on-the-job training of graduates. How does the state plan to improve the practical on-the-job training, how would these inclusive companies work and what should be their specifics?
TSS: Does the ministry plan to reduce the bureaucracy of employers in the area of employment and payroll tax policies? In which stage is the electronisation of services in this area?
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