Jobless rate hits post-crisis high

WINTER is traditionally unkind to those seeking jobs but Slovakia cannot blame its 13.16 percent unemployment rate in February, the highest post-crisis level, only on cold weather. While Slovakia’s economy has been slowly getting back on its feet, recovery in the labour market has not kept pace. Employers remain cautious in hiring, waiting for a more stable level of orders and labour market analysts say a drop in the jobless rate might only begin in the second half of 2011.

February’s 13.16 percent jobless rate increased by 0.18 percentage points in comparison with January and in human terms it meant that 395,445 people were registered as unemployed at the country’s labour offices, according to data released by the Labour, Social Affairs and Family Office (ÚPSVAR) on March 21. The jobless rate in February also stood 0.19 percentage points higher than the same month in 2010 and marks the highest number of unemployed Slovaks since January 2005.

Eastern Slovakia’s Prešov Region registered an 18.43 percent jobless rate and Košice Region had 17.78 percent, the two highest regional unemployment rates in the country.

Michal Páleník of the Employment Institute, an employment think tank, told The Slovak Spectator that the first quarter of the year is traditionally not a very positive period for improvements in the labour market, but that alone does not explain the lack of hiring.

“The economy is slowly growing but employment isn’t,” Páleník said.

“Companies have rationalised their processes during the crisis and they no longer need as many employees. They are also more cautious since their orders are leaner than before the crisis.”

Along with the regular seasonal influences, the unemployment rate has been influenced by a decline in the number of people who are considered to be economically active, Eva Sadovská, an analyst with Poštová Banka, told The Slovak Spectator.

The registered rate of unemployment is calculated by setting the number of jobless people who are immediately ready to accept work against the number of people who are economically active – those who are considered to be part of the labour force. Although the number of economically active people changes during the year, ÚPSVAR only estimates the number at the beginning of the year and then uses that figure for the rest of the year, Sadovská explained.

Last year the number of economically active persons was calculated at 2,687,048 and this year it is 2,667,708, Sadovská said, adding that “regardless, the actual number of people without jobs is the highest since the beginning of 2005”.

“Despite the rather gloomy start, we expect the unemployment rate to decline during the year,” Sadovská said, noting that 12 percent might be the lowest level that the country reaches. “The pre-crisis levels cannot even be thought of. It will only be in three to five years that Slovakia will be able to reach those levels.”

Páleník expects the jobless rate in March and April to be very similar to February but added that seasonal jobs in May and June could increase the level of employment.

“It is difficult, however, to predict when [business] orders will be high enough and last for a longer term so that employers start hiring many more people,” Páleník said.

Sadovská agreed that seasonal jobs that traditionally emerge during the summer should help to some degree but that there are more fundamental possibilities.

“This year the country relies mostly on revival in industry and investments planned within that sector to create new jobs,” Sadovská said.

She added, however, that current and future layoffs in the public sector will have a negative impact on the unemployment rate.

Regarding the types of initiatives that the state might use to reduce unemployment, Páleník said that the long-term steps are clear: an improved business environment, better law enforcement, reduced corruption and less administrative burden.

In the short-term, Páleník said only very effective, active labour market policies could help to bring supply and demand into better balance.

Slovakia should launch various structural reforms to the labour market to push down the unemployment rate, said László Andor, the European commissioner for employment, social affairs and inclusion, when speaking to a ministerial conference about the impacts of the global economic crisis on employment held in Bratislava on March 22.

Andor also stated that Slovakia should create better opportunities for people who are now excluded from the labour market, the SITA newswire reported.

In terms of the structure of those who are unemployed, Páleník said that during the economic crisis a higher number of people ended up in the pool of unemployed but its core composition remained the same. He added that many school graduates, who must usually depend on new job openings, are becoming stuck in persistent unemployment.

The number of jobless people who had previously worked in the trade or services sectors increased by 330 in February compared to January. The number of jobless people without qualifications grew by 160 month-on-month while the number of unemployed who had previously worked in administrative jobs, for example as clerks, increased by 155, said Sadovská. Additionally, 3,154 people who were not classified in any particular job category became unemployed in February, she noted.

On a brighter note, 371 people who had been previously employed as machine operators found jobs in February and Sadovská said this confirms other statistics released by the Statistics Office which show that only the industrial sector has created new jobs while the trade, services and construction sectors employ fewer employees than a year ago.

Restrictions on working in Germany and Austria to end

Germany and Austria will fully open their labour markets to Slovak citizens when the 7-year transition period that these countries negotiated with the EU at the time of Slovakia’s accession expires on May 1, 2011.

“The delay in the full opening of the [labour] market on the part of Austria and Germany germinated from fears of an excessive influx of cheap labour,” Sadovská told The Slovak Spectator. “Thus both countries have been working on measures that would reduce the eventual invasion of cheap labour.”

Based on analysis of the Slovak labour force, Sadovská said approximately 127,000 Slovaks are working abroad.

“If we add approximately 25,000 students and various illegal workers, we would probably get the number up to somewhere about 200,000 people [abroad],” Sadovská said. “So about 9 percent of the total Slovak workforce is working abroad; one of the highest rates in Europe.”

Of the Slovaks who are legally employed abroad, the largest proportion, 41.4 percent, work in the Czech Republic and another 18.9 percent have jobs in Austria, Sadovská said, adding that most of the Slovaks legally working abroad hail from the Prešov and Nitra regions.

Sadovská said Slovaks do not have much difficulty travelling abroad to take up jobs, particularly since Austria and the Czech Republic are Slovakia’s neighbours. While some Slovaks might have been waiting a long time for the expiration of the labour market restriction, Sadovská noted that those individuals who wanted to work in Austria or Germany probably had already found a way of doing so.

The lure of jobs in Austria or Germany might be very attractive for both employed and unemployed Slovaks since the average wage in these countries is four times higher than in Slovakia.

But Páleník does not expect a mass exodus. “It certainly will not be any fundamental change,” he said. “I assume that a couple of hundred or maximally a couple of thousand people will be involved.”