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Work law: EU rules, old world thinking

An exhaustive rewrite of Slovakia's Labour Code, which had been amended 15 times since 1991, was passed by cabinet late on Sunday, March 4. The new law brings Slovak labour law into line with European Union legislation, in part by requiring small companies that don't have unions to elect worker representatives. However, it has been criticised by business leaders for not correcting the main problem on the labour market - the difficulty of firing employees once they have work contracts.
The new Labour Code, which must now be passed by parliament, is set to take effect on January 1, 2002. The document in its paper form is the size of a telephone directory for a major city; at least two thirds of it devoted to a summary of EU and international labour law, and where these directives can now be found in Slovak labour legislation. This goal of 'harmonising' Slovak rules with those of western countries, say the law's authors, was the main reason the rewrite was undertaken in the first place.
"I think this law is a very high-quality one, mainly because it is founded on basic international labour law principles," said Vlasta Husáriková, director of the legislation department of the Slovak Labour Ministry. "It contains many conventions from international labour organisations. It wasn't necessary to drastically improve our labour law, but we needed to bring in some EU principles which weren't expressed to the extent required."


Despite changes to the labour law, many businessmen remain sceptical of overall employment legislation.
photo: Ján Svrček

An exhaustive rewrite of Slovakia's Labour Code, which had been amended 15 times since 1991, was passed by cabinet late on Sunday, March 4. The new law brings Slovak labour law into line with European Union legislation, in part by requiring small companies that don't have unions to elect worker representatives. However, it has been criticised by business leaders for not correcting the main problem on the labour market - the difficulty of firing employees once they have work contracts.

The new Labour Code, which must now be passed by parliament, is set to take effect on January 1, 2002. The document in its paper form is the size of a telephone directory for a major city; at least two thirds of it devoted to a summary of EU and international labour law, and where these directives can now be found in Slovak labour legislation. This goal of 'harmonising' Slovak rules with those of western countries, say the law's authors, was the main reason the rewrite was undertaken in the first place.

"I think this law is a very high-quality one, mainly because it is founded on basic international labour law principles," said Vlasta Husáriková, director of the legislation department of the Slovak Labour Ministry. "It contains many conventions from international labour organisations. It wasn't necessary to drastically improve our labour law, but we needed to bring in some EU principles which weren't expressed to the extent required."

Deputy Prime Minister for Economy Ivan Mikloš agreed that the new Labour Code was more an attempt to unify Slovakia's basic labour principles than to reforge them. "Until now, these rules had been constantly amended, and many of the laws now collected in this one version had been spread throughout other laws," he told The Slovak Spectator.

But business leaders, who have long complained that the Labour Code requires them to pay five months' wages to employees they wish to dismiss, and that the acceptable grounds for dismissal are troublingly vague, are unhappy that the revamped Labour Code addressed neither of these issues.

Dag Ole Storrosten, managing director of Internet provider Nextra, said that fast-developing industries such as information technology needed far greater freedom when hiring and firing workers, largely because such firms had to react swiftly to changing market conditions. These freedoms, he said, were curtailed in the current Labour Code as well as its successor.

"The main problem with the current law is that it gives employees a false and inflated perception of how safe they are," he said. "They get a false sense of security because they believe they are protected by the law. In reality, we are fighting a market war to establish a company and make it profitable. It's difficult to compete in an international setting if you have a workforce which feels too safe. They tend to be laid back and to perform poorly, because they never feel the effect if we don't meet our goals".

Compromise

One of the reasons that the new Labour Code did not go further in its reforms is that it, as so many other Slovak laws, was the result of a fierce battle between competing interest groups - in this case, Slovakia's unions and employers' associations.

Mikloš, whose job it is to steer reform of the economy towards attracting more foreign investment and reducing barriers to doing business in Slovakia, admitted that the tense battle that developed over the draft had doomed any attempts at deeper change.

"We first came to agreement on it three quarters of a year ago, but then a dispute developed between unions and employers, who felt that the holidays given were too long, that the work week had been shortened too much, and so on," he said. "Agreement was found between the two camps - the [Labour] Ministry and the unions on one side, and employers and the government on the other. Both sides made compromises. But I agree that it could have been more flexible, mostly in the part dealing with the dismissal of workers, in the level of protection offered workers in their entry to, and departure from, their jobs."

For business, while the barriers to hiring and firing remain, a troubling new element has actually been added - the requirement (paragraph 234) that in companies with at least 20 employees, an 'employee council' consisting of at least three members be elected by workers, and be given "the right to negotiate with the employer, even in cases where an existing labour body has the same right, as well as the right to [company financial] information and to control the observance of labour law implementation".

In companies with less than 20 employees, an 'employee representative' must be chosen and given the same rights. Members of employee councils, and those chosen as employee representatives, serve four-year terms, unless recalled by employees, and during this time - as well as during the 12 month period following their tenure - cannot be fired without the approval of "the Labour Inspectorate" (paragraph 238, article 7).

For Storrosten, these new rules not only create another layer of labour bureaucracy, but also reveal an ominous 'big-government' intent in the law.

"I think this is very dangerous," he said. "It looks like the labour unions have been working with the government on the law, but I'm not sure how many businesses were consulted. You have these elected employee councils which represent the law, and they are required to have access to company financial statements. The intention of this, which seems to be that the employees get information, is good, but they should be given it directly by the company management.

"I'm not sure if the intention here was to get the labour unions more 'in', to get the workforce more unionised - back to the old world, with labour unions on one side and management and owners on the other. That no longer fits. Real democracy is when employees get some kind of ownership programme, stock options and so on. In the US and modern western European countries, trade unions are fighting to find a new role."

But the Labour Ministry's Husáriková dismissed such complaints as disingenuous. "Employers who come to Slovakia from European Union countries and set up operations complain that our labour laws restrict them, but they are complaining about institutions that they have at home as well. They probably imagined that these institutions would not yet be in force in Slovakia," she chuckled.

"Yes, this law creates a new level that employers have to consult with where before there was no labour group, they're right about that, but this is the principle that European labour law is based on."

Such reasoning is unlikely to appease employers, however, who feel that while EU directives have been woven in to the new Labour Code, the anachronistic thinking behind the law has not been seriously challenged.

"It [the Labour Code] maybe fits the manufacturing world, where you have large factories with evil owners who exploit their workers," said Storrosten, "but I'm not sure how it fits into the new world".

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