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FDI troubles loom as labour shortages seen

With a considerable increase in the volume of foreign direct investments in Slovakia over the last 12 months, a threat has arisen that supply of what is now the government's most efficient tool for attracting foreign investors - a skilled and qualified labour force - will not be able to meet growing demand.
With foreign companies present in Slovakia claiming they are starting to feel the effects of a labour shortage, both analysts and government officials have said that a lack of skilled and qualified labour may mean Slovakia loses its main advantage over neighbours Hungary, Poland and the Czech Republic in the battle for foreign investors.

With a considerable increase in the volume of foreign direct investments in Slovakia over the last 12 months, a threat has arisen that supply of what is now the government's most efficient tool for attracting foreign investors - a skilled and qualified labour force - will not be able to meet growing demand.

With foreign companies present in Slovakia claiming they are starting to feel the effects of a labour shortage, both analysts and government officials have said that a lack of skilled and qualified labour may mean Slovakia loses its main advantage over neighbours Hungary, Poland and the Czech Republic in the battle for foreign investors.

"Slovakia is not yet desperately suffering from a shortage of skilled and qualified labour but it is on the way there," said Karol Balog, director of the Agency for Industrial Development and Revitalisation (AIDR).

According to the representatives of foreign companies, problems with finding a skilled labour force with the right technical qualifications have so far been a minor issue, but one which is growing in significance every year.

"The problem is that demand for [skilled] people is growing as more manufacturing companies are coming to Slovakia. Meanwhile, the labour force is still the same size as it was a few years ago," said Peter Doll, general manager of the German car clutch producer Sachs Trnava.

He added that another problem lay with the financial straits in which the education sector now found itself, with many institutions being forced to rein in costs and therefore unable to turn out as many skilled graduates.

Economy Ministry spokesperson Dagmar Hlavatá said that many skilled technicians had moved into more lucrative professions, and that a revival of the lagging Slovak industrial sector was the only way to motivate more graduates to enter the profession for which they had been trained at school.

"We feel that there has been a decrease in the volume of skilled labour, and we have to boost industry in the country to solve it," she said.

School authorities confirmed that while the number of graduates overall had not changed considerably over the last five years, the main reason behind the shrinking skilled labour force was deteriorating secondary school and university technical education, which itself stemmed from a lack of motivation.

"They [the students] often read in the newspapers how a company or two collapsed and how many companies are running into trouble. This doesn't really motivate them," said Juraj Sinay, rector of the Technical University in eastern Slovakia's Košice.

According to AIDR's Balog, many university graduates are further demotivated by wide variations in salary between professions. "It isn't a problem for a lawyer or an economist to get a salary of 30,000 crowns ($600) per month. However, a manufacturing engineer has no chance of getting so much money," Balog said.

"Put it this way - the great majority of our graduates looks for employment in professions that will give them good money easily and in a relatively short time," Sinay added.

The number of graduates from university technical faculties in 1999 was 3,734, a rise of 641 on the figure four years ago. But the number of graduates from secondary vocational schools with manufacturing and electrotechnical education has fallen from approximately 4,709 in 1994 to 3,174 in 1999, similar to what has been happening at secondary apprentice schools which have registered a decrease from 42,043 to 40,568 over the last four years.

Hlavatá said that the government had to pay more attention to what kind of companies were doing business in Slovakia, and what their labour needs were. "Nobody looks at what kind of jobs companies provide, and it might well be that more money than necessary is being invested into the support of study areas that are not so much in demand from [the majority of] companies," she said.

She explained that in the past, there had been good contact between companies and schools, and schools and the government knew exactly what was demanded from the labour market. "There used to be secondary apprentice schools based in places where big manufacturing companies had factories. These companies used to donate money to these schools because they knew that many students would become their future employees. But many of these companies were either shut down or had to lay off some employees as a result of the poor economic situation after 1989, and schools turned out students who could no longer find jobs," she said.

The need to motivate engineers and secondary technical school graduates to stick to their crafts may have become even greater in the wake of news late last month that the biggest foreign investor in Slovakia, car manufacturer VW, is to build an industrial park near the west-Slovak village of Lozorno. Slovakia is also competing with other countries to get what would be the third largest investment in its history: a manufacturing plant for the German auto giant BMW.

To boost the eastern Slovak region, an investment-poor area where unemployment figures of 30% are not uncommon, as well as to help increase the size of the qualified labour force on the market, Košice's Technical University has started a cooperation project with AIDR and the regional office of the Slovak Chamber of Commerce. The initiative is aimed at using the knowledge of its students and putting them to work on concrete development projects.

"These projects will be carried out for foreign and also domestic investors. We hope that they will help our students to find good and well-paid jobs in these companies after they graduate," Sinay said.

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