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False data feeding anti-reformers

As doubt spreads about the accuracy of official data on Slovakia's jobless rate and real wages, the gaps in the numbers are beginning to interest more than economic analysts. Some Slovak politicians and foreign investors now say that the exaggerated figures may be pushing leftist parties to stiffen their resistance to reform, and encouraging them to protect citizens from 'threats' that don't really exist.
Most criticism has been focused on the country's unemployment rate, which according to Labour Office estimates hit a record 20.5% this January. Both government and independent analysts have put the real figure closer to 15%, saying about 150,000 of Slovakia's current 550,000 registered unemployed actually work on the side (see story, page 1).


Reformers are worried that SDĽ politicians like Peter Weiss may be following rather than leading public opinion.
photo: Peter Brenkus

As doubt spreads about the accuracy of official data on Slovakia's jobless rate and real wages, the gaps in the numbers are beginning to interest more than economic analysts. Some Slovak politicians and foreign investors now say that the exaggerated figures may be pushing leftist parties to stiffen their resistance to reform, and encouraging them to protect citizens from 'threats' that don't really exist.

Most criticism has been focused on the country's unemployment rate, which according to Labour Office estimates hit a record 20.5% this January. Both government and independent analysts have put the real figure closer to 15%, saying about 150,000 of Slovakia's current 550,000 registered unemployed actually work on the side (see story, page 1).

Ján Langoš, a right-wing MP with the ruling coalition SDK party, put the real jobless rate even lower, and said that the official figures were a powerful tool in the hands of those who wanted to slow reforms such as price hikes, bank and utility privatisation and civil service cuts.

"What we are seeing is kind of a semi-reality which comes from errors in the way figures are collected - errors which, according to our experience over the last 10 years, have been influenced by politics," Langoš said. "The real figures, meaning unemployed people who don't have jobs and who are interested in finding work, are far below the official figures - perhaps as much as a third lower. They would shock many politicians, and would substantially aid reforms."

For Langoš, leftist parties in the coalition like the former communist Democratic Left Party (SDĽ) might even have a hidden interest in making sure the official figures were not examined too closely, given the party's close relationship with the state bureaucracy. "There is over-employment in the state sphere, so if official figures remain high, that gives the government a powerful reason to avoid adding to unemployment by civil service cuts," Langoš said.

The government has promised to approve a state administration reform bill this March, but the 10% cuts in the ranks of the civil service promised in 1999 have been whittled down to about 5% largely as a result of SDĽ objections to the bill.

SDĽ officials, however, have dismissed ulterior motives in their opposition to reforms proposed by free-market advocates like Langoš, and say that whatever small discrepancy exists between official jobless numbers and the real situation, unemployment is still a grave problem in Slovakia.

"Unemployment of 14 or 16% can be taken as high," said Peter Weiss, vice-chairman of the SDĽ, "so even if one could show that official figures were two or three percent higher than they should be, that still wouldn't change the fact that in some eastern areas of Slovakia, there are still districts with over 30% unemployment, and villages where unemployment is over 90%."

Weiss said that no link could be drawn between the release of January's record unemployment total and SDĽ leader Jozef Migaš's call last month for the party to practice "more leftist politics." Political analysts have said that the country's apparently worsening economic figures were behind the SDĽ's recent fall in the polls to around 5% popular supprt from over 14% in 1998, and had triggered a decision from the party's leadership to re-establish itself as the defender of the common citizen.

"That's a label that we have been given by the pseudo-reformers in the Democratic Party [of Ján Langoš]," said Weiss. "Whenever we don't agree with every poorly-prepared economic idea we get labelled as being anti-reform. This is a cliché that we have to get rid of. The SDĽ is interested in seeing the transformation process completed, but we are also concerned that public support for reform is not lost. Without continued public support, no modernisation of this country will be possible."

It is this government concern for public support - and the impact that high jobless figures and slumping real wages have on the average voter - that worries Heinz Zemke, director of Juhocukor, the largest sugar mill in the country. "On the political level, economic figures play a huge role," said Zemke, who estimated that the real unemployment figure was about half the official total. "I'm just afraid the government will take the wrong steps to alieviate unemployment, such as trying to control markets more tightly rather than liberalising them."

But other investment professionals have noted that worsening economic figures have actually buttressed the arguments of right wing politicians that reforms be pushed through more quickly. "Take, for example, the new investment package that is being produced for foreign investors," said Roman Minarovič, director of the SNAZIR investment booster agency. "The high unemployment figures have been pushing the government to prepare new conditions for investors, and the inventives in our new package will be better than those in countries around the region."

Minarovič said a government working group composed of SNAZIR, Deputy Prime Minister for Economy Ivan Mikloš and the Ministries of Finance, Economy and Labour would have the investment package ready by the end of March. He predicted it might be approved by cabinet in April.

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