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Jobless benefits to be cut sharply in '99

Battling a "catastrophic" unemployment rate and widespread abuse of the social benefits programme, the National Labour Office and the Ministry of Labour have agreed to slash unemployment benefits in the second half of 1999.
Officials from the Labour Office and the ministry told journalists on April 29 that the planned revision to the Employment Law, which the government should discuss by the end of June, would shorten the maximum period for receiving unemployment benefits from twelve to nine months.
The proposal also suggests that the maximal monthly unemployment benefit should be cut from the current 5,400 Slovak crowns ($127) to 4,500 crowns, while the minimum rate of 3,000 crowns would remain unchanged.

Battling a "catastrophic" unemployment rate and widespread abuse of the social benefits programme, the National Labour Office and the Ministry of Labour have agreed to slash unemployment benefits in the second half of 1999.

Officials from the Labour Office and the ministry told journalists on April 29 that the planned revision to the Employment Law, which the government should discuss by the end of June, would shorten the maximum period for receiving unemployment benefits from twelve to nine months.

The proposal also suggests that the maximal monthly unemployment benefit should be cut from the current 5,400 Slovak crowns ($127) to 4,500 crowns, while the minimum rate of 3,000 crowns would remain unchanged.

The scheduled cuts won applause from economic analysts worried that the state would not meet its fiscal targets for 1999, but drew fire from unions and unemployed Slovaks, who say cuts to benefits will not get them off the unemployment list any faster.

At the Bratislava Labour Office on May 5, for example, a 45-year-old metal worker speaking on condition of anonymity ridiculed the prepared changes to the benefit scheme. "It's stupid, because what can you do if you can't find a job? I'm not getting much now, and if they do this thing, I'll get even less," he said.

Unionists, for their part, claim that the planned restrictions to the benefit scheme are only an administrative measure meant to secure the outlined fiscal targets of the government, but that they would not help the problem of too few jobs in the labour market.

"This is not a solution to the problem of unemployment," Emil Machyna, vice-president of Trade Unions Confederation, told The Slovak Spectator on May 6. "It's not fair when people who worked for over twenty years lose their jobs through no fault of their own, and when they can't find new ones they get less in their benefits."

A necessary evil

State officials justified the unemployment benefit cuts by citing the recent dramatic rise in Slovak unemployment, and the resulting strain this has imposed on a cash-strapped state.

National Labour Office statistics show that the jobless rate rose to 17.62% in March, an all-time high. The number of the unemployment increased to 470,000 people, also a record.

"The situation with unemployment is catastrophic and we have to do something about it," said Pavel Tomasta, director of the analysis and strategy department at the National Labour Office in an interview with The Slovak Spectator on May 4.

Edit Bauerová, the state secretary at the Labour Ministry, explained why the state had decided to cut benefits rather than focus on creating jobs to deal with the unemployment rate.

The nation's social welfare system needed a radical overhaul, Bauerová said, since its overly generous provisions provided few incentives for jobless people to look for work. Without such reform, she predicted, by the year 2010 Slovakia would have two economically unproductive people for every working citizen. "That's why Slovakia needs a new social welfare system," Bauerová said at a May 2 press conference.

Unionist Machyna agreed, but said that the changes should consist of systematic measures, including a strict mechanism to stop working people from illegally collecting benefits. "More strict sanctions should be implied in the new draft, to allow the labour offices to cooperate with police, let's say, in finding and penalizing both employers and employees who abuse the benefit system," he said.

Trade unions, Machyna continued, would propose such changes to the draft in further discussions with the Labour Ministry and the National Labour Office.

According to official Labour Office research, over 130,000 people who are registered as unemployed are in fact working illegally. Tomasta blamed this situation on a 1997 amendment to the Employment Law which allowed people to abuse the unemployment benefits system.

"I think it's nonsense to give people [unemployment benefits] just as pocket money, while they continue to earn additional money elsewhere without even paying taxes," he said.

Tomasta also reported that under the terms of the 1997 amendment, the Labour Office had been forced to spend 93% of its funds on providing benefits, and only 7% on job-creation schemes and re-qualification courses.

According to statistics provided by the Labour Office, the agency paid 1.93 billion crowns ($46 million) in unemployment benefits in the first quarter of 1999, a new record. Only 136.6 million Sk ($3.25 million) was spent in support of job creation in the same period.

Tomasta said that the proposed benefit cuts would save the Labour Office up to 1.2 billion crowns annually, money which could be used to encourage employers to create jobs for unemployed people.

For now, however, many of the unemployed feel caught between a job-creation programme that doesn't work and a benefits scheme that is about to dry up.

"I have been waiting for a re-qualification course since February, and now, after three months they [the Bratislava Labour Office] told me that they don't have money for it," said Ľubomír S., a 36 year-old former printer who hopes to re-qualify in computer graphics.

"Now they're telling me that I could pay for the course myself, but where am I supposed to get 15,000 crowns for it, when I'm receiving the minimum benefit rate [of 3,000 crowns a month]?" he asked.

Ľubom'r S, like several other unemployed people questioned at the Bratislava Labour Office, expressed support for the state's aim of cutting down on welfare cheats. "Those who abuse the benefits shouldn't get anything," he said. "Let people find jobs and work, even for less money, but don't give them money to waste on drinks."

But the Labour Office's Tomasta warned that the benefits cuts would not seriously cut down on fraud before the first half of 2001 at earliest.

"It will be a slow process to push those who abuse the soft social welfare system out of the [benefit scheme] lists," he said.

Tomasta did add, however, that the draft proposal provided for an inspection mechanism that would control and investigate abuses of the benefits system.

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