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YEAR IN NEWS - REVIEW 2004

The year of the biggest reforms

WHILE tackling a series of legislative changes to harmonize its laws with those of the EU, the Slovak parliament has not only adopted a series of EU directives but also earned international acclaim as passing the biggest reform laws of the year.
Among them are healthcare reform laws, fiscal decentralization laws, and legislation governing the future operation of the new pension system as of January 1, 2005.
The cabinet completed the public administration reform when parliament finally passed a plan on the distribution of income tax to municipalities and self-ruling regional and municipal parliaments.

WHILE tackling a series of legislative changes to harmonize its laws with those of the EU, the Slovak parliament has not only adopted a series of EU directives but also earned international acclaim as passing the biggest reform laws of the year.

Among them are healthcare reform laws, fiscal decentralization laws, and legislation governing the future operation of the new pension system as of January 1, 2005.

The cabinet completed the public administration reform when parliament finally passed a plan on the distribution of income tax to municipalities and self-ruling regional and municipal parliaments.

Pension reform, the basis of which was already approved in 2003, also required the passage of new laws governing pension savings institutions.

As of 2005 they will start providing citizens with their services in the new pension system's so-called capitalization pillar.

The cabinet's pro-reform and pro-western image has helped attract more business to Slovakia, which in turn has resulted in a greater need for legislative changes in order to speed up court verdicts and bankruptcy proceedings.

Although some of these changes have been passed, or will soon be presented to parliament, including a reshuffling of the Slovak courts system, Slovakia is still behind in anti-corruption measures.

Legislation enabling the operation of a special court and special attorney's office to deal with serious crimes, including corruption in top places, has been brought to life.

However, the Justice Ministry now faces difficulties in finding the right people to fill the new posts. Nevertheless, measures to fight corruption within its own ranks have been taken. For example, the Justice Ministry has made public the property declarations of Slovak judges on the Web.

MPs, however, were reluctant to pass tough laws they saw as aimed against them. In March parliament passed a constitutional revision that actually expanded the MPs immunity. In May the MPs also overruled the presidential veto on a new elections law that increases state funding to parties that qualify to parliament.

However, the MPs have managed to pass the long-promised conflict of interest law, which obliges MPs, municipal officials, and other official state representatives and their spouses, to submit regular property declarations, under the threat of losing their posts or having to pay fines.

The Education Ministry is lagging behind in university reform that, among other changes, promises to introduce tuition fees to Slovak universities. Education Minister Martin Fronc has failed twice to get the law passed, the last time being in June 2004.

Fronc plans to submit the relevant legislation at the beginning of January 2005. According to the plan, university students will start paying tuition fees from September 2005.


Healthcare reform

Approved initially on September 21 and 22, and later in November following a presidential veto, a package of six health laws are expected to improve the quality and effectiveness of medical care in the country and eliminate corruption in the health sector.

In December, four of the laws had details changed.

The new healthcare system, which is expected to gradually take effect from next year, will see hospitals and healthcare insurance firms operating as businesses competing for patients and insurance clients.

The healthcare laws include an act on health insurance companies and an act on health insurance, which introduces two types of insurance - public, which is obligatory, and voluntary. The latter covers services that go beyond the scope of general insurance, as it is normally defined.

The healthcare act defines healthcare and individual services. The act on the scope of healthcare determines which diagnoses will be fully covered by public health insurance and which will be partially or fully paid for by the patients.

The act on healthcare providers transforms hospitals into joint stock companies, and the act on ambulance services redefines ambulance services and introduces sanctions for the failure to deliver emergency assistance to patients.


Pension reform

Old-age pension savings, within the framework of the second capitalization pillar, will be launched from January 2005, when citizens will be able to start depositing a part of their present contributions to old-age pension insurance schemes (nine percent of their gross salary) to their personal account in a pension fund management company.

According to the Labour Ministry's estimates, from January to June next year, 12 percent of the working population is expected to join private pension fund schemes. A further 28 percent is predicted to join private schemes in the second half of the year, bringing the total by the end of 2005 to 40 percent.

An additional 10 percent of economically active people are expected to join the schemes in the first two months of 2006. The majority of citizens will have until June 2006 to decide whether they will voluntarily join the pension savings system.


Fiscal decentralization

A directive approved December 2 completed the public administration reform in Slovakia, as the cabinet approved the establishment of the distribution of income tax revenue worth Sk31 billion (€775 million).

As a result of budget decentralization, municipalities and regional governments are entitled to a direct proportion of state income taxes to fund their budgets.

For 2005 the cabinet-approved directive gives towns and villages Sk23.5 billion (€578 million) of income tax revenue. Regional authorities will get Sk7.9 billion (€197 million). The cabinet will keep 6 percent.


Antidiscrimination law

Approved in May, the anti-discrimination law bans discrimination based on race, religion, sex, medical condition and sexual orientation, and enables temporary positive discrimination measures based on national or ethnic origin.

The law is designed to help the nation's Roma population. However, Justice Minister Daniel Lipšic has challenged the law at the Constitutional Court arguing that positive discrimination is anti-constitutional. The court has yet to announce its verdict.


New tripartite

The old form of social dialogue between employees, employers and the government was abolished and replaced by a so-called board for social and economic partnership. The body will have an advisory function.

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