TRADE unions that restrain from calls for pay hikes and strike pressures had seemed a dream unattainable for many governments and employers until not so long ago. The global economic downturn has not only brought national economies to their knees and upset labour markets but has also tamed Slovakia’s labour unions, which now pledge wide support for the measures passed by the government of Robert Fico to ease the impacts of the crisis and maintain employment.
The Confederation of Trade Unions (KOZ), an umbrella organisation of Slovakia’s labour unions, said that the unions would not demand any pay hikes from employers exceeding the growth level of labour productivity in Slovakia and, for the sake of social reconciliation, would restrain from using pressure tactics such as strikes.
In return the government promised to preserve the current level of employee protection in Slovakia. On February 20, KOZ President Miroslav Gazdík and Prime Minister Robert Fico signed a memorandum to seal the deal.
Both the unions and the government remain resistant to calls by businesses and some labour market observers for changes to the labour code, which the Fico government had revised at the beginning of its term, tuning it to be friendlier to employees and stricter on employers.
The country’s opposition parties have also demanded more flexibility in the labour code, suggesting that it could serve as an instant remedy to aches in the Slovak labour market.
The trade unions view the memorandum as their way of supporting the government measures to boost the economy and ease the impacts of the economic crisis first of all on employees in Slovakia, and KOZ does not see this step as meaning that the unions have adopted a weaker position.
“Our position in negotiating wages and labour conditions should not weaken,” KOZ spokesman Otto Ewiak told The Slovak Spectator. “In the memorandum the government undertakes the obligation to respect and deal with the proposals and solutions that KOZ brings into the social dialogue.”
The government, by adding its signature to the memorandum, promised to guarantee the current status of employee protection while it would restrain from reopening the “key and currently valid labour legislation, which would worsen the status of employees,” said Ewiak.
The highest possible employment along with support for the unemployed has been the priority for the unions within the country’s economic crisis committee as well. The unions also advocate allowing people to opt for early retirement under certain conditions, Ewiak added.
Last November, the unions were talking about pay hikes at least high enough to cover the level of inflation in Slovakia so that employees would not see their real income dropping.
Meanwhile, the unemployment rate in Slovakia reached 9.03 percent in January and between October 2008 and February 15 government labour offices were notified about 156 planned mass layoffs.
The unions have several times said that employers have not been using all the available tools to maintain employment.
According to KOZ’s Ewiak there are several legal options such as shortening the working week without cutting wages or shortening working time and adjusting employees’ wages after mutual agreement. He also listed a few other ways: restraining the use of overtime; dividing one work position between two employees; and re-qualifying employees.
Announcing a company production break is also among the options to prevent having to fire people along with the possibility of using the so-called flexikonto system, which the government developed to help employers to retain skilled labour and avoid mass layoffs, said Ewiak.
Flexikonto is a long-term worked-hours account to flexibly manage employees’ working time during swings in production. It allows employees to stay at home on full pay, with the un-worked hours being recorded in individual employee accounts. Later, over a period of years, the employee is expected to work those hours in the form of overtime. Carmaker Volkswagen is already using flexikonto.
Will the labour code resist changes?
A more flexible labour code would be an instant relief for businesses struggling with the crisis, say some economists. However, the unions are resisting the idea of changes to the code while the prime minister has also said that proposals to change the legislation are “neo-liberal attempts” that his government shall resist. Fico added that the labour code does not harm anybody and only secures standard European rights for protection of employees.
“We want to guarantee the existing legal protection of employees regarding their labour and social status,“ Fico said as quoted by the SITA newswire.
“The status quo of the current labour code, which was not born easily but which can now be compared to European standards, suits the labour unions,” Ewiak told The Slovak Spectator. “Based on the responses of the tripartite social and economic council it also suits other social partners, apart from small exceptions of certain employer organisations and, of course, the political opposition.”
If the labour code was more flexible, at least temporary jobs could be created, said Tomáš Malatinský, President of the Association of Employers of Slovakia (AZZZ), a major umbrella organisation for Slovak employers.
"Employment in Slovakia might be protected by higher flexibility in the labour law,” Malatinský told the SITA newswire.
Fico has said that employers are happy with the labour code as it is now and they do not regard its current form as an obstacle. The parliamentary opposition parties, the Slovak Democratic and Christian Union (SDKÚ) and the Christian-Democratic Movement (KDH), have proposed changes to the code, which they have described as inflexible and restrictive. The prime minister said that the opposition proposals are politically motivated and that the opposition is abusing this time of economic crisis to gain political strength.
During an economic slowdown it is very important to have the most flexible labour market possible, which can promptly adapt to the restructuring of the economy, said Richard Ďurana, Director of the Institute for Economic and Social Studies (INESS), in an earlier interview with The Slovak Spectator.
“It is important that businesses in the private sector, which account for the largest share of GDP creation - more than 90 percent, have the best conditions for doing business,” Ďurana said.
Some time ago, the World Bank called the amended legislation, which became effective on September 1, 2007, a step backwards that weakened flexibility in the labour market and increased business costs. The revised code grants more powers to unions, limits overtime work, toughens conditions for fixed-term employment contracts and limits the use of trial periods before signing a permanent-status contract with an employee. It also bans an employer from terminating a fixed-term work contract without a legal reason and guarantees severance payments for employees who are terminated due to restructuring.
A revamped labour code was part of a deal that Fico made with trade unions shortly before the parliamentary elections in 2006, in return for an endorsement by some of the unions.
The labour code adopted under the previous government of Mikuláš Dzurinda had increased the working week to 48 hours (with overtime payments) and enabled flexible part-time arrangements. It also introduced indefinite repetition of fixed-term contracts and weakened the powers of trade unions in several ways.
That labour code also reduced severance pay and eased the conditions under which workers could be dismissed.