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Slovaks fret over fears of joblessness

ALMOST half of all Slovaks feel they are living with the dark prospect of losing their jobs because of the global economic downturn and more than half are worried that their partner might get laid off: at least this is what a recent Eurobarometer poll has found. Slovaks are among the most worried Europeans when it comes to job prospects, according to this poll conducted in all EU countries and published in mid-July.

ALMOST half of all Slovaks feel they are living with the dark prospect of losing their jobs because of the global economic downturn and more than half are worried that their partner might get laid off: at least this is what a recent Eurobarometer poll has found. Slovaks are among the most worried Europeans when it comes to job prospects, according to this poll conducted in all EU countries and published in mid-July.

However, citizens’ sentiments in other EU countries are not much rosier as 61 percent of those polled expect to experience some further job impacts because of the economic crisis and a full third are very concerned about being laid off.

“At least 6 in 10 Europeans feel that the worst of the economic crisis is yet to come and only 28 percent think it has reached its peak, with the highest distress levels being in the Baltic countries – 82 percent of the respondents in Latvia, 76 percent in Estonia and 74 percent in Lithuania think the worst impact is still to be felt,” reports the survey. The survey also showed that Europeans have high expectations regarding the role of the European Union in curbing unemployment. More than 70 percent feel the EU has had a positive impact in creating new job opportunities and fighting unemployment, the Eurobarometer survey found.

The unemployment rate in Slovakia reached 11.81 percent in June: the highest figure since January 2006, which provides some basis for worries about jobs among Slovaks. Analysts say that the unemployment rate in Slovakia is rising faster than in neighbouring countries and that the year-on-year growth in the unemployment rate of school graduates, for example, has reached an alarming 88 percent.

At this point, market watchers do not have many rosy predictions to relate about any forthcoming improvement in employment; they say that the upcoming months might lead to even more people losing their jobs.

Meanwhile, the opposition Slovak Democratic and Christian Union party has lashed out at the government of Prime Minister Fico for what it calls a “lack of sufficient attention to the growing jobless rate”.

Analysts concede the tools that governments can use in times of economic crisis are rather limited but some economists say that the ones the Slovak government have opted for might not have been the most effective.

“The main reasons for the growth of unemployment have been the drop in foreign demand which led to closedowns of operations in Slovakia and the return of Slovak workers from abroad,” Radovan Ďurana of the economic think-tank INESS told The Slovak Spectator. “For this reason, the options of the government are very limited. However, many of the measures that the government adopted are not effective enough.”

Ľubomír Koršňák, an analyst with UniCredit Bank, agrees that the government does not have very many effective tools to reverse or ease the growth of unemployment.

“Artificial, one-time measures are usually costly and very often the deformations in the market overpower the positive effects of the measures,” Koršňák told The Slovak Spectator. “Thus, long-term support for the business environment seems the most effective solution.”

According to Ďurana, high government spending on reduction of unemployment cannot guarantee long-term preservation of jobs.

“The only such guarantees are a stable demand and a good business plan,” Ďurana said. “The government is able to guarantee neither of those and therefore inflating spending to fight unemployment is not bringing any fruits.”

Ďurana said that the government should focus on cutting the indirect expenses on labour costs and reducing the administrative burden so that it frees the hands of employers and the self-employed to create new jobs and preserve existing ones.

By the end of June, Slovakia’s labour offices registered 313,076 unemployed people able to start working immediately. Sociálna Poisťovňa, Slovakia’s social insurer, provided unemployment benefits to 60,300 jobless people in that month. This is the highest number of benefit recipients in any month since 2004, the SITA newswire wrote.

Slovakia's joblessness rising faster than its neighbours

While all countries in the central European region have experienced a growth in joblessness, Slovakia has posted one of the highest increases.

Koršňák of UniCredit Bank says that it is rather difficult to determine exactly why the unemployment rate in Slovakia is increasing faster than in neighbouring countries. The factors could be manifold, he said.

“The number of Slovaks working abroad was relatively high,” Koršňák told The Slovak Spectator. “In the same way that Slovakia in the past helped to reduce its domestic unemployment by exporting its labour force abroad, the return of this labour back home means the country is currently ‘importing’ unemployment from the surrounding countries.”

According to Koršňák, the number of Slovaks employed abroad dropped by approximately 34,000 in the first quarter of 2009 and, presuming that they all registered with their local labour office, their numbers alone would have pushed up the unemployment rate by 1.3 percentage points.

“Another factor could be the fact that the crisis hit many Slovak companies just when they planned further expansion and to reach that goal they had also just increased the hiring of labour,” Koršňák said. “Since the crisis in many cases stopped any further expansion, some firms may be struggling with considerable excess labour for this very reason.”

Koršňák said that the summer months traditionally bring a seasonal drop in unemployment, thus the growth of the unemployment rate could at least slow during the summer months.

“On the other hand, economic theory says that growth of unemployment follows the decline in the economy with a moderate delay,” Koršňák said. “The trend of the growth of unemployment, cleaned of seasonal influences, will most probably not stop in the upcoming months.”

Slovakia’s labour market authorities reported on June 23 that the number of jobless graduates has been rising while available vacancies have been shrinking. The unemployment rate of graduates has shot up 88 percent year-on-year, according to the TASR newswire.

Koršňák said that in September a second, and usually larger, wave of school graduates registers with the labour offices.

“It is harder for graduates to set their feet in an environment of growing unemployment and therefore the number of registered jobless graduates compared to previous years will most probably grow - as it did in the first wave during the months of May and June,” said Koršňák.

Koršňák thinks that unemployment might start dropping at the end of next year but that the reduction will be very moderate and that the unemployment rate may only return to its pre-crisis level after several years: perhaps as late as between 2013 and 2015.

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