THE CONDITION of the Slovak labour market continued worsening in September. Under the influence of the global economic downturn, which is significantly affecting the small and export-oriented Slovak economy, the number of unemployed grew again. While market watchers expect Slovakia’s jobless rate to continue growing during the next few months, experts see as a positive sign that the fall in the number of job vacancies has now stopped.
Slovakia had 368,021 residents without jobs at the end of September, putting one statistical measure of the unemployment rate at 13.89 percent, the highest level in nearly five years.
Job vacancies numbered 7,251, meaning there were almost 51 jobseekers for each available vacancy, the Labour, Social Affairs and Family Office (ÚPSVAR) announced on October 20.
Ján Sihelský, the head of ÚPSVAR, sees as positive the fact that even with the significant increase of 48,902 new jobseekers in September, unemployed persons managed to fill more than 22,000 jobs during September. In total, almost 36,000 people were removed from the registry of jobseekers during September.
Sihelský also said that concerns that between 16,000 and 18,000 school graduates would flow directly into the registry of jobseekers in September did not materialise, adding that some graduates used the opportunity to do practical, but low paid, internships with companies.
In September, a total of 33,369 school graduates were seeking jobs. This was an increase of 12,830 from the previous month according to Vladimír Hašto, the head of information and statistics at ÚPSVAR.
“In September, the growth of unemployment accelerated moderately, especially because of the inflow of school graduates to the labour market,” Dávid Dereník, macro analyst with UniCredit Bank Slovakia wrote about the latest jobless figures, adding that compared with last year the number of jobless graduates is about 6,000 higher. “The unemployment rate has moved to the level of late 2004 and the labour market and its revival will be one of the key problems the next government should address.”
Some unemployment statistics
Another way of calculating the unemployment rate in Slovakia is based on the number of jobseekers who are prepared to accept a job immediately. Using this criteria, there were 329,860 unemployed in September and the unemployment rate on this basis was 12.45 percent, up 0.4 percentage point when compared with August.
The monthly jobless rate had been dropping every month from September 2005 to September 2008. It was 11.2 percent in September 2005 and had fallen to 7.54 percent in September 2008, according to the Sme daily.
During the last 12 months, the aggregate number of unemployed increased by almost 139,860 and in September it increased by 12,980. The jobless rate calculated on the basis of total job seekers rose by 5.13 percentage points over the one year period from September 2008 and by 0.49 percentage points when compared with August.
The district of Rimavská Sobota, as is common, reported the highest registered unemployment rate in September, hitting 32.84 percent. The districts of Revúca and Rožňava followed with 30.41 percent and 26.92 percent, respectively. The Bratislava Region reported the lowest unemployment rate, reaching as low as 2.63 percent in its 1st district and 4.43 percent in the whole region.
The regions of Trenčín and Trnava also registered one-digit jobless rates, at 9.79 percent and 8.17 percent. All other regions of Slovakia had unemployment rates greater than 10 percent, with the Banská Bystrica Region topping the rankings with a jobless rate of 18.89 percent.
According to Sihelský, the Slovak labour market remains somewhat differentiated, with September’s jobless rate decreasing moderately in seven of the country’s 79 districts when compared with August. He said the textile, clothing and footwear industries remain the most endangered industrial sectors where further unemployment is possible.
Unemployment will keep growing
ÚPSVAR expects that the unemployment rate will keep increasing through the end of the year.
“We still receive signals that the jobless rate will grow to the end of the year,” Sihelský said when introducing the September figures. But he sees a downward trend in the number of jobs that might be lost due to mass layoffs and he views this as positive.
Earlier estimates of analysts suggested that unemployment would peak in Slovakia at the beginning of 2010 at around 14 percent.
Martin Chren, the director of the F.A. Hayek Foundation estimated that 30,000 to 50,000 jobs would vanish from the Slovak labour market by 2011, according to the TASR newswire. Chren said this is because Slovakia is one of the most open economies of the world and it reacts very directly and severely to economic changes in countries with which it trades.
Lucia Burianová from Slovakia’s largest job listing service, Profesia, agrees that there will still be an upward trend in unemployment but she sees an end to the fall in vacancies, which Profesia had been registering since April, as positive news.
“Right now, companies are very cautions when recruiting new workers and will mostly wait until at least the start of 2010 to see if improvement in the situation will be proved,” Burianová told The Slovak Spectator. “We expect that, if no radical worsening occurs during next months, the situation in the labour market, at least in the offer of vacancies, will improve at the beginning of 2010.”
Profesia has registered a drop in job openings in all segments of Slovakia’s economy, but the deepest drops in vacancies were in the automotive, engineering, transport, logistics, electro-technical, energy, construction and real estate industries. The job portal registered the highest year-on-year increase in job applicants in the agriculture and food, services, engineering, and real estate industries.
In mid October Profesia’s online job portal listed about 4,680 vacancies, with the highest numbers being in Bratislava, Nitra and Košice regions. The least number of jobs were in the Trenčín and Prešov regions.
Compared with October 2008, Žilina Region reported the largest drop in vacancies, down 55 percent, followed by Bratislava and Trenčín Regions with 46 and 45 percent declines, respectively. The smallest drop in vacancies was reported by Košice Region, at 28 percent.
Changing labour market dynamics
The dynamics of Slovakia’s labour market have changed significantly over the last year. Employers were complaining widely one year ago about a lack of qualified job applicants and a declining quality in the available labour force. Now workers hold their current jobs in more esteem and employers have more candidates from which to fill any available vacancies.
“At the beginning of 2008 job seekers were voluntarily changing their jobs to get more interesting and better paid jobs,” said Burianová. “At that time the market was suffering from a lack of quality job seekers and companies were willing to ‘overpay’ available candidates. But during the last year, when the number of available jobs has shrunk significantly and the number of job seekers has increased as well, companies can now have higher conditions when selecting new employees because the number of candidates for one vacancy has increased several times over.”