Labour market awaits further positive signals

‘CRISIS’ is the most frequent word used to describe what has happened in the labour market – it is used repeatedly by employees, employers and HR experts. The crisis has turned the labour market upside-down as job applicants can no longer dictate their working conditions as was the case in recent years and it is now employers who have more options. The crisis has required company HR departments to search for better and more innovative employment approaches. And it has also pushed HR agencies to look more closely at their modi operandi and to adapt to fiercer competition in their field of work.

‘CRISIS’ is the most frequent word used to describe what has happened in the labour market – it is used repeatedly by employees, employers and HR experts. The crisis has turned the labour market upside-down as job applicants can no longer dictate their working conditions as was the case in recent years and it is now employers who have more options. The crisis has required company HR departments to search for better and more innovative employment approaches. And it has also pushed HR agencies to look more closely at their modi operandi and to adapt to fiercer competition in their field of work.

The Slovak Spectator spoke to Martin Marek, sales manager of Lugera & Maklér, Monika Voláková, country manager of Lugera & Maklér, Gerard Koolen, managing partner of Lugera & Maklér, Drahomíra Kutňanská, area manager of Randstad, and Lucia Burianová, spokesperson of Profesia about the labour market in Slovakia, the role of HR professionals and how they see future developments.

The Slovak Spectator (TSS): How do you perceive the Slovak labour market? How has the situation changed since last year? What do you expect with regard to the employment outlook based on the expected upswing in Slovakia’s economy this year?
Martin Marek (MM):
Actually, August 2009 and March 2010 are the only months in which unemployment did not grow since May 2008. March 2010 can particularly be evaluated more or less as a milestone as there have been several positive signals from the economy regarding new projects to be launched, new investments, and growth in industrial output/orders as well. Nevertheless, as the SITA newswire reported, 15,325 jobs are still endangered due to possible mass layoffs. Since 2008 from the total reported 46,466 jobs that could be affected by mass layoffs, 31,171 of those people have already lost their jobs, plus there are some new layoffs coming.

The labour market will not directly follow positive growth outlooks. Though the EU has favoured Slovakia and Poland as growth leaders with 2.7 percent GDP growth in 2010, there is a legacy of rising unemployment and wasting of public funds and stabilisation can be expected no sooner than the second half of 2011. Employers need to play a really careful game to maintain the proper ratio between orders, productivity, required headcount, and output and that creates a potential for part-time jobs, flexible forms of employment and flexible human resources policies.

We do expect that the positive economic outlook and increases in production, for example in the automotive segment as our key economy sector as well as in the electro-technical industry, together with already confirmed new investments, will contribute to rising employment numbers – by the end of 2010 but more so in 2011. The threats from 2008 and 2009 are still alive.

Monika Voláková (MV): Slovakia’s labour market was very sensitive to any change in the region in 2008 and 2009 and that brought a radical increase in the number of unemployed. On the other hand, in the case of employers who tried to keep maximal employment, it brought a reduction in turnover, a stabilisation of their labour force, as well as a much expected change in employees’ attitudes.

2010 started with a sense of first swallows and some positive changes – either in the form of arriving new projects or at least a partial stabilisation of jobs. Certainly, it is necessary to be a realist and it is too daring to expect a rapid increase or a radical revival of the labour market during this year.

Lucia Burianová (LB): During the first three months of 2010 the number of job offers at the Profesia job portal increased each month. In March, the number of job offers was up by 9 percent compared with February. The industrial sector, in which companies were looking for employees in March at the highest level in the last 16 months, helped to produce the better statistics.

The number of job ads published on the portal in March was the highest for the last 12 months and for the first time since the start of the crisis the number of job offers rose in most segments. However, the number of published offers is still far below the pre-crisis level.

Over the course of the current year we do not expect a significant improvement in the labour market and unemployment will remain at high levels compared to previous years.

TSS: Has the crisis changed processes for job interviews or the actual selection of employees? Have companies changed in their behaviour towards job applicants?
: The interview is a standard process which has its regulations and rules. In some sectors the number of candidates currently available on the market is higher and thus also the selection time is longer. A greater emphasis is being put on personality, motivation, and references from previous employers.

Drahomíra Kutňanská (DK): Yes, in a certain direction. Candidates who apply for work positions are more interested in knowing the profile of our client. They are especially interested in stability and the background of the company. This means that even during the first round of a job interview, which is a telephone call in our agency, this question is being asked and answered.

On the other hand, the behaviour of companies towards job applicants, from a certain angle, has also changed. If we omit some narrow, specialised positions, there are really plenty of candidates and companies this year have a wide field from which to choose.

LB: At the moment it is the employer who can lay down conditions for an employee. Both parties are aware of the fact that there are a lot of available job applicants and that can make employees less certain. Before the crisis, the situation was the opposite and there were employees
who raised their requirements towards employers.

Currently, employees appreciate that they have a job and they are now more loyal.

They are less prone to criticise their employer or to complain or speak about problems openly; they are also more likely to make concessions and more willing to make compromises because they are afraid that failing to do so could endanger their jobs.

Under the influence of the crisis employers are now putting greater emphasis on employees’ performance. They consider more carefully the opening of each working position and in an effort to save money they assign more responsibilities and tasks to one employee.

TSS: Has the crisis brought some new trends in the HR field? If so, what are they?
Gerard Koolen (GK):
Yes, very much so. Many processes in HR had to be more streamlined, to deliver results faster, at a higher quality, and at lower cost. The HR manager/director has had to be more financially focused on his or her HR activities and be able to express the results of the HR function in the sense of profit and loss. Lugera, together with the Netherlands Chamber of Commerce and VGD, has initiated a series of three breakfast seminars on this topic.

MV: Certainly. HR experts themselves have felt higher pressure to deliver solutions from inside and to use the internal capacities within the HR department to a maximum extent.

DK: HR departments in many companies got a green light during the financial crisis. Large companies particularly realised that human capital, a proper employment structure, well-focused motivation of employees, and everything that is linked with human resources, create the core of each company and that without proper people in proper positions things simply do not work. The crisis has very much facilitated the so-called outsourcing of certain types of work positions. Our clients, as well as our candidates, perceive this form of employment as a positive feature and thus they also see pluses that outsourcing brings. In our company we carefully follow the rules that pertain to this kind of employment and unconditionally keep the legal condition of equality between our [candidates] and internal employees. If other agencies in the market follow this trend, this will be one of the more common and, for both sides, beneficial forms of employment in the near future.

LB: The crisis has brought more contemplation into companies about where to save costs and how to optimise processes and human resources. Companies must constantly return to their strategic plans and re-assess them and make their approval processes stricter. Also the pressure on employees’ performance is much higher than before. Companies are thinking more about the effectiveness of each new working position and they are searching for new employees with this in mind.

Employees have started being less demanding, more empathetic, more respectful of the job they have, and are more likely to accept unpopular measures, for example reduction of benefits or keeping the same salary level while perceiving these as measures that prevent layoffs.

During these crisis times, employers especially cut marketing costs, focus more on selection of employees of higher quality but for a lower wage, reduce education and development costs, and alas, some companies have even been forced to cut working hours or their labour force.

TSS: How has the crisis influenced HR agencies in Slovakia? Has it brought any new challenges or positive features?

GK: All agencies had to restructure and the crisis helped to differentiate ‘the men from the boys’, meaning the strong agencies survived and the weak brothers and sisters had to close down. This will increase the average level of service in the HR industry in Slovakia. A very big plus coming from the crisis are the innovations we have been able to develop together with our clients: the crisis ensured better and closer cooperation and partnerships with clients, streamlined processes, higher efficiency and quality, at lower cost.

MV: Certainly a lot of companies had to critically analyse their portfolio of services, their prices and supplemental services. Like everywhere else, efficiency of processes and cutting costs resonated strongly, too. A prompt response to requests of clients, untiring establishment of upper-standard relations, and understanding of current needs are permanent challenges, but were highlighted by the crisis.

DK: First, it is necessary to say that only those stronger players have survived. As the second biggest agency in the world, we see a great challenge behind every crisis. Because the crisis caused a positive turn for HR departments in companies, the view about the effectiveness of a recruitment agency has changed as well. Effectiveness in finding labour, that is, why should companies deal with something that is not their core business when there is the opportunity to get help from a recruitment agency, is one of positive outcomes that the crisis has brought. No one can do everything well and every company has a core business in another area. We are a recruitment agency and we are here to solve problems and answer questions in the area of human resources – so our clients perceive us in this way. This is a step which I assess very positively and partly this is an outcome of the crisis.

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