Shifting to innovation

THE COUNTRY must have fresh and more innovative approaches to education says Jake Slegers, the Executive Director of the American Chamber of Commerce (AmCham) when pondering the challenges Slovakia faces if it wants to keep its business environment attractive for future investments.

Jake SlegersJake Slegers (Source: Courtesy to AmCham)

THE COUNTRY must have fresh and more innovative approaches to education says Jake Slegers, the Executive Director of the American Chamber of Commerce (AmCham) when pondering the challenges Slovakia faces if it wants to keep its business environment attractive for future investments.

“It may meet strong resistance, but it is a necessary step,” Slegers said in an interview with The Slovak Spectator.

Slegers also offered his opinions about the new government’s programme statement, the state of the judiciary in Slovakia and how the chamber views the country’s labour legislation, while also sharing details about the role of AmCham over the years since it was founded in 1993 and its near-term and longer-term initiatives for the future.

The Slovak Spectator (TSS): Which of the goals presented by the Radičová government in its official programme statement are the most appealing to the community of foreign investors? Which ones might make investors cautious?

Jake Slegers (JS): Most foreign investors are cautiously optimistic about the goals presented by the new government in its programme statement. There are many things we find interesting, intriguing and appealing. Of course, there are many details to be worked out. At AmCham, we’d like to see much focus on the education system and its reform, attracting research and innovation here and ensuring that the education system is geared towards the needs of the business community in the long term. That’s one of our goals at AmCham because our Business-Academic Cooperation Committee has a long-term commitment – with far-reaching plans projecting 10-15 years – for the development of the Slovak education system.

The Slovak judiciary is, of course, also of keen interest to the chamber. In fact, we had a working group already formed in June focusing on the judicial system. Increased transparency and rule of law are necessary for the business community to have real faith in the Slovak judiciary. This issue keeps cropping up in our surveys, be it in last year’s Foreign Investors Survey or in our recent survey among SMEs. It’s one of the areas that the US embassy proposed we address as well. This ties in a little bit with the introduction of the electronic public procurement system and posting contracts closed by the state on the internet. We fully support these changes and have been calling for them for some time.

One issue we were sceptical about was the proposed increase in social contributions by companies, which in turn would dramatically increase labour costs. That was a big red light for us because one of the key areas of Slovakia’s competitiveness is a relatively reasonable cost for labour, which is currently much lower than in many western countries. Our member companies felt that such an increase would dramatically decrease Slovakia’s competitiveness, which, according to the latest World Economic Forum’s Global Competitiveness Report for 2010-2011, has already been happening. We even felt the need to formulate an official position towards the proposed increase in social contributions. However, the coalition later decided not to push this plan for now.

TSS: AmCham last year identified through its survey several areas within the business environment which it said require improvement. Have you noticed any change in these areas? Which areas call for further improvement?

JS: It’s difficult to see big changes within nine months, but labour legislation was identified as the single most desired area for change since some of the current aspects of labour legislation have been hindering business. One of our committees has already begun an initiative aimed at starting a very strong, high-level dialogue with the Ministry of Labour over these issues. It is one of the areas where there had been little hope for change in the past but now we see some prospect for significant changes.

It’s a very important issue for many of our major members – basically anyone who has a significant number of employees here. We have a long history of working on labour legislation and if I were to identify a single national issue the chamber has been involved with from the very beginning, it would be this issue. It goes way back to 1998 when the first government of Mikuláš Dzurinda took power or, perhaps, even before.

We are also aware of the government’s commitment for e-procurement and e-government – I touched on this issue already – and this is the area where we are now expecting to see improvement. It is one of the tools to reduce corruption, which has always been a closely monitored issue. When I read one of the first statements of the new government, the fight against corruption was one of the highest priorities mentioned and we were very pleased by that.

TSS: You have already mentioned Slovak academia. We also hear from many HR professionals that education is disconnected from the needs of the business. Slovakia has a high number of university graduates but some companies say they cannot find qualified labour. Is a lack of qualified labour a matter of concern among US investors?

JS: Yes, there is a big concern about the lack of qualified labour. In fact, to be concrete, it was identified by over 50 percent of respondents in our 2009 Foreign Investors Survey as the major challenge companies are facing, followed by labour costs and then by social costs. The follow-up question was about the least available skills and here the lack of good managers was clearly identified. The new labour and education ministries are facing this huge challenge: the education sector needs fundamental change which will be painful for some people; but this must happen. We must have fresh and more innovative approaches to the education system. It may meet strong resistance, but it is a necessary step.

I don’t question the integrity, honesty and goodwill of those involved in the education system. But often necessary, beneficial and innovative changes are rejected. On the positive side, I have read that the new minister of education intends to introduce a new system for testing academic papers to see whether these were plagiarised or not. I would be very glad to see those changes. These types of changes are necessary and it will take a fundamental shaking of the system.

TSS: Slovakia is no longer a ‘low-wage country' and we have witnessed the departure of Molex from Kechnec, for example. Is the Slovak business environment still interesting for US investors?

JS: We’ve fully expected that some manufacturers will move out. There is nothing we can do to stop that; nor do we necessarily want to retain all. It was necessary and productive for Slovakia to have provided an excellent environment for such manufacturers for a while but now may be the time when some low-level investors will be replaced by high-tech and innovation-focused enterprises.

We shouldn’t panic when we see a lower-level manufacturer leaving. This trend has been predicted for 15 years and we don’t see a dramatic change, even at present. Based on our survey, during the crisis only 1 percent of our respondents indicated that they intended to leave Slovakia at the time, over 50 percent intended to maintain the status quo and 30 percent were planning on expending. But, we will of course see some of them leave. They will move eastwards, for example, to Ukraine, Bulgaria or Romania. But this is why it is now so important to greatly enhance the educational system through reform and to attract R&D and high-tech innovation. We have also been working on that for some time with the Ministry of Foreign Affairs and the Slovak Embassy in the United States through road shows in Minnesota and Texas and visits to California; we have additional, similar activities planned for the near future and long-term as well. The Slovak business environment has great potential to attract US investors.

TSS: AmCham was founded in 1993. How has the role of the chamber evolved or changed over the past 17 years? What were the most challenging times for the chamber or the most important milestones?

JS: It has taken a lot of focus, dedication and hard work from the board and staff to develop the chamber and we have grown considerably over time; we also took advantage of the influx of investment that came from 1998 to 2006. We were, however, keenly aware that we needed to provide value for our members. At the beginning we were more event-focused, geared towards social events or business breakfasts, which we still do a lot of, but since then we have moved much more towards the policy arena. We now have more staff dedicated to lobbying and various ways of addressing legislation. This is the area in which we have expended the most effort.

We have formalised our system for approval of position papers: today we need the approval of 17 board members, which often means that you have 17 separate opinions that need to be somehow united. We do take great care to produce quality position papers. We comment on most proposed legislation that might have an impact on our members.

One of the areas in which we have become quite involved is fostering high-level, open dialogue on issues important for the business community. For example, our Foreign Investors Survey and the ensuing summit and our Conference on Innovation Policy and Technology Transfer that we actually did at the request of Slovak government – we were not in a position to organise these kinds of activities seven or eight years ago.

In general, our cooperation with individual ministries and ministers has intensified over the past few years. We’ve had close cooperation with all relevant ministries and the office of the Slovak government.

For me a big milestone was opening our office in Košice, something we had long dreamed of. Ever since we were finally able to do it, with the support of the board, it has been nice to see that office grow and expand in its activities and scope.

Our dream is to expand and assist businesses in other regions of Slovakia as well, since the improvement of business conditions for everyone is our main goal in this time. Along these lines, we have also started many business and professional development activities as added value for our members in other regions of Slovakia. Probably one thing that members are not so well aware of is AmCham Slovakia’s activities on the pan-European level. We have strong involvement with the European Council of American Chambers of Commerce where I serve on the executive committee.

TSS: What activities does AmCham plan for the near future?

JS: We are just beginning our Slovak Minister Speakers’ Series. As background, during the last three election cycles, before the elections, we hosted the Political Party Speakers’ Series for those who accepted our invitation. On two occasions, we hosted live, televised debates with all major political parties, thereby greatly fostering an open dialogue. Now, we plan to host all appropriate ministers of the new cabinet at various member-related events. We also intend to host a regional educational forum for ministers and ministries on education-related issues for the Visegrad countries. And we have just started a new initiative to help improve conditions for Slovak SMEs, which includes a major survey which we hope will produce useful recommendations for the government. These are just a few and there are also many more to come. I have a feeling that things are going to be very busy and stimulating for some time.

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