THE DEVELOPMENT of a long-term strategy for enhancing Slovakia’s competitiveness and a strategy for educational reform are areas where Jake Slegers, executive director of the American Chamber of Commerce in the Slovak Republic, or AmCham, sees a major role for his organisation. Slegers, an American who has lived in Slovakia for most of the last 17 years, notes that there is a dangerous disconnect whereby the Slovak education system produces well-educated graduates, but not of the type that industry is seeking. The Slovak Spectator spoke to Slegers about the quality of the business environment, reform of labour legislation, and the path taken by AmCham over the past decade.
The Slovak Spectator (TSS): According to the Global Competitiveness Report 2011-2012 published by the World Economic Forum, Slovakia has fallen nine rungs down the international competitiveness ladder, to stand at 69th out of 142 countries – the worst result among the Visegrad Four countries. What do you think are the most important steps that the government could take to improve the country’s standing?
Jake Slegers (JS): Slovakia’s competitiveness is something that we at AmCham have been focusing on for quite some time. One of the things we see as extremely important in improving Slovakia’s ranking is a comprehensive strategy. Such a strategy is needed in many areas, for example education or attracting foreign direct investment (FDI). In this respect we have formed an FDI committee whose main aim is to form a strategy for attracting FDI and therefore affecting Slovakia’s competitiveness in the very long term. We are looking forward to presenting it to the Slovak government as a relatively independent organisation so that it will be adopted and there will be continuity through the various governments that will come to power in the next 15 to 20 years. The same might apply to educational reform and to long-term employment issues. Slovakia’s educational competitiveness must be developed and thus there has to be a considerable reform within educational institutions. What we have now is what we call this dangerous disconnect where universities and, basically, the Slovak education system are producing well-educated graduates, but not the types that industry is looking for. This is going to get even worse over time if we don’t do something about it.
TSS: Do US investors make their decisions based on rankings?
JS: I think rankings are important. People look at them for a quick study, for very quick information. We deal with many potential foreign investors and some of them have very little knowledge of Slovakia. They do consult competitiveness reports [to see] how Slovakia ranks. The Global Competitiveness Report, when it was released a year ago, caused quite an earthquake in Slovakia. I remember we had a public discussion on how sharply Slovakia had fallen. This year the ranking was even worse, which is very unfortunate.
TSS: What, in your opinion, are the positive aspects of the Slovak business environment that US investors still appreciate?
JS: According to a survey we conducted among our foreign direct investors, there was a very strong feeling among them that the adoption of the euro was a very important development for the business environment. This is a positive point for Slovakia, i.e. that foreign investors do not have to deal with Polish zlotys, Czech crowns, Bulgarian leva, Hungarian forints or Romanian lei. They know what they are going into in connection with the euro when investing here. Additionally, there is a feeling of political stability in recent times. I remember some time ago, when looking at the political and economic situation in Hungary, the Czech Republic and Poland, they were all in complete turmoil. The Czech Republic did not even have a government, while Hungary was in complete disarray; and although Slovakia at that time was not perfect, there was a certain stability, which is very important for investors.
Stability is a magnet for foreign investment. What investors really dislike is dramatic change: they come in and there is agreement, then the situation changes dramatically and it messes up all their plans. The location of Slovakia is another positive, which is a great selling point for Slovakia.
TSS: German investors have already sent out some strong signals regarding the lack of qualified labour and suggest that they are having difficulty finding adequately trained employees. Is this concern also shared by the US business community? What are the most urgent steps that, in your opinion, the government should take?
JS: Yes, there are concerns among US investors and we can hear them. There are also many facets to this issue: there is qualified labour in Slovakia but a lot of it is leaving for opportunities abroad. Another issue that should be discussed much more in public, and where we would like to contribute with the expertise and experiences of our member companies, is economic migration, which will have some pending impact on Slovakia’s competitiveness and that is a really big issue. We plan to make recommendations to the Slovak government on how Slovakia might deal with this issue.
TSS: The current government has modified the country’s Labour Code. Changes to this particular legislation were on the wish list of the business community. What has been the response to these changes so far? In what areas could the government of Iveta Radičová have gone even further?
JS: First of all, labour legislation has been one of the most consistent and important topics that we have dealt with during the existence of the Chamber of Commerce. From the beginning of my time here, I can remember it being one of the first issues we were dealing with. Of course, we have sometimes been on different sides, supporting proposed legislation or opposing proposed legislation quite dramatically. It is an area where we’ve seen this pendulum swing; basically it was from right to left, then back from left to right. I think that one of the plus points for investment is a liberal labour policy and certain stability in this area. [But] if there is a liberal Labour Code in effect and it changes dramatically two years later, that is not a very strong incentive for foreign investors either.
We have an employment and social affairs committee here at AmCham that has been very much involved right from the beginning in the public discussion and commenting of this new Labour Code. Our members view the new Labour Code as a mostly positive development. There are issues where they feel the government may have gone a little bit further, and that still might be re-opened, but the general feeling is positive.
TSS: Prime Minister Iveta Radičová and Economy Minister Juraj Miškov have set out, within the Singapore programme, 100 measures that in five years should, they say, result in a 25-percent drop in Slovakia’s administrative burden. How do you view this initiative?
JS: It is always good to develop some kind of comprehensive strategy instead of short-term decisions. Our members have supported the concept of the Singapore project. We were asked for our opinion and feedback on this initiative. And, as mentioned, we are supportive of many of the measures.
As for the problem of red tape, the results of our SME survey indicated that almost 68 percent of respondents felt that the amount of money spent on regulations and reporting requirements wasn’t reasonable and that the costs, in terms of time spent, were too high. In terms of acquiring building permits, 93 percent of the respondents said this took far too long. All in all, as indicated by our survey, our members feel that the administrative burden is far too high as well, so we would applaud the efforts of the Slovak government to reduce it.
TSS: Are there any other positive changes that occurred over the past year or so that your members appreciate?
JS: We have very much appreciated the approach of the minister of justice as well as the chance to be involved in a working group to assist with drafting the legislation and the proposed changes to public procurement. We have appreciated her approach regarding the Act on Bankruptcy as well. We have also appreciated the approach of the minister of labour and we feel a particular openness and seriousness in the approach of the Ministry of Finance and the Ministry of Economy.
TSS: You have been executive director of AmCham for the past ten years. Could you describe for our readers how the organisation looked when you joined it and where it stands today?
JS: I was fortunate to become director at a time when things were just starting to really happen. We experienced a period of significant growth from 2000 to 2006, even to 2008, largely because of Slovakia’s expanding economy, and thus it really was a good time to enter the environment – but a big challenge as well. In the late 1990s, AmCham was more a social networking organisation, in that it was strong in social areas. Over the years, we have transformed it into an advocacy-related organisation where we try to be a very strong advocate for our member companies. While we still work on the social aspect, almost everything we do is in some way connected to our policy and advocacy agenda.
In terms of policy and advocacy issues, we have made significant contributions to various forms of legislation in the past, especially the Labour Code reform and education legislation. The opening of our office in Košice in 2003 was also a kind of milestone in our development. It took a lot of work behind the scenes but I feel that we are really serving our members in eastern Slovakia through that.
I think the transformation of the chamber from basically a hundred members, three employees and lots of social activities, into a major voice for business has been a significant development, because it also reflects the development of Slovakia as a country.
TSS: What is your main vision for AmCham in the upcoming years?
JS: What I would like to see in the future is the development of a long-term strategy for enhancing Slovakia’s competitiveness and a strategy for educational reform as well. We are developing those strategies along with the Slovak government and making suggestions and recommendations to them in those areas. I would like to see AmCham focus on these areas even more in the future, while continuing the very open and constructive dialogue with various players on the Slovak political scene, be they party chairmen, ministers, or the prime minister. I think we have a lot to offer in that way as well.
TSS: Meanwhile, you have been granted Slovak citizenship. Do you still retain your outlook as a foreigner in Slovakia or, after living here for almost two decades, do you see the country through the eyes of a local?
JS: I travel to the US on a regular basis, including with our roadshows, and I meet American businesses. I certainly think I have retained the American outlook, but have developed a deep understanding of the Slovak business environment. I do not think I will ever become completely Slovak, and I will always feel a bit of an outsider. I got Slovak citizenship partly because of respect for the country where I’ve lived for the past 17 years. I felt this as certain sense of duty at a personal level. Sure, there are a few other advantages, but this country has given me many opportunities and I want to recognise that as well.
3. Oct 2011 at 0:00 | Beata Balogová