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Short-term work gets much pricier

THE FACT that Slovakia has been operating in austerity mode for some time has had a significant impact on both employees and employers. After the Robert Fico government raised the rate of social and health insurance contributions for those working via limited employment agreements known as “na dohodu” to 48.6 percent, employers warned that a radical drop in the number of such employees might follow.

THE FACT that Slovakia has been operating in austerity mode for some time has had a significant impact on both employees and employers. After the Robert Fico government raised the rate of social and health insurance contributions for those working via limited employment agreements known as “na dohodu” to 48.6 percent, employers warned that a radical drop in the number of such employees might follow.

At the beginning of last year, more than 450,000 people worked under limited employment agreements, while in early 2013 their number dropped to less than 300,000, according to the Sme daily. Yet, on February 18, the social insurer Sociálna Poisťovňa reported that it registered 339,552 people working under such contracts, compared to 297,000 at the end of January, representing an increase of more than 14 percent. However, the January numbers might change significantly in the upcoming months since the statistics are only preliminary, spokesman of the Sociálna Poisťovňa Peter Višváder told the SITA newswire.

Employers commented that the recent growth may have been influenced by seasonal factors.
“This increase can be seen each year,” National Union of Employers (RÚZ) secretary Martin Hošták told public broadcaster Slovak Television (STV), adding that it is linked to the fact that a number of contracts are signed from January 1 until December 31. “After that the occurrence of newly concluded contracts is gradual, which means that [in] January, February and March [they] grow.”

It will take some time until it becomes clear how many of those working through limited employment agreements wound up jobless at labour offices; switched over to regular full-time employment or even took up work illegally, observers agree.

Yet, Slovak Democratic and Christian Union (SDKÚ) MP Ľudovít Kaník suggested that illegal labour in Slovakia has been on the rise, also due to the decision of the ruling Smer party to impose payroll taxes on work done through limited employment contracts, according to SITA.

The Labour Ministry however has been defending the changes it introduced for those working under limited employment contracts, with ministry spokesperson Michal Stuška suggesting that “the main goal and need is to clean up the abuse of the rules while approaching a balanced relation towards regular employees,” Sme reported on February 19.

Stuška also told STV that many people might switch to regular work contracts since the “motivation to work on limited employment agreements” has been reduced in cases where it is not justified based on the Labour Code.

The new rules embedded in the revised tax legislation as well as the modified Labour Code, which became valid at the beginning of 2013, equalise the terms for paying health and social insurance for limited employment agreements with those of regular employees, and raise employment expenses for many firms that employ temporary staff compared to last year. Market watchers and human resources professionals suggest that these changes do impact the choices employers make.

“As a consequence of the changes to the Labour Code, we have recorded lower interest in so-called temporary employees,” said Katarína Bobotová, operations manager at Grafton Slovakia. “Some companies are reporting plans to cancel positions that in the past were filled by temporary employees and distribute these tasks among current core employees.”

Employers, among others, have criticised the capping and limiting of fixed-term employment contracts and “na dohodu” work contracts, as well as changes to the definition of dependent work, conditions placed on flexi-accounts requiring the agreement of trade unions and the omission of the condition of ‘representativeness’ of trade unions in a company.

Rastislav Machunka, president of the Federation of Employers’ Associations (AZZZ), listed the limitation on the ‘chaining’ of fixed-term employment contracts as one of the most negative changes.
“The [current] crisis is characterised by unstable and short-term orders, which forces us not to accept and carry out some orders,” Machunka told The Slovak Spectator in an earlier interview, explaining that if employers took on employees to perform such orders they would have to cover the higher costs of their later dismissal, and would not be allowed to terminate a fixed-term employment contract more than twice.
According to Hošták, these changes reduce employment flexibility, something which is particularly necessary during a period of economic crisis, and which will reduce the chances for many jobless people of finding work.

For more information on Slovakia's labour market please see The Slovak Spectator’s new Career & Employment Guide 2013

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