The Fico government has announced that it is preparing to make direct cash payments to companies in return for promises to create new jobs, the Sme daily reported on April 12. The government is ready to pay €50 million in return for 13,000 new jobs – in addition to indirect support and tax relief.
Besides the state aid assigned to German tyre-making firm Continental, which plans to add 600 new jobs in Púchov in western Slovakia, Tatravagonka will get money for a promise to create 350 jobs in Gelnica, in the east of Slovakia. Another 390 jobs are supposed to be created in the eastern town of Vranov nad Topľou by the Grandwood company. While Continental will be paid in the form of tax relief, Tatravagonka and Grandwood are slated to get direct cash payments – the first such cases since 2011. The government said the payments are justified by the high unemployment rates in the areas involved.
The INESS think tank analyst Martin Vlachynský told Sme that the real reason is the government’s growing desperation over the unemployment rate, which has recently climbed to almost 15 percent nationwide and almost 30 percent in some areas.
The German company Continental will create 600 jobs over a two-year period. The cabinet will support the €250-million investment at the tyre-making plant with a 2-year tax holiday, with relief estimated at €20 million, the Hospodárske Noviny daily wrote. The state will thus pay over €33,000 per job, the SITA newswire wrote. The company will also invest in jobs in research and development, SITA quoted Fico as saying. After the investment is finished, Continental plans to produce about five million more tyres annually. Continental said it plans to employ 163 more people this year.
Sources: Sme, Hospodárske Noviny, SITA
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12. Apr 2013 at 10:00