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Unions gain power; firms cry out

UNIONS and representatives of employees will be able to enforce pay hikes even in firms which disagree with such hikes thanks to a Smer-designed revision to the law on collective bargaining. The legislation, which sailed through parliament on October 29, hit a raw nerve with foreign chambers of commerce, an association of employers as well as the political opposition, and the changes may yet end up at the Constitutional Court.

UNIONS and representatives of employees will be able to enforce pay hikes even in firms which disagree with such hikes thanks to a Smer-designed revision to the law on collective bargaining. The legislation, which sailed through parliament on October 29, hit a raw nerve with foreign chambers of commerce, an association of employers as well as the political opposition, and the changes may yet end up at the Constitutional Court.

“The law, according to a prevailing majority of employers, will increase costs of the affected companies and influence their ability to compete in the prevailing negative economic situation,” according to an official statement released by the National Union of Employers (RÚZ).

The German-Slovak Chamber of Commerce (SNOPK) said that the revision violates the freedom in collective bargaining and worsens conditions for medium-sized companies. Yet the Labour Ministry insists that the law will improve working conditions and contribute to fairer economic competition.

“It will prevent unfair dumping on the part of those who want to compete only through slipping under social and working standards,” Labour Ministry spokesperson Michal Stuška said, as quoted by the TASR newswire, on October 31.

The binding nature of higher level collective agreements will be automatically extended to additional firms employing more than 20 people in a given sector without the consent of the individual firms, according to the revision prepared the Labour Ministry, led by Ján Richter, of Smer.

So far, the agreement of the employer was necessary in order to apply collectively bargained agreements to the given enterprise.

A so-called tripartite commission, composed of representatives from unions, employers and the state and set up by the Labour Ministry, will have a final say on proposals for the extension of collective agreements as well as objections from employers. Ministry and Statistics Office officials will represent the state, according to the SITA newswire.

“The role of the commission will be acting in line with the public interests; to observe the conditions set by the law and objectively assess the conditions of particular employers, [and] eventually assess also other conditions, which could impact the extension or the non-extension of the binding nature of collective agreements,” the ministry said.

Firms with less than 20 employees or where the number of physically disabled employees reaches 10 percent will be exempt just as firms which are affected by ‘extraordinary developments, or are in bankruptcy proceedings, or those which have been in business for less than 24 months.

“Categories of employers where an objective reason exists that extending the collective agreement to these employers could be causing them problems will be exempt,” the ministry claims, as quoted by SITA.

The affected firms however will lose their options to negotiate the working and payment conditions with their employees depending on the individual economic situation, wrote SNOPK spokesperson Markus Halt in a memo sent to The Slovak Spectator.

“Instead, they will receive collective agreements dictated from above and negotiated by large companies and thus they will be able to less flexibly react to crisis situations,” Halt wrote.

RÚZ called on President Ivan Gašparovič to refuse to sign the bill into law, while stressing that the legislation violates what the employers call the principle of contractual freedom, the inviolability of private property and the right to do business.

“The state, in case of putting the revision to work, might face a number of lawsuits over damages by the affected firms, which will suffer damages due to the involuntary extensions,” RÚZ wrote.

Martin Hošták of RÚZ noted that the Czech Constitutional Court has already said that applying a collective agreement without the consent of a firm is unconstitutional, according to the Sme daily. RÚZ assumes that the change might affect as many as 11,000 firms.

The unions are praising the revision, suggesting that it will help to bring salaries of people in a certain sector of the economy to an even level. Head of the Confederation of Trade Unions (KOZ) Jozef Kollár argues that the firms have been artificially cutting salaries so that they perform better in competition.

“Certainly, no one will be asking for a pay hike where it could cause problems,” Kollár told Sme.

Emil Machyna of KOVO, the metal workers trade union, called the revision good news because “many will see their salaries and social demands increase”.

“We are getting to the group of states, such as western Europe, where this extension applies to 98 percent of employers so that social dumping is not used,” Machyna told the public service Slovak Radio on October 29.

Yet, human resources professional Luboš Sirota, the general director of the McROY Group, suggests that the legislation might significantly distort the labour market, while some firms might seek ways to avoid the application of the law.

“Some smaller firms already are looking for ways to avoid the new duty,” Sirota told SITA.

Sirota assumes that smaller firms which employ dozens of employees will try to reduce the number of employees so that they can escape the duty, for example, by shifting a portion of their employees to self-employed contracts.

Opposition leaders have strongly condemned the change. Július Brocka of the Christian Democratic Movement (KDH) said that the revision is harmful and unnecessary.

“The stronger will strengthen their positions on the economic market,” Brocka warned during the parliamentary debate, adding that it will also improve the position of trade union bosses.

Ivan Štefanec of the Slovak Christian and Democratic Union (SDKÚ) said that the revision is a defeat of all the citizens of Slovakia, and particularly “a defeat of employers as well as employees”, while the practice of extending the collective agreements without the consent of the employers will harm the weakest, SITA wrote.

Štefanec said that smaller firms in regions with higher unemployment will suffer the most.

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