The Slovak labour market is becoming overheated with more and more employers reporting difficulty filling their vacancies with qualified labour, due to the shrinking pool of suitable employees. While employers have already started searching abroad for labour, the Labour Ministry refuses for now to ease employment requirements for people from non-EU member countries and would like to see vacancies filled by people registered with job offices or those lured back home.
“The labour market is changing and it is becoming even more heated during the last months,” Ivana Molnárová, the director of the biggest job website Profesia.sk, told The Slovak Spectator, adding that while on one hand the historically highest number of job offers are listed, on the other there is a decreasing trend of appropriate applicants.
Overall unemployment figures in Slovakia improved in 2015 and during the first months of 2016 decreased to below 10 percent. Companies point to the lack of qualified and skilled personnel. Sectors most affected by the shortage are IT and industrial production. “The expectations are that unless the situation [in the structure of unemployment] changes, we will have to open the issue of migration legislation,” Martin Hošták from the National Union of Employers (RÚZ) told The Slovak Spectator.
The Ministry of Labour, Social Affairs and Family opposes intensifying efforts by employers to bring in workers from third countries.
“There are still 100,000 people registered at labour offices, which is more than in 2008, when the unemployment rate was relatively the lowest,” said Labour Minister Ján Richter on the occasion of Labour Day on May 1, as cited by the TASR newswire. “There’s room for working with Slovak people and preparing them for the labour market.”
Therefore the ministry can accept bringing in workers from abroad only when this concerns regulated sectors that appear to be suffering from a lack of skilled labour vis-a-vis the Slovak labour market. At the same time this must take place only following proper communication between the relevant employer and the local trade unions.
“Slovakia is interested in covering the lack of a qualified workforce by the people registered at the job offices,” Michal Stuška, the spokesperson of the Labour Ministry, told The Slovak Spectator, adding that it must be balanced by producing skilled workers.
Moreover, the Slovak government has introduced a grant scheme that should attract Slovak professionals living abroad back home, while some companies have started to fill the gaps with foreigners.
Jobless rate decreases
The average registered unemployment rate, i.e. the rate of those able to take a job immediately, was 11.50 percent in 2015 while its monthly rate decreased to 9.89 percent in March. Simultaneously, recruiting companies experienced an increase in the number of offered positions.
“Last year we experienced a 30 percent year-to-year increase of work offers,” said Molnárová of Profesia.
However, experts say many of those without jobs are virtually unemployable due to lack of skills and flexibility in commuting.
“The main reason is the structure of Slovak unemployment in combination with the poor system of education,” said Luboš Sirota, board chairman and CEO at McROY Group. About 100,000 of the unemployed have completed only elementary education and many of them cannot be categorised in terms of occupation.
While some estimate the natural rate of unemployment in Slovakia at 8-8.5 percent, Michal Páleník from the Employment Institute believes that the natural rate for Slovakia is 3-4 percent and anything above this is an indicator of erroneous policy.
The government has introduced several motivational tools, including the so-called deductible item on payroll taxes enabling low-wage workers to earn more and reduce the burden of health insurance premiums paid by employers. The Labour Ministry wants to continue projects helping people to establish themselves on the labour market.
“If we accepted that the “natural” or even indispensable unemployment rate in Slovakia is ... 9 percent, this would mean that we resigned over education reforms, re-qualification programmes and social economic tools,” said Stuška. “It is impossible to take the current rate of qualification of the unemployed as status quo.”
Last year, the Education Ministry launched a Return Home scheme that supports return of specialists from abroad in order to fill the gaps in Slovakia’s labour market. The programme aims at Slovak nationals who completed a prestigious university abroad or have a well-established position within their profession. Together with the Finance Ministry, they set aside €1 million annually for the scheme. The ministry also runs a grant programme that should improve the analytical capacity in public administration.
But experts are rather sceptical about the approach. Sirota cited a survey of the Business Alliance of Slovakia (PAS) according to which more than half of the Slovaks working abroad want to stay there for life. When asked whether they are planning to return in the short term, 91 percent responded no.
“It is almost impossible to pay top scientists and experts in Slovakia, or offer them more attractive prospects,” said Hošták, adding that even less-qualified Slovaks will be motivated to return only by gradual matching of the salaries between Slovakia and their current country.
On the other hand, employers are eyeing the labour force abroad to fill their vacancies.
“The interest of employers in people from beyond the borders has increased 10-30 percent year-on-year, depending on the sector,” said Sirota, adding that the interest is the highest in the automotive sector. “It is mainly people from the EU, as contracting a worker from a third country is demanding in paperwork.”
McROY registers interest in people from Hungary and Poland, but also the Czech Republic, Bulgaria and Romania.
“Surprisingly, the largest number of foreigners working in Slovakia is not from the nearby countries but from Romania,” said Páleník.
In March, based on data of the Labour Ministry, a total of 27,300 foreigners, up 6,000 year-on-year worked in Slovakia, the SITA newswire reported. This included 6,500 Romanians working in Slovakia, compared to 3,400 Czech nationals and almost 3,100 Poles. However, people from outside the EU can often fill the gaps.
“Hiring IT specialists from Ukraine would help the market, because it is almost impossible to get them from other EU countries due to pay differences,” said Sirota.
Currently Slovakia is not planning to open its labour market for foreigners from third countries, said Stuška citing the Migration Policy of Slovakia with the outlook up to 2020. The document put stress on efforts to fill the gaps on the labour market by people registered with job offices and assuring that the education system produces a suitable work force.
In terms of the future, experts are not optimistic.
“Expectations for the future are not optimistic because it is very difficult to change the structure of the unemployed and the situation with education is similar,” said Sirota. “If we add to this also the low mobility of the labour force, it is highly probable that Slovak firms will lack qualified people for a long period of time.
Hošták agrees, saying that with the growing economy and falling unemployment the problem of a lack of qualified workers will become more pressing.
Employers see the situation in professions that require three-year training programmes even more pressing.
“In the future, up to 70 percent of the gaps on the labour market will be crafts and professions based on vocational training,” said Roman Conorto, the manager for education at the Federation of Employers’ Associations (AZZZ).
Conorto blames the flawed strategy of the Education Ministry in educational and training programmes as well as the unwillingness of the parents to enrol their children in less-prominent training.
“We have to introduce a system of planning in terms of study and training programmes in accordance with the needs of the labour market, in order to provide enough skilled labour,” said Hošták, adding that RÚZ wants to present a plan of potential programs.
Sirota added that dual education is a right step but it should not be considered a panacea that will bring immediate results. It might match the competences of the graduates with the needs of the market, but there are still things to fix.
“It puts huge responsibility on the employers without satisfactory financial compensation,” said Sirota.