Austrian firms praise Slovak productivity

But state still needs more transparency.

Austrian firms see several drawbacks in the Slovak business environment.Austrian firms see several drawbacks in the Slovak business environment.(Source: SME)

There are a variety of Austrian companies doing business in Slovakia, and they find both advantages and drawbacks. Though these companies are still drawn to Slovakia mainly thanks to geographical proximity and low labour costs, they often stay because of financial stability and shared EU membership.

The Slovak Spectator spoke with Markus Jelleschitz, country manager of Gebrüder Weiss Slovensko, a provider of logistics services; Walter Egger, managing director of Strabag construction company; and Mária Berithová, head of the Slovak-Austrian Chamber of Commerce, about advantages, problems and opportunities of the Slovak business environment.

The Slovak Spectator (TSS): What are the advantages of doing business in Slovakia?
Mária Berithová (MB):
In the first trimester of 2016, there was an opinion poll among the EU investors in Slovakia including Austrian companies. Among the best valued local factors in the poll is membership in the EU, productivity and workers’ willingness to be productive, availability and quality of local suppliers, labour cost and the qualifications of workers. Though the last factor is still rated positively, it recorded a significant decrease compared to the previous year. In addition, geographical proximity is also of interest.

Markus Jelleschitz (MJ): Slovakia plays a significant role in high-tech and automotive sectors, and in recent years it has achieved a huge expansion in these sectors. In addition, there are a number of suppliers specialising in electronic parts and sufficient network of customers and partners who are already accustomed to a high standard of services provided by us.

Walter Egger (WE): Financial stability, the euro as currency with no exchange risk and CEE region which means short geographical distances to our headquarters, similar culture, good knowledge of foreign languages and open minded people.

TSS: What are the problems of the Slovak business environment in your view?
The opinion poll defined problematic areas as corruption and crime, legal confidence, transparency in public procurement and the tax system. Meanwhile, a new act on public procurement entered into force which means a number of changes in the practices and processes of the procurement including those changes that reflect real requirements of the practice and try to make the process of drawing EU funds more effective. Currently, we register certain progress especially in strengthening of transparency and predictability in the legislative process. Recent drafts of legislative measures leading to increased transparency and efficiency of the courts is a positive step.

MJ: There are a few obstacles that threaten the country’s advantages in the long run, and some of the biggest are lack of resources and the entire education system. As an example, when we search for appropriate employees for our company, we repeatedly need to educate and train them at least for one year to see them able to carry out our jobs. Ergo, we are trying to find ways to exploit the dual education and work closely with the universities and high schools.

The second challenge is the huge amount of administrative burden and legislative requirements in spheres like data protection, waste management, the labour code, accounting and work protection. In comparison with other countries, Slovak regulations still have a lot of space for improvement and making a more friendly environment.

WE: The lengthy time it takes to get a decision from a court.  

TSS: Which factors affect the decision of Austrian companies to launch a business in Slovakia?
For the future, it is very important to solve the lack of skilled, qualified workforce and to adjust the education system to the needs of the market. Frequent changes in the legislation and burdensome administrative procedures and requirements unfavourably influence business in Slovakia. Huge administrative and regulatory barriers within certain professional services and network industries as well as long-term concerns about the quality of the judicial system damage the business environment and discourage investors.

Moreover, we may remember the infrastructure for better linking of the east and the west crucial for deciding on the location. Poorly developed transport infrastructure in central and eastern Slovakia is still an obstacle to investment.

MJ: Among the critical factors in entering the market are geopolitical location, macroeconomic indicators, the degree of promotion of foreign investment, infrastructure, resources, availability, quality and language skills of the workforce and – last but not least – costs. Slovakia provides a very nice mix of positive indicators of all the above factors. Of course, not everything is perfect, however, the most important factors are long-term developing trends. And in this respect, the country provides stability and development for foreign companies.

WE: The good opportunities for a start-up or buy-in, financial stability and transparent size of business.

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Theme: Foreigners in Slovakia

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