Dissimilarity on the labour market is a good thing, as immigrants who are different than the local population have the potential to enrich the skill set in society, says Martin Kahanec, founder of the nongovernmental Central European Labour Studies Institute and researcher at the University of Economics in Bratislava.
The Slovak Spectator (TSS): Slovakia’s employers have complained about the lack of a qualified labour force. How big is this problem from your perspective?
Martin Kahanec (MK): This is a very significant problem, it signals a fundamental change in the labour market. For some time unemployment has been declining and the number of vacancies is increasing. The pool of potential employees is shrinking, and employers are not able to find people to fill their vacancies. This implies a loss of potential for the economy. What makes it an even bigger problem is that this trend is shared by neighbouring countries, like Hungary and Poland. This signals that the education system is becoming a bottleneck for the further economic progress of Slovakia and its neighbouring countries.
TSS: So does the main problem and the main solution lie in the education system?
MK: Yes. One very much needed reform is the reform of the education system. People who enter the labour market do not possess the right skills. Not just hard skills, which are also a problem, but also soft skills. This is reflected in PISA testing, where people are unable to comprehend written text. We are unable to train people in the skills that are needed on the labour market and required by employers. But this is not the only issue here. The education system is one, but another one is labour mobility, within the country and across borders. We need to enable our labour force to be more mobile and go to the places where jobs are. But we also need to be more flexible in employing foreign nationals.
TSS: Why is mobility within the country a problem? Is it cultural?
MK: Only partly. Particularly in eastern and central Slovakia, there is a big tradition of migration, even overseas. So culture is only a partial explanation, but a more imminent problem seems to be the housing market. We have a high home ownership rate, people own their houses, and the problem is that a house on the outskirts in Slovakia is only a fraction of the price of a house in the economic cores. And for these people, even if they can get a better job in Bratislava or Košice, the increase in their salary does not compensate for the very significant increase in their housing costs. Also, these people are often not the youngest, so their horizon is not long enough for this kind of investment.
Missing workers should come from abroad
TSS: Is Slovakia interesting to foreign workers? Would a Ukrainian nurse rather not go to Germany?
MK: I think it is definitely interesting. Slovakia is a good place for living. What makes it more attractive for, say, Ukrainian nurses, is the linguistic proximity. They can speak Slovak within a few months and we would probably not be able to recognise they’re not Slovak. We have a tradition of immigration from our eastern neighbours, but we also see some immigration from Vietnam, from China, and some Asian countries. The experience of the Czech Republic, Spain, or Ireland, tells us that these things may change very quickly. In the Czech Republic, about 7 percent of the population is foreign born. In Ireland or Spain, they used to have the share of foreigners in the population lower than 10 percent, and Spain even lower than 5 percent, in the early 2000s, and after about a decade it is 13 percent in Spain and more than 16 percent in Ireland. So the dynamics of the change is fast, and with the convergence in Slovakia, in terms of GDP per capita and the wages are almost at par with the Czech Republic, the country is as attractive as any other around. It’s not a problem of attractiveness, it is more about when and how it will happen and how we will be able to manage this and integrate those people.
TSS: So are we ready? With the laws, for instance.
MK: I was involved in a discussion about a new immigration and residency law, and the starting point some three, four years ago, was very bad. We were very closed. Our research has shown that the easier the access, the higher the economic benefits of migration. If you make access easy then people go to the occupations and jobs to realise their highest potential.
TSS: Are the other V4 countries more open to foreigners?
MK: Not Hungary, under the current government. But Poland used to have and possibly still has a dedicated programme for foreigners from Belarus and Ukraine. And they were quite successful. People are afraid of immigration because they think that immigrants will take their jobs. But you will not find this in any data. You rather find that immigrants fill the gaps in the market where we are missing skills, thereby making the economy more dynamic, and this actually generates more jobs for the natives as well. Immigrants are especially flexible in terms of allocating to those industries and occupations where their skills are most needed, where the local labour force does not have the right abilities and skills.
TSS: Stereotypically, Ukrainian and Romanian workers are the first who come to mind as potential immigrants to Slovakia. What other countries could supply a labour force?
MK: The Balkans, the Eastern Partnership countries. But if you walk around Bratislava you see successful Asian communities, which may be a bit separated from the native population but economically they perform very well. From an economic perspective, the immigration of people who are very similar to Slovaks and bring a similar skillset is beneficial, but even more beneficial is the immigration of people who are different, with a different set of skills, that are more complementary to our skills.
Slovakia needs to work with its diaspora
TSS: You say Slovakia is a good place to live, but what about the disturbing brain drain statistics? Should we be focusing more on bringing them back home?
MK: Definitely, Slovaks living and working abroad are a great asset for Slovakia: if they come back home, but also if they stay in their receiving countries. Data analysis has shown that immigrants coming back to their sending countries bring new skills and new ideas to the domestic labour market. Also business ties, trade ties. So it is very desirable to make their return easy.
TSS: Is it not easy?
MK: I myself returned and it’s a nightmare to reintegrate into the social security system. Our administration is not ready for this. And now with Brexit, there will probably be a significant number of Slovaks coming back and we need to get ready for it. Otherwise, they might not come back and that will be lost potential. Although, it is also a different type of asset if they stay in the receiving country, because they form a diaspora that can be used again to create economic and business ties between the two countries. The Irish are the masters of this globally. They have very actively worked with their diaspora in the US and other countries. For example, they figured out that Obama’s ancestors were also Irish, so they invited him for St Patrick’s Day, to create ties. But when Obama flies to Ireland, he comes with businesspeople. We do have Slovaks in various positions abroad and we should actively work with this diaspora.
TSS: Is it very likely that people living and working in the UK will come back after Brexit, or will they go further west or elsewhere in Europe?
MK: I think they will explore both options. Many migrants will return. Slovakia should actively manage this and have a very clear policy. Because clarity, transparency, and predictability are absolutely important. This concerns the immigration of third-country nationals to Slovakia, but it also concerns the Slovak diaspora abroad. We should give them a clear signal: if you like, we are happy to welcome you back, this is the office where you should go, here is the website you should look at to get all the information you need. And there should be qualified people to advise you how to do this, how to register with social security, what are the specific things you need to take care of. We do not have this. And I can tell you it is a very difficult process. Not very pleasant.
Under-educated are at risk
TSS: What other big challenges do the countries of central Europe face nowadays regarding their labour markets, etc.? What do they have in common in this regard?
MK: The one challenge is that employers are unable to find employees with the right skill set. But the other is that certain groups of the population are excluded from the labour market. This concerns the notorious case of socially excluded communities, most of them Roma. We already observe in Slovakia that the lesser educated have some of the highest risks of exclusion from the labour market in the European Union. So having a low level of education in Slovakia really is an enormous disadvantage, more so than in other countries in Europe. It seems that the education system is not able to provide for the mobility of people from underprivileged backgrounds to attain an educational level that will be required. The economy is prospering. Slovakia has about the same GDP per capita and the same wages as the Czech Republic, there is foreign investment, factories, many relatively high-tech, and this creates interesting jobs. But we also will see fewer opportunities for the less-educated. With the decreasing quality of the education system, there will be more and more such people. This will be a great disadvantage.
TSS: So working with pupils from excluded communities and with people who are more likely to be less-educated by the end of their schooling should be at the core of the educational reform?
MK: The social mobility of pupils and students is one of the important aspects, so that no child is left behind. On principle everyone should have equal opportunities, but we know that family background matters and rich families will send children to better schools, etc. But the state should take absolute care of those who are at a disadvantage and enable them to attain an education which will empower them on the labour market. But this is not the only thing, there is another very fundamental change required in educational reform, and that is the move from memorising to education which inspires students to solve problems, understand problems, ask the right questions, be able to apply the right approaches to problems, creativity, innovation. And this is where we are doing a very poor job.
TSS: Some years ago, politicians were speaking a lot about building a knowledge-based economy. Now it seems as if they have succumbed to the pressure of employers who need more workers for their production factories. How do you perceive this shift?
MK: I think that business has done a good job convincing the government that the education system has to better align with the needs of employers. But there are at least two negative aspects to this. First, the education system is pushed into certain technical disciplines at the expense of the humanities. Of course we do not need 2,000 political scientists a year, but we need to have a balanced education system with all key disciplines covered. Second, simply pushing students into vocational training to supply to some factories may help in some way, but the fundamental reform of the way we teach students is still missing. And this is very much entrenched in the educational culture in Slovakia where we think that we have to force pupils to memorise. We have to change the whole philosophy, because this is not preparing students for life and for the labour market.
TSS: Do you think it is going to happen with the announced educational reform?
MK: I very much hope so. But I’m also involved in education here and I see that the thinking of people is very different in this regard. At the same time, I do see inspired teachers who are really doing a great job. What we need to do is to learn from their experiences and scale it up to the whole system and prepare students for life on the labour market.
Who is Martin Kahanec
Martin Kahanec is an expert on the labour market and its institutions, as well as migration and ethnicity. He is the founder and scientific director of the non-governmental think tank Central European Labour Studies Institute (CELSI) in Bratislava, professor at the Central European University in Budapest, and the University of Economics in Bratislava, among others. Martin Kahanec has held several advisory positions and leading roles in a number of scientific and policy projects with the World Bank, the European Commission, OECD, and other international and national institutions.
2. Mar 2017 at 6:30 | Michaela Terenzani