Slovakia is 26th on the Employment Flexibility Index

Higher work surcharges will push Slovakia down.

(Source: Sme)

The Employment Flexibility Index, which is based on World Bank data on labour regulation, currently ranks Slovakia 26th out of 41 EU and OECD countries. The planned changes in surcharges for night, weekend and holiday work will send Slovakia down to 36th place, claims the think tank Institute of Economic and Social Analysis (INESS).

“The surcharges will complicate the business plans of employers and reduce the flexibility of employment,” said INESS analyst Radovan Ďurana, as cited by the SITA newswire. “This means their willingness to create new jobs and expand production will diminish.”

In the long run, the change in surcharges will impact the entire labour market, but in the short term it will be most evident in sectors that depend more on weekend work, in sectors that are not so profitable, and where employees do not have such a strong negotiating position, believes Ďurana.

“The impact will be mainly on sectors such as retail, restaurants, hotel services and other services with lower wages,” said the analyst.

The Employment Flexibility Index embraces indicators for hiring, working hours, redundancy rules and redundancy costs. Denmark is the leader of the index as its labour regulations stipulate neither, for example, minimum wage nor the duty to pay out a severance pay. These parameters are subject to an agreement between employee and employer as well as collective bargaining.

The index for 2018 shows France as the country with the strictest labour regulations. Slovakia’s Labour Code is stricter than those of the Czech Republic and Hungary as well as Austria.

Proposed surcharges

Surcharges for night, weekend and holiday work will gradually increase in two phases. Representatives of employers, employees and parliamentary deputies for the ruling Smer party agreed upon compromise increases on January 15. The new surcharges still need to be approved by parliament.

Read also:Surcharges for night, weekend and holiday work will go up in two phases

The surcharges should increase as of May 1, 2018 and then again as of May 1, 2019.

Night surcharges, will depend on whether workers are conducting ordinary or risky work. In the case of surcharges for ordinary night work, they will increase from the current 20 percent of the minimum wage to 30 percent as of May 1, 2018 and to 40 percent as of May 1, 2019. Night surcharges for risky work will increase to 35 percent and then to 50 percent, respectively.

Employers will be able to employ a so-called derogation exemption. This means that they will be able to agree upon an increase in night work surcharges within a collective agreement, but the surcharge will have to increase to 25 percent at least, as of May 1, 2018 and to 35 percent at least, as of May 1, 2019.

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