What are the reasons behind low wages in Slovakia?

The average wage costs per Slovak employee accounts for only 44 percent of the EU average.

The autimotive industry is one of main pillars of the Slovak economy. The autimotive industry is one of main pillars of the Slovak economy. (Source: Courtesy of VW SK)

After almost 30 years since the fall of the communist regime and transfer to a market economy, Slovaks are still far from enjoying western salaries. But while trade unionists as well as Robert Fico’s ruling party Smer pursue administrative measures to increase employee wages, economists point to the low labour productivity of companies as an obstacle to greater growth.

“It is necessary to pay more attention to labour productivity growth for the long-term growth of wages in Slovakia,” Milan Výškrabka, analyst of the Financial Policy Institute (IFP) think tank running under the Finance Ministry, writes in its analysis the High and Low of Companies in Slovakia published in early June. “This is because the productivity of most companies significantly lags behind the best performers.”

The Labour Ministry points out that the findings of the analysis cannot be applied over the entire business sector in Slovakia since the surveyed sample of companies includes only companies that operate in Slovakia as well as abroad.

“Nevertheless, international comparison confirms that Slovakia’s wage costs lag behind the European average more than productivity,” Veronika Husárová, spokesperson of the Labour Ministry, told The Slovak Spectator.

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