As a former water athlete, Peter Kompalla remembers the white-water facility in Liptovský Mikuláš very well, which is why he looked forward to relocating to Slovakia after serving for German chambers of commerce around Asia for several years. Now in Bratislava, Kompalla, executive director of the German-Slovak Chamber of Commerce (SNOPK) not only fosters Slovak-German business relations, but he also is a regular in nearby Čunovo, riding the Danube waters.
In an interview with The Slovak Spectator, Kompalla compares his experience in Vietnam and the Philippines to Slovakia and describes the challenges that German businesses face here, including whether the chamber’s members are looking – and finding – German-speaking workers.
The Slovak Spectator (TSS): You arrived in Slovakia almost one year ago. What is your impression of the country and its economy?
Peter Kompalla (PK): Slovakia is a wonderful country, and Bratislava is a great city, which made it very easy to settle in for my family and me. We really enjoy the balance between the urban comfort of a European capital and its size. The German school my children attend is only 10 minutes from our home, and from the school I have five minutes of walking to the office. Another thing we appreciate is the city’s green parts and the nature close by.
I am deeply impressed by the quantity and quality of German-Slovak business relations. It’s not only the number of companies involved, the large investments in the automotive sector with the carmaker Volkswagen and suppliers of the automotive industry like Brose, Continental or Schaeffler, but also the collaboration in retail, energy and life sciences, which is outstanding compared to other countries.
But, returning to the European Union after working for the network of German chambers outside the EU for more than 10 years, it was surprising to realise how complicated and very time-consuming the free movement of labour and services in a single market is for companies. From the outside you always perceive it as a common market with all the benefits, but there is certainly room for improvement.
TSS: You spent the previous years in Vietnam and the Philippines. What ideas have you brought from these countries to Slovakia?Related articleRead more
PK: The mindset of the people in both countries has inspired me. Thanks to their positive and strong attitude, combined with discipline, these countries made leapfrog developments which have taken decades in Europe. This dynamic development of Asian markets gave me an idea of the importance of competitiveness, which we have to secure through a strong collaboration in Europe.
TSS: What is the position of Slovakia as a business partner for Germany? Do German entrepreneurs recognise the potential of this country?
PK: Slovakia, with its strong industrial network and the flourishing development of industries that also have a strong position in Germany, like the automotive, electro-engineering, machinery, metallurgy, and plastics industries, remains an interesting business partner for Germany.
Slovakia is one of the most important trade partners for Germany. It ranks sixth within central and eastern Europe and 21st globally. According to Slovakia’s relatively small size, this is a very strong position, similar to Brazil and India for Germany.
Unfortunately, many small and medium-sized enterprises in Germany do not yet recognise the business opportunities in Slovakia. The largest federal states of Germany especially lack knowledge about the business destination Slovakia. For this reason, our chamber produces an image brochure about the country and its market potentials, with which we are going to stir interest among German SMEs.
TSS: What are the biggest challenges investors face in Slovakia?
PK: In cooperation with other chambers active in Slovakia, our chamber conducts an annual survey where we ask our member companies for their opinions. The feedback is quite stable, with positive items like EU membership and quality of labour.
The challenge is the shortage of skilled labour resulting in wage pressure and increasing employee fluctuation. Western Slovakia has experienced especially dramatic developments.
Therefore, we support all initiatives aiming to improve the qualification of employees. These include vocational training, university studies and further education, as well as dual education. As the latter does not have the volume yet to have a major impact on the problem, what we foster is better cooperation between all kinds of educational institutes and businesses. This includes students taking over projects in companies. We fully support this because this is exactly what brings together educational institutes and businesses, and that is what we see as a platform through which we could have an impact.
TSS: How do you perceive the fairly robust wage increases in Slovakia over the last few years?
PK: The executives of companies that I meet every day are strongly committed to the country and show great responsibility for their employees, beyond wages with many other social benefits. At the same time, they operate in markets with strong global competition and low margins, and they have to manage costs if they don’t want to risk the future of their businesses. These costs are not only wage costs as these companies have invested in Slovakia massively. So, at the end of the day, productivity is the key. Therefore, we support and welcome all initiatives which enhance productivity through education and training, along with digitalisation and automation, for example.
Another challenge is indirect costs stemming from recreational vouchers and the increased minimum surcharges on night, weekend and public holiday labour. They also increase the red tape companies have to tackle. Such instruments need to be checked after consulting all affected stakeholders before they are introduced. What we observe in political practice, however, is that there have been several attempts to introduce such legislative changes without any public discussion. Our chamber is always willing to provide necessary insights about the possible influence of legal action on the business sector.
TSS: How do you view the current level and scope of R&D brought in by foreign investors to Slovakia?
PK: Among our 440 member companies, several are innovation-driven companies, which deploy their own development departments, or in some cases entire development centres in Slovakia. This is especially true for our members in the car supplier, electro-engineering and engineering sectors. What is still missing is the joining of basic R&D activities at the institutional level with applied R&D activities at the company level. In Germany, we have such an institute, which secures closer cooperation between those two sectors. Thus, we see room for improvement here. Another point is the lack of funding. Although Slovakia has managed to increase its R&D spending compared to GDP significantly, it still trails behind the other three Visegrad countries – Hungary, Poland and the Czech Republic.
R&D also raises another topic: startups, with their fresh ideas, play a role in generating innovations. We see that there are a lot of things going on, not only in Bratislava, but also in Kosice’s IT Valley and in all of Slovakia. For this reason, the Slovak-German Chamber of Commerce hosts events which bring together startups and innovation-driven companies. We are also supporting two Slovak startups that show potential in the attendance of the Bits&Pretzels event in Munich in September. One has developed a rehabilitation procedure for patients after brain drainage, and the second has developed a technology that speeds up communication between emergency and hospital teams during urgent cases.
In terms of support from the government’s side, Slovakia has introduced several support programmes for R&D and increased the tax deductibility of corporate R&D expenses. These measures certainly point in the right direction. However, it still remains a task to establish a more sophisticated framework for R&D involving all stakeholders, like research institutions, universities and companies.
TSS: Earlier this year, the Slovak-German Chamber organised the second edition of Life Science Innovation Day. What was its focus and what results did it bring?
PK: It is focusing on health care, zeroing in on challenges like the ageing of society and increase of cancer patients and cases of heart disease due to the lacking resources of qualified personnel. It is also zeroing in on new technological trends, for example, telemedicine, innovative solutions and medical treatments. These are so complex that no party could solve them alone. The idea of Life Science Innovation Day is to bring the government, businesses and science together, because at the end of the day, these relationships are always between people. At this event they can exchange ideas and strategies on how to address the challenge. It is quite surprising to see how different the perspectives these parties sometimes have are.
TSS: What is the importance in holding such events?
PK: We really need to create platforms where people can meet, share, collaborate and understand. We have a new word for this – coopetition, which stands for cooperative competition where competitors work with each other. Life Science Innovation Day is even one step further since, besides businesses, the government and scientific institutions are also involved.
TSS: How do you perceive the planned change to scrap the English language as the compulsory first foreign language every primary school pupil has to learn, thus creating the possibility that pupils may choose, for example, German instead?
PK: We asked our member companies two years ago. They highly welcomed this step as it provides flexibility. It was always Slovakia’s big advantage that people had such good language skills here. Companies, including the German ones, take into account the huge importance of the English language. Nevertheless, other European languages are also important. If you look at the reality of daily business, it is not that they have business lines between Germany and Slovakia; they have suppliers in Sweden, Hungary and Italy, and they have customers in France and other countries. This shows how important other European languages are, which is why this flexibility is welcomed.
TSS: Do the chamber’s member companies lack German-speaking employees?
PK: Yes. There are a lot of German-speaking workers and even entire units in companies where they are speaking only German. We know that there is a big interest in more German-speaking workers in these companies. But this is not reflected in the ads published, for example, on the job portal Profesia.sk due to the current shortage of labour. Companies hesitate adding another skill because they are afraid that they won’t find any people. So, they compromise and look for someone that speaks English. But when such a person also speaks German, this is very welcomed and reflected in the salary level, too. Learning German or another European language is something that really pays off.
TSS: In terms of education, young people prefer general education to the detriment of a technical education, while this trend is not limited to Slovakia. Can organisations like SNOPK help change this trend?
PK: That is definitely something Slovakia and Germany have in common. It is a topic we know very well in Germany, and I think what we can do is be a part of a concerted approach. We are very active in showcasing the benefits of technical education and dual training, which many German companies like Volkswagen, Brose, Continental and T-Systems provide in Slovakia. The feedback of the attendants shows a really high work satisfaction and very secure and well-paid jobs in the future. However, it is important to start at an earlier stage with the promotion of a technical education among students and their parents.
One instrument for making students aware of technical education at an early stage are internships in elementary schools. This two-week internship is a good chance for students to gain some insight into what factories do and how interesting a technical profession can be. We already help to establish connections for the ninth-grade students in German companies in Bratislava.
TSS: What are the chamber’s plans for the future?
PK: I look at the future in two ways. One is the bigger picture, when global economic, technological and ecological challenges will have a major impact on both Germany and Slovakia, while their economic developments have been synchronised since the last financial crisis. The business world is becoming more VUCA, i.e. more vulnerable, uncertain, complex and ambiguous. No company can survive alone in a connected world. We would like to be the platform for the collaboration of companies and institutions in order to address these major challenges.
Secondly, we will continue to build bridges between Germany and Slovakia with a hands-on approach. We want to get more German companies interested in the business opportunities in Slovakia and of course, we equally support Slovak companies in entering into business with German partners. We fully believe that strong business ties between Slovakia and Germany are mutually beneficial.
30. Jul 2019 at 8:30 | Jana Liptáková