Businesses in Slovakia to save up money on the minimum wage

The Economy Ministry has introduced 42 measures to help companies.

Economy Minister Peter Žiga has introduced 42 measures that are to help firms in Slovakia in the times of troubled economic growth. Economy Minister Peter Žiga has introduced 42 measures that are to help firms in Slovakia in the times of troubled economic growth. (Source: TASR)

PM Peter Pellegrini (Smer) met in mid-September with the representatives of employers, who had criticized the high surcharges and fast-growing minimum wage joint for all sectors, promising to draft measures to help businesses in times of slower economic growth.

Soon after the meeting, Economy Minister Peter Žiga (Smer) introduced an action plan comprised of 42 measures to support the business sector and the Slovak industry. The most detailed proposals revolve around the minimum wage, the Hospodárske Noviny daily reported.

The reason is that the minimum wage is used to calculate various surcharges, including those for weekend and night work.

“By detaching the minimum wage it is possible to release the pressure in the increase in labour costs,” reads the document, as quoted by Hospodárske Noviny.

The surcharges should be calculated from another sum, but it is not clear for now what it would be, according to the daily.

Apart from the minimum wage-related changes, the ministry proposes to introduce a flexible working time, the so-called “kurzarbeit” system, and a digital tax.

A new variable

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The minimum wage is expected to rise from the current €520 to €580 a month next year. This will thus mean additional annual costs for companies through different surcharges, including weekend and night-time ones, derived from the minimum wage.

However, the Economy Ministry does want them to be delinked from the minimum wage. Hence, they are looking for a new variable.

“The measure may diminish a negative impact on the companies’ costs regarding the fast-growing minimum wage,” Peter Goliaš of the Institute for Economic and Social Reforms (INEKO) said, as quoted by Hospodárske Noviny.

“Kurzarbeit” proposed

Tax advisor Silvia Hallová of Grant Thornton has welcomed the ministry’s plan to detach bonuses from the minimum wage. However, more has to be done, she stressed.

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“Slovakia must gradually and over the long term reduce the overall workload, otherwise companies will face difficulties when maintaining long-term employment,” she said, as quoted by Hospodárske Noviny.

The ministry is planning on introducing a German-inspired measure known as “kurzarbeit”. Instead of dismissing a worker, their working time would be shortened and the wage lowered. Yet, the state would reimburse the difference provided the worker attends some workshops and courses.

Slovakia introduced a similar measure, known as flexikonto, in the past.

“It is an even cheaper and more efficient solution than an unemployment benefit,” Andrej Lasz, general secretary of the Association of Industrial Unions (APZ), told Hospodárske Noviny.

The Economy Ministry is also considering imposing a tax on the revenue from online advertising in the case of multinational tech giants, to increase revenues to the public administration budget, the daily wrote.

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