Welcome to the Ozempic economy

For a government that never ceases to assert its “national” identity, it is curious how often Slovakia’s current ruling coalition resorts to English-language phraseology and euphemisms.

So it was on 17 September, when Prime Minister Robert Fico – who, incidentally, speaks pretty good English– declared that “consolidation is, as the English say, ‘a must’.”

The Slovak euphemism – “konsolidácia” – was quickly revealed to have the same meaning as its English progenitor: spending cuts and tax rises.

The most eye-catching move was a drastic hike in the VAT rate, which will rise from 20 to 23 percent.

Bait and switch

It is a sign of the prime minister’s political skills that despite his ostensibly weak position – his tax rise for literally everyone, his party’s anaemic support (it won less than 23 percent in last year’s election), and his warring coalition’s razor-thin 4-vote majority – he still has everyone dancing to his tune.

This past week, what should be the second-strongest party in the coalition, Hlas, was lamely pleading with him to resolve a dispute with their other partner, the pro-eagle, anti-bear Slovak National Party (SNS), whose leader has been manoeuvring for months to be given the vanity appointment of speaker of parliament – despite the job being assigned to Hlas under the coalition agreement (it was left vacant when the party’s former leader, Peter Pellegrini, was elected president in April).

Hlas leader Matúš Šutaj Eštok, we learned, would be very grateful if Mr Fico would please call a meeting of the coalition leaders so that by the end of the year(!) they can "solve all the issues and problems that the coalition has been pushing for some time."

Quite why Šutaj Eštok cannot call a coalition meeting himself, or force a resolution of the “issues” – without his party’s votes the government would, in theory, quickly lose power – goes unexplained.

The speaker of parliament is, at least in theory, one of Slovakia’s three most senior constitutional officials. Pellegrini was signalling his presidential run from late last year, so everyone knew the job might need to be filled.

But Fico has decided it suits his purposes for now to keep everyone twisting in the wind, and the post will likely remain vacant for months yet. Apparently only grown-ups can call meetings and resolve disputes.

The president, despite trying hard to act presidential, still seems to be attached to his erstwhile mentor’s puppet strings, popping up in New York to take a swipe at the SNS – even though he is supposed to be above the political fray.

Even the opposition seems resigned to playing Fico’s games. After flashing a little spine upon being unceremoniously booted from his position as one of parliament’s four deputy speakers by the coalition on September 17, Michal Šimečka, leader of Progressive Slovakia (PS), soon returned to a defensive crouch.

Šimečka’s completely groundless dismissal – which came on the heels of some pretty vicious personal attacks on his family – was a clear flex by the prime minister, one that Fico followed up by summoning opposition leaders to discuss economic policy just a week later.

The fact that Šimečka and Milan Majerský, leader of the Christian Democratic Movement (KDH), agreed to turn up without any clear response to Fico’s scattergun “consolidation” plan suggests a worrying lack of focus. Fico duly trumpeted their attendance as an endorsement of his slash-and-burn approach, and then dismissed what little they actually had to say.

Don’t look now

All this political commotion would be par for the dismal course were it not for the fact that it helps to obscure the real, and largely unaddressed, issue at its core: Slovakia’s bleak economic outlook.

As former finance minister Ivan Mikloš recently pointed out in these pages, Slovaks are by some measures now the poorest citizens in the EU. And even if one can quibble with purchasing-power calculations, like-for-like comparisons show that the country’s competitiveness is in long-term decline.

Given the fiscal hole Slovakia finds itself in, some public-sector “austerity” (to use another euphemism) is probably needed. But raising VAT and other regressive measures – like imposing a transaction tax on businesses that actually pay their bills, heaven help us – are short-term fixes that will not address the long-term policy drift that has afflicted the country for almost 20 years now.

The important thing is to get the economic pie to grow faster. But neither Smer nor the other parties are offering very much in the way of a plan to achieve that.

You do not have to agree with the radical economic liberalisation of the Dzurinda governments of 1998-2002 and, especially, 2002-2006 to recognise its profound effect. Aside from the upward lurch in growth and wages that resulted in the 2000s, Fico himself (who has been in power for most of the years since 2006) has tacitly acknowledged its logic by doing almost nothing, bar some ineffectual tinkering, to change the framework established by Ivan Mikloš, who was Mikuláš Dzurinda’s reforming economy and then finance minister, with a brief reprise during Iveta Radičová’s short-lived administration in 2010-12.

But Slovakia’s economic circumstances, and the global economy, have changed significantly in the last 20 years: ‘steady as she goes’ is no longer a workable plan. Rather than come up with one, what Fico has done – using political tactics like those described above – is to consistently divert the state’s, and the electorate’s, attention from the absence not just of a plan but of even the most basic investment in roads, education and state capacity that represent the minimum requirement for sustained growth.

Take the high road

I could not but laugh at a reader’s comment under a recent Sme daily story reporting that while the Gorilla case (a labyrinthine tale in which Fico himself was embroiled), has now been definitively closed, allegations of corruption related to the construction of the Branisko highway tunnel almost a quarter of a century ago are to be reinvestigated, yet again: “Apparently, Slovakia needs more historians than judges,” the wag opined.

The thing about the Branisko tunnel – which opened in 2003, connecting the Spiš and Šariš regions in eastern Slovakia – is that whatever skulduggery attended its construction, the damn thing actually got built. Every day and night for more than 20 years now it has saved thousands of cars and trucks from having to wind laboriously up and down a steep range of hills, and vastly improved transport connections in the area.

Sadly, despite having been promised since the 1990s – Fico himself assured us it would be open by the end of his first term in 2010 – Slovakia is still waiting for the completion of its first multi-lane east-west highway link. The failure, over decades, to complete two key tunnels, leaving trucks crawling on crumbling roads through dusty villages and towns in northern Slovakia, has become such a bad joke that the issue has almost faded from public view.

But every week that large parts of Slovakia are not connected to the wider European highway network costs the country millions of euros in potential investment, hundreds of thousands of wasted hours, and a huge toll in unnecessary pollution.

The dirty little secret of Volvo’s much-vaunted investment in eastern Slovakia, where a new car plant for electric vehicles is due to be built by 2027, is that its construction hinged on the site’s connection to the Hungarian highway network: a link to the industrial park where the factory is being built is already open (tellingly, nearby Košice – Slovakia’s second city – is still waiting to be connected).

There is still no firm date for the completion of Slovakia’s main highway. (And it’s worth remembering that even when highways do get built, sometimes the interconnecting junctionssomehow do not.)

Thanks to the latest “consolidation” we will soon be charged 50% more to drive on the comparatively modest stretches of high-speed roads that do exist.

Nice work if you can get it

While most of us are left to ponder our dwindling purchasing power, and many in the public sector must be wondering if they will still have jobs by the end of the year, a select few are enjoying good times.

Earlier this year ministers awarded themselves a munificent tax-free salary bump. But even ordinary MPs can reap a pay-and-allowances package that amounts to more than €6,000 per month, i.e. between four and five times the national average wage – a king’s ransom by most people’s standards.

Parliament’s website reveals that some MPs’ assistants are also doing pretty well.

MPs can pay their staff more than €3,800 a month, about three times the national average. Some share it between two or three assistants. Others lavish it on just one. (Another trick is to remunerate one generously, while paying others a pittance – presumably, this gets them access to parliament and, with it, other potentially lucrative opportunities.)

Take well-connected Smer MP Michal Stuška, a long-serving ministerial advisor and spokesperson, who made it into parliament at last year’s election from 40th place on the Smer candidate list. He currently lists two assistants: Artúr Bekmatov, a self-avowed communist whose day job as the leader of the Socialists party (for which he ran, unsuccessfully, in June’s European Parliament elections) apparently does not preclude him from assisting another party’s MP – at a decidedly un-communist monthly salary of €3,190; and Matúš Hlocký, who receives the princely sum of €1 per month.

By contrast, PS leader Michal Šimečka employs two assistants, and pays them both €1,930.

The Slovak National Party (SNS), as is its wont, has some of the most baroque arrangements.

Frothing conspiracy theorist, anti-vaxxer and SNS MP Peter Kotlár lists, erm, “Relocation Consulting s. r. o. v zastúpení konateľa [represented by manager] Mgr. Michal Bučko” at a rate of €3,861 per month. Employing what sounds like a furniture removals company as your parliamentary assistant? Sure, why not...

Fellow SNS MP Rudolf Huliak, whose nuttiness was sufficient to prevent his appointment as environment minister (and remember, this is the same party that gave us Martina Šimkovičová, who inexplicably did make the ministerial grade), this month hired Deana Jurčová, a former Miss Universe Slovakia contestant as his second assistant.

As it happens, Jurčová has a compelling backstory (she grew up mostly in children’s homes) and some public-sector working experience, at the Labour Ministry and the Office of the Commissioner for Children. In fact, the latter’s LinkedIn profile and her own both suggest that she is still working there, which would make the €3,840 a month Huliak is paying her a very attractive part-time salary.

Falling behind

These figures are fairly eye-popping for the average Slovak, but not especially remarkable for many European economies – and positively microscopic by US standards. Even unremarkable towns in the American Midwest are reportedly offering housing subsidies to families with monthly incomes of up to $10,000 (about €9,000), while American children can qualify for free or subsidised school meals – a common proxy for poverty – if their families make less than $5,000 per month.

Average incomes in Slovakia are not going to catch up with those in western Europe, much less the United States, any time soon. The problem is that, for now, they are drifting even further apart.

As we have seen this month, senior politicians seem to have very few ideas about how to reverse this trend. “Consolidation” may be ‘a must’ – but so is a plan. We can’t all be MPs’ assistants.