The new Slovak government has two key employment aims: pulling jobless citizens out of the 'social trap' – where the economic motivation to work is low – and fighting the serious problem of long-term unemployment.
In 2009, the employment rate in Slovakia stood at 66.4%, just below the EU average (69%) and ten percentage points below the EU's 2020 goal of 75%. Currently, more than 400,000 Slovak citizens are out of work.
The Europe 2020 targets are not mentioned in the new cabinet's task list, though the document labels the strategy a ''useful tool for pushing the necessary reforms''. Slovakia will simply try to get as close to the targets as it can.
Former Prime Minister Robert Fico, who attended the EU summits focused on the strategy agenda, said that Europe should have ''realistic targets'' when it comes to growth and employment.
As in other Eastern European countries, the employment rate in Slovakia depends more on job creation in the services sector than in industry.
Fighting the 'social trap'
For many people in Slovakia, particularly those with fewer qualifications, it does not make a difference in financial terms whether they work or not. This is because the social subsistence they receive is only slightly lower than what they would earn for many full-time jobs.
In some cases, wages can even be lower than the social support provided – meaning that the motivation to join the labour market is almost entirely absent.
The biggest problem for the Slovak job market is the large proportion of long-term unemployed citizens – more than 50% of whom have been out of work for more than a year. According to experts from the Institute of Employment, an individual approach towards these citizens is required.
The new government of Iveta Radičová plans to tackle this problem by introducing a so-called 'labour intermarket', which is based on a combination of social benefits and part-time work.
It will also encourage companies to hire long-term unemployed people by reducing the social contributions they have to pay for them, compared with other employees. Generally, the centre-right government considers the social tax burden to be the greatest hurdle to new job creation.
However, the budget deficit means that more state revenue needs to be generated. The ministries of finance and social issues had suggested raising social taxes for certain groups – especially the self-employed – but the proposal was quickly abandoned. Instead, taxes on alcohol and tobacco are to be increased.
Another issue requiring attention is the very low level of part-time employment in Slovakia. The rise in youth unemployment owing to the economic downturn is also a worrying trend.
Western jobs going East?
Before the global economic crisis, the issue of Eastern EU enlargement was accompanied by widespread concern in the 'old' member states that the countries who joined in 2004 and 2007 would take away jobs by attracting Western companies to the East, where labour was, and still is, cheaper.
This was to some extent the case, with many firms based in the old member states transferring some of their activities to the countries in 'new' Europe. However, the reality is more complex. Germany, for example, did lose several thousand jobs due to production moving eastwards – in Slovakia's case it was the automobile industry.
Yet statistics show that although wages for low-skilled jobs in Germany fell due to the international division of labour, the country also experienced an increase in salaries for higher-skilled jobs.
Aside from the positive macroeconomic effect of foreign direct investment for employment in Slovakia, other aspects have been more negative. In late August, 300 women working in two Italian-owned textile companies in Hencovce – a town in the poorer eastern part of Slovakia – went on strike.
They complained about harsh working conditions and demanded a €50 pay rise on their existing salary, which was just €260 net per month. Initially, the Italian owner proposed a 2% increase – less than €6 – but eventually agreed to the workers' demands, bringing the week-long strike to an end.
