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Slovakian report Slovakian report
by Euro Reporter
2012-08-29 09:08:51
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Slovakia teachers' unions plan strike on 13 September

Workers in the education sector are slated to hold a one-day strike that is expected to keep teachers and other staff away from schools on 13 September. Speaking at a press conference, the head of the sector's trade unions, Pavel Ondek, announced that the strike is expected to run between 6 am and 6 pm. "Both teachers and non-teaching staff shouldn't carry out their work for their employers. As for pupils, parents will be notified as to whether or not their particular school will join the strike," said Ondek.

The trade union's top representatives convened at a meeting last Monday to discuss the budget proposal for the education sector in 2013. The Slovak Finance Ministry has earmarked €2.45 billion for the sector, which is an increase of €16.6 million, but Ondek said this is mainly due to extra money from EU funds. "In comparison with this year's budget, the expenditure of the state budget (in the education sector) for 2013 has dropped by €7.85 million. This may translate into a cut in salaries for all categories of employees in the education sector," said Ondek.

The trade unions are demanding that salaries of teaching personnel amount to 1.2-2 times the current average salary. The planned strike is intended to make the government come to grips with the dismal financial situation in education and the insufficient funding of research. Based on recent figures, teachers in Slovakia earn an average of €770 per month. In response to the announcement of the planned work stoppage, the ministry said that Education Minister Dusan Caplovic (Smer) has three priorities in mind for next year's budget. They concern scholarships for children of the needy, salaries in the sector and support of research and science.


Slovakia makes good on promise of pro-worker labour code

Slovakia's centre-left government backed up its electoral pledges to fight for the common man by passing a new labour code on Wednesday that makes it harder for companies to fire workers and gives more protection to contractors. Free marketers and business figures say the new law will dent labour market flexibility, sour investment and harm job creation in the country of 5.4 million, whose cheap labour and reforms over the past decade have made it a hub for car and electronics factories. Manufacturing growth in recent years has helped the small euro zone member weather the economic downturn and Slovakia is projected to be the fastest-growing economy in the currency bloc this year.

That has been backed up over the past decade by pro-business legislation that has steadily rolled back the bureaucracy and pro-labour regulations of the pre-1990 communist era. But like elsewhere on a European continent that has failed to meet ambitious targets set in 2000 for catching up with the United States on labour productivity, the new bill is evidence of the political barriers to further liberalisation. Slovakia dropped five places to 48th out of 183 economies monitored in the World Bank's most recent Doing Business survey, which measures the regulatory environment for entrepreneurs. The legislation would strengthen overtime pay and renew severance for workers on the job for more than two years that are fired or leave for health reasons.

It also limits the amount of time and times a firm can hire a temporary worker, while contractors would receive most benefits that full-time workers get. The proposals, due to come into effect next year, will head next to parliament, where Prime Minister Robert Fico's government holds a safe majority. Fico swept to power in March this year on a pledge to bring Slovakia's fiscal budget in order at the expense of the rich and without costing the poor. To date, Fico's leftist government has made good on that promise, focusing austerity measures on the better off, hiking taxes on the wealthy and on companies, imposing special levies on banks and reclaiming funds from private sector pension providers. But the government said last week it would need more austerity steps to help it meet a goal of cutting next year's budget deficit to under 3 percent of economic output.


Slovakia follows peers to shift pensions back to state

Slovakia became the third country in the European Union's former communist eastern wing to reclaim funds from private sector pensions for the state on Thursday, planning to siphon off 300 million Euros this year and next to help reduce its budget gap. The move, similar to steps already taken by Hungary and Poland, will help the euro zone's second poorest economy by per capita income make good on a promise to cut its fiscal gap to less than 3 percent in 2013. The change marks a reversal of a reform, introduced in 2005, allowing people to save part of their mandatory state pension contributions with private pension funds rather then just relying on a state system burdened by an ageing population. That reform, praised as a major success for many of the former communist economies who joined the European Union in 2004, has fallen flat due to poor recent results for many funds, the governments say.

"This is a move shielding a majority of Slovaks. Results of the second pillar are catastrophic," Prime Minister Robert Fico told reporters. Neighbouring Hungary and Poland have also moved to cut contributions into private pension funds. Critics say governments have just taken the opportunity to seize back resources which can benefit the budget in the short term but store up future liabilities. The Slovak finance ministry expects the measure to give it an additional 71.6 million Euros in resources this year and 229.2 million Euros next year. Contributions to private pension funds, deducted from the gross wage, will be cut to 4 percent from 9 percent effective from September, and Slovaks will also be allowed to send an additional 2 percent from their own net income.

There will also be a four-month period, until the year-end, allowing interested Slovaks to leave the private pension pillar altogether. "Cutting contributions to private pension pillar means the state will be paying less now, but will have a more difficult time in the future, when current employees retire," said Michal Musak, senior analyst at Slovenska Sporitelna. "It does not save the money to the state, but rather shifts it in time," he added. The parliament also approved a change in the retirement age, now standing at 62 year, which will be, starting 2017, tied to an average life expectancy, meaning the longer Slovaks will live the later they will retire. Centre-right opposition parties have accused the government of planning to steal Slovaks' private savings over eight days of heated debate in parliament. Finance Minister Peter Kazimir said in July that an extra 500 million Euros will be needed this year and 1.5 billion Euros in savings and tax hikes in 2013 to meet the deficit target.

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