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Slovakia – Parliament discussing equal pay for temporary workers and cap on temporary assignments

24 November 2014

A robust increase in the minimum wage, higher collective agreements, and proposed changes to temporary employment laws were some of the developments in the Slovakian labour market during 2014 and into 2015, reports the Slovak Spectator

While the developments have been praised by Prime Minister Robert Fico and Slovakia’s trade unions; employers have warned that the changes will have a negative impact on the labour market and companies’ competitiveness.

In October, Parliament began discussing a draft revision to the Labour Code, which included, among other things, the introduction of the so-called shared responsibility principle. This means that temporary workers must earn the same salary as regular employees if they do the same work.

If a temporary worker earns less, the staffing agency would have to pay the difference from its own budget. If the agency fails to cover this cost, the difference would have to be paid by the company. It is not clear under which circumstances an agency would be permitted to not cover the cost.

The revision would also put a 24-month cap on the maximum period of time that a temporary workers can work for the same firm. It would be possible to prolong an agreement for one specific temporary worker no more than five times. This would prevent companies from employing one person for several years without offering him or her a permanent position.

No implementation date has been specified for the changes to the Labour code regarding temporary workers.

The revision to the law on collective bargaining, implemented at the start of 2014, re-introduced a forced extension of higher-level collective agreements to all businesses in a given industrial sector that have not signed them individually.

Martina Nemethová, spokesperson of the Confederation of Trade Unions (KOZ), commented: “[The] extension of higher-level collective agreements is a standard tool to equalise working and wage conditions, and conditions of employment used in several member countries of the European Union. Thus, it is necessary to see the main positive feature which the revision brings, especially in the improvement of the position of employees, increasing protection of their labour-legal relations and securing their labour-legal rights.”

Trade unions also pointed out that workers covered by collective agreements typically have between +17% and +19% higher wages than those not covered by such agreements.

In October the Slovakian cabinet also approved the increase of the monthly minimum wage from €352 to €380 (€2.18 per hour) in 2015, which represents an increase of +7.95%.

Prime Minister Fico, who has said that the minimum wage is a holy thing for him, commented: “We will constantly create pressure on increasing the minimum wage. It must be more worthwhile for people to work than to sit at home and take social benefits.”

Representatives of employers opposed the increase, claiming that greater labour costs will impair Slovakia’s competitiveness. In response to the criticism, Mr Fico reduced employers’ health insurance contributions, but employers say that the reduced costs do not offset the higher wage costs.

Luboš Sirota, CEO of recruitment firm McRoy Group, expects that the record increase in the minimum wage, along with approved changes limiting temporary employment will have the biggest impact on the labour market in 2015.

He added that the increase in the minimum wage would also raise various costs and therefore its influence would be negative. He estimates that limiting temporary employment may mean a loss of jobs to about 20,000 people and may reduce for companies the space for responding to changes in orders.

Mr Sirota concluded that, along with negative impacts from the extension of higher collective agreements as a consequence of growth, employment may slow down in 2015.