European Trade Union Institute, ETUI.

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Labour market reforms in Slovakia: background summary

Since 2000 labour market reforms in Slovakia have been mostly determined by the alteration of power between left- and right-wing governments. Whereas liberal oriented governments introduced a number of measures aiming at flexibilisation of the labour market, the left-leaning governments focused on increasing protection of employees. Labour market reforms took place in the context of high unemployment rates in Slovakia, global economic crisis and the growing emphasis of the EU on Slovak fiscal discipline.

Main reforms

The conservative government presided by the Christian-Democrat Prime Minister approved an important amendment to the Labour Code in 2003, which brought about a large number of changes to the initial legislation. This reform is considered by experts to be one of the main factors of the subsequent economic growth in Slovakia. In general, the amendment strengthened the flexibility in employment relations, in particular by the following changes (cf. Goliaš and Kičina 2007; Zachar and Goliaš 2010):

  • The obligation to provide both a paid notice-period and severance pay was cancelled, resulting in the reduction of redundancy costs. In general, the termination of an employment contract was simplified.
  • The working hours were deregulated so that working time could be designed according to the nature of the job and the type of work and an employee could work for as many employers as he/she liked. Trade union approval was no longer needed for flexible working time. Moreover, the amendment extended the limits for overtime agreed with the employee and deleted the requirement for employers to ask for the consent of trade unions and the National labour Office for such extension.
  • Employment relations were flexibilised by allowing unlimited renewal of fixed-term contracts and facilitating their use and termination. Signing and terminating contracts was facilitated also in the case of part-time contracts.
  • Trade unions lost the effective veto power over the organisational changes and firing of workers, and their power was generally weakened. Moreover, the compensation of their representatives for the time they spent on trade union duties was abolished. On the other hand, the power of works councils was strengthened.

Simultaneously with the amendment of the Labour Code the government adopted a tax reform and a social welfare reform in 2004, which included such measures as reducing sickness benefits and limiting the availability of unemployment benefits. The reform resulted in the decrease in unemployment levels and in the number of people receiving social benefits (Goliaš and Kičina 2007).

Trade unions represented by the Confederation of Trade Unions of the Slovak Republic opposed the Labour Code amendment due to its potential negative impact on employees, and their disagreement resulted in open protests. However, public support for the amendment eventually led to the trade unions’ withdrawal.

Nonetheless, before the Parliamentary Elections in 2006, trade unions made an agreement with the Social Democratic party SMER-SD to upset some of the changes adopted by the 2003 amendment. Since SMER-SD won the elections and became the main party in the government coalition, some changes were indeed reversed by a new Labour Code amendment in 2007 (see Goliaš and Kičina 2007; Zachar and Goliaš 2010):

  • The obligation to provide both a paid notice-period and severance pay was restored and the severance pay was increased for specific cases of redundancies.
  • Standby duty was included in overtime hours.
  • The potential to extend and renew fixed-term contracts was limited to one contract in 3 years. The termination of a fixed-term and part-time contract became more difficult.
  • The trade unions were again compensated for some of their representatives’ lost wages and could now co-decide on flexible working time.

However, the economic crisis obliged the social-democratic government to take steps towards a higher level of flexibility of the labour market. Thus, in a new amendment to the Labour Code of 2009 it introduced a flexible working time account (“flexikonto”). The accounts allowed to keep the workforce in spite of production breaks for they enabled workers to cumulate paid un-worked hours, which were later compensated by unpaid overtime (cf. Zachar and Goliaš 2010).

The Labour Code was partly liberalised under the centre-right government operating from July 2010 to April 2012 (cf. Domonkos 2016).

  • The flexikonto was transformed from a temporary measure introduced in the context of economic crisis into a permanent flexibility instrument in 2011.
  • The obligation to provide both a paid notice-period and severance pay was again abolished and the length of notice period became more differentiated according to the seniority of worker, the reasons for the termination of employment and the contractual party terminating the contract. The redundancy procedure was again simplified.
  • A more flexible treatment of fixed-term contracts was introduced.

Nevertheless, the return of the Social Democratic Smer to power in 2012 resulted soon in withdrawal of a number of these changes. The Labour Code amendment from 2012 in particular (re-)introduced stricter rules on the renewal of fixed-term contracts, bogus self-employment, and overtimes, it restored the accumulation of paid notice-period and severance pay, levelled to some extent the employment conditions of contracted workers and core employees , strengthened the position of trade unions etc. (e.g. Domonkos 2016). On the other hand, the flexikonto was abolished, or more precisely, it has been merged with the institute of working time account, resulting in a new stipulation of working time accounts (including compensatory periods), which has been no longer defined as an anti-crisis measure (see Čarská and Dobrovolná 2013; Márton 2012; FUTEJ & Partners 2012).

Recent important changes in the labour-related legislation include:

  • the enrolment of atypical workers (those who work based on out-of-employment contracts) in the standard pension insurance scheme and unemployment protection since 2013;
  • limits set to temporary work since 2015 (cf. e.g. Kahanec and Sedláková 2016).

Further changes, presented in the National Reform Programme of the Slovak Republic 2016, should focus among other things on the more intensive integration of women, low-skilled and long-term unemployed into the labour market.