Restructuring in Slovakia

Transcription

1 Restructuring in Slovakia Conference Anticipating and managing restructuring in a socially responsible way New partnerships to preserve employment Brussels October 2010 Ludovit Cziria, PhD. Institute for Labour and Family Research Bratislava

2 Main outcomes of restructuring Changes in sectoral employment Up: Financial intermediation and insurance, wholesale and retail, real estate, rental and related business services, public administration and defence. Down: agriculture, hunting and forestry, construction, transport, post and telecommunication, education and healthcare. Relatively stabile is the manufacturing industry. Increasing share of private sector from 41% in 1993 through 67% in 2000 and to 78% in Increasing share of SMEs from 27% in 1993, through 35% in 2000 and to 40% in Increasing volume of FDI from 2 bill. USD in 2000 to 4 bill. USD in Decreasing unemployment rate from 18.6% in 2000 to 9.6% in 2008

3 Basic legal framework Act No. 2/1991 on collective bargaining Act No. 328/1991 on bankruptcy and clearance Act No. 231/1999 on the state aid Act No. 565/2001 on investment incentives Act No. 503/2001 on assistance to regional development Act No. 311/2001 on the Labour code Act No. 461/2003 on social insurance (guarantee fund) Act No. 5/2004 on employment services Act No. 7/2005 on bankruptcy and restructuring

4 Brief summing up Main steps and activities related to the restructuring From 1990 to 1993 Social assistance to dismissed employees, mainly through redundancy pay and unemployment benefit. Establishment of tripartite social dialogue related to restructuring issues. Adoption of special legislation on employment, e.g. creation of employment found, establishment of public employment services. Support to enterprise restructuring, e.g. by adoption of law on bankruptcy and clearance, provision of state aid to investors creating new jobs. Implementation of state programmes for public investments, e.g. development of road and rail infrastructure. After 2000 Activities of the Slovak Agency for the Development of Investments and Trade (SARIO) from 2001, e.g. attraction of foreign investors. Implementation of social and economic reform, e.g. flat taxation and new old age pension system. Adoption and implementation of new law on bankruptcy and restructuring from Adoption of anti-crisis measures in 2008/2009.

5 Types of restructuring (ERM data) 1% 1% 3% 10% 18% Internal restructuring Business expansion Bankruptcy/Closure Offshoring/Delocalisation Relocation Merger/Acquisition 67%

6 Impact of the economic crisis Decrease of GDP: from +6.4% in 2008 to -4.7% in Rapid increase of the number of job seekers: e.g. by 36% ( people) in the 3rd Q/2008 1st Q/2009. Decline of the manufacturing industry: by about 20% in 1st half of Rapid increase of unemployment rate: from less than 10% in 2008 to 14% in 2010 (LFS).

7 Types of restructuring October December 2009 (ERM data) 1% 2% 9% 18% 40% Internal restructuring Business expansion Bankruptcy/Closure Offshoring/Delocalisation Relocation Merger/Acquisition 30%

8 Some adopted measures 1. Shortened working hours with decreased salary - state allowances are provided to employers, which employ redundant employees for at least 60% of wages instead of dismissing them. The subsidy is provided to cover compulsory contributions to insurance funds during 60 calendar days during the year, as a maximum. It allows for a temporary decrease of labour costs and retain of employment. 2. State allowance to employers, which create new jobs for registered unemployed - amounting from 15% to 30% of the value of the average wage in the country or up to 50% of the wage cost related to employed job-seeker during 12- month period. 3. Flexikonto- innovation of the existing measure of the Labour Code, which can be used temporarily in a period of two years. It allows reacting more flexibly to the temporary lack of jobs and maintains employment during the recession. 4. Temporary reduction of compulsory contributions to the Solidarity Fund paid by self-employers to Social Insurance Agency - from 4.75% to 2% of the tax assessment base. The measure can be applied from 1 April 2009 to the end of Support to registered unemployed who set up own business as self-employer. They can receive a subsidy to cover compulsory health insurance payments during 22 months and later on also social insurance payments for four months.

9 Implementation of anti-crisis measures According to the Národný program reforiem Slovenskej republiky na roky Implementaná správa 2009 Planned costs at almost 1.5 bill. euro (about 2.3% of GDP) in The implementation of anti-crisis measures assisted to saving existing jobs and creating new jobs. For illustration (figures from March to July 2009): Implementation of Measure No. 1 cost 21.2 mill. and concerned 41,000 jobs Implementation of Measure No. 2 cost 8.1 mill. and created almost 2,600 new jobs.

10 Types of restructuring from January to September % (ERM data) 0% 0% 9% 21% Internal restructuring Business expansion Bankruptcy/Closure Offshoring/Delocalisation Relocation 67% Merger/Acquisition

11 Recent development When comparing 2010 with 2009 Significant reduction of bankruptcies and mass dismissals - by more than 40% less closures (ERM data). Decreasing number of internal restructurings - by almost 50%. Increase of business expansions - by about 100%. Developing sectors: mechanical engineering, including automotive industry, transport and metallurgy. Declining sectors: textile and clothing and construction. Increasing unemployment rate - from 11.3 % to 14.4 % (LFS 2nd Q of 2009 and of 2010).