Electronic Library of Scientific Literature
Volume 48 / No. 4 / 2000
Ján KOŠTA – Ľubica AZUDOVÁ – Ivan OKÁLI
The problem of a considerable decline in employment and associated abrupt increase of unemployment is typical for the transformation process in the Central and Eastern Europe transitive economies. In the Slovak Republic in addition, the outlasting high rate of unemployment acquired a character of a central economic and political problem. It is because of its overall and rigid absolute quantitative level, and also due to its substantial structural-and-allocation and regional disparities that categorically decreased and have further been decreasing the efficiency of implemented labour market policy tool, as well as the traditional income policy.
The rate of the economic activity of the SR population declined from 63.5 % in 1990 down to the level of 59.4 % in 1999. This decline was, from the demography point of view, caused by a faster growth of the population in their production and post-production age. In this consideration, the growth of population in their production age by 305.4 thousand persons, was the most important factor of the labour supply development in the period of 1990–1998. Of that, the increase of the population in the age groups of 15–19 years old and 20–24 years old represented 129.2 thousand persons can explain the 42.3 % total increase of the population in the productive age for the examined period. The transition economy of the SR was not able significantly absorb the about stated increase of persons in their productive age, that were practically directly and fully transformed into the increase of a potential labour supply. This development together with a considerable reduction of the over-employment, predominantly found in the processing industry and in agriculture, originated and subsequently for a long-term conserved the serious conflict between the demand and supply on the labour market, while the high rate of unemployment is apparent on the macro-level. Partial structural factors on the side of labour supply, e. g. the decline of the above-average pre-transformation level of the economic activity of women, the decline in the employment of persons in their post-production age, but also more visible dynamism in the number of the SR citizens working abroad, could partially ease the pressure against the labour market. However, their influence has currently been exhausted and from the macro-economic point of view is negligible.
Attempts to increase the level of flexibility on the labour market, growing number of smaller companies and elimination of the so called gray employment is not workable under the present economic policy, that except for other instances, is due to the obsolete economic structure.
A positive development trend in the employment in the SR economy was recorded in 1995–1996. Years that followed were marked with a decline in employment as it was evident especially at the end of 1999 when 80 thousand persons in y/y comparison fell off the labour market.
Problematic social labour market groups were formed at the very beginning of the transformation and represent a stable core of those economically active persons, which were pushed away from the labour market. Those are groups aged 15–24 and it is alarming that the same happened to the persons in their most productive age of 25–49, mostly on a lower educational level.
On the macroeconomic level, the employment mobility in the national economy of the Slovak Republic from the end of 1995 was stabilized on an employment decline in the primary and secondary sectors, and on the employment growth in the tertiary sector. During the years 1995–1999, the particular sectors of the SR economy reacted to loosed or increased of the labour with different intenzity. For summarizing purposes we can say that the employment in the primary and also in the secondary sector was evidently manifested in y/y losses, which culminated at the end of 1999. The employment in the tertiary sector during the transformation period was still increasing till 1996, and from this year up to the end of 1999 have mostly been stagnated, or show moderate y/y losses of labour. During the examined period the decline in employment in all sectors of the SR economy ranged from 380 to 450 thousand persons.
In the analyses of the rate of unemployment we found two periods of its development. In the first period (1990–1995), the production decline associated with a transformation recession proved to be the main cause of unemployment. The decline in production was not accompanied by a corresponding decline in unemployment. Due to that the labour productivity declined, we faced over-employment or hidden unemployment. The real unemployment rate in the above mentioned years equalled the sum of the officially recorded and the hidden unemployment rate. Since 1996 the growth in labour productivity has become a major factor of unemployment.
Both unemployment development periods (differing by their causes) are included in the long-term structural adaptation of the Slovak economy for the conditions of a market economy. In the first period, a passive adaptation of the economic structures to a new situation prevailed, while in the other period, active adaptation processes dominated, thus leading to the higher competitiveness and broke negative trends in the (un)employment development. A more detailed view on the unemployment development shows, that once the negative unemployment development culminated at the end of 1998 and in the first half of 1999, the unemployment development started to bear signs of improvement.
In several structural views on the unemployment development we found, that the population groups with a higher educational level accepted for a work position requiring a higher qualification took an advantage from a fundamental decrease in the unemployment rate. At the same time it was found, that a positive effect of a higher education for the decline in unemployment has not been sufficiently considered in the SR education policy so far.
Ivan ŠUJAN – Milota ŠUJANOVÁ
Currently, the high unemployment rate belongs to major economic problems of the Slovak Republic. The unemployment rate officially recorded (according to the National Labour Office – NÚP) in the annual average increased from 12.9 % in 1997 to 14.6 % in 1998, and to 18.2 % in 1999, while at the end of 1999 reached up to 20.1 %.
The unemployment is principally determined by a difference between the labour supply (economically active population) and the labour demand (materialized by the number of employed persons, i. e. employment).
The article is identifying relevant factors influencing the supply and demand on the Slovak labour market. Using time progressions on relevant statistical indicators regression equations of the labour supply and demand are constructed, assessed and interpreted. The regression analyses results are used to assess the influence of particular factors. Finally, the most significant factors influencing the unemployment are evaluated and some comparative benefits and drawbacks of the Slovak economy associated with the unemployment are derived.
Demographic factors, especially population in their production age (men 15–59 years old, women 15–54 years old) are the basic source of the labour supply. The number of the SR population in their productive age increased from 3.04 million in 1990 to 3.35 million in 1999, i. e. by more than 300 thousand persons. At the same, time the economically active population (i. e. labour supply disregarding the age) increased from 2.52 million to 2.67 million, i. e. approx. by 150 thousand persons during the same period.
In accord with the theory of the supply equation we introduced also other labour supply factors like price relations. The price of labour is the average real wage. The intensity of an interest to work is influenced mainly by two average wage relations:
The higher is the average wage in relation to the old pension, or to the unemployment benefits, the higher is the interest of particular population groups to be work. In the last four year the average wage ratio to the old pension stabilized at the value of 2.9. The average wage ratio to the unemployment benefits increased from 2.1 in 1991 to reach value of about 4.2 during 1994–1996, but in 1997–1999 it oscillated around the value of 3.2. From the above stated figures we can conclude, that the difference between the level of the average wage and of the unemployment benefit as well as between the social scheme benefit, is big enough, and it cannot de-stimulate the interest of the unemployed person to work.
The basic source variable for the labour demand is the gross domestic product in fixed prices (GDP in f. p.), as relatively complex indicator of the production and services scope. GDP growth call forth the employment growth, but in a more moderate rate to compare the GDP growth. In 1993–1999 GDP in f. p. increased from 460.8 billion SKK to 625 billion SKK, i. e. at the annual average rate of 5.2 %. During the same period the employment was growing as far as 1995 and then till 1999 it was declining. The average rate of the decline during the whole period was 0.2 %, since there were further factors associated with the decline.
The coefficient of GDP impact on the labour demand is, as we assumed, rather low. It seems, that the increase in the GDP rate by 1 % brough the employment rate increase by 0.187 % (assuming that no other factors were active). In 1993–1999 the GDP in f. p. was growing annually in average rate of 5.2 %, what after multiplying by the coefficient of 0.187 impacted the growth of the employment rate by 0.97 %. Other factors, however, worked in opposite direction so that the employment in the given period decreased mildly in an average.
A further coefficient of the regression equation disclosed that the increase of the average real wage by 1 % call forth (as we expected) a decline in the employment by 0.137 %. In the period of 1993–1999 the average real wage decreased by 3.23 %, and that brought the decline in employment by 0.44 %.
An important factor is also he substitution of labour by investment property, when it was growing (in the previous year) by 1 %, the employment decreased by 0.224 %. Although, this effect is partially compensated since the gross increase in the investment property (generation of the gross fixed capital) is a GDP input and in this way partially influence the employment growth.
Restructuring of the economy expressed approximately by the time variable retards the annual employment growth by 0.185 percentage points. This effect is also partially compensated, since the restructuring boosts the GDP growth and in that way also increases the employment.
The results of the econometric impact analysis of supply and demand on the labour market allow to make a succession of particular factors and their contribution to unemployment in medium-term changes covering the period of 1993–1999 (in the brackets we introduced also the contribution of particular factors to unemployment in shor-term changes between the years of 1998 and 1999):
Factors increasing unemployment (contributions in thousands persons):
· influence of the economy restructuring
· increase in the number of foreign workers
· increase in the number of population in productive age
· substitution of labour by the investment property
· increase of an average real wage
· an average wage ratio to an average old pension
Factor decreasing the unemployment (in thousand persons):
· the growth of the gross domestic product in f. p.
Other factors are negligible or compensate each other (other non-listed influences). The above mentioned values of the influence of factors on the unemployment are only auxiliary, because they carry a burden of statistical errors and do not include all relevant factors. The sum of the mentioned influences (less deduction of the minus GDP influence) give the number of 163.2 thousand persons, that roughly match the increase of the unemployment between the years 1993 and 1999 (162.0 thousand persons).
In 1999 the performance of the SR economy for the first time returned to the level achieved during the last pre-transformation year (1989). However, the pre-transformation level of employment was not met – in 1999 was 15 % less than 10 years ago. Structural parameters and the overall character of (non) sustainability of a noteworthy economic growth in 1994–1998 did not create any significant and long-lasting stimulus to boost employment. The mass economic and political change towards the necessary stabilization of both internal and external macro-economic imbalance has since 1999 till today deteriorated the difficult situation on the labour market and the rate of unemployment, at least from a short and long-term period.
The slow rate of the economic growth from 1996 till 1999 is evident if we compare the value added growth and unemployment in selected industries. A faster growth in value added to compare the employment growth, regarding both primary and secondary sectors, can be considered as a trend common in all market economies. It is a bad surprise to see that a relatively fast growing value added in the service sector, which in 1996–1998 represented the major source of the GDP growth, was not accompanied by a corresponding increase in the employment in the service sector.
Changed production structure in industry sector at the same time weakened the industries that are more work demanding, and on the other side, strengthened the industries that need high energy and raw materials. An overview on the Slovak foreign trade balance development covering industrially processed goods by production factors is supporting our statement.
A positive balance of the Slovak foreign trade was recorded predominantly in the group of goods demanding high raw materials input. Before 1998 the foreign trade achieved a positive balance also in the group of goods demanding high labour, in 1998 the situation changed. However, still less positive balance trading the above mentioned goods was visible also during the years before.
The increased share of sophisticated commodities in the foreign trade structure should understood at the most important direction in the structural and export policy of the Slovak Republic. This is the only way how to decrease the high dependency of the Slovak economy on imported raw materials and energies, and at the same time to prepare conditions to level existing big differences between unit values in exports and imports. In kilogram prices it means that for 1 kg in exports we get 1 USD, on the other side, for 1 kg of imports we pay 3 USD. This is the way how to increase the growth in export sector which could mightily increase the total potential of the internal economy including the potential for employment improvement.
A dramatic lag behind in wages to compare the level reached in 1989 has been mainly used to support (principally justified) requests for faster wage increase. Employers solve this pressure promoted also by trade unions mostly by lay-offs, i. e. by reducing the number of employees. Finally, the reasoning for such reaction is that since 1989 real wages, evaluated like the GDP (characterizing the cost side of wages), have sustained still faster growth to compare the growth in labour productivity.
The transformation process thus promoted the labour productivity growth (in 10 years roughly by 20 %) at the expense of the employment. If considering the past period of 10 years being one unit, then the labour productivity in the transformation so far, have been almost exclusively achieved by saving the labour, i. e. by eliminating the labour from the reproduction process.
Under the influence of growing labour productivity, the labour needed to create almost the same volume of the national product like in 1989 and 1999, during the examined period decreased. This process called by labour savings and uneven distribution among the participants on the labour market should not be evaluated negatively. The core of the problem is that the economy did not set up conditions for creating new work positions.
The present bad unemployment development in the Slovak Republic has resulted from a decline in employment in the national economy by 300–350 thousand of persons at one side, and from an increase of the number of inhabitants in their productive age by 300 thousands of persons on the other side, out of which 150 thousand of persons represent the labour supply.
One of the substantial problems deteriorating the employment in the Slovak Republic, which assuming will be pertaining for a longer period, is the large and steadily reproduced segment of loosing companies.
The share of employees in loosing non-financial companies since 1993 was not less than 40 % of the total number of employees. This share on a total number of employees in the national economy decreased during recent years to represent 1/5th. However, it was mainly due to decreased total number of employees in the examined segment of non-financial companies.
About 400–440 thousand of employees worked roughly in the loosing non-financial companies during recent years. In the whole economy their number would be even higher. It can be expected that among small non-financial companies (with the number of employees up to 19, or 24), in financial companies and among entrepreneurs there are also loosing companies.
As loosing companies we do not consider companies, which were on the threshold or a bit under the threshold of profitability, but companies which in 1996–1998 were running their business with 15–16 % loss; in 1999 the situation improved a little – the loss represented only 10.8 %. The scope of losses that from 1993 in the segment of loosing non-financial companies appeared till the end of 1999 represented about 350 billion SKK.
The existence of loosing companies has a strong negative impact upon the relationship between labour productivity and wages.
The relationship between labour productivity and the level of wages in loosing companies to compare profitable companies have been considerably deformed. The following findings support our statement:
Evidently, in the given situation in the Slovak Republic it is very difficult to maintain the appropriate ratio between labour productivity and average wages development.
A substantial solution on further existence of loosing companies, which have usually the highest debts, can be expected only after a total restructure of the companies (financially and subsequently restructuring the out-of-date production structures). With the existing number of employees in loosing companies – considering their losses, the most of the companies are ready for the restructuring – this restructuring process from the point of view of the unemployment rate, is extremely risky. Even with the best prepared restructuring plan on the enterprise level, a certain loss of work places cannot be avoided.
The educational level of the population and a permanent growth of it skills is one of the basic preconditions of a successful development of a modern national economy. This is a necessary condition for innovation on higher degrees, for the ability to absorb the outcomes of the world science and of a know-how into the domestic environment. The educational level determines also the level of adaptability of a society to quickly changing development conditions both on a domestic level and worldwide. It is an inevitable condition for sustainable economic growth and for a favourable employment development.
A polarization based on a spiritual property, i. e. polarization based on education, knowledge and skills, is working much faster and with higher intensity to compare the polarization based on physical property.
This process is running not only between countries, but also inside them. Population with not sufficient education is pushed out on a periphery of the labour market. The data about the SR also supported this statement. While in 1999 the rate of unemployment with university educated workers represented 5.9 %, high school graduates with A Levels/ school leaving certificate 15.2 %, without A Levels 20.4 % and with workers having just basic education 35.3 %.
Regarding the above facts as well as the world development trends we cannot mark the current situation in the as favourable. The reflection are found in a decreasing quality of education and in decline in the research potential of the SR. One of the major factors of that decline is the lack of funds.
Total costs of education in the SR for the purpose of international comparison can be evaluated from two basic aspects: according to their share on the GDP, and the absolute value per inhabitant.
According to the percentage of the GDP, even if since 1993 up to 1996 we can see a decline from 5.7 % to 4.4 %, this indicator is still comparable with some small economically developed countries like Greece (3.1 %) and Portugal (5 %) during 1990–1992.
According to expenditure per one hundred of inhabitants the situation is different. Despite the fact that the value of this indicator from 1993 till 1996 grew from USD 33.2 million (in the purchase power parity – PPP) to 36 million USD (in PPP), Slovakia ranks together with other Vissegrád group countries deeply under the average of small economically developed countries (USD 128.8 million). The only exception out of such countries is Greece with value of USD 20.5 million. Slovakia dramatically legged behind in investments. The share of investments on the total expenditures fell from 12.5 % in 1993 to 3 % in 1996.
The ratio of investment expenditures in the SR in comparison with an average of small economically developed countries in 1993 represented 45 % and in 1996 it dropped to only 12 %. It means a radical limitation of investment activities, probably in favour common expenditures to keep school institutions operations.
However the nominal value of the total funds for universities increased, the real value decreased dramatically. From 1989 to 1998 the real value of total expenditures expressed by the index dropped down to the value of 71.4; out of that investment to 61.5 and wages to 75.3.
The decline in the volume of funds was accompanied by the increase of the number of students at universities. Due to such development the total real expenditures per a student decreased much quickly. The index of total costs per student from 1989 fell to 39.5; of investments to 34.1 and of non-investment costs to 39.7. The index of real wages calculated per university teacher decreased during the same period to 67.8. Since 1995 the difference between the average salary of the university teacher and the average wage of an employee in the national economy lessened. If in 1995 the average salary of a university teacher was by 59.5 % higher than the average wage of an employee in the national economy, in 1998 it was only by 41.1 % higher.
The cutting down of funds for education found a negative reflection also regarding the societal status of the education. According to the polls of the Institute for Public Affairs from September 1999 as much as 70 % of inquired people said that the university education has no future in the SR. As much as 75 % of people aged up to 30 thought the same. The analysis of the Ministry of Education of the SR from 1994 states that due to low salaries 1 406 teachers and research workers in their most productive age left the Commenius University.
The volume of funds given for a scientific and research activity is an important indicator of conditions supporting the education quality growth. The volume of common expenditures of universities for research and development per 1 million inhabitants in the Slovak Republic represents USD 3.8 million (PPP), while the average of small economically developed countries is USD 103.2 million (b. c.), i. e. 27 times more.
If we compared the development in the number of university students per 100 thousand inhabitants, we found that despite an evident progress, we did not manage to get rid of the aggregate SR deficit to compare the small economically developed countries. While the average number of graduates per 100 thousands of inhabitants increased in small economically developed countries from 1980–1992 by 66 %, in the SR we saw a decline from 1980 till 1993 by 15 %. After 1993 there was a continual growth in average by 6 % annually till 1998, when the number of graduates per 100 thousands of inhabitants achieved the figure of 279, that means it reached the level of small economically developed countries during 1989–1992.
Even more serious is the situation with the scientific education. This is a top form of education preparing scientists, top experts, innovators. The SR is lagging behind the most on this field. If in the small economically developed countries during 1990–1993 there were 201 students per 100 thousands of inhabitants, in the SR it was only 43 in 1993 and 100 in the year 1997.
Small economically developed countries during 1989–1992 recorded in average 30 graduates per 100 thousands of inhabitants at the post-graduate level of study. In the SR the figure in 1999 accounted for only 7.7. This is even less than in newly industrialized countries in the South-eastern Asia.
In conclusion we can state that the educational level of the work force in the SR so far corresponds the level of small economically developed countries up to 86.7 %, as for the level of other factors the SR accounted only 37 % in comparison with small economically developed countries.
This considerable lag behind in a technological equipment, management, etc. revealed the basic problem of the SR economy. The low level of other factors of the production devaluated quite a high educational level of the SR population and at present means a big barrier for the intensifying of the production background in the SR.
The rate of economic activity of the population in the Slovak Republic declined from the year 1989 by 4.1 % and at present (1999), in paradox, shows a value that is identical with the European Union average as a whole (59.4 %). Despite of this aggregate match the scope and character of unemployment in the SR is very specific from the point of view of age, skills and regional dimensions.
Unemployment in Slovakia by the age structure can be characterized mainly by the following disparities:
An important indicator of the unemployment development is, however, not only a total scope of unemployment, but mainly the long-term of the unemployment. At present the group of long-term unemployed represents 39–40 % of the total number of the unemployed, while the highest number of the unemployed are found among people who are more that two years jobless.
From the aspect of qualification the biggest problems to find job in 1991–1995 related especially to unskilled workers. After 1996 more problems to find a job appeared also with skilled workers as well. As much as 34.7 % of active population with a basic education are unemployed. The lowest participation on a total unemployment was recorded in the following two categories of people: with high school and vocational school graduate 3.5 % and with university graduates 5.4 %.
In 1999, a further acceleration of the rather high rate of unemployment at an aggregate level caused deeper regional differences in the rate of unemployment. The most extreme reflection of these long lasting rigid differences is the following comparison: while in the Slovak Republic in August 1999 there were 56 applicants for 1 work place, in some other districts the figures were much worth (in Košice 156 registered unemployed per 1 work place, in Rimavská Sobota 2513 unemployed per 1 work place).
Both the external and internal imbalance of the Slovak economy called by the need for more radical measures at the company sphere and banking sector for restructuring even more underlined the chronic latency of labour market problems in Slovakia, and further reduced any real chances for success of the current institutional-and-allocation structure of the active element of the employment policy.
The problem of the Slovak economy is the permanent situation where hundreds and thousands of work places cease to exist, but new work places are not generated. As a result of that we face a flat increase in the unemployment up to more than half a million persons and dramatic increase of the shale of long-term unemployed up to 40 %.
A decisive role is played by the situation on a company level. If previously, the lay-off were typical for some sphere of the economy – agriculture and industry, since 1998 and 1999 we are can see flat lay-off of work force from all branches of the economy and from all types of company size structures. Work force is released not only from large companies, but in addition small and medium size companies cease to exist having impact on the employment.
Global unemployment is a key issue, i. e. the total surplus of the work force in association with the current status and needs of the real economy.
In this connection it should be reminded that in contrary to other Vissegrád group countries, a considerably high dynamism of the economic growth in the SR during 1994–1998 (6 % in average) had a unique neutral, if not ex post negative impact on the scope of employment at the aggregate national economy level. The high imports-and-technology demand of that growth linked to the concentrate character of production structures of exports-ready segment of the Slovak economy, not only gradually hit the ceiling of the sustainable deficit payment balance current account, but quite logically, regarding the labour saving character of those modernizing investments, could not – per se, as well as due to underdeveloped segment of finalizing productions – more evidently contribute to a significant absorption of the increasing structural unemployment. During the whole period of 1990–1999 the Slovak economy was typical by a higher rate of unemployment to compare Hungary, Poland and the Czech Republic. At present, the rate of unemployment in Poland is 12.5 %, in Hungary 7.1 % and in the Czech Republic 8.6 %. In the Slovak Republic the 1991 average unemployment accounted for 18.2 %, but through the end of 1999 it reached 20.1 %.
From the results of this analysis and from other articles included in the mono-thematic issue of the Ekonomický časopis / Journal of Economics we can conditionally derive some comparative advantages and disadvantages of the SR economy regarding the unemployment issue.
As a conclusion we can summarize that changes in the SR employment structure were running more slowly that the changes in the added value structure. The adjustment of the number of workers to the companies’ performance proved to be one of the weakest aspects of the adaptation process. A part of the released workers did not proceed from the primary and secondary sector to the tertiary sector, but they joined the army of unemployed. A support of structural changes in the SR economy will have to become a key task in the economic policy before entering the European Union.
Vilma JURÍČKOVÁ – Peter STANEK
A dramatically different development in employment and its considerably differentiated structural interrelation with the overall dynamism of the economic growth, to compare the European Union member countries and the USA are an object of frequent analyses and of intensive economical-and-political discussions.
Despite a massive start of global trends in the world economy during the post-industrial era, and thus despite of a significant dynamic chance to transfer particular production factors also between particular institutionalized blocks of the most developed market economies, the symmetrically inverse development of employment and of unemployment to compare the EU and the USA is a remarkable phenomenon. While in 1960 the average rate of unemployment in the EU countries represented only about 1.4 %, in 1999 it was more than 7 %. In contrary, in the USA it went down as of the end of 1999 to 3.3 %, that means practically to the level of the year 1960, and it was less than a half of the level recorded in 1983 when the USA achieved historical maximum values (about 7 %). Even more important were findings that in the USA the employment growth (and unemployment decline) from 1984 was accompanied by a dramatic increase in households’ participation on the labour market. The participation reached in 1999 as much as 74.6 % out of the total number of the population to compare 61 % reached in 1960. In contrary, a total rate of the work activity of the EU countries population declined in the period of 1960–1999 by more than 5 % (from 64.6 % to 59.4 %).
In this context our article has focused to identify major structural and institutional rigidities and economic-and-political inconsistency of the employment development and of the labour market policy in the EU as a whole, and also on the level of single member states. In compatibility with that the authors attempted to specify the character and weight of particular factors, by which the European employment policies differ from the existing institutional-and-allocation adjustment in the USA labour market functioning. However, they first specified several most important structural factors, which mostly and in a long-term negatively impacted the employment, the total rate of work participation, as well as the unemployment in the EU countries. The factors are mainly as follows:
Despite the part of presented negative structural factors as well as the overall national economy employment and unemployment dynamism resulted to a certain level from principal macroeconomic distortions and turbulence related to rather restrictive phase of a fiscal consolidation of the EU member countries before joining the European monetary union, a broad consensus exists (e. g. OECD Jobs Strategy, outputs from the EU Council meeting held in Luxembourg in 1997, Cardiff 1998, Cologne on the Rhine 1999, and finally in Lisbon in 2000) stating that institutional and economic-and-political rigidities in general responsible for the unsatisfactory status on the labour market are significant. It regarded especially:
All the statements led gradually to changes in the character and objectives of the labour market policies in the EU, both on the common level within the Union and on the level of single member countries.
The first priority goals in the EU is not to protect the existing work place, but creating new work places preferably in the areas which can greatly increase competitiveness of the countries and of the business entities in the European Union. A major part of the support programs is currently oriented to faster exchange of work places and to faster creation of new work places, and it all in connection with the information society development.
Herta GABRIELOVÁ – Vilma JURÍČKOVÁ – Rudolf KOSTOLANSKÝ – Ján KOŠTA – Peter STANEK
Despite a significant level of progress made in the overall political, institutional and economic integration of single member countries to form a unified frame of the European Union, the labour market is the segment of the economic policy, that is typical by the largest scope and depth of specific features and long lasting differences among particular EU economies. No matter that certain global (i. e. OECD Jobs Strategy) all European recommendations were and have been permanently worked into particular national employment policies, it is difficult to identify the rate of their influence and the adequacy for a favourable development of labour marker dynamism in a particular EU economy.
The authors of this article focused on two substantial area of a comparative analysis in the given theme. Firstly, they identified fundamental structural and institutional characteristics of 2 concepts of employment policy, which have been implemented in Europe for a long time. The first one can be described as the market oriented concept sharing a certain analogy with the USA concept, and the concept currently used in England from the beginning of 80-ties. This concept is typical by its labour market flexibility, by a less significant role of trade unions in the collective bargaining, by decentralization of collective bargaining and by a lower level of obligatory protection of employees. The second one, so called corporate and consensual concept is typical by a strong influence of trade union membership and by a more structured form of a collective bargaining, by higher expenditures for the employment policy as well as by less significant range of wage dispersions inside and amongst single industries as a result of centralization and institutional unity of tripartity negotiations. Indeed, none of these two concepts does not currently exist in its clean form in any of the EU member countries. However, a prevalence of one or the other attempts can be quite significantly identified in the majority of developed European economies. Finally, this is not a surprise regarding the long lasting structural specific features in general, and also due to historically created profile of a specific national model of corporativism in particular countries of the continent Europe (mostly in Germany, France, Holland and in Sweden), that were sometime presented like specific models of capitalism.
Authors of the article in details further analyzed the labour market policy models and employment in selected European countries – in the Great Britain, Germany, Spain, Denmark and Ireland. They paid attention especially to current tendencies and to changes within these policies with a special focus on their inter-relations and coordination with the overall economic-and-political frame, and also in connection with their reflection to mutual EU initiatives in the field of the employment policy. They paid attention to specific factor-and-mobilizing and structural aspects of the active labour market policy in Denmark and Ireland, and also in the countries that together with the Great Britain and Holland have achieved the biggest success on this field in the EU during the recent period of time. For the Slovak economy at present, the example of the Danish employment policy is extremely encouraging. This policy highlighted an active role of various cabinet levels and of public institutions predominantly oriented to establishing and to a endless support for a long-life vocational education system and for training applicants to find a proper orientation in the real labour market. Interesting is also the success achieved by Ireland on the field of employment and of the overall economic development, based on a long lasting consistent and a consistent criteria shape of industrial (structural) policy with the accentuated need of a continuous growth in competitiveness of the Irish economy.
Vilma JURÍČKOVÁ – Ignác RENDEK
In the article, we analyzed the dependency between the GDP growth, productivity, employment and unemployment and their development during 1997–1999 in particular in Slovakia, Czech Republic, Hungary and Poland.
Regarding the unemployment, it decreased only if a growth in employment was achieved. And vice versa, the unemployment did not decreased (improved) in any of those years, if the labour market situation deteriorated and if there was a drop in employment.
In Hungary during last three years the employment increased by 164 thousand of persons and unemployment decreased by 115 thousand of persons. In Poland during 1997–1998 employment increased by 382 thousand of persons and the number of unemployed went down by 292 thousand of persons; in 1999, but, the employment decreased and the number of unemployed increased. In Slovakia and in the Czech Republic the unemployment did not declined in any of the analyzed years, and the total employment also declined.
However, there is no linear dependency between the decrease or the increase in employment and unemployment. A difference is due to demographic and other factors.
The article is analyzing also some changes in the industry employment and unemployment structure. In Poland during 1997–1998 the paid employment grew by 5.6 %, especially in trade and building industry. Rather less new work places were created in the processing industry and even those were lost in 1999 due to weakened prosperity. In Hungary in contrary, the biggest increase of new work places was recorded (12 %) in the processing industry. In Slovakia and in the Czech Republic the paid employment declined during the analyzed years especially in the processing industry.
Our analysis proved that the relation between the GDP growth, productivity and employment growth in a real life in particular countries is can be the best expressed by the following equation:
delta Z, or Z – increase in employment, or a total number of employed persons;
h – the rate of GDP growth;
p – the rate of a total growth in productivity.
Employment is growing (the quantity D Z has a positive value), if
gaining a positive value, i. e., if the GDP is growing faster (h) than the labour productivity (p), and vice versa.
Also in the reality in analyzed countries the employment was growing (thus unemployment declined) if the rate of GDP growth was faster than the rate of productivity growth. And vice versa – the employment declined if the rate of GDP growth was less than the rate of labour productivity growth.
In Hungary (1997–1999) and in Poland (1997–1998) the GDP grew faster than the labour productivity; employment increased, unemployment declined. In contrary in Slovakia and in the Czech Republic, and also in Poland in 1999 the rate of GDP growth lagged behind the productivity growth; employment declined and unemployment grew.
The behaviour on a company sphere is a key factor regarding the employment and productivity development. If there are lay-offs, but companies do not raise the production, their productivity is raising, however the employment declines (the unemployment increases). This is what happened in Slovakia and the Czech Republic. If companies are not this “easier way” oriented, it they are predominantly oriented for increasing their output, the number of new work places growth. This is what happened in Hungary and to a certain level in Poland as well.
Except for that, the analysis revealed that the company performance, the growth in employment and drop of unemployment influence the sales significantly, mainly in exports. For instance, a booming development in the car production and electronic industry in Hungary could not happen if global corporations had not included Hungarian production to their sales networks.
Since the scope of the presented study is broader going far beyond the implementation of the employment policy in the Vissegrád countries, we mentioned only some specific attributes of the employment policies of our neighbouring countries. They differ from us basically by the fact, that being the OECD members these countries were mainly Job Strategy oriented.
Except for other problems, Poland has problems with their demographic development reflected especially in the growth of population in their productive age and due to that also in the labour supply increase. Another problem is associated with the restructuring process in agriculture where a big number of work places disappeared. Similarly, the restructuring of “strong” industries, transport industry, etc. is also very strongly influencing the employment situation. Due to that in the context of a Job Strategy implementation the development of small and medium size business mainly in the rural regions is highlighted.
The Czech Republic like Poland, when joined the OECD in 1995, took over an obligation regarding the Job Strategy to change their priority from the passive employment policy for the active employment policy, predominantly for creating work places. In support the Czech government following the above mentioned strategy prepared the National Employment Plan that included also Programs of Active Employment Policy.
Improved labour force skills and competence’s through wide – running changes in education and training system belong to substantial elements of the Job Strategy. This strategy is tightly connected with wages, with the tax system, and mainly with raising the competitiveness of the economy.
In Hungary, similarly like in other transforming countries the most serious employment problem is unemployment of young people (aged 15–24). A special attention is paid to measures adopted for solving this problem, mainly harmonization of the labour market and of the educational system. Education and high skills competence are prerequisites of success on the labour market.
Central statistical office in Hungary made selective polls targeted to the mentioned group. The results show, that in the age group of 20–29 there is rather high number of people running a private business and being employed at the same time. Only a small part of unemployed young people belong to the passive employment policy. Active labour-and-market conditions are strongly preferred. The number of students and interns is also growing, still more and more people work under the public work scheme, of course, this is just an alternative solution. Differences were found regarding the young unemployed people in the countryside where the figure represented 12 %, while in Budapest only half of it.
Confrontation of the Slovak society with the phenomenon of a mass unemployment after 1989 evoked a lot of complex questions about the position and character of a moder face of the labour factor – human capital in the transformation process and in the current capitalism logic as a whole. The contrast between the above average level status of the Slovak Republic population formal education indicators in the context of the most developed world economies (OECD) and the total below average performance of the Slovak economy is really significant. At the same time this contrast on the political-and-economy level, is the best presented mainly by the high share of young, relatively well educated participants on the labour market, who, after finishing their schools, join the army of a long time unemployed. No dispute, the present unfavourable situation resulted from two substantial transformation problems running in parallel. This is not only Slovakia special feature, but a typical reflection of the unbalanced market labour in all transformation economies, and being also a long term problem of still deeper integrating European Union. The following are the issues:
The principal reason for a dynamic solution of both selected areas of structural and adaptation-and-mobilization rigidity for the labour market in the SR, as well as in the EU countries is distinctive. Because of that, the author in his article attempted predominantly to picture a complete characteristics of the institution-and-standardization measures, which have already been approved and implemented by the EU member countries, and which are thus closely associated with further integration ambitions of the Slovak Republic. The following areas were focused:
The Slovak Republic has now a good opportunity, regarding our prior interest to be EU integrated, to evaluate the overall concept and consistency of our educational system and its structure with the top complexity. No question, the initiatives and institutionalized measures taken at the EU level will play an important role checking the necessary minimum quality criteria, but also criteria of speed and flexibility of the mechanisms of such a crucial reform.