SNOPK: Slovakia Must Further Work on Its Competitiveness

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Miners from the Cigel Mine in Prievidza, February 1980 (photo by TASR - Tibor Babjak).

Bratislava, February 11 (TASR) – Slovakia must work on its competitiveness in order to remain an attractive location for investments long term, member of the managing board at the Slovak-German Trade and Industry Chamber (SNOPK) Peter Lazar said at a press conference on Thursday.

Lazar was speaking on behalf of seven foreign business chambers (French, Dutch, German, Austrian, Spanish, Swedish and Italian) with an outlook toward the approaching general election (March 5).

“The bilateral chambers of commerce I’m talking on behalf of represent the interests of more than 1,000 member companies, employing more than 180,000 people in Slovakia. These companies in principle want to continue to invest in Slovakia, as is also evident from regular surveys carried out by chambers among investors,” he said.

Nevertheless, according to OECD, the level of taxes and salary deductions increased from 28 percent to 31 percent between 2012 and 2014. “The statistics did not include the tax licences introduced in 2015. So, the trend of tax growth has remained upward,” said Lazar.

Lazar further pointed to the high tax rate on incomes of businesses. As well, employers have to bear a large share of social security deductions. “It’s a well known fact that if secondary salary costs are reduced, this has a positive effect on employment. Nevertheless, the levy (payroll deduction) burden at the current level of 35.2 percent remains too high,” he stressed.

When it comes to labour laws, the most recent reforms have led to a surge in costs, as they’ve made the hiring and dismissing of staff more expensive, apart from making the working time management and opportunities for temporary employment less flexible. “This significantly limits employers’ scope in employment regulation. A higher degree of freedom in working contractual relations is also needed, apart from accelerating labour law court proceedings,” he said.

With respect to education, foreign chambers of commerce have welcomed the latest amendment to the Vocational Education Act. “The legislation has laid a foundation stone for the education of young people in accordance with practical needs of the labour market,” he said. Nonetheless, it’s still necessary to focus on improvement in some other areas, for example, in creating more favourable conditions for companies providing education to young people, and in providing stronger financial support for youth and vocational schools.

Improvements are also needed in the removal of bureaucratic obstacles. “Bureaucracy in principle represents a broad range of administrative operations and an enormous burden for businesses, apart from shortcomings in implementation of individual rules. Regulations are not always clear-cut, in addition to frequent changes. Therefore we encourage the new (future) government to reduce bureaucratic obstacles and increase efficiency in public administration. With respect to the implementation of e-government, acceleration of the process is needed,” said Lazar.