Kazimir: Foreign Firms No Longer View Slovakia as Land of Cheap Labour

Finance Minister Peter Kazimir (Photo by TASR)

Bratislava, February 5 (TASR) – Some foreign investors are beginning to realise that Slovakia is no longer a country with cheap labour, Finance Minister Peter Kazimir (Smer-SD) told a news conference on Monday dedicated to presenting the country’s macroeconomic prognosis.

News appeared in late January that South Korean firm Samsung is planning to shift production from Voderady to Galanta (both Trnava region). However, there were also rumours that Samsung would scrap production altogether. “I’m in both formal and informal contact with big employers, and I must confirm that some foreign investors who based their ‘happiness’ solely on a cheap labour force in this country are starting to sober up,” stated Kazimir. However, this isn’t only Slovakia’s problem. “We must take care of labour productivity and quality here in Slovakia,” said the finance minister.

Prime Minister Robert Fico (Smer-SD) also thinks that economic growth can’t be based on cheap labour. “He who wants to build a country’s economic success on cheap labour is laying the foundations for poverty and huge differences. I’m pleased about the existence of cannibalism among companies, as it leads to pressure on salary growth,” said the prime minister, reiterating the Government’s efforts to increase the minimum wage to above €500 as of next year.

“I am happy that there’s some wage growth. I want salaries to grow at such a pace that we’ll approach the EU average faster than we originally expected. However, I want to guarantee that we’ll take no steps that would threaten Slovakia’s competitiveness,” stressed Fico, adding that he views a lack of labour as a bigger problem than salary growth.

The decision to be made by Samsung should have no major impact on the Slovak economy. “The Voderady plant is a relatively small part of the company and it won’t be shut down, but only shifted to a new locality. Its impact on Slovakia’s economic development is negligible. The given company could have a problem with selling its products, which doesn’t necessarily reflect conditions on the domestic labour market” said Peter Harvan, acting director of the Finance Ministry’s Financial Policy Institute (IFP).