Minimum wage will not increase by much and will be cut from work surcharges
The Igor Matovič government is in an open conflict with labour unions over the minimum wage. While the labour minister insists the unions are putting forward unrealistic demands, the unionists are complaining that they have not been treated like this since the 1990s.
The formula for calculating the minimum wage annual increase has failed to put an end to the autumn quarrels between trade unions, employers and the government. While the trade unions insist the increase should amount to what the formula calculated, i.e. EUR76, making the minimum wage EUR656, the Labour Ministry and employers agreed on a lower increase behind the unionists' back, causing the trade unions to walk out of the social dialogue.
Labour Minister Milan Krajniak (Sme Rodina) charged on August 24 that the unions have refused to make any concessions on the minimum wage ever since the Matovič government took office in March.
"This is not a dialogue; these are ultimate requirements," the minister said. He believes that with the coronavirus-hit economy contracting by more than 12 percent y/y in the second quarter of 2020, "we should all try to come to a compromise".
Trade unions, in turn, are accusing Krajniak of arrogant behaviour and of disrupting the social dialogue that has been building up in Slovakia for over 30 years.
"Such a situation has occurred only once - during the term of the Vladimír Mečiar government," said Monika Uhlerová, vice-president of the Confederation of Trade Unions (KOZ), as cited by the TASR newswire.
What the unions want
Trade unions entered the negotiations with employers and the government about the 2021 minimum wage increase with the requirement to raise it by a sum indicated by the formula adopted in 2019. The result was EUR76, making the minimum wage 60 percent of the 2019 average wage or EUR656. The unions refused any reductions during all the negotiation rounds.
The Labour Ministry proposed an increase to EUR620, while employers wanted to keep the minimum wage frozen at the 2020 level of EUR580 due to the dire situation of many companies in Slovakia hit by the coronavirus pandemic. They agreed to a slight increase only during the following negotiation rounds.
"We do not fully identify with the final agreement, but given the circumstances, I believe that the result took time to emerge and was acceptable in the end," Tomáš Malatinský, president of the Federation of Employers' Associations (AZZZ), wrote in his op-ed for the Hospodárske Noviny daily.
Disrupted social dialogue
The representatives of the government, trade unions representing employees and employers met on August 24 for another round of negotiations over the 2021 minimum wage.
Trade unions insisted on a raise up to EUR656 and refused any compromise. Minister Krajniak thus consulted the increase behind closed doors with employers. They agreed to submit to the cabinet for approval a hike of EUR43, to EUR623. Trade unions walked out in protest.
"They went for a 25-minute consultation; this is an unprecedented, harsh violation of tripartity, which we refuse to accept," said Marián Magdoško, president of the KOZ, as quoted by TASR. Unions do not rule out calling street protests.
Minister Krajniak is criticising trade unions for their stubborn behaviour and what he calls arrogance, and branded their demands unrealistic. "Even though we held talks for months, they didn't agree on one single compromise," Krajniak said. "I suspended the talks and we continued negotiating with those who wanted to negotiate."
Apart from the EUR43 hike in the minimum wage, to 57 percent of the 2019's average wage, the Labour Ministry stepped back, as required by trade unions, from the plan to introduce a starting minimum wage for the long-term unemployed.
The valorisation mechanism of six levels of the minimum wage, depending on how demanding a given job is, will change too. So far, the remaining five levels of the minimum wage have increased as multiples of the basic sum, but now they will all increase by a lump sum of EUR43.
Krajniak did not accede to the requirement of employers to cut wage surcharges from the minimum wage. But while it used to be a coefficient linked to the minimum wage that set up the final night and weekend work surcharges, now these will increase by lump sums. For several companies it was this link that presented a problem as it increases wage costs, even though they do not have any employees on their pay rolls on minimum wage.
If social partners fail to agree upon it, the formula for calculating the minimum wage will be set at 57 percent, instead of 60 percent, of the average wage from two years before. "The compromise is a better solution for the business sector than the minimum wage to be set according to the so-far effective law," wrote Malatinský.
The cabinet approved these proposals at their session on Wednesday, August 26. They still need to be adopted by parliament. Abused minimum wage? Some 10 percent of the 2- million strong labour force is estimated to receive minimum wage in Slovakia.
Some economists and labour market watchers consider the growth dynamics of the minimum wage over the last years too fast and say it threatens the competitiveness of Slovakia's economy. Michal Páleník of the Employment Institute and the Comenius University's Faculty of Management points out that the steep increase unacceptable for employers leads to the abuse of the minimum wage.
For example, employers might push their employees into parttime contracts, while expecting them to work the same number of hours as before, for a lower wage. Or employees might get paid only part of their remuneration officially and the rest in cash.
Minister wants more partners
After the trade unionists walked out of the tripartite meeting, Krajniak questioned whether they represent all the employees. The membership of employees in trade unions' organisations is estimated at about 200,000, approximately 10 percent of the total labour force.
The minister proposes to extend the tripartite, i.e. the platform for discussion between the government, trade unions and employers, by other organisations representing employees, like the Employment Institute thinktank or the non-governmental organisation Pracujúca Chudoba (The Working Poor). "The representatives of 1.8 million employees not represented by the unions can also express their opinion in a decent tripartite dialogue," said Krajniak, as cited by the SITA newswire.
Opposition calls for Krajniak's head
The opposition Smer of Robert Fico and the emerging Hlas of Peter Pellegrini have loudly disagreed with the proposed changes, calling Krajniak arrogant.
"We will support the trade unions; we consider their objections justified," said former finance minister Ladislav Kamenický (Smer).
Smer was the one to push through the formula to calculate the minimum wage, with the votes of the thenopposition MPs of the nowruling OĽaNO and Sme Rodina.
The formula was to calculate the minimum wage at 60 percent of the average wage from two years before. The scheme was to be used for the first time in 2021. Until then, minimum wage was subject to tripartite agreement. If their talks failed, the government set the hike.
As Smer and trade unions had signed a cooperation agreement, the trade unions had been used to more favourable behaviour than employers.
Smer and Hlas are now calling for a no-confidence vote against Krajniak if he fails to fix what they call his mistakes. Apart from changes to the minimum wage calculation scheme, Krajniak is proposing to scrap free school lunches and replace the 13th pension with just a social benefit.
"We didn't expect them to be so quick to touch these measures and in such an aggressive and arrogant manner as they're doing today," said MP Erik Tomáš of Hlas, adding that they will support trade unions street protests.
[The Slovak Spectator; 31/08/2020]