VZCZCXYZ0000
RR RUEHWEB

DE RUEHSL #0946/01 3410816
ZNR UUUUU ZZH
R 070816Z DEC 06
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC 0514
INFO RUEHSS/OECD POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC

UNCLAS BRATISLAVA 000946 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR MROGERS 
 
E.O. 12958: N/A 
TAGS: ECON ELAB LO
SUBJECT: WHAT DOES A GUY HAVE TO DO GET FIRED AROUND HERE? 
 
¶1. (U) Summary. Slovakia's Ministry of Labor and Social 
Affairs is busy preparing new legislation to overhaul its 
labor code in early 2007.  Business interests are happy with 
the current law and concerned about forthcoming changes, 
especially since the drafter of the new proposal, MOL State 
Secretary Emilia Krsikova, is considered strongly pro-labor 
 
SIPDIS 
and a tough customer in general.  Krsikova has not released 
her plans to anyone, even to high-ranking members of her own 
party (Smer), and is not meeting with core stakeholders. 
Expected changes would primarily affect domestic industries, 
but U.S. investors will likely feel a pinch as Slovakia 
harmonizes its labor code with EU norms.  The Embassy is 
weighing in by coordinating dialogue between companies and 
MOL on proposed changes. End Summary. 
 
Brief Background 
---------------- 
 
¶2. (U) Slovakia's labor code has been changed dramatically by 
each of the past two governing coalitions.  In 2001, despite 
the presence of a primarily center-right coalition led by 
SDKU, pro-labor voices in the government were able to push 
through revisions that strengthened the hands of unions. 
Among other changes, the maximum number of working hours was 
set at 40, and employers had to get trade union approval in 
order to fire employees.  In 2003, the new, uniformly 
right-of-center ruling coalition enacted a revised labor code 
that strongly favored business interests.  The new law 
extended the working week to 48 hours, dramatically 
liberalized hiring/firing laws, authorized use of rolling 
indefinite-term contracts without benefits, and limited 
severance pay, among other changes.  Trade unions retained 
the right to bargain collectively, but lost all mechanisms to 
provide leverage within the process. 
 
Labor Smer, Business Smer 
------------------------- 
 
¶3. (SBU) Further changes are expected from the new government 
since Prime Minister Robert Fico's Smer party is nominally 
the party of labor, enjoying support from the trade union 
confederation KOZ.  To satisfy KOZ, the PM staffed the 
Ministry of Labor with ardent critics of the 2003 labor code 
reforms, including Minister Viera Tomanova and State 
Secretary Krsikova, both fellow Smer members.  Fico's 
 
SIPDIS 
promises to organized labor have always been vague, however, 
and the PM consults primarily with the business wing of his 
party, such as financier Juraj Siroky.  (On December 5, Fico 
met with KOZ president Eugen Skultety for the first time 
since the June election.)  Most coaltion members have limited 
interest in labor rights issues.  In the past week, Smer- and 
HZDS-appointed State Secretaries at the Ministries of Finance 
and Economy have told us that they would oppose any 
significant changes to the labor code.  In turn, Tomanova and 
Krsikova recognize that they have limited allies even within 
a Smer-led government, and are very secretive about 
forthcoming legislative changes.  All stakeholders are 
excluded, even unions.  For example, when Tomanova's advisor, 
MP Robert Madej, introduced an amendment earlier this month 
to change the administration of the social insurance system, 
KOZ had not been notified in advance and completely disagreed 
with the proposal. 
 
Outlines of a Proposal 
---------------------- 
 
¶4. (SBU) Due to lack of information from the primary source, 
the contents of forthcoming labor legislation are now a 
matter of speculation for all parties.  Based on 
conversations with business leaders, labor leaders, Smer MPs, 
and mid-level MOL officials, there seems to be a generalized 
consensus about what substantive changes are expected to be 
introduced as proposed legislation in early 2007. They 
include the following: 
 
- Businesses would not be allowed to employee long-term 
employees as contractors.  The 2003 labor code enables 
employers to require many classes of employees to acquire 
tradesman licenses and work as contractors, which allows 
companies to entirely avoid paying Slovakia's high payroll 
taxes for health and other social insurance programs. 
Business associations argue that the current law provides not 
only greater flexibilty but also results in higher wages for 
workers as a result of lowered tax burdens.  Unions argue 
that the system has created a growing class of workers 
ineligible for social benefits.  Primary sectors affected by 
this law include construction, forestry, agriculture, and 
education -- all of which are domestic industries.  While the 
practice is widespread in Slovakia, international investors 
looking to attract a talented, stable labor force rarely 
utilize such contracts. 
 
- The 48-hour work week would be retained, but with more 
limited opt-out options and fewer available overtime hours. 
It is not expected that the change would fully enforce the 
1993 EU directive authorizing the rigid 48-hour work week (as 
only Italy and Luxembourg have done), but the proposal will 
more closely resemble countries such as Germany, which offers 
exceptions for emergency service workers but generally 
follows the directive.  This marks a depature from the 
previous government, which closely aligned with the British 
position promoting maximum flexibility.  The potential impact 
on U.S. and other foreign investors is quite real but 
difficult to assess at this point. 
 
- Collective bargaining between unions and employers may be 
required to reach settlement within the tri-partite 
negotiating process.  According to changes made in the 2003 
labor law, businesses are required to bargain with unions but 
in case of an impasse the dispute can be sent to arbitration 
courts.  Existing labor law broadly enables the courts to 
decide in favor of employers in case of labor stoppages, as 
they did during the 2003 railroad workers strike and the 2006 
health care workers strike.  Proposed changes would have 
greatest potential affect on unionized businesses, including 
US Steel, and three major auto manufacturers, Volkswagen, 
Kia, and Peugeot-Citroen.  Other foreign investors such as 
Dell and ATT&T have non-unionized workplaces.  These 
companies generally have worker councils that do not enjoy 
collective bargaining rights. 
 
- The new legislation would remove the right to dismiss 
employees working on definite term contracts without stating 
an official reason.  No one expects, however, that unions 
would regain their right to sign off on hiring and firing 
decisions.  Nor is there any sign that the government would 
interfere in the hiring and firing process. 
 
- Part-time workers on definite contracts would receive 
health and social benefits equal to those of full-time 
workers. 
 
Reactions and Next Steps 
------------------------ 
 
¶5. (SBU) The domestic and international business communities 
obviously view the proposed changes above with concern, 
though they have not been especially aggressive on the issue. 
 Many are not even aware of the changes under discussion.  To 
gain further insight, the American Chamber of Commerce in 
Slovakia has tried to meet with Ms. Tomanova and/or Ms. 
Krsikova, but has not been granted an audience as of yet.  To 
facilitate communication, the US Embassy will work to 
organize a lunch at the Ambassador's residence between 
Minister Tomanova and various US business interests.  During 
a charity event sponsored by the Chamber on December 5, 
Tomanova and Ambassador Vallee spoke briefly on the subject. 
She tentatively agreed to attend a labor-code related 
luncheon in January.  Also, the DCM told State Secretary 
Krsikova that MOL plans to make the labor code "more like 
France, Belgium and Germany" could undercut steps that made 
Slovakia so attractive to investment in the first place. 
 
 
VALLEE