3.1 General context
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After the economic recession in 2008 the unemployment rate in Slovakia has reached 14,5% in first quarter of 2013. It took almost a whole decade to economy being fully recovered and the unemployment rate to decrease to 5,6% (4Q 2019). According to official data there have been positive trends recorded on the Slovak labour market over recent years.
However, the whole world economy is nowadays under the pressure due to the Covid-19 pandemic. The Covid-19 pandemic has spiraled Europe into an unprecedented economic recession, which is likely to bring back dramatically high unemployment rate. In Slovakia, it has already increased by 14,7%, year-on-year, in the 2nd quarter of 2020, adding more than 22 800 persons into unemployment status. Such sharp increase was last recorded ten years ago (in the second quarter of 2010). The registered unemployment rate has increased from 4.92 % (December 2019) to 7.35 % (October 2020). Due to the lasting Covid-19 pandemic, the economic crisis is deepening and the forecasts continues to announce worsening situation on the labour market.
Before the Covid-19 crisis the economic growth of the Slovak economy was based mainly on the high-quality production of foreign companies combining the use of cheap work and imported technologies. In 2020, the distribution of employment in Slovakia by economic sector is 2.1% of the employees in the agricultural sector, 36.06% in industry and 61.83 percent in the service sector. However, continuation in this model is not sustainable in the long term in order to meet socio-economic needs of the society.
The adverse factors:
- dropping average age of citizens,
- major regional differences in employment,
- high long-term unemployment,
- the labour force offer higher than demand,
- instability of working places/posts.
Substantial increase of unemployment during the crisis is triggered also by insufficient measures in the education system and inclusion of disadvantaged groups: low skilled people, woman, the Roma people, elderly aged 45 – 54 and the people with disabilities. For example the unemployment rate of young women aged between 15 to 29 years in 2019 is around 19,5% against 9,7% of men in the same age group while the EU average for young unemployed women in the same age group is 14,6%.
The unemployment rate of low-skilled young people at the level of 46.5 % is too high when comparing to the EU average (26.5 % in 2016). In 2016, there were less than half of young people under the age of 25 years registered in the system of Youth Guarantee. Almost one in five (18.2 %) of young people was registered as unemployed for more than 12 months. Considering the increasing number of early school leavers and shortages of skilled workforce, these are the worrying developments.
When the economic growth before 2020 has positively influenced youth unemployment, the young people are the most touched by the Covid-19 crisis.
While there were 71 878 young people under the age of 29 years registered as unemployed in Slovakia in 2016, their number decreased to less than 40 000 in 2019. According to EUROSTAT, the share of young people aged 15 – 29 years not in employment, education or training (NEET) in Slovakia in December 2019 represented 15,9 %, still over the EU average (12,6 %). The economy crisis under the Covid-19 Pandemic has already added more than 16 000 young people to the unemployment rate counting in October 2020 more than 59 000 young people without work (23,5 %).
The Covid-19 pandemic is also affecting young people’s starting wages. Starting a career today is a real challenge for young people. In general in time of the economic crisis, employers often wait longer to hire new employees until the situation stabilizes over the long term.
Entering the labor market is a very important step for graduates not only for their career, but also for their potential earnings in the future. The annual wages of graduates starting work during the crisis are about 9% lower than the wages of comparable graduates during the economic boom according the a study by Cockx in 2016.
The Covid-19 affect drives existing wages down (ILO 2020). In European Union it decreases 6,5 points in average while women are affected more than men (8,1 points decrease for women against 5,4 points for men).
Yearly, almost 32 000 of young people leave the country in search for education and work abroad. The reasons behind are schools of higher quality and better readiness of graduates for the labour market, adequate placement in the labour market, more working opportunities and higher remuneration (Kremský, 2015).
There is no specific terminology for the field of employment in Slovak legislation or practice.