Slovakia’s ability to compete in the market and amongst

themselves

Konkurencií schopnosti Slovenského trhu i firiem medzi sebou

Temporary Agency point of viewJanuary 2014

Slide 2

3 Main areas affecting Slovakia’s competitiveness

1. Legislative changes in 2013

2. Legislative changes in 2014

3. The current educational structure in Slovakia

Underlying everything is corruption and “nevymožiteľnosť práva“ (Justice in SR = who you know, what you know and how much $)

Slide 3

Legislative changes in 2013

As of 1.1.2013• Complex changes in “part time” contracts

• significantly increased administration• increased cost to employer by 30%

• Increase of social contribution ceiling • from an avg. of 2 400 € to the current unified ceiling of 3 930 €• an increase of up to 60% • specialists, managers, many IT jobs became more expensive• better paying jobs became more expensive to employers

• Personal income tax increase• from flat rate of 20% to a revolving rate up to 25%

As of 1.5.2013• „ 5 krát a dosť“

• this year the 2nd year – expect employers to end contracts with ADZ employees

• Temporary labor agencies cannot use part time contracts/services • estimated number of new s.r.o.’s created to provide services is in the 100’s…

The 2013 changes in employment laws meant a loss of employer flexibility, higher costs and increased use of limited companies to get around the law!

Slide 4

“Integrity from the Start”

“Our Values govern how we behave and are built

on our unwavering commitment to integrity….”

“…corporate citizenship and social responsibility is in every aspect of our company”

“…core values: respect, excellence, responsibility.”

“The “I want to work here ” culture “

“…respects each individual and wants

all its employees to be treated with

respect and dignity.”

“Insisting on the Highest Ethical BehaviorOur policies and practices direct our employees to

conduct business lawfully and ethically wherever we operate.”

Code of Conduct

“…compliance and integrity program helps guide

our employees to obey all applicable laws and

regulations while conducting business around the

world.” “….does not establish nor continue business

relationships with advisers, suppliers and

anyone clearly refusing to accept the Code of

Conduct.”

INTEGRITY

Compliance with the Law

PRICE

PRICE!PRICE

Legislative changes in 2013 - impact

Slide 5

Legislative changes in 2013 – Price Wars

According to the Slovak statistical office.... „ Za jedenásť mesiacov roku 2013 oproti rovnakému obdobiu roka 2012 vzrástol index priemyselnej produkcie o 4,6 %, z toho v priemyselnej výrobe o 5,7 %“. V priemere od začiatku roka 2013 v porovnaní s rovnakým obdobím roka 2012 zamestnanosť klesla v priemysle o 1 %.” * A result of increased efficiency?!?!?!?!

Even though production in Slovakia increased, we had a decrease in employment, and a decrease in temporary services….where did these employees go?

Limited companies offering „services“ • are not licensed (nekontrolovateľné)• are not subject to the equal pay ammendment of the law • are not subject to client’s union labor agreements• the employees receive minimum wage and travel expenses (not subject to tax)• they are endangering the future security of these employees• they are violating the law!!!!• If service then REAL service – Managed Services in every context of the meaning!!!!

We (APAS) urge the Minister of Labor to actively enforce existing laws, sanction those agencies (s.r.o.’s) that disregard the law, and advocate revision of the labor code to include Employers as equally responsible for disregard of the law!

* Štatistický úrad Slovenskej republiky

Slide 6

Legislative changes in 2013 – solution(we are not so rich that we can afford to buy cheap)

In Sept/Oct of 2013 Adecco performed a mystery shopper survey

Of the 28 agencies that we visited, only 2 (one of which was Adecco) actually interviewed candidate(s)

- The single most important indicator of candidate feasibility is the interview!- Proper employee selection impacts

- Voluntary / Involuntary fluctuation = $$$$- Absenteeism = $$$$

In 2012 Adecco established the TH KPI report and has been measuring each client, every week for the past two years………

Working with a licensed temporary work agency that actively measures defined KPI’s can guarantee you cost savings through measurable performance results.

Slide 7

Defined ìssues

High overtime

High turnover

Poor quality of newcomers

Lack of sickness leave control

Lack of facilities/lockers for newcomers

High costs of work clothes

Troubles with personnel during production peaks

Communication problems between temps & agency:

- Doubts about salary correctness (for obvious reasons)

- Doubts about Holiday calculation methods

- Lack of research about reasons for turnover

Slide 8

Proposed solutions

Control and analyis of turnover (exit interviews)

Create tests specific to Client’s products

Sick leave control and management

Manage locker logistics

Workclothes from dismissed workers redistribution

Regular and planned communication with temps and client staff

Slide 9

Summary of possible savings

Slide 10

Legislative changes in 2014

As of 1.1.2014 - Higher collective bargaining contracts are applicable for almost all employers in Slovakia / Vyššie kolektívne zmluvy budú takmer pre všetkých

- Applicable for all employers with as little as 20 employees- Conditions for applying the higher collective bargaining contract will take place even without the employers approval and with disregard to the employers own bargaining contract- The ministry will establish a tri-party commission to decide on extending the high collective bargaining contract to employers- 5.12.2013 Members of the Slovak opposition submitted a claim to the SK Constitutional court regarding this new legislation. In the Czech Republic the Constitutional Court decided that similar legislation that was planned for the Czech Republic was unconstitutional

This law goes will have a disastrous effect on Slovakia’s ability to compete in the market place especially for small and medium enterprises.

THE SME’s of Slovakia cannot and will not be able to compete with the largest employer’s profits, pocketbooks or influence

Slide 11

Legislative changes in 2014

I am from Detroit (Motown) and lived there for 26 years. Today everyone knows that Detroit is bankrupt and the automotive industry that once fueled it’s greatness is dead. Many reasons exist for the destruction of the automotive industry in Detroit, including the Unions.

I must mention an article published in SME on December 9, 2013. The title of the article is “Zabije nás nakoniec úspech našich automobiliek?”. The author is Tomas Bella.

“Jeden príklad za všetky: mimoriadne silné odbory až do roku 2007 trvali na zachovaní takzvanej pracovnej banky. Znamená to, že automobilky mohli modernizovať výrobu a používať viac robotov – ale ľudí, ktorých roboty nahradili, nesmeli prepustiť. Tí ďalej chodili do práce a čakali, čí sa nejaká práca náhodou nevyskytne.“

V roku 2009 General Motors a Chrysler zbankrotovali.

Another quote from Mr. Bella’s article. This time about education – my final point….

“Ak začneme debatu o akejkoľvek alternatíve k automobilkám, skončime nakoniec zasa pri vzdelávaní, pretože svet sa stal príliš zložitým na to, aby sme vedeli vyveštiť na 30 rokov dopredu. Jednoducho budeme potrebovať bystrých ľudí s univerzálnymi schopnosťami, ktorí budú schopní prispôsobiť sa, či už v tom čase budeme vyrábať Volkswageny, solárne panely, vodíkové články, autá Tesla alebo autá čínskey značky Geely“

competencie

Slide 12

3rd competetiveness factor - EDUCATION

Not everything in the former regime was bad...

Ministerstvo Školstvo Priemysel

Základne školy

GymnáziaStredné

Priemyselné Školy

Obchodné Akadémia

Stredné odborne u ilišteč

Univerzitá

Odborné Predmety

PRAX

ZAMESTNANIE

spolupraca

Slide 13

EDUCATION todayKompetenčný zákon 2001

Ministerstvo Školstvo

Univerzitá

Ministerstvo Vnútra8 VUC-ky

competencie

obsah

ZŠ

Gym

SPS

OA

SOU SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

SOU

ZŠ

Gym

SPS

OA

Zriaďovateľ = $, koľko, kde a komu

Priemysel ??????

Slide 14

EDUCATION todayKompetenčný zákon 2001 / effect since 2006

I compared information from the Ústavu informácii a prognóz školstva“ for school years 2011 / 2012 and from 4 years prior, t.j. 2007 / 2008 (and compared the largest regions: BA, ZA, KE, PO). In this sample the number of students in ”high schools” increased by 7,5%, however the number of schools increased by 62%! Students in technical vcational schools increased by 82%, but the number of schools by 172%!

Gymnazia2007 / 2008 2011 / 2012 rozdiel za 4 roky

KrajPočet škôl -

celkom

Súčet žiakov spolu Kraj

Počet škôl - celkom

Súčet žiakov spolu

% Narast pocet škôl

% narast pocet žiakov

BA 24 12570 BA 44 13388 83% 7%ZA 22 11671 ZA 29 11602 32% -1%KE 25 12598 KE 36 12205 44% -3%PO 21 10291 PO 40 13045 90% 27%

SOŠ2007 / 2008 2011 / 2012 rozdiel za 4 roky

KrajPočet škôl -

celkom

Súčet žiakov spolu Kraj

Počet škôl - celkom

Súčet žiakov spolu

% Narast pocet škôl

% narast pocet žiakov

BA 23 12570 BA 63 13605 174% 8%ZA 17 11671 ZA 63 24099 271% 106%KE 27 12598 KE 60 21346 122% 69%PO 35 10291 PO 77 25193 120% 145%

Slide 15

EDUCATION todayKompetenčný zákon 2001 / effect since 2006

Since the application of the Competency Act of 2001 today control over the amount of school (numbers), the amount of financing, and location is determined by 8 separate regional councils (VUC) – thus, the Minister of Interior

- The Ministry of Education is no longer the “owner” of our educational system. Today we have 8 owners with various degrees of competency, understanding and interest! - Literally 100’s of Associations, local organizations, individual companies, etc…. Have been searching for a model to increase the effectiveness of education and make it applicable to the needs of society and industry – without gaining consortium (even at the local level)- Even if a “perfect” model was developed, under the current structure it would have to be “sold” to 8 regional VUC-ky!!!

The government must revert back to the former succesfull model of education in Slovakia and take all steps to remove the education system from the Competency act of 2001. Without one owner, one vision, one strategic plan to meet our current and future needs in education, the

current system will (already is) intellectually bankrupt Slovakia.

Thank You!!!

Bruna Beata JakubCountry Manager Adeccco Slovakia, spol. s r.o.Ajilon (UK) LimitedApollo Business CenterMlynské nivy 45, 821 09 Bratislavamobile: +421 902 943 684bruna.jakub@adecco.comwww.adecco.sk; www.adecco.com