Slovakia becomes magnet for IT service centres

CENTRAL and Eastern Europe (CEE) is a popular location for international companies who want to establish new shared services and contact centres. Investors appreciate the low costs, skilled labour, and relatively short distances to the more developed countries of Western Europe, where their main customers reside. Slovakia, which offers all of these benefits, is one of the most preferred service centre locations in the region. CEE countries continue to be popular among European companies that are seeking alternative locations for their IT and business process outsourcing services. The CEE region offers a well-educated labour force with strong language skills, as well as proximity to Western European clients. Major CEE cities are a mere two-hour flight from London and Paris and are virtually next door to Germany and Austria.

In fact, according to data made available by the United Nations Conference on Trade and Development (UNCTAD), in recent years, more than 20 percent of offshore projects by European firms have gone to the CEE region.

The SARIO state investment agency recently listed 22 companies who have shared services and contact centres in Slovakia. The largest firms on the list are IT and telecoms companies such as IBM, T-Systems, T-Com, Dell, Hewlett-Packard (HP), Accenture, AT&T, Siemens, and Lenovo.

Following several large recent investments in the IT industry and service centres, the Slovak labour market is suffering from a shortage of IT-skilled people. But while IT service centres say they feel the shortage, they do not regard the situation as dangerous. Moreover, most have set up their own of further education and training programs. Work in such a centre can be a challenge for young people. They get to work for international companies in a domestic environment. They get useful experience and learn a lot from their training.

Slovakia regions and labour market

The current problems connected with ongoing restructuring changes, different economic conditions, geographic differences in foreign investment, and employment growth, etc have multiplied the differences between individual regions as regards their infrastructure and potential for economic development. Therefore large regional differences can be seen in the economic strength of regions, which in recent years have exhibited a tendency to further deepen. Problems connected with the development of the economic infrastructure, the lack of modernisation in industry, the slowdown in construction, recession in agriculture, etc. are now exacerbating these current regional disparities. The economic strength of regions is, among other factors, determined principally by the economic, technical and social infrastructure in place. Quite naturally, this infrastructure is concentrated mostly in urbanised areas, where consequently there is a high share of job opportunities. The economic strength of a region is significantly reflected in unemployment insurance payments, which comprise both an employee as well as employer aspect. This indicator partially, but relatively accurately shows the economic potential of a region. The urban areas of Bratislava and Košice generated two-thirds (67%) of redistributed funds, (Bratislava, Košice and Žilina) created together three quarters, i.e. 75.1% of these funds. The high surpluses were caused not only by the above average economic infrastructure, but also by the low rate of unemployment. Bratislava itself created almost a quarter of the total premiums collected (SKK 2.3 billion, i.e.23.2%) or of funds. Those regions highly urbanised and well-equipped in terms of infrastructure (outside the urban parts, the districts of Bratislava, Košice, Žilina, Nitra, Trnava, Banská Bystrica, Prievidza, Trenčín and Prešov) in 2002 created more than half of the unemployment insurance collection (51.9%) and concurrently also the overwhelming majority (91.1%) of all free funds for redistribution to economically weak regions for instance Orava, Kysuce etc.

Bratislava region – why the most prosperous in Slovakia???

Bratislava’s strategic location at the junction of the Czech Republic, Austria and Hungary has been a key factor in making the Bratislava region the most prosperous in Slovakia, facilitating economic and cultural cooperation, an educated and skilled labour market, the easy circulation of goods and capital, and tourism.

The region now generates about a quarter of the country’s GDP, has absorbed about 65 percent of its foreign investment, and enjoys virtually full employment. All industrial sectors are well represented in the Bratislava region, and are highly centralised in the capital. However, Bratislava is also the administrative and financial hub of the country. All major banks and all major insurance houses have their headquarters in the Slovak capital, and the finance and insurance sector accounts for about a quarter of the region’s GDP, well above the Slovak average. Main production branches of the region are the chemical, automotive, engineering, electro-tech and food industry. Still, the Bratislava region is the first region of Slovakia where trade and services are gaining dominance over industrial production. Bratislava is Slovakia’s technological and scientific-educational centre. It has the highest percentage of university-educated citizens in the country, and over 40 percent of Slovak university students study in Bratislava. Several international IT firms, including Dell, IBM, Lenovo, AT&T, Accenture and SAP have set up outsourcing centres in the capital.

There is no doubt that in contrary to the other Slovakia regions, is Bratislava on the top regarding to labour market and employment. All of the major companies are situated in capital of Slovakia and that is why there is a big gap between Bratislava region and for instance Orava region.

Czech labour market

The problems of the Czech market are well-known. Everything starts with the system of education, which is not adequately connected to the real labour market and its needs. This is very obvious in construction. In the last couple of years, the number of new graduates of technical secondary schools and colleges has been continuously decreasing, especially in teaching construction jobs. This situation continuously aggravates the age structure of employees in construction firms, namely in skilled positions. The system of vocational schools does not currently produce optimum numbers of students in total as well as with respect to their structure and focus (bricklayers, carpenters, etc.). There are several causes. One of them is the unfavourable demographic development of the Czech population. Another is the state policy – increasing the level of education among the population decreases interest in vocational jobs. The attractiveness of construction jobs is reduced by the need to commute, by frequent changes of job sites and often by the performance of work in bad weather. Last but not least, unfortunately, some building jobs have a lower social prestige in the eyes of the public and are not sufficiently rewarded. Companies have to deal with this problem and look for ways to bring pupils from elementary schools to the vocational schools, while ensuring that they work in construction when they complete their education. They have to try to communicate with their parents a lot and deploy a motivation system in the form of scholarships, pocket money and study loans.

Poland and its problems with labour market

Poland is widely regarded as one of the most successful transition economies. On the other hand, Poland is one of two countries in the Europe in which absolute poverty rates have risen in recent years. Poland’s labour market trends may well have something to do with the fact that polish unemployment rates have been among Europe’s highest since the mid-1990s. Improvements in the areas of poverty and social inclusion in Poland are unlikely if the unemployment situation is not addressed. Poland’s overall registered unemployment rate has been in the 18-20 per cent range ever since 2001. This is roughly twice the EU average. Moreover, hidden unemployment is estimated at approximately 1 million people, and informal employment is estimated at slightly less than a million. Labour market trends are particularly unfavourable for women and young people. The long-term unemployed (those without work for at least 12 months) are also quite numerous, accounting for more than 50 per cent of total unemployment. Poland’s employment rate is not surprisingly quite low: at only 51.5 per cent in 2003, it was well below the EU15’s. This caused that on average, one Polish worker must support two non-working Poles.

Why is this so bad?

Firstly it is because of demographic conditions. Polish labour markets are absorbing large numbers of new workers created by the population boom and many of these young workers are not finding jobs or face poor prospects for career advancement.

Secondly it is caused by weaknesses in educational system. Polish schools often do not provide education of the desired quality, particularly in terms of skill development.

At last but not least it is caused by inappropriate social protection policies and structural changes in the labour market.

European labour market deals with unemployment

This should give you an impression of the European labour market in general and an in depth view of the British and the German labour market. Furthermore it shows differences in the approach of fighting unemployment. Government invests greatly into the labour market and managing unemployment. Evidence can be found in laws, training schemes and social benefit. Germany and Britain are following quite different tracks to fight unemployment. More then two years ago the British government decided to introduce national minimum wages to prevent a widening pay gap throughout regions. Advantages are obvious – as workers get a higher income they can spend more money on food, health, education and children. Another advantage for the state is that the increased wage takes some workers over the state benefits threshold. The state saves money and the burden is assumed by the private sector. The German government also introduced minimum wages but only for certain sectors and for other purposes. Wages only exists in two sectors: construction work and roofers. The aim was to stop companies recruiting cheap labour from the former East Bloc and therefore gain competitive advantages. As trade unions have a strong position in Germany most sectors have a kind of minimal wage set by negotiation between trade unions and employers’ federations. Britain’s employment laws are probably the most lax labour laws in Europe with the policy of attracting investment in mind. It should give Britain a competitive advantage against the other European states because labour is one of the more expensive and inflexible production costs and therefore crucial to investment decisions. In Germany the employee’s representative must agree to the terms of proposed redundancies. The company is also obliged to help find alternative employment and in areas of high unemployment they also have to pay a kind of tax to the state to help fund training initiatives. Additionally companies have to pay compensation for loss of office depends on the employees job tenure. Which country has the better way of fighting unemployment??? It is not that obvious, but you can make your own opinion.

What can help EU labour market? – Education!

Education should meet the needs of the European, national and regional dimensions of education. In particular it must meet the needs of Europe’s multicultural and multilingual needs. The areas of education relating to European and the shaping of the European citizen – pro-active, multicultural, and multilingual – should be areas of shared responsibility. Among the many thinkable dimensions – without putting to much strain on them, since clearly they cannot solve all of society’s problems – schools should also help to become European. European in the sense of not just being part of and helping to shape the modern European landscape, but also of cultivating, developing and defending European values, European culture, and the history of the European project e.g. the reason which gave rise to the project, the functioning of the EU, its policy, the position of its citizens and their rights and obligations. Beyond the European dimension in education there is of course the need for education to be based on the global values of humanity. It goes without saying that all educational planning must be compatible with these values. Young people want Europe to be tangible. The views of 15to 24-year olds on the functioning of the EU as well as their vision of Europe identified the following measures to make young people identify with Europe: Employment is one of young Europeans` main concerns. One in every two young European thinks that completing part of their school, university or vocational education in another country is a “very effective” measure. Many young people are in favour of learning another foreign language.

Job centre and career of youth in Orava region (Slovakia)

„Every human has the right to work, freedom of job choice, right to appropriate and satisfactory job conditions and unemployment protection.“

(Universal Declaration of Human Rights of United Nations, of 10 of December 1948, article 23, section 1.)

The unemployment is a phenomenon of Orava region. Recently, a large number of jobs were retracted for the sake of rationalization process eventually structural transformations. This situation is serious for everyone, especially for women who are forced to returnt to households and for the youth, who find it difficult to access to the labour market. One of the objectives of the European Union employment policy is the support of the equal access to the labour market. For this aim there was established the initiative EQUAL with the role to develop and verify new methods and Instruments against discrimination and unequality on the labour market. In relation to this initiative the project of the Information youth centre Orava under the name „Job centre and career – consulting for the youth of the Orava region“ and the module of the youth innovative education concerning the sphere of career and personal increase were created. The project is assigned for students of secondary schools before termination of education.

The objective of the EQUAL project under the name „Job centre and career – consulting for the youth of the Orava region“, coordinated by the Information youth centre Orava is to provide for more efficient instruments for youth in the sphere of successful integration into the labour market (through the medium of education, career consulting and development of vocational skills) and to eliminate a number of unemployed youth – graduates of secondary schools in the Orava region.

New trends in the integration of convicts in Slovakia

Civic association ANDROS is an association that provides education for adults, seeks to develop conditions for general and constant access of individuals to new and revision of existing knowledge and skills and to stimulate their proactive approach to further education. Focusing at identification of the opportunities for education and assistance in the integration of individuals who served their sentence into society, the NEW START project has introduced new dimension to the education of adult learner in Slovakia.

The New Start is a project providing education to individuals serving their sentences and assistance in integrating such individuals into working cycle after they served their sentence. The project’s key objective is to facilitate access and return to work to the individuals having difficulties with the integration and reintegration at the labour market. The NEW START seeks to achieve the above aim by improving the qualification and standard of education for individuals serving their sentence and by proactive post-penitentiary care. Opportunities for good quality or specialised education of this group are limited. After having served their sentence and left the imprisonment facility, this group does not have equal chances when looking for a job.

This project attempts to give them an opportunity to be trained in IT skills and to receive the internationally recognised certificate of computer skills. Moreover, they are trained to present themselves before potential employers. Besides, they are receiving help in identifying suitable work. Help to find employment for individuals who had been released from a penitentiary and completed the self presentation, PC courses and motivation training is an important part of this project. Post-penitentiary care in this project is defined as contacting potential employers, mapping of labour market for this target group and helping them to get a qualified employment.

How the German government tries to reduce the unemployment

The unemployment in Germany fall from about 5 million in January 2005 to below 3 million in the November 2008. And even if the experts do not appreciate that the crisis will hit the country so bad like the United States the unemployment in Germany is rising again. In January 2009 almost 400.000 people loosed their jobs and the unemployment rate shot to a total of 3,489 million. But this fall was not only caused by the bad economic conditions which was caused by the crisis but also through the hard winter, so that in many sectors of the economy, that can only operate in good weather, companies have had to fire people.

To stimulate the economy and prevent the further rising of the unemployment numbers the German government introduced a program whereby it will take over a large portion of social security payments from companies if these companies will introduce shorter working hours for employees instead of laying them off. This program is known as “Kurzarbeit” what means short work and should valid for 18 months. During these 18 months the government hopes to defense the crisis and the economic situation will become better so that companies will be able to change from shorter working hours to full working hours and employ more.

But this “glimmer of hope” is now facing a number of critics from experts and also from journalists. “Süddeutsche Zeitung”,” Handelsblatt” and “Die Tageszeitung” are daily german newspapers and are blaming the government now to think to optimistic and say that this program will lead to more problems if the crisis will not end during this 18 months. Also the critics underline that this safety net provided by the government will also catch a high number of jobs who are reduced not due to the crisis but due to the traditional seasonal employment model. Like sectors in which it is usual have fewer workers during the winter, such as construction or touristic market. And also companies which did not plan to layoff somebody, could reduce working hours to let the government take over a part of social security payment. But if the government will stop the payments after 18 months and economy will not became better this measure will led to more unemployment. And also the forecast of the crisis time-span of 18 months is could be wrong because measurements will be seen only with delay and nobody can forecast when the crisis will finish.

Source:
http://www.spiegel.de/international/germany/0,1518,604582,00.html