Coalition SNS seeks mandatory 13th salary (The Slovak Spectator)

The Slovak Spectator citoval 8.5.2017 vyjadrenie Radovana Ďuranu ohľadom negatívnych dopadov povinného 13. platu v Španielsku vo vzťahu k aktuálnej diskusií na Slovensku

Coalition SNS seeks mandatory 13th salary (The Slovak Spectator)

PART of the ruling coalition, the Slovak National Party (SNS) wants to oblige companies in Slovakia to pay out a 13th salary to their employees. They see this as a way of enabling employees to enjoy the country's sound economic growth, but economic analysts perceive the idea as a populist one.

The business sector insists that stimulus such as the 13th salary should remain voluntary or it would lose its motivating effect. They also believe that although more than 70 percent of companies in Slovakia pay out some sort of a 13th salary, making this obligatory would result in speculation and hinder the growth of wages.

SNS chair Andrej Danko unveiled the idea at the party's congress in Sliač on April 8 saying that he wants to see Slovak citizens approaching their western counterparts in terms of salaries and benefits, as he does not see any meaning in the country's membership of the EU without this.

"Today SNS adopted a vision of a strong social-market economy where both employees and employers would be satisfied," said Danko as cited by the TASR newswire. "The constitution declares that we have a social-market economy, and SNS is speaking about strengthening the social pillar."

Danko proposed that the 13th salary, i.e., usually the equivalent of one month's salary and paid in December around Christmas and also referred to as a Christmas bonus, could be exempt from income and payroll taxes. He would like to see the compulsory 13th salary for all employees working for a company for at least one year introduced during the current electoral term.

"I'm fully aware of the reaction of entrepreneurs," said Danko. "That's why this motivational part is there, even featuring the possibility of absolute tax exemption."

Prime Minister Robert Fico has described the idea of the 13th salary as "inspiring" while the third coalition party, MostHíd would instead prefer a systemic solution in the form of a reduction in the compulsory sick leave insurance, for example.

13th salary yes, but not compulsory The Business Alliance of Slovakia (PAS) conducted a survey among businesses to find out whether they pay out the 13th salary, and how they perceive the SNS' proposal.

See 13th on pg 9

13TH: Firms want flexible benefits

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The survey showed that out of 177 participating companies, as much as 70.6 percent pay a complete (33.9 percent) or partial (36.7 percent) 13th salary.

"The motivation for payment of the 13th salary is especially good economic results of companies," said Peter Kremský, executive director of PAS, adding that more than one third of companies pay the 13th salaries only when they perform well. "Another large group of companies rewards employees with the aim to motivate them to work better; eventually it seeks to draw new workers."

The survey showed that if the government introduced the compulsory 13th salary exempt of income and payroll taxes, more than one third of companies would halt ordinary increases in wages and would transfer them into annual benefits. Some companies would even reduce wages in order to accumulate money for the compulsory 13th salaries.

In case the 13th salary would be exempt from income and payroll taxes, but its payment would be not obligatory, almost 40 percent of companies would pay it at the current amount. Thus, employees would get more as they would also receive money normally paid to the state and insurance companies in the form of income and payroll taxes.

"Another, very similar group of employers would speculate," said Kremský, adding that they would try to maximise the portion of monthly salaries going into the 13th salary to save on income and payroll taxes. "But this can be easily prevented by capping the 13th salary at the average monthly wage."

More than half of the surveyed companies opined that making the 13th salary compulsory would harm the Slovak economy and see it as a populist proposal.

"They especially complain about the loss of flexibility when rewarding their employees - they would no longer be able to appraise more quality work or exceptional results when all employees would obligatorily receive the 13th salary," said Kremský.

Compulsory in Spain

When introducing the idea of the compulsory 13th salary, Danko cited Spain as a country where it is compulsory.

Radovan Ďurana, an economic analyst with the think tank INESS responded that in Spain this measure deepened the crisis in the labour market and that this crisis has persisted until today.

"The wage package cannot be blown up by a decision made by the government or parliament," said Ďurana as cited by the Sme daily. "The fact that some countries use it does not mean that it is a wanted measure." In several countries, the payment of the 13th or the 14th salaries is not mandatory in general, but based on collective agreements with local trade unions.

"Usually, it is part of collective bargaining between the social partners," Markus Halt, the spokesperson of the SlovakGerman Chamber of Commerce and Industry (SNOPK), told The Slovak Spectator.

The chamber perceives the Danko's proposal as a financial burden for the Slovak economy when the chamber in general does not support any state intervention in wage bargaining.

Jana Liptáková
The Slovak Spectator, 8.5.2017

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