Unemployment Increasing Despite Season

Despite little smaller GDP decline in the second quarter as well as favorable summer season, registered unemployment in Slovakia continues to grow. In July, it reached 12.1% of labor force, and is expected to grow in the coming months as well. Current unemployment rate increase (4.6 percentage points annually) is the largest ever, and joblessness is now reaching highest levels since 2004. Strained labor market, where supply of labor abundantly exceeds the demand for it, is caused by global economic crisis, which manifests itself particularly in shrunk foreign demand for local exports. Lower production thus requires considerably fewer workers compared to times of economic boom in 2006-7.

In this context, the proposal of trade unions for increasing the statutory minimum wage by 8.1%, when consumer inflation approaches zero, must be regarded as irresponsible. Considerably increasing the minimum wage in times when many companies operate without any profits could endanger thousands more jobs in the economy.