2023-04-27 12:55:59
The pandemic, the war conflict in Ukraine and the energy crisis brought new challenges to our economy. On the occasion of May 1 – Labor Day, Eva Sadovská, analyst at WOOD & Company, prepared an overview of the development of unemployment, salary increases, in which industries and regions we are talking about a record high number of employees, but also whether the home office is sustainable in the long term . The analysis is based on the most up-to-date data from the Central Office of Labour, Social Affairs and Family, the Statistical Office of the Slovak Republic and Eurostat.
Unemployment at a three-year low
The rate of registered unemployment fell to 5.6 percent in March 2023, which corresponds to 156.9 thousand unemployed people able to start work immediately, says Eva Sadovská. Unemployment is thus approaching the levels that were registered just before the outbreak of the pandemic.
Data from the Center for Labour, Social Affairs and Family (ÚPSVaR) showed that in January and February 2020, the rate of registered unemployment reached the level of around 5 percent (i.e. approx. 138,000 job applicants). However, the corona crisis has lengthened the ranks of the unemployed at employment offices. They were the longest in April 2021, with an unemployment rate of 8 percent (219.3 thousand people without work). After the relaxation of strict measures and lockdowns, there was an increase in the number of job offers and rehiring of people.
The number of employees increased mainly in the Bratislava Region
“In Slovakia in 2022, the average number of employees was reported at the level of 2,394.9 thousand. However, it was not enough for the values before the pandemic (in 2019 at the level of 2,416.1 thousand). Despite this, some industries and regions not only exceeded the levels before the corona crisis last year, but even reached record high numbers of employees. These are primarily sectors such as healthcare and social assistance, professional, scientific and technical activities, education, information technology and communications (ICT), but also transport and storage. In each of these branches, 10,000 to 17,000 employees have been added over the past five years. On the contrary, the largest decrease in the last five years was recorded by industry, with a decrease in the number of employees by almost 31 thousand to less than 513 thousand,” the analyst explains.
From the current data of the Statistical Office of the Slovak Republic, it emerged that among the regions, the Bratislava region dominates in terms of employment. The number of employees there increased by almost 33 thousand to over 513 thousand from 2017 to 2022. On the contrary, the Košice region recorded the most significant decrease with a drop in the number of employees by more than 13,000 to 288,000.
Record-high inflation causes a real drop in wages
Last year, the average wage in the economy rose to 1,304 euros. On the other hand, we witnessed a sharp rise in prices. “Inflation reached an average level of 12.8 percent, and at the turn of 2022 and 2023 it even stayed above 15 percent for four months. In 2022, not even the “fairly decent” nominal growth of salaries at the level of 7.7 percent could compete with the record high inflation. Salaries of male and female Slovaks thus recorded a real decrease of -4.5 percent. This happened for the first time in the last 10 years, the last time salaries in the Slovak economy actually fell in 2012, by -1.2 percent,” explains Eva Sadovská.
Home office did not shake the labor market
The home office allowed companies to limit mobility and at the same time not interrupt operations during the pandemic. However, Eurostat data for 2021 do not confirm that the pandemic could significantly increase the share of people working from home. The number of employees who exchanged their office for a living room was 15 percent (with 8.4 percent occasionally and 6.6 percent regularly). Just before the pandemic, the proportion of people working from home was reported at 9.5 percent.
“Industries such as information and communication, administrative services or financial and insurance activities have the greatest potential for remote work. However, these areas only employ more than a tenth of all employed people,” said the analyst. As he further reminds, home office brings more problems than benefits in the long term, therefore a hybrid work model is becoming the “normal” – several days a week the employee does his work at the workplace and the remaining days he works from home, for example in a ratio of 3:2.
- Psychologist’s opinion on long-term home office:
“With long-term work from home, our mental health is threatened by increased anxiety and depression. In the beginning, it can look like loneliness or a feeling of separation – “I have no one to turn to with a problem”. With a home office, the clear dividing line between home and work environment disappears – “I’ll still send this email and wash the dishes”. Ultimately, this can suddenly increase the psychological and emotional burden”, says psychologist Miloš Poštek. “Long-term work from home can also lead to the so-called “atomization” of team members, loss of synergies, support and sense of belonging, but also lack of information. The personal and professional growth of an employee also hits its limits in a home office, which is better realized in a team”, added Poštek.
What awaits the Slovak labor market in the near future?
According to analyst Wood & Company, we expect that this year the number of unemployed people registered at the employment offices will decrease slightly. The unemployment rate could thus be on average at the same level as last year, i.e. around 6 percent. The estimate of inflation for this year is 10 percent, while nominal salary growth could also be around a similar level. In practice, this means that Slovaks could, on average, afford a comparable amount of goods and services from their salaries as last year.
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