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Opinions of NUE
The National Union of Employers is providing attitudes and opinions concerning the current issues of the business environment
In recent period following opinions have been produced:
Minimum wage
Dispensing of investment incentives
Reducing limit on CO2 emissions
Court fees increasing
EU Directive on Services
Lower income tax
Enlargement of the scope of powers of the Supreme Audit Office of the Slovak Republic (NKÚ) towards self-governments
Recycling fund
The institute of minimum wage is in the present the systemless measure in the Slovak Republic. The amount of minimum wage (MW) in the current form and the means of its regulation does not take into account real conditions of the economic progress. The MW should be not bound to the whole area of the SR but it should respect regional differences in the income and unemployment areas. Economically unreasonable growth of the MW causes additional job abolishment or makes new job creation more difficult in poorer regions. Increasing of MW does not concern only to1.5 to 2% of employees on the nethermost level according to the work demandingness (as it is generally proclaimed) but it is followed by the pressure on pay rise for all jobs which when maintaining the trend of labour productivity enhancement may result and is resulting in decreased number of jobs. The growth of the MW causes increasing of the social payments and wage costs which may be mostly for smaller companies and sole traders unbearable.
One of the consequences of the unreasonable growth of the MW is the substantial volume of illegal work with its all negatives due to lack of sufficient efficiency of restrictive measures. The NUE shall with the regard of MW rate adjustment within the CESP require the submission of the analysis of impacts on the business sphere, together with referring to the remarks of the NBS (National bank of Slovakia) on the disproportionate growth of wages in the SR in the first quarter of the year 2005.
NUE will also henceforth justify its proposal on cancellation of the institute of minimum wage in its current form and it repeatedly expresses its interest to participate actively in the activities of working groups on solving of minimum wage issues and decreasing of payment burden.
Dispensing of investment incentives
NUE is fundamentally against any dispensing of investment incentives irrespective of if it is referred to local or foreign investors:
- Investment incentives disturb market environment
- Investment incentives generate unfair competitive advantages
- Economic effects of investment incentives are questionable
- Investment incentives turn into bribes for companies
- Long-term effects of investment incentives are questionable
- Investment incentives are not efficient and too costly
Reducing limit on CO2 emissions
NUE has called upon the Ministry of the Environment of the Slovak Republic not to accede to the EC requirement to decrease the quotas assigned for the SR by another 1.5 million tons and that means at the cost that the National Register will not be put into service. In case of ongoing pressure from the part of the EC we request the Ministry of the Environment of the Slovak Republic to file the action against the European Commission.
The initially submitted Slovak National Allocation Plan had already been reduced by 14 per cent despite the fact that Slovakia fulfilled its obligation arising out of the Kyoto Protocol without any problems. Any other illegitimate decreasing would critically injure the Slovak industry.
NUE considers the EC requirement as contrary to the law and illegitimate due to the reason that any ex-post amendments of the approved NAP (National Allocation Plan) are not allowed under the principles of the European legislation, they are inconsistent with the whole philosophy of the European Business Scheme and in additionally they are not in compliance with previous rejecting attitude of the European Commission to any later amendments. The decreasing of already granted quotas to companies would simultaneously mean the serious violation of their property rights. EC may not condition the putting the National Registry of the Emission Quotas into service by decreasing of the granted emission quotas for the Slovak Republic by 1.5 million tons.
Court fees increasing
As the one of the principal reasons for the court fees increase is the fact listed in the draft law that with reference to the present amount of the fees juristic persons are not willing to use alternative ways of solving the legal disputes. The proposal presumes that if the fees are increased, juristic persons will be motivated to solve their disputes in the extra-judicial way.
The fact that amount of the court fees in commercial disputes will increase to 10% of the recovered amount, maximum up to the amount of SKK 1.000.000, the number of motions to the court, in our opinion will decrease but not du to the reason that entrepreneurs will settle their disputes in extra-judicial way but mainly because of the reason that they will not have enough financial funds to pay such high amount of the court fees. It is inconceivable that Slovak judicial ineffectiveness will be solved by the means of court fees increasing with the purpose to decrease the number of motions in commercial disputes. Court fees increasing would indirectly lead to restriction of the entrepreneur’s rights for court protection as well as to restriction of their rights arising out of the constitution.
We take the line that the amount of court fees in commercial disputes is currently high enough (5% of the recovered sum, maximum up to the amount of SKK 600.000). Despite the high amount of court fees the court proceeding, from the filing of a motion to giving a valid and effective ruling, nowadays lasts too long, in many cases even more than 5 years. For example in Bratislava the courts notify the juristic person about the fact that the first hearing in case which was filed at the court in 2004 is supposed to be held in 2008. These above mentioned facts expressly show the evidence of judicial ineffectiveness of the Slovak judicature.
If the court fees were increased it would have to have the real positive impact on the course and duration of the court proceeding to be redeemable why entrepreneurship entities are to pay higher court fess in comparison to the current situation. Therefore we suggest that the state shall guarantee after the payment of increased court fee the maximum length of the court proceeding until the valid and effective decision on the merit. If such guaranteed length of the court proceeding will not be fulfilled the state undertakes to pay the court fee or its part back to the plaintiff.
We suggest paying-back of the court fee in the amount of 50% in case the court proceeding will not come into valid and effective termination within one year from the filing of the motion or in the amount of 100% of the court fee in case the court proceeding will not come into valid and effective termination within two years from the file of the motion.
We are convinced that the implementation of these principles would be the natural motivation for more effective judicial performance the result of which would be dramatic reduction of court proceeding duration as well as increasing of the law enforcement in the Slovak Republic.
NUE voiced its disconcertment over the statement of the representatives of the Confederation of Trade Unions (KOZ) to protest against the adoption of the Directive on services in Brussels. We anticipate that this particular legislative regulation shall eliminate the inequality of chances and status of employers and employees providing services in the EU. The admission into the EU constituted the significant milestone for our country and as far as the further development is concerned we consider as highly important the consistent exercising of equal principles for each member. It also refers to the area of services, as well as to movement of workforce.
NUE expressed its amazement at the addresses of the representatives of the Confederation of Trade Unions (KOZ), demonstrably directed against the interests of employees and citizens of Slovakia. We consider that KOZ protest as antislovak and antieuropean position, but most of all as the demonstration of disrespect towards the citizens of Slovakia whose chances for employment and prosperity would be increased by the adoption of the above mentioned directive.
The NUE as the largest employers´ organization in the Slovak Republic welcomed the statement of the Finance Minister Ivan Miklo¹ on the Slovak Television on 19th October 2005 saying that the adequate income tax rate could be 15 per cent instead of current 19 per cent.
In this context the President of the NUE Mr. Anton Jura said: „ NUE already proposed the tax rate adjustment of income of natural and legal entities at the end of the first half-year of 2004 because we consider the decreasing of tax and payment burden, as well as the enhancement of law enforcement as the priority stimuli for entrepreneurship development and for general quality improvement of business environment in the Slovak Republic. We are aware that the presenting of potencial possibility for decreasing of income tax results from the current, very favourable development of the economic growth in which the implementation of several structural reforms have a stake. The NUE will henceforth support the particular measures of the Government in the field of economy which contribute towards the improvement of conditions for doing business in the Slovak Republic and towards the sustainment of economic growth in the future.“
Enlargement of the scope of powers of the Supreme Audit Office of the Slovak Republic (NKÚ) towards self-governments
NUE welcomed the adoption of the constitutional law which extended the scope of power of the Supreme Audit Office of the Slovak Republic on the entire economic management of self- governments and it supported the adoption of this law in May 2005 when being passed by the Government of the Slovak Republic.
Entrepreneurial sector is by means of municipal taxes and motor vehicle tax an important provider of financial resources for self-governments and therefore it is natural that we take interest in the way how these funds are disposed and how the professional supervision absolutely independent from self-governments is secured which according to our opinion is not.
The Presidium of the National Union of Employers was at its meeting on 8th November 2005 inter alia repeatedly dealt with the situation in the Recycling fund (RF). The ongoing intransparentness by redistributing of the grants, ineffectiveness of the control, limiting of information from the side of the Administrative Board of the RF and serious suspicions of abusing of the financial sources by preferring of the close group of the entrepreneurial subjects is for the NEU henceforth unacceptable. In spite of the fact that the NUE has delegated out of the total number of 17 members of the Administrative Board its 5 representatives the principles of the transparentness and effectiveness of utilizing of the financial sources in the RF which are created by obligatory fees of the large number of the entrepreneurial subjects have failed to be enforced. More than SKK 2 billion has been accumulated in the fund in which the financial funds for support of collection, valuation and processing of commodities designated by the law are concentrated. Each natural and legal person who subscribes to the RF should be entitled to look in full extent into the decision making process of the grants allocation.
NUE points out that despite the fact that the RF administers the large amount of the public financial resources there is a lack of any control over the allocation but mainly control over the utilization of provided funds by receiver of such grants. The current state creates considerable space for ineffectiveness, corruption and clientelism by allocation of grants from the RF.
The Recycling Fund issue was one of the topics at the working meeting of the NUE representatives with the Minister of Economy of the Slovak Republic Mr. Malchárek at the beginning of October.
NUE prepared quite a number of measures for improvement of the RF activity from the amendment to the act up to the organization measures which would secure the transparency of decision making of NUE bodies.
NUE considers the submitting of the proposal for recall of its members from the RF Administrative Board to the Minister of Economy as an utmost solution.
The current situation in the RF only confirms the NUE statements which in long run points out at the RF as a non-justified and systemless element in the entrepreneurial environment which negatively influences the competitive environment quality in the way that it makes enable to provide financial grants only for some of chosen entrepreneurial subjects. All the more critical the NUE judges establishment of the similar Environmental Fund (EF) in the year 2004 the activity of which is connected with the similar problems as the RF has.
NUE will expressly enforce the legislative amendment that would immediately terminate contribution of fees to the RF and EF and would secure effective utilization up to now accumulated sources and would prepare both funds for termination of their functions.
NUE will enforce that the goals for which both funds were established would be secured by conceptual and transparent mechanisms that are in sufficient extent created also by the EU legislation.