BRATISLAVA: Slovakian unemployment jumped to an 8-year high in December as economic activity slowed, with analysts also pointing to changes in the country's labour code that local businesses have criticised as damaging to jobs.
The euro zone country saw unemployment rising faster than expected to 14.44 percent in the last month of the last year, its highest level since May 2004, following 13.94 percent in November, the labour office data showed on Monday.
The leftist government, in power since April, changed the labour code in October to boost rights of contractors, workers and unions and make it harder for employers to sack an employee, with the measures effective from this year.
Businesses repeatedly warned that these adjustments, combined with approved hike in corporate income tax to 23 percent from previous 19 percent, will harm job growth in the already stressed situation.
Analysts said the prime factor behind higher jobless rate was situation in the euro zone, now visible in worsening performance of Slovak industrial production, which is currently the export-reliant economy's sole driver.
"The other significant factor is likely the amended labour code, thanks to which companies shifted lay-offs, planned for 2013, into the end of 2012 to avoid higher lay-off costs," Martin Balaz, analyst at Slovenska Sporitelna said.
Analysts said unemployment could slightly rise in the coming months and hover around current levels throughout year.
"The labour market fundamentals remain weak. Weak economic growth, or stagnation eventually, rising taxes and social compensations with more rigid labour code are hampering creation of new jobs and wage rise," said Andrej Arady, analyst at VUB bank.
According to the Eurostat data had Slovakia the fifth highest jobless rate in the European Union in November.
The central bank expected the jobless rate would peak at 14.6 percent in the second and third quarter of this year and ease to 13.9 percent in the last quarter of 2014.
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