In Slovakia employers’ Q1’19 hiring sentiments less upbeat

Slovak employers are less upbeat on the hiring front in Q1’19 as the share of those who plan to hire new staff in the next three months decreased by 2pps y/y and by 1pp q/q to 12%, the results of a survey by HR consultancy company Manpower among 750 Slovak employers showed. The share of respondents who plan to shed staff was 4%, down by 1pp y/y, but flat q/q. The unadjusted net employment outlook was hence 8%, the same as a year ago but down by 1pp q/q. After seasonal adjustment, the net employment outlook for Q1 is 10%, flat y/y but down by 1pp q/q.

Zuzana Rumiz, managing director of ManpowerGroup Slovak Republic, commented that the unemployment rate has been declining, which was very good for people looking for a job, but that companies increasingly complain that they cannot find enough suitable candidates. She added that companies seek not only specialized skills in IT, engineering or trading, but also non-qualified workers in manufacturing and logistics. She also noted that employers in 21% of large companies plan to increase the number of vacancies, especially in the automotive sector and logistics.

The seasonally adjusted net employment outlooks are consistently positive across companies of different sizes. There is a positive association between company size and seasonally adjusted net employment outlooks, with the latter rising from 5% for micro-size companies to 21% for large-size companies. Staff numbers are projected to increase in eight out of 10 sectors in Q1’19 with the highest seasonally adjusted net employment outlooks found in manufacturing (+21%, same as for Q4’18), finance, insurance, real estate and business services (+14%, same q/q), transport, storage and communication (+11%, down from +27% for Q4’18), wholesale and retail trade (+10%, +16% for Q4’18). Jobs are to be shed in agriculture and in restaurants and hotels.

The unemployment rate fell by 1.6pps y/y to record-low 6.4% in Q3, according to the latest labor force survey. Nominal wage growth marginally decelerated to 6.1% y/y in Q3 from 6.4% y/y in Q2, suggesting persisting upward wage pressures on the back of shrinking labor market and increasing shortages of qualified labor force. If real wages continue growing at much stronger rates than labor productivity, especially given administrative measures such as the minimum wage hike, the increase in wages in the public sector, the introduction of weekend work bonuses and of 13th and 14th salaries, we may expect the companies’ and overall economy’s competitiveness to deteriorate. Moreover, the increasing labor costs may make some companies delay the planned investments or expansion plans, thus hurting their long-term growth potential, in our view.

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