Commentaries

Paradoxes of development on labor market

Even from labor market – with big time lag – now leave some signs of recession. Right on this market they lived the longest time. The message about more than 2 percent growth in number of workers is probably the most positive and most important message about macroeconomic development in first quarter of 2011. It doesn’t mean definite and smooth turnover in development on labor market whatsoever. Information about development of unemployment are contradictory, same as the information about wages and incomes. Labor market is currently full of contradictions. We devote here the attention to two significant contradictions.

Ministry of finance introduced Program of stability for years 2011 – 2014

Ministry of finance published Slovak Program of stability for years 2011 – 2014 [in Slovak], in which it presents program of consolidation of public finance. Main goals of the Program of stability are:

1. Lower the deficit of public administration under the boundary of 3% of GDP in 2013 (Table 1) and stabilize and start to decrease the public debt (Table 2).

2. Fulfill the planned deficit in the amount of 4.9% of GDP in 2011 by realisation of consolidating measures.

3. Lower the deficit of public finance to the level of 3.8% of GDP in 2012.

Health care is a sector with exceptionally high rate of value added

Branches, which expanded in Slovak economy in the past, often had similar disadvantages: their production had low rate of value added, so undoubtful benefit of these branches to economic growth was connected with „turning“ a huge mass of goods. Health care has got other character: it has an unusually high rate of value added and its potential expansion would substantionally contribute towards better economic growth.

VŠZP in years 2007 to 2010: camouflaged life beyond means

We didn’t warn against financial problems of VŠZP only in our newsletter, but also in other media. For my statement in an interview for Plus 7 dní weekly, that VŠZP is “the most probable candidate for bankruptcy” and the merger of VŠZP and SZP I commented that “from a lame and crippled there will be no runner”, I was sued for unauthorized intervention into good reputation. But as the lawyers say, in order to be the good reputation damaged, first it has to be good.

Labor market is starting to consolidate

It will help health insurance companies

Signs of the end of recession and start of recovery of economy are present even from the beginning of 2010. But first positive signals from labor market occured only in the end of the year. Substantial part of incomes of health care system is dependent on the development of labor market. So we could expect better times for health insurance companies. But the brake are payments of state.

Bill for the state health care: -382 mil. €

The government of Robert Fico via its ministers of health Ivan Valentovič and Richard Raši established the trend of state health care. The result is financial loss in the amount of 382 mil. €, which should pay all citizens of Slovak republic, either in higher taxes or in higher deductions.

HPI on Program manifesto of the Government

Although the new government has in its program manifesto agreed with the health care reform of Rudolf Zajac (Minister of Health in 2002 – 2006), but it was not able to overstep the fear from private ownership in health care.

Assessment of development on labor market in 2009 and the outlook for 2010

The development on labor market reacted with delay, but anyway very appreciably on the progress of economic recession. Similarly, as the parameters of labor market worsened with delay (after development of production), they will probably improve the same way with delay. This fact has negative impact on incomes of social security funds, including health insurance companies.

Before next macroeconomic stabilisation (pt. I)

Macroeconomic stabilisation becomes again a frequent professional and also political theme. That’s why we submit a series of analytical articles oriented on stabilisation of economy and consolidation of public finance. Professional and political elites in SR should have rich experience with stabilisation programs. But each of previous stabilisation operations ran along different circumstances.