|
Slovak
prosperity in the shadow of football beatings
In recent
years the Slovak economy has been characterised by double-figure economic growth, 30% state debt as a proportion of GDP,
a budget deficit barely exceeding 2%, a halved unemployment rate and euro
introduction in 2009. Since the millennium Slovakia’s name has become almost
synonymous with “economic miracle”.
The
analysis below, in addition to presenting the bumpy road to these impressive
results, also draws attention to some little known facts that question the
genuineness of Slovakia’s
much envied development.
Long time coming
Although
the government led by Robert Fico is now reaping the benefits of the economic
successes, economists agree that these are in fact due to the reform programme
implemented the right-wing cabinet of Mikulás Dzurinda, which governed between
1998 and 2006.
The
Dzurinda government made considerable efforts to consolidate the budget,
stimulate an influx of foreign capital and make the labour market more dynamic.
Society shook up
The reform
project lacked both political and social consensus and also affected the social
welfare systems.
Of the
changes, the introduction of the 19% flat tax system in 2004, which made tax
evasion more difficult and tax collection easier attracted the most attention.
The other
major wave of reforms concerned welfare and health, in which the government
slashed social benefits by 30-50%, and cut disability support pensions and
family allowance payments. The social cuts primarily afflicted Roma families
with many children, but the government suppressed their protests in an
unprecedented way; by bringing in the police and the army.
In addition
to slashing the state’s social spending, another element of the reforms was
creating workplaces, as a result of which from 2004-07 the number of people
employed rose by 270,000. Almost 100,000 people left the country to work
abroad, however.
At this
time private insurers began to enter the healthcare system. Hospitals and
surgeries were closed down, some hospital services were privatised and a
visiting fee was introduced, although it has since been abolished.
The untouchables
The above demonstrates
that the Dzurinda cabinet including the Hungarian Coalition Party (MKP) took no
notice of “sacred cows” in connection with the reforms, i.e. the governing
majority managed to implement major changes, even in areas considered
untouchable.
Analyses of
Slovakia
have a tendency to only emphasise the “fruits” of the success, and to forget
about the downsides of the reforms lying behind the buoyant macroeconomic
figures.
Reality check
There are
five main points of criticism:
1. Slovakia’s
impressive growth figures are partly due to the fact that the economy had to
overcome a serious disadvantage. Eight to nine years ago the country faced
similar severe economic difficulties (the spectre of state bankruptcy and
collapse of the national currency) to those experienced by Hungary in
recent weeks.
2. As a
result of the tax reforms and the scaling back of the social-welfare network,
within a few years budget expenditure fell by 10% to constitute just 37% of the
Slovak GDP last year (in Hungary it currently represents half of GDP).
3. The
changes have deepened Slovakia’s
economic divide. Bratislava
and the south and western part of the country have low unemployment, good
infrastructure and attract foreign investors. The central and eastern areas,
however, are still lagging behind economically.
4. The Roma
who make up 7-8% of society and those living at a subsistence level have not
seen any of the benefits of the economic growth. The extremely low quality of
life of these social groups has worsened since the introduction of the reforms.
5. And
finally, Slovakia’s
economic growth stems from one main source: car manufacturing.
Down the road
There could
easily be a big price to pay for the country putting all its eggs in one
basket, as wages in Slovakia
increase and infrastructure in countries further east improves, raising the
question as to what engine will drive the economy in the long-term.
The Fico
cabinet formed in 2006 – despite rejection of the reforms and constant
references to “the social state” – but has not carried out serious reversals in
the economic sphere, beyond a few measures carried out for the sake of
appearances.
Poison in the mix
Slovakia’s situation is unique. Its
pre-crisis soaring economy is coupled with the social and national demagogy of
the Fico government’s domestic and foreign policy. anti-Hungarianism is part of
this today.
The
governing parties (in particular Ján Slota’s National Party) and certain
individual politicians regularly insult Hungarian politicians and society.
The events
in Dunaszerdahely the weekend before last – when Slovak police officers
brutally assaulted supporters of the football team from the majority ethnic
Hungarian town, including Hungarian citizens – pointed clearly to growing
Slovak nationalism on a state level.
Fico has
two more years to decide on with whom and what manner of political (in
particular economic policy) response will he answer the question “where does Slovakia go
from here?” 
 Add as favourites (121) | Views: 1826
Only registered users can write comments.
Please login or register. Powered by AkoComment Tweaked Special Edition v.1.4.6
AkoComment © Copyright 2004 by Arthur Konze - www.mamboportal.com
All right reserved |
