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Dec 04, 2007 16:19 EEST
LJUBLJANA (Slovenia), December 4 (SeeNews) – Demand for foreign labour is expected to rise in Slovenia in coming years due to rapid economic growth and its ageing and dwindling population, economic analysts and company representatives say. But they said this is just a short-term fix for the tiny Alpine nation.
“We registered high economic growth in the Slovenian economy recently and, as a result, demand for employees is rising and in separate fields a greater and greater shortage of labour is appearing,” the country’s Labour Ministry told SeeNews in a statement.
“There is a shortage of employees, mainly in the fields of construction, metallurgy, transport, health care, and of specialists in engineering, electricity and the computer industry,” the ministry said.
Fortunately Slovenia, the wealthiest country in the region per head of population, has little problem attracting foreign workers from central and eastern Europe who are looking for a bigger pay packet. However, these countries are also expected to suffer labour shortages in coming years, due to their own ageing populations and the migration of their workers abroad, and recruitment from them will become difficult.
Analysts say that in the medium and long term Slovenian companies will have to adjust their business model, retrain the local labour force to meet changing conditions and requirements on the market, and perhaps shift to sectors with higher value added or export more.
The country of two million people, which joined the European Union in 2004 and the euro zone on January 1, 2007, registered real economic growth of 6.5% year-on-year in the first half of 2007. In September the government's Institute of Macroeconomic Analysis and Development (UMAR) raised its 2007 economic growth forecast to 5.8% from 4.7% projected in April, compared with 5.7% in the whole of last year
In September the average net monthly salary was 820 euro ($1,199), while the jobless rate fell to 7.2% from 8.8% a year earlier.
“There is one area in which Slovenia stands out. It is certainly ageing very fast, as other countries are, but it is going to have one of the oldest average ages, of about 47.4 years, in the year 2025,” Arup Banerji, sector manager for human development economics in the Europe and Central Asia Region of the World Bank, said.
Slovenia's labour shortage has two dimensions, he told SeeNews in a recent interview. “One is that the overall population is going to shrink in Slovenia, but the other is that the population is going to be increasingly old,” he said, adding that in the next 15 to 20 years there will be more retirees than workers.
Slovenian companies already face problems securing the workers they need.
“Securing the labour force is becoming more and more difficult as there is not sufficient quality on offer on the labour market. It requires a flexible search for potential candidates through different sources and their qualifications and training after that,” Boris Dular, head of the human resource department of local drug maker Krka, told SeeNews.
“The trend of a greater labour shortage will present difficulties, especially for the operations of new investors,” he said. Krka, which employs 3,150, plans to increase its staff by 6.0% in 2008.
Slovenian automobile manufacturer Revoz, part of France's Renault, had difficulties earlier this year in getting the number of employees it needed to launch production of the New Twingo model.
“It is true that we were looking for employees for quite a long time. Now we have three shifts, morning, afternoon and night. At the moment it is not a big problem for us,” Revoz public relations officer Nevenka Basek Zildzovic said.
“It is true that this labour market is quite exhausted, that there are few workers available, depending on the field. The construction and production industries have the biggest problems,” she said.
Revoz found most of its workers in nearby areas. “We have also co-operated with job recruitment agencies which provide labour from the European Union,” Zildzovic said, adding that the majority of the foreign workers were from Bulgaria and Romania.
There are a lot of recruitment agencies in Slovenia as there is demand for employees from abroad, Zildzovic added.
Branka Lemaic, head of projects at local recruiting agency Tehnocomerc, agreed, saying: “There is a trend in Slovenia for a rising number of jobs recruiting agencies due to the underlying shortage of the labour force."
“In Slovenia there is a shortage of labour mainly due to the structural discrepancy, low interest in occupations in excess demand and low mobility of the Slovenian labour force,” Lemaic said, adding that the most intense labour shortages were in the steel, automobile and construction industries.
“On the one hand, the Slovenian labour force is not enough, on the other hand, people simply do not want to do some jobs,” Laura Smrekar, a public relations officer for recruitment agency Adecco, told SeeNews
Slovenian companies attract workers from other neighbouring ex-Yugoslav countries and some EU members. “(Employees) from Poland and the Slovak Republic are the most numerous, but there is no doubt that the number of workers from Bulgaria and Romania will also rise,” Tehnocomerc’s Lemaic said. The two Black Sea countries joined the EU on January 1.
Slovenian employers are most interested in workers from other ex-Yugoslav republics, mainly because there is no language barrier. “Bulgarian workers are also in demand as we understand each other easily,” Lemaic said.
She thinks foreign investors will not have trouble securing the necessary staff as the interest shown by foreigners in jobs in Slovenia is relatively high. Citizens of central and Eastern Europe have been attracted to work in Slovenia due to the higher salaries.
“According to our estimates the employment of foreigners will continue in the long term but it is not a solution,” Lemaic said.
Adecco’s Smrekar agreed, saying, “All forecasts point in the direction that the employment of foreigners will continue and even rise. However, this kind of employment of foreigners can only partly solve the problem with the labour shortage.”
“As a short-term solution [the import of labour force] is fine and many countries have done it,” the World Bank’s Banerji said. "The problem is where do you import the labour force from.”
“One of the biggest challenges, I think, that every country in the region is facing is that neighbouring countries also have labour shortages [...] One of the challenges, therefore, is to what extent Slovenia can politically afford to import labour from further off, from Turkey, North Africa, the Soviet countries,” Banerji said.
Slovenia will have to make sure such immigrants have language skills and cultural acclimatisation in order to be able to contribute fully. “It is a political question that the Slovenian authorities have to solve,” he added.
Banerji said the short-term solution to the emerging labour shortage could be importing the necessary workers, but in the medium run firms will have to adjust their business model and even maybe change the sector in which they operate.
"In the long run it is clear that the country’s development cannot be based on the growth of sectors with lower value added. [...] The economy should be directed to sectors with higher value added," Igor Masten, a professor at the Economy Faculty of the University of Ljubljana, says in support of this position.
Analysts suggest that local labour force is retrained and the rate of employment among above 55-65 year-old people is raised. Another solution is outsourcing part of the production, they say.
“Production should be automated. The problem is that [...] part of the production is difficult to keep at these locations and should be slowly moved to other areas,” France Krizanic, a professor at the Ljubljana Faculty of Law, said, adding that North Africa could be one such location.
The labour shortage will not stop Slovenia’s economic growth but could slow it down and solutions to the problem have, therefore, to be sought now, the World Bank's Banerji said.
“I don’t think that it [labour shortage] is going to be a brake on Slovenian growth in terms of that it is going to stop, but certainly it could slow down growth.” To collect the fruits of this investment five years from now, decisions have to be made right away. If the decisions are postponed, then this sort of slowdown is going to be longer, he added.
($ = 0.68 euro)
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