Current developments in Slovakia

In March Slovakia experienced an early parliamentary election after the right-wing coalition failed to function after just 16 months in power. The outgoing coalition was headed by Prime Minister Iveta Radičova, who took office in July 2010. Robert Fico's Social-Democratic party, Smer [Direction], won a massive 45% of the vote, taking 83 seats in the 150-member assembly.

Robert FicoRobert FicoThe defeat of the outgoing government can be explained with its attempt to introduce severe austerity measures. At the very top of the government agenda were broad austerity measures. It started with lifting taxes on consumption – VAT went up from 19 to 20 percent. Easing already limited restrictions on the regulation of prices of gas, electricity and water for households has caused a price-hike of these commodities by 10.5 percent. Foodstuffs went up by 5.5 percent. Transport over 10 percent. Overall inflation in 2011 reached 4.7 percent.

Unemployment in 2011 stayed as high as 13.5 %. Employment in the public sector in the same year was hit by a 4.2 percent job cut, while the remaining public employees had to take a nominal wage cut averaging 10 percent.

In spite of this austerity, a veritable onslaught on the purses of most Slovakian men and women, the economy still managed a 3.3 percent growth rate – one of the highest in the EU – while real wages fell by 1.7 percent.

One of the main pillars of the National Reform Programme, as the right-wing coalition called its austerity measures, was to attack the Labour Code. With the revised Labour Code in place, the employers can dismiss a worker without giving a formal reason, and they can order an employee to work overtime up to 400 hours in one year (which comes to 2.5 months of regular 8-hour working days on top). At the same time they lowered the nominal value of overtime from 1.5 to 1.25 of the normal hourly rate.

Trade-union busting has found its firm place in the new labour law. Now, unions will be required to prove they have at least 30 percent membership at a workplace in order to be recognized by the employer.

Doctors’ strike

In 2011 Slovakia experienced the most serious trade union action in its post “Velvet Revolution” history. It was provoked by an unprecedented attack of the right-wing coalition on public healthcare, which is guaranteed by the constitution as a free service for all.

One of the most harmful acts of the government was the elimination of over 3000 hospital beds (about 10 percent of the total) as well as closing down tens of policlinics and in many cases entire hospitals. Mostly affected were small towns and villages, which lost the access to local healthcare and where local inhabitants are now forced to travel 50 and more kilometres to visit the nearest doctor.

However, all of this was only an overture to the main task – to steer the entire national public healthcare sector towards privatization. A new law was passed enabling the transformation of all hospitals into joint-stock companies. Since nearly all hospitals are surviving on impossibly low budgets and most of them are in the red at year’s end, that would surely mean either a cheap sell-off of assets or outright foreclosures. The majority of hospital doctors quickly realized what a treacherous plan to dismantle public healthcare had been laid down and they took it upon themselves to try to stop it and reverse the law, whatever the cost may be.

Although the machinery of executive and legislative bodies was set in motion against free public healthcare, the doctors launched a campaign against the government’s plans. Organized in a countrywide trade-union (LOZ), the doctors were set for a tough fight. Because the doctors’ right to strike is limited by law, they decided on a risky strategy.

Almost half of the all doctors caring for hospitalized patients all over Slovakia decided to resign in protest against the privatization of public healthcare, unsustainable work conditions and the low pay of all hospital staff. They simply gave in their notice.

The final showdown was set for December 1, 2011 when they planned not to show up at their workplaces. A sense of panic gripped the government day by day as the deadline was approaching. The government had been trying to break the doctors’ resolve by throwing dirt at them, blackmailing them, by pleading and giving new promises several times a day.

The doctors refused to settle with the promises of the politicians and would not withdraw their notices unless the fulfilment of their demands was guaranteed by law. Even with a guarantee of a pay rise and better work conditions, but without repealing the law preparing public healthcare for privatization, they were staunchly refusing to back off. The threat of an unconstitutional situation, where the state would not been able to guarantee even urgent emergency healthcare was coming ever closer.

Two days before the deadline the government responded by declaring a “state of emergency”, and thereby forcing the doctors to stay at the hospitals. After an unprecedented three days of a state of emergency and continual pressure, the prime minister signed a binding agreement with the trade-union representatives which guaranteed all their four demands:

- A halt to the transformation of all hospitals into joint stock companies (stop to the privatization of public healthcare)

- Strictly maintaining the Labour code in the workplace (an end to unbearable overtime and overworking)

- An increase of the budgets for public hospitals (an end to mounting debts produced by literally every hospital)

- And finally, a pay rise for all hospital doctors

It would be hard to imagine a clearer victory! After almost a year-long campaign and patient intensive work among the doctors and other health workers, they managed to defeat a reform which, called by its real name, amounts to nothing short of treachery against the people.

Furthermore, the catastrophic public healthcare policies of the right-wing parties were without a doubt one of the reasons for their heavy electoral defeat in the early parliamentary elections of March 2012.

The fall of the right-wing coalition government

The government of Prime Minister Iveta Radičova was formed after the July 2010 national elections. It was composed of a broad coalition of four right-wing parties, after the winner of the elections failed to form a one-party majority.

The real winner of the elections was a social democratic party called Smer, which had governed during the previous term (2006-2010). Interestingly enough, this same party increased its support after four years of heading the government (2006: 29%, 2010: 34.8%).

It could be said that the strongest thread holding the new right-wing coalition together had been keeping social democratic Smer out of power for the following term. However, after only 16 months in office, Radičova's austerity coalition government collapsed. The government hit the rocks when the vote on the European bailout fund for Greece was held in October 2011.

A Gorilla case

After the collapse of the right-wing government and their disastrous handling of the doctors’ strike, the final and fatal stroke, which literally broke the neck of the traditionally strongest right-wing party and the leader of the coalition, was a corruption scandal.

An investigative journalist and writer Mr. Nicholson published a seven year old secret document from the archives of the state secret services. It contained a multipage transcript of recorded conversations of high-ranking politicians, Members of Parliament and even the Minister of Economy. They had all been meeting with one single person – one of the wealthiest and most influential businessmen in Slovakia. He had literally been giving orders to his boys in parliament and the government about which public enterprises to privatize, whom to sell them to and for how much. For their good services the gentlemen were generously rewarded with millions of Euros while the state lost billions.

When the document started circulating among government members, it stunned and paralyzed everyone who read it with fear of the consequences it would have if the people would come to know about it. For about three years the document was well known amongst the political elites, including the General Prosecutor and the Ministers of Justice. But they did nothing.

When the document was made public it sent shockwaves into every corner of the country. There wasn't a person who was not genuinely outraged by the shameless theft of public wealth. Although far from being a revolution, it seriously altered the consciousness of the people and decided the outcome of the early parliamentary elections of March 2012.

Early elections of March 2012

The right wing suffered a catastrophic defeat. The party most seriously stained by the corruption scandal was SDKU (Christian Democratic Union Party), and its leader Mikuláš Dzurinda – twice prime minister and the uncontested leader of the right for 18 years – only narrowly managed to get his party over the threshold to enter the parliament. The other right-wing parties did not fare much better.

On the left, Smer – the Social Democracy – gained a historical victory. Robert Fico, the leader of Smer SD, not only won a landslide victory, but actually gained an outright parliamentary majority. It is the first time in the recent history of the Slovak Republic that a single party has been able to form a government.

There are now many expectations in this Social Democratic government. Smer has reached a historical high. Now it must either deliver on its promises or the last remnants of any illusions about post-revolutionary politics will be gone. Smer is under pressure not to continue with the same brutal austerity policies as its predecessor.

Weeks after Robert Fico became head of the government, he introduced his consolidation package by saying: "Our policy is oriented towards solidarity of the rich with the poorer ones. Here are the main points of his programme for balancing the budget deficit and getting it below the magical 3% before the end of 2013:

- Cancellation of the 19 percent flat tax

- Introduction of a mild progressive taxation of 25 percent for about 10% of the top earners (with an income above 2750 Euros per month). The rest pays 19% as before.

- Raising corporate taxes to 23 percent (from 19%)

- Bank tax - extra tax on the last year’s record breaking profits of banks (about 7% on their net profits)

- Extending taxable bank assets including their portfolio of domestic savings

- Extra 4.2 percent tax on all regulated corporations for 2012, 2013 (all infrastructure corp., energy producers and distributors)

- Raising of cap for national insurance costs (from 3 to 5 times of an average income, after that amount it doesn't rise)

- Tax on above standard properties

- Tax on dividends (somewhere around 10-20 percent)

- Tax on luxury cars

- Raising of minimal national insurance contributions for the self-employed (it was too low to afford a living pension when retired)

- Prohibiting casual contract work (except for students and retirees)

- Changing the ratio of contributions to private pension funds and redirecting them to a traditional state pension scheme.

Fico also pledged not to carry out privatizations and promised to push for investments to stimulate growth. It all sounds much better than the gloom of the preceding policies of Radičova's government. Certainly, many people gave a sigh of relief to see Fico replacing Radičova and genuinely believe that he is serious about his talk of solidarity and putting the bulk of the weight of the crisis on the rich, who can better afford it.

However, given the overall crisis of capitalism affecting the whole of Europe and the austerity measures being demanded everywhere, with immense pressure being brought to bear on all governments – whether of the Social Democratic type or the right-wing Conservative version – how Fico is going to keep to his promises is another matter.

On March 11, the Economist commented on the tasks Fico faces. Under the title “Slovakia's election – Slovakia turns left” it explained that: “Mr Fico exuded caution in his victory speech. He reiterated several times that he was open to partnership with other parties. [Note: in spite of getting an outright majority!] He pledged a pro-European outlook, and stressed the need to bring together political opposition, trade unions, businesses and civil-society groups to discuss planned reforms…”

The reporter went on to explain that: “Mr Fico’s number two, Robert Kaliňák, told me that Smer knows tough times and unpopular decisions lie ahead. He said the government would be ‘candid’. To squeeze the budget deficit below 3% of GDP by 2013, as the EU's new fiscal compact demands, the government will have to find savings worth €1.85 billion…”

And with the coded language often used by The Economist the article ended: “Slovakia's new prime minister will, one hopes, act with the great responsibility that comes with great power.” Great responsibility to whom, we may ask. Clearly it will be to the European Central Bank, the EU officials and the IMF, the same troika that is putting such unbearable pressure on the Greek workers.

The Slovak workers and youth are about to get a lesson in “reformism without reforms”. Historical experience speaks volumes, and shows that it is much more likely that as time passes and the economic crisis gets ever deeper, social democracy eventually resorts to siding with the dictates of capital rather than going against it. So far we have not heard Fico speak of breaking with capitalism!

(June 14, 2012)