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Is Employment of Disabled People a corporate social responsibility in Slovakia?

Are you enjoying a good health? This may change in an instant. How will your life look like then? Besides family and friends, employment is one of the lynchpins of your life.

 

In 2013, the Social Insurance Agency of Slovak Republic acknowledged 19,769 new cases of disability pension allocated due to musculoskeletal diseases (accounting for some 25% of all reported illnesses in 2013), malignancies (15.7%) as well as mental illnesses and behavioral disorders (15 3%). While the psychiatric clinics in Slovakia recorded about 80,000 new patients suffering from the overload of work stress last year. The World Health Organization estimates that depression together with cardiovascular diseases will be the world's most frequent diagnoses in 2020.

 

Based on the data of the Social Insurance, it can be argued that people with disabilities make up 8.52% of the economically active population. The standard of living of disability pensioners is in most cases limited to the amount of the disability pension and characterized by a restricted access to stable employment. According to the Statistical Office of the Slovak Republic, the partial-disability pensioners’ average amount of pension was € 193.45 per month (while a subsistence wage in 2013 was € 194.58) in 2013.

 

According to available statistics as of 31 December 2013, and in terms of a relationship with the labor market, the distribution of people with disabilities (PWD) in a productive age was as follows:

 

Chart 1 – Structure of PWD in relation to the Slovak labor market
Source: UPSVAR (2014), ŠÚ SR (2014) and MPSVR (2014)
Thus as many as 70% of PWD remains economically inactive, which means that 7 out of 10 adult disabled people are not involved in the labor market.

 

Whereas, the purpose of the Employment Services Act 5/2004 is to motivate employers to employ PWD by establishing an obligation for any organization with more than 20 employees to employ PWD. Available options of how to fulfil that obligation, calculated on the basis of figures as published by the Central Office of Labor, Social Affairs and Family (2014), are presented in the following table:

 

 

Table 1 – Implementation of the legal obligation to employ persons with disabilities by organizations with more than 20 employees
Source: Calculation of the total labor costs for 2013 (UPSVAR, 2014)

Examples of PWD calculations based on the number of all employees of an organization with more than 20 employees

Obligatory 3.2% share – Number of PWD to be employed by an organization (§63)

Total labor costs (minimum wage, insurance contributions and taxes for the whole year 2013) (§63)

Obligatory contribution to the government for the year 2013 (§65)

Alternative performance – Contract with Sheltered Workshop for the year 2013 (§64)

20

1

5 472

951

845

150

5

27 460

4 755

4 225

300

10

54 720

9 510

8 450

 

In practice, this means that it is financially more advantageous for employers to pay a compulsory levy (which generally represents a 2-month total labor costs of a PWD) rather than paying PWD wages and having further increased expenditures on PWD’s special adaptations of their workplace due to their disabilities. It is also easier to pay the levy instead of having to invest time to the selection of appropriate sheltered workshop and to the paperwork connected with documenting the contract with a sheltered workshop under the so-called “Alternative Performance” for the Office of Labor, Social Affairs and Family (UPSVAR). Besides, it is also time-consuming to find out the accounting conditions under which the alternative performance can be recognized as a legitimate expense in the corporate accounting.

 

Due to the transformation of information systems and statistics in the Central Office for Labor, Social Affairs and Family, the most recent data that can be obtained on request are those on the performance of the obligation to employ POW in 2012. Nearly 12,000 employers with 1.2 million employees in total had an obligation to employ POW, while the 3.2% share of mandatory employment of PWD in these organizations amounted to 38,000 POW in 2012. For example in 2010 (as the last available reliable statistics), some €4.5 million of compulsory contributions were paid to the state budget for non-employing POW (for comparison, it was represented the amount of as much as 12 mil. € back in 2005), while some 650 employers failed to comply by paying the contributions in the total value of  €1.7 million.

 

Obviously, the amount of mandatory contributions paid to the state therefore has fallen by almost half between 2005 and 2010, but the arrears of compulsory contributions rose almost twofold. Uniform statistics of the development of compulsory contributions for non-employing POW is not publicly available in Slovakia, nor is the list of those organizations obliged to pay them. Employers pay these levies to the competent Office of Labor, Social Affairs and Family, and consequently these contributions go directly to the state budget, where they are lost without the possibility of using them in favor of employment of POW.

 

At the end of 2013, there were 7,300 sheltered workshops and workplaces registered in Slovakia with their 20,480 employees with disabilities, which render a variety of services or manufacture different products. According to our finding, employers in Slovakia are interested in entering into contracts with sheltered workshops to receive their goods or services, and the upward trend is indicating that this positive development can be expected in the future. However, this interest should be used wisely, jointly, and ideally on the principle of social solidarity, because the less economically capable sheltered workshops employing POW with severe combined, physical or mental disabilities will not be able to succeed otherwise in the competitive environment of the free market.

At last, we would like to ask whether it would not be better for the state as well as for the firms or the POW themselves, if the sanction approach (coercive means to make employers give job to POW – the payment of compulsory contributions) was replaced by an incentive-based approach. Such approach could, for instance, introduce significant increase in the existing tax and social benefits for employers who employ POW in the open labor market, establish new tax and levy bonuses for businesses introducing innovative intermediate labor market, inclusive employment, internships for students or public procurements with social element (contractors would be obliged to sub-contract sheltered workshop for a part of the contracted performance). Creating a common platform on the basis of cross-sectorial and transnational strategic partnership for the POW-related issues, where entrepreneurship is associated with social responsibility, is now an existential necessity for the future employment of not only POW, but any disadvantaged jobseekers.

 

By PhDr. Elena Kopcová.
WELLNEA s.r.o. (sheltered workshop) / TENENET o.z. (supported employment agency; social and psychological advisory center)
Contact: ena(a)wellnea.sk, ena(a)tenenet.sk