AZZZ: Gov't Fails to Cut its Spending Adequately

Bratislava, 9 September (TASR) – The government continues to insufficiently reduce public spending, which threatens the effectiveness of fiscal consolidation and unnecessarily burdens entrepreneurs and workers, Miriam Filova, the spokesperson for the Federation of Employers' Associations and Unions (AZZZ), stated in response to the third consolidation package presented on Tuesday by Finance Minister Ladislav Kamenicky (Smer-SD). „According to economic theory, successful and sustainable consolidation should consist of approximately 70-percent savings on the expenditure side and only 30 percent on the revenue side. However, the government has failed to maintain this balance and missed the opportunity to eliminate populist social measures, such as the 13th pensions or free school lunches. These are financially unsustainable in the long term, as they represent annual spending in the billions, growing faster than the economy," said AZZZ President Rastislav Machunka. Tightening conditions for sole traders – such as cutting down their levy exemptions and increasing minimum levies – runs counter to the principle of supporting small and medium-sized enterprises. Instead of motivating and assisting new entrepreneurs during a period when their costs are highest and revenues are still gradually growing, the state is increasing their administrative and financial burdens. If Slovakia wants to support entrepreneurship, the creation of wealth, and job creation, people should be encouraged in the initial months of starting a business, not discouraged. This period is the most challenging, and if the state makes the conditions even stricter, many will not even attempt to start a business. Similarly, the extension of the period during which employers must cover sick pay from 10 to 14 days will negatively affect companies. Sick leave is unpredictable, meaning firms will have to create larger reserves for unplanned expenses. At the same time, both employees and employers pay health insurance precisely to cover such situations, making it illogical for part of this burden to be shifted back onto employers. mf