The unemployment rate in Slovakia has reached record lows, a development that is undoubtedly positive for job seekers but less favorable for employers grappling with a labor shortage. Compounding the issue is a significant rigidity in the labor market, with many employees opting to remain in their current roles rather than seeking new opportunities. According to a recent analysis by the Financial Policy Institute (IFP), this lack of mobility is detrimental not only to companies but also to workers themselves, as it limits wage growth and career advancement. Employee turnover in Slovakia reached its lowest point in 15 years in 2023. “The labor market experienced its highest turnover during economic booms before the pandemic,” the IFP noted. Historically, low unemployment rates have driven employers to attract talent from competitors while emboldening workers to pursue better opportunities. However, recent crises—including the COVID-19 pandemic, the energy crisis, and soaring inflation—have drastically reduced labor market fluctuations. According to the IFP, turnover rates are now three times lower than during pre-pandemic periods of economic expansion. This reluctance to change jobs is tied to economic uncertainty. During crises, workers are more hesitant to leave stable positions for the unknown, contributing to a stagnation in labor market mobility. Slovakia’s labor market rigidity is particularly stark when compared to other countries. Employee turnover is more than five times lower than in nations like the Netherlands, Finland, or Denmark, which are characterized by highly flexible and dynamic labor markets. Even within Central and Eastern Europe, Slovakia lags behind, with fluctuation rates half as low as those in Poland or Hungary. “The labor markets in newer EU member states, including Slovakia, exhibit significantly lower flexibility compared to their Western European counterparts,” the IFP highlighted. Low labor mobility has broader implications for both workers and employers. Employees often remain in roles where wages stagnate, missing opportunities to negotiate higher salaries or advance their careers. Meanwhile, companies face challenges in filling open positions, which can stifle productivity and growth. “Employers must work harder to attract and retain employees in an environment where the workforce is increasingly immobile,” the analysis stated. “This dynamic underscores the need for policies that encourage greater labor market flexibility and support for individuals willing to transition to new roles.” While Slovakia’s record-low unemployment rate reflects economic progress, the labor market’s rigidity poses challenges. Encouraging greater mobility among workers could benefit both employees, through higher wages and career opportunities, and employers, by addressing labor shortages. In the long term, fostering a more flexible and dynamic labor market will be crucial for sustaining economic growth and competitiveness in Slovakia. Source: Pravda.sk