Slovak govt, unions agree to cap wage hike demands

BRATISLAVA, Feb 6 (Reuters) - The Slovak government and the umbrella trade unions agreed on Friday to limit wage hike requests as part of attempts to save jobs threatened by the global financial crisis, Prime Minister Robert Fico said. Fico said trade unions had pledged they would only negotiate for salary increases that do not exceed productivity growth.

"At the time of economic crisis, at the time of pressure on jobs, it is not possible to create pressure with irrational wage increases," Fico told journalists after meeting the Confederation of Trade Unions.

"The decisive criterion will be labour productivity. This is a significant agreement," Fico said.

Slovakia, a euro zone member since January, has been spared from a direct impact of the financial turmoil on its banks because of their limited exposure to toxic assets.

But the $95 billion economy, relying heavily on exports to the rest of the European Union, will be hurt by slowing demand for its goods, mainly cars and TV sets.

Hundreds of people have been laid off in the past few months as companies try to cope with fading demand, and the government estimated in January that the global crisis was threatening some 15,000 jobs in Slovakia.

Leftist leader Fico is trying to reshuffle budget spending to free money for a 332 million euro economic stimulus package, but he does not want any cuts in expenditure allocated for welfare programmes.

Preserving employment is a top priority for Fico's government when it prepares ant-crisis steps.

The cabinet has already drafted measures such as temporary cuts in employment taxes for selected employers who would otherwise axe jobs, or subsidies for new jobs for businesses that want to expand operations as part of the stimulus package.

Slovak wages rose by real 3.5 percent in the third quarter of 2008, the latest available quarterly data. Slovakia's unemployment has risen gradually to 8.39 percent in December, from record low of 7.36 percent in August. (Reporting by Peter Laca)