Guidance

Overseas Business Risk - Slovakia

Updated 7 June 2023

Information on key security and political risks that UK businesses may face when operating in Slovakia.

1. Political and economic situation

1.1 Political overview

Following the dissolution of Czechoslovakia, Slovakia became an independent state in 1993, joining the EU in 2004 and Eurozone in 2009. Slovakia is a parliamentary democracy. The government acts as the central body of executive power and the unicameral, 150-member National Council (Parliament), elected by universal adult suffrage for a four-year term, acts as the sole body of legislative power.

In 2019, Slovaks elected their first female President Zuzana Čaputová. A relative newcomer to politics, Čaputová made her name as a lawyer and civic activist. For 10 years she was the face of a campaign against a waste site in the city of Pezinok near capital Bratislava. In 2016 she received the Goldman Environmental Prize for her involvement in the case, which ended in the protestors’ favour. She replaced Andrej Kiska in the office who has formed a new centrist party Za ľudí but withdrew from politics after last election due to health reasons.

The President, who is the also commander in chief of the Slovak armed forces, attended the NATO summit in London in 2019, COP26 in Glasgow in 2021, when she met the Prince of Wales, now The King. She attended the funeral of Her late Majesty The Queen in 2022 and coronation of The King in 2023. She has shown particular leadership on judicial reform, fighting corruption, gender equality and on climate action – prompting a more forward-leaning Slovak position on emissions reductions. She led by example on mask-wearing from the very beginning of the pandemic, and has intervened several times with the Prime Minister to encourage a more considered public communication approach.

The Prime Minister is designated by the constitution as the Head of the Government. The Prime Minister is usually the leader of the strongest party. The Prime Minister’s executive power is shared with the President who is the Head of State and whose role is largely ceremonial but retains a legislative veto in certain circumstances. The President is directly elected for a five-year term, restricted to two consecutive terms of office.

A technocratic government currently leads Slovakia after a series of cabinet resignations in the last government. The 4-way coalition which formed the government after the last election in 2020 and which was originally led by OL’aNO leader, Igor Matovič, came under pressure in 2021 after a number of disagreements within the coalition over the management of the COVID-19 pandemic. Then PM Matovič stepped down and swapped places with his Finance Minister Heger. In September 2022 another coalition crisis escalated and one of the partners, SaS, left the coalition.

After months of struggle for support in Parliament, the minority government lost a no-confidence vote in December. PM Heger and his cabinet remained in power in a caretaker mode with limited powers for five more months with early elections set for 30 September. However, after the resignation of several ministers PM Heger eventually resigned too and in mid-May the President appointed Slovakia’s first caretaker technocrat government, led by economist Ľudovít Ódor. The President’s choices for top ministries indicates a continuity in tackling corruption, promoting more transparency in government and maintaining a pro-western/EU position on foreign policy issues.

Opposition party Smer has dominated Slovak politics for much of the last two decades but its dominance was damaged after the murder of investigative journalist Ján Kuciak and his fiancée in February 2018. The largest demonstrations in Slovakia since the Velvet Revolution in 1989 forced Smer leader and then PM Robert Fico and then Interior Minister Kaliňák to resign. Their party colleague Peter Pellegrini was appointed PM, although Robert Fico remained the chairman of Smer and had been constantly challenging Pellegrini’s independence. Since losing the 2020 election, Smer has split, with Pellegrini forming a new centre-left party Hlas (Voice). After an initial drop in Smer’s populatiry, currently both Smer and Hlas show strong support in recent polls (both c17%).

Smer is currently pursuing a strong pro-Russian narrative, is opposing sanctions and military aid to Ukraine. The other main opposition in parliament are the far-right extremist Republika (Republic) and ĽSNS (People’s party our Slovakia) parties (polling c10% and c3% respectively). Republika is a split from ĽSNS party which has lost much of its popularity ever since. The split occurred after ĽSNS chairman, Marian Kotleba changed the by-laws of the party in order to stay in power even from prison.

Some regions of Slovakia have a sizable Hungarian minority population (7.75%), but the ethnic Hungarian parties failed to reach the threshold for parliamentary representation (5%) in the 2020 election, for the first time in history. Currently Hungarian minority parties are united in Aliancia (Alliance) party and are polling c4%. Progressive liberals from Progressive Slovakia party (PS), who just missed the threshold in 2020 regained popularity, are now third strongest party in Slovakia (polling c13%).

More information on political risk is available in FCDO travel advice.

2. Economic overview

Slovakia has been one of the most stable and prosperous markets in Central and Eastern Europe and remains an attractive market for UK companies. The country is 45th in the World Bank’s Doing Business 2020 rankings and 49th in the WEF Global Competitiveness Report in 2022. Slovakia boasts a strategic geographical location in the centre of Europe, the Euro currency, cost-effective, skilled, loyal labour force with excellent multilingual skills with companies well integrated in to global value chains. Slovakia has the 2nd highest share of exporting and importing firms among EU member states. The banking sector is resilient, highly profitable and well capitalised.

Slovakia is recovering well from Covid-19 and energy-related shocks. Industrial production performed better than previous pessimistic expectations in 2022, as year-on-year output increased by 2.5%. The car industry continues to drive the Slovak industry, showing a 15.6% year-on-year output increase. GDP is expected to grow by 1.7% in 2023 as activity in the manufacturing industry recovers. Expanding investment, recovery of supply chain bottlenecks and increasing global demand for Slovak manufacturing products will help GDP to grow 2.1% in 2024.

Similarly to the rest of Europe, some challenges still remain, the Slovak economy faced high inflation in the past year due to high energy and food prices caused by the war in Ukraine. In 2022, overall productivity growth in industry has declined below the EU average to a negative growth of 2.6%. With the recent decline in input and energy prices, no further growth of food price is expected after a peak of 25%. Although still at double digit levels, inflation has peaked according to analysts in light of its gradual decline since the beginning of 2023. Household energy prices are significantly below market prices and among the lowest in the EU due to a government-imposed cap. Businesses can also benefit from government support for the high energy cost related spending. As a result of these interventions, energy prices are expected to increase only modestly in the next years.

Government debt is projected to increase to 58.3% in 2023 and to 58.7% in 2024, driven by high deficits in the past two years as the government has responded to Covid-19 and the impact of the war in Ukraine. As the economy recovers and Covid-19 measures are phased out, the public debt levels should begin to fall.

Slovakia has a long-standing mining and metallurgy tradition and a good mineral potential. Slovakia is the most significant EU producer of magnesite and magnesium compounds. In 2019, it ranked 4th globally in mined production of magnesite and the 3rd largest producer of manganese ferroalloys in the EU.

The business environment is improving as reforms aimed at reducing excessive administrative and regulatory burden for businesses have been introduced, such as the 1in2out rule, ex-post evaluation of laws and regulations, and protection against gold-plating. The adoption of a comprehensive public procurement reform should simplify procedures. The sustainability and predictability of the business environment and lack of discussion with stakeholders when introducing or amending legislation, however, remain an issue for companies in Slovakia.

Slovakia is developing reforms to modernise education, reduce early school leaving, improve inclusiveness and quality of education. Improving digital infrastructure and inclusive participation in the labour market is expected to underpin long-term growth.

Improving access to finance would boost Slovakia’s growth potential. Slovakia has access to the EU Recovery and Resilience Fund but has been slow to absorb the funds.

As an open, export-oriented economy, Slovakia wants to maintain close trade relations with the UK. The UK is one of Slovakia’s largest export markets, with its third-highest trade surplus. The automotive sector is the bedrock of the economy and contributes almost 50% of Slovakia’s exports to the UK. The UK accounts for every seventh car rolling off the production line. It is expected this number will continue growing, particularly with JLR’s Defender being exported mainly to the UK market.

There are hundreds of UK companies already operating in Slovakia. Tesco and JLR are some of the largest employers in the country. Other major UK investors include Haleon, G4S, Shell, CP Holdings, Mondi, DS Smith, Tate and Lyle, GlaxoSmithKline, Eminox, Hi-Tech Mouldings, Gleeds and Allen, and Overy.

3. Business and human rights

As a member of the European Union, the level of respect for human rights in Slovakia is generally very high. Slovakia has ratified 76 ILO conventions and improving workers’ rights has been also a priority for the current government.

The main issue in relation to workers’ rights is the effective exclusion of large parts of the Roma community from the workforce. However, the government continues with implementing a program to increase the motivation of the long-term unemployed Roma to find jobs.

Employees’ representatives in Slovakia are trade unions, works council and employee trustee (in relation to health and safety also an employee representative for health and safety at work). Unions have a real influence particularly where the employer is a large organisation or if the employer employs a large workforce (particularly industrial firms).

Minimum wage, hours of work, and occupational safety and health standards are appropriate for the main industries and effectively enforced. The law establishes health and safety standards that the Office for Labour Safety generally enforces. Workers can generally remove themselves from situations that endangers health or safety without jeopardy to their employment, and authorities effectively protects employees in this situation.

4. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organization carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Despite the recent problems in the coalition, the first year of PM Matovic and his government’s fight against corruption was relatively successful despite some flaws. A number of corruption-related charges have been pressed against several high ranking officials (including former ministers, senior police officers, prosecutors and judges) as well as other people who have been previously seen as untouchable (including controversial businessmen). In 2022, Slovakia was ranked 49 out of 180 countries according to Transparency International’s corruption perception index. This is an improvement of 11 places since 2019 and a reflection of the success Slovakia is having in its fight against corruption. Corruption remains an issue however, with Slovakia ranking among the bottom five EU member states.

The government has introduced justice system reforms aiming at reducing corruption and unethical conduct. They have also made the selection of staff to key positions more transparent (including the selections of the general and special prosecutors). However, the government has also been criticized for proposals to speed up public procurement through measures that may decrease the transparency of deals made between the government and private contractors.

Read the information provided on our bribery and corruption page.

5. Terrorism, protective security and organised crime

Please read the information provided on the FCDO´s travel advice page. This includes our terrorism threat page as well as advice on safety and security.

There are some elements of organized crime in Slovakia as in many European countries. These often involve people trafficking (forced labour), drug and cigarette smuggling. However, the majority of businesses will be unaffected. Any crime related incidents should be reported to the Slovak authorities for investigation.

Read the information provided on our organised crime page.

6. Cybersecurity

The National Security Authority (NBU) is the central state administration body responsible for Cyber Security in Slovakia. It holds the status of a national unit of Computer Security Incident Response Team (CSIRT). NBU cooperates with other governmental institutions with responsibility for cybersecurity in their own areas of expertise such as the Ministry of Investments, Regional Development and Informatization.

The NBU has established the National Unit Slovak Computer Emergency Response Team (SK-CERT). This team provides strategic activities in the field of cybersecurity management, threat analysis and also tackles security incidents. Incidents can be reported to SK-CERT using an online form accessible in English from the SK-CERT website. SK-CERT also publishes regular security updates and advice on their website, although the Slovak language pages may be more up to date than those in English.

7. Intellectual property

Intellectual Property (IP) rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

For information on registering your trademark or obtaining a patent in Slovakia, you should contact The Industrial Property Office of the Slovak Republic. It is a central state administration body operating in the field of industrial property protection.

More information on intellectual property rights in Slovakia is available at the website of the World Intellectual Property Organisation (WIPO).

Read the information provided on our Intellectual Property page.

8. Department for Business and Trade contact

Department for Business and Trade
British Embassy Bratislava
Panska 16
811 01 Bratislava
Slovakia

E-mail: [email protected]