Should Slovakia fear Russia cutting it off its gas?

Russia has shut off gas supplies to Poland and Bulgaria after they refused to pay in rubles. Will Slovakia be next?

Slovakia, just like Poland, supports and enforces sanctions against Russia despite getting all our oil and 85% of our gas from the country.

TREND.sk · TRENDY Fridays: Should Slovakia fear Russia cutting it off its gas?

Prime Minister Eduard Heger said on social media that Slovakia is ready to face the same obstructions as Poland, and it will continue making payments for the purchased gas in euros.

Minister of Economy Richard Sulík said that the situation is tense but not critical. The next Slovak payment to Russia is due on 20 May – until then, the gas supply should be stable.

According to Sulík, gas supplies for households in the following months should be secured, the only question is posed by the regulated gas price next year, which is increasing in comparison to the current one.

And while households should not experience gas shortages, the same might not apply to the industry dependent on the constant supply. A halt to gas supplies from Russia would mean not only a lack of certain products but also redundancies and rising unemployment.

Rising prices of building materials wreak havoc in construction

The construction industry is suffering from a shortage of materials and workers. Increased demand and lagging supply are driving up the prices of building materials. Everything is affected – steel, aluminium, plastic, cement, wood, glass, and oil.

In a desperate rush to secure the materials needed, developers are willing to pay more and more, driving the prices further up.

And as the price of building materials can constitute almost two thirds of the price of real estate, increased prices are inevitable in that sector as well.

The reason behind the rising prices of building materials is the shortage of raw materials, which is partially caused by the conflict in Ukraine. The prices reflect high energy costs and logistics outages. It’s no wonder the delivery time for bricks has been extended up to six months.

If the prices of both building materials and construction work are going up, can the real estate bubble still burst? It’s still possible. A crisis, such as Russia shutting the country off its gas supply, could bring about a dramatic fall in prices. Without gas, the national industry would be paralysed, companies would start to lay people off or freeze their salaries. Banks would react by limiting mortgage accessibility, and real estate prices would fall.

News from the labour market

Slovak unemployment has been decreasing, reaching 6.67% in March this year. Minister of Labour Milan Krajniak said he expected a significant increase in salaries this year and the following one – and Prime Minister Heger has been equally optimistic about the labour market. However, the Slovak market should keep an eye out on Germany, which is preparing for a possible recession.

U.S. Steel Košice: While the company is gaining record profits, thousands of its employees are threatening to go on strike. Among others, they demand an increase in wages and their permanent growth, as well as better working time after the company proposed an increase in the weekly working time by two hours.

Jaguar: The youngest Slovak carmaker is facing its third collective negotiation with its employees over a short period of time. Because of inflation, the union representing the Nitra workers demands better pay and working conditions.

ZSSK: The State Railway Company Slovakia (ZSSK), has been increasing wages and salaries while having kept ticket prices mostly the same over the last 10 years. They manage to do that by streamlining its operations and digitalising processes, such as purchasing tickets online, as well as by increasing their subsidy from the state budget.

Healthcare: Healthcare unions warn that medical staff’s salaries are growing faster in the neighbouring countries than in Slovakia. Despite their growth thanks to valorisation and as a result of the pandemic, they said it’s not sufficient.