PPS and the Transaction Tax.

The PPS Group is not exempt from the broader economic reality: if each Slovak citizen carries an average share of the national debt amounting to €14,000, then PPS, which directly or indirectly employs around 1,000 people, can be seen as indirectly bearing a “collective debt” of approximately €14 million. This is the portion of national debt attributed to its employees and associates, considering Slovakia’s total public debt of around €76 billion.

Of course, such a debt, when viewed through the eyes of an individual employee, does not feel personal or binding — it is not something one consciously created or feels responsible for. Yet, in practice, it will be repaid — whether people realize it or not. Interestingly, PPS Group, in its own way, acts as a guarantor of this debt.

What I mean is that PPS’s business performance can help reduce such debt. Conversely, if PPS or other manufacturing companies struggle, there will be no means to service this public debt. A professional debt management system is crucial for maintaining a country’s long-term solvency. The same applies to PPS, which must also internally and professionally manage its own debt. Just as we align income and expenses, plan investments, and define strategies for growth, public institutions must do the same.

For example, since 2017, there has been no comprehensive public report by ARDAL, the Slovak agency responsible for state debt management. I agree with the statement made by Ľubomír Andrassy, head of the Supreme Audit Office of the Slovak Republic, who emphasized the need for a proper strategy report on state debt. According to the Debt Sustainability Monitor 2024, Slovakia’s long-term public finance sustainability ranks among the worst in the EU.

Cost-saving and fiscal consolidation are necessary not only at the state level but also within companies. PPS, like the national economy, must consider the aging workforce, retirement age, and the generous legacy of trade union benefits, all while ensuring economic growth. Only a healthy business can absorb unexpected expenses — be they new taxes, levies, or other contributions — and thereby contribute to consolidating public finances.

Higher taxes and contributions imposed on the business sector must be accompanied by measures that improve the business environment. The transaction tax, for example, should not be treated as a standalone burden but analyzed in the broader economic context.

There are various opinions on the transaction tax — even within PPS, among the board, management, and other governance bodies. My personal view is that this is one of the potential — and possibly very effective — tools for reducing national debt. It offers a response to current economic challenges. I say this despite knowing that PPS will likely pay around €150,000 in transaction tax this year. This amount must first be earned, even though PPS is an export-oriented company, with over 95% of its production going abroad. Much of this export is later re-exported by multinational companies, even to the USA — where high tariffs are imposed on most final products.

If 2024 was economically challenging for PPS Group, 2025 could prove even more difficult (especially due to stagnation in Germany and limited demand in the Eurozone). So, for a company like PPS Group, a transaction tax is certainly not a welcome “starter” on the business lunch menu. That said, it is technically simple to administer and relieves businesses of complex bureaucratic procedures. It is straightforward and contributes to national fiscal consolidation — and if I were the Minister of Finance, I’m not sure I could come up with anything better. It has certain technical flaws, but those can be fine-tuned.

What’s missing, however, are accompanying measures that would improve the business environment. One such example could be a flexible current account (similar to Germany’s Kurzarbeit), which would apply in cases where a company loses contracts through no fault of its own, due to independent and unpredictable factors — like an export disruption. In such cases, the state could cover 60% of wages and the employer 20%. The definition of external factors could even include Trump-era tariffs on European goods and their re-export. Such tariffs may push the Slovak — and European — economy into recession.

Last year, PPS Group had to compete — and succeed — against global firms benefiting from similar domestic support in their markets. It was, in a sense, an unfair competition. And now, PPS must once again face a combination of recession and high U.S. tariffs.

For a business, the availability of working capital — especially for labor — is crucial. This includes supplements for night shifts, weekends, or holidays. Employers need more flexibility. There should also be more freedom to terminate employment, whether immediately or otherwise, for breaches of work discipline. The Labour Code should reflect the employer’s perspective, not only prioritize the employee’s protection. Various allowances — for meals, vacations, sports, etc. — should be reconsidered or eliminated. This area of labor relations offers ample space for savings.

I view “savings” as creating conditions that allow employers to do what they do best — not only manage physical assets but also manage their workforce with greater authority and accountability. Trade union powers should also be reconsidered in the business sector. Admittedly, this is politically sensitive.

Improving the business environment should be accompanied by additional consolidation efforts — for example, reducing the size of state administration, abolishing redundant research institutes, agencies, and so-called independent offices operating under ministries. At the same time, top experts should receive competitive salaries and replace these bloated bureaucratic structures.

Significant savings could also come from reassessing certain social benefits, reducing the number of public holidays, and other structural reforms. Again, politically unpalatable — but economically necessary.