**7. The relationship between the housing and labour mobility**

Consistency between housing (housing market) and jobs (labour market) has become an important part of the public policy of the state and local governments. The working places are increasingly dependent on the availability of housing (or rental housing). There are many reasons for this—for example, a higher quality of life, such as the demand for businesses for employees living in the neighbourhood or the solution of traffic situation (saving money on transport or saving time in traffic jams). Housing is therefore an important source of employment. The functioning of the housing market is connected with the mobility of housing, which is closely linked with the desired and undesired labour mobility. Many people have become "prisoners" of their homes, whether rented or own housing, due to lack of offers or for economic reasons. Requirement of ensuring increased mobility of housing is a prerequisite for greater labour mobility and thus better opportunities and success in the labour market. In order to ensure the competitiveness of regions and foster job mobility, it is necessary to diversify the supply of housing—not only at the level of different types of ownership and usage but also diversity in the supply cost to provide housing. The reason is particularly the availability of quality housing, which will proportionally correspond with the financial resources of households. Also, instant availability of housing for employees is an essential condition for the development of a dynamic labour market—the development of employment is blocked by the lack of housing.

**6.2. Donation and loan policy in the rental housing**

32 Housing

be interested in rental housing for low-income groups.

and the maximum loan amount per dwelling is 60,000 EUR [11].

Public funding sources, which are currently provided for the development of the construction of rental apartments, have two forms—subsidies and "cheap" loans from the State Housing Development Fund. It should be noted that in terms of economic theory, direct subsidies are considered as one of the least efficient housing policy instruments and should therefore be used only where the market is unable to provide the needs of certain groups in the construc-

*Subsidy* (*donation*): they are subsidies for rental flats and the construction of technical infrastructure. According to the legislation, applicants can be only municipalities, respectively boroughs. This means that applicants for grants cannot be housing organisations that would

*Government loans*: they are provided by the State Housing Development Fund and are considered as "cheap loans" because their interest rate is at 1.0%, with a repayment within 40 years,

However, the reality is that for the loan from the State Housing Development Fund as well as different types of subsidies for the development of housing services provided by the Ministry of Transport and Construction of the Slovak Republic, there is no legal entitlement and its

*Donations for housing* are one of the claims in the provision of assistance in the material need

• 89.20 € monthly, if it is a citizen in material poverty and natural entities, who are assessed

Consistency between housing (housing market) and jobs (labour market) has become an important part of the public policy of the state and local governments. The working places are increasingly dependent on the availability of housing (or rental housing). There are many reasons for this—for example, a higher quality of life, such as the demand for businesses for employees living in the neighbourhood or the solution of traffic situation (saving money on transport or saving time in traffic jams). Housing is therefore an important source of employment. The functioning of the housing market is connected with the mobility of housing, which is closely linked with the desired and undesired labour mobility. Many people have become "prisoners" of their homes, whether rented or own housing, due to lack of offers or for economic reasons. Requirement of ensuring increased mobility of housing is a prerequisite for greater labour mobility and thus better opportunities and success in the labour market. In order to ensure the competitiveness of regions and foster job mobility, it is necessary to

tion or reconstruction of housing fund, which is a source of serious problems.

provision and purposive fullness is set by strict conditions in the relevant law.

**7. The relationship between the housing and labour mobility**

to cover housing costs. The height of the contribution for housing is [12]:

• 55.80 € monthly, if it is a citizen in material poverty and

together with the citizen in material poverty.

In Slovakia, the real estate market is characterised by a high proportion of owner-occupied real estates and almost non-existent rental housing. Moving for work is therefore complicated because of the lack of availability of rental housing. The current structure of the housing market is largely due to historical development —both in the development before 1989 and in the lack of adaptation of the housing sector to the new conditions in recent decades. After the change of the political system in 1990, the transformation process began, which also included the privatisation process. Part of the privatisation process in 1992 was the introduction of the right to redeem the property for tenants in state apartments at very reasonable prices (apartments were redeemed into private property at prices that correspond to 5% of their market value), resulting in a change in the ownership structure. A large proportion of public rental housing was subsequently purchased by tenants into the private sector. For example, in Bratislava, the share of private housing increased from 12% in 1992 to 70% in 1998. The high occupation of flats, the rise of prices and rents, geographic differentiation of wages and so on lead to the reduced labour mobility [13]. While the historical development has helped to shape the current structure of housing, housing support policy helps to preserve this structure and thus contributes to the slower development of rental housing. At present, most public expenditure spent on housing support is used for the subsidy of owner-occupied housing. Cheaper financing of owner-occupied housing has a direct impact on the entire housing market. Subsidised owner-occupied housing is financially more attractive and more accessible than rental housing. This promotes the demand for owner-occupied housing at the expense of rental housing. The market reacts to a lower demand for rental housing with lower investments for the creation of new rental housing, which leads to a slower development of this segment of market.

Flexible labour market enables workers in the better choice of employment and the efficient allocation of labour among companies. In Slovakia, one of the obstacles of labour mobility in the labour market is low regional mobility. Comparing internationally, Slovaks move for work much less than people in neighbouring EU countries. One of the factors that may negatively influence this condition of the labour market is the housing market. Low mobility on the labour market has a negative impact on economic growth. Regional unemployment is rising while jobs remain unoccupied. The low labour mobility also reflects regional differences in unemployment rates. It leads to inefficient use and allocation of human resources. People are forced to refuse job opportunities in other regions, where they could generate more economic value and thus earn more money. Higher unemployment and limiting productivity growth are associated with lower GDP and lower living standards. Labour mobility involves changes in the physical location of workers (geographical mobility) or their movement across jobs and sectors (occupational mobility). Two main types of internal labour mobility are in the centre of attention—internal migration and commuting. Migration is usually associated with a change in the residence of a worker (in economic literature, a migrant is considered a person who stays in the destination region for more than 1 year). Commuting occurs as a rule without a change in the worker's residence (i.e., a worker's place of work and place of residence are located in two different regions) [14].

(15–64 years) changed their place of residence in 2011, of which 46% moved between municipalities within districts (i.e., short-distance migration), 29% between districts within a region and 25% between regions. These figures are remarkably stable over time (there are only minor variations in data between 2000 and 2013), implying that the overall internal migration capacity and main flows are relatively unresponsive to external factors such as international migration or policy interventions. No more than 3–4% of residential migrants (3.3% in 2011) indicate employment-related motives as the reason for relocation. "Housing reasons" and "following a family member" account for almost two-thirds of officially declared migration reasons. The share of labour migration increases with the spatial distance of relocation and is the highest in migrations between regions (8.5% of all inter-regional migrations in 2011; in comparison, employment reasons were stated in merely 1.1% of relocations between municipalities). Jurcova and Vano [18] points out that this observation is consistent with data on the educational structure of migrants and the general assumption that the propensity to move for

Housing Policy in the Slovak Republic http://dx.doi.org/10.5772/intechopen.78611 35

In this chapter, we tried to discuss the development of housing policy in Slovakia after 1990, some selected issues related to the development of housing in Slovakia and the availability of housing and labour mobility. An indispensable factor in housing development is a welldeveloped institutional environment regarding efficient economic instruments (particularly credit and tax policy) as well as the establishment of the organisations in the housing market.

Finally, we can say that focusing on supporting housing housed by owners with existing tools causes a particular disruption to the real estate market. There are possibilities to help adjust the current situation and avoid future complications. One of them is the redirection of the state aid for housing housed by the owner for financial contributions to housing (housing allowance). This housing policy tool would allow the recipient to choose between a rental and a housed owner. It means that financial contributions could be more tied to income and other social criteria and thus to achieve the more significant resurgence of resources. The strength-

The high occupation of flats, the rise of prices and rents and geographic differentiation of wages lead to reduced labour mobility. In Slovakia, one of the obstacles of labour mobility in the labour market is low regional mobility. Comparing internationally, Slovaks move for work much less than people in the neighbouring EU countries. One of the factors that have negatively influenced this condition of the labour market is the low share in the offer of rent

In the future there is a need to focus on the simplification of administration schemes of supportive state financing in the field of rental housing, to prepare new financial mechanisms to

ening of this instrument in Slovakia is also recommended by the OECD.

improve the development of the rental sector in the Slovak Republic.

housing for various income groups of inhabitants.

work increases along with educational attainment.

**8. Conclusion**

From **Figure 4** we can see the negative trend in the development of rental flats in Slovakia.

Important is also the fact that social rental housing depends on income. This means that in case of the entitlement of rented apartments, the motivation to earn more money is lower. The reason is the fear that the tenant loses his entitlement to a rented flat. The result of such a situation is reduced incentives to work and thereby a decrease in the mobility of labour. On the other side, the second extreme in Slovakia is a high proportion of persons who have apartments in their ownership [16]. Purchase, respectively, rental of residential property is generally not just a matter of rational economic calculation, but to some extent it is also a reflection of national usage. Within the internationally comparable survey on income and living conditions (Statistics of Income and Living Conditions—SILC) in European countries, it is proven that not only in Slovakia but also in most countries the ownership of the house or apartment is preferred more than rent. In the EU, 28.70% of the population subscribes to the ownership of residential property. However, between countries there are obvious differences. Slovakia clearly belongs to the category of countries where the term ownership of real estate considerably resonates (up nearly 90%). On the other hand, the most significant relationship to rental housing in Europe is shown by the people of Germany and Austria.

Available cross-country comparisons show that mobility flows in Slovakia are low in international terms. This applies in particular to internal migration, which means to flows connected with a change in the place of residence. The internal migration rate for Slovakia, measured as gross regional outflow as a percentage of working age population is significantly lower than in most EU countries and other advanced economies as well as neighbouring Visegrad countries (see e.g. [17]). According to national statistics, 1.6% of the productive age population

**Figure 4.** The evolution of the share of rental apartments in Slovakia among the total number of completed apartments (in percentage). *Source*: own processing according to data from the Ministry of Transport and Construction of the Slovak Republic [15].

(15–64 years) changed their place of residence in 2011, of which 46% moved between municipalities within districts (i.e., short-distance migration), 29% between districts within a region and 25% between regions. These figures are remarkably stable over time (there are only minor variations in data between 2000 and 2013), implying that the overall internal migration capacity and main flows are relatively unresponsive to external factors such as international migration or policy interventions. No more than 3–4% of residential migrants (3.3% in 2011) indicate employment-related motives as the reason for relocation. "Housing reasons" and "following a family member" account for almost two-thirds of officially declared migration reasons. The share of labour migration increases with the spatial distance of relocation and is the highest in migrations between regions (8.5% of all inter-regional migrations in 2011; in comparison, employment reasons were stated in merely 1.1% of relocations between municipalities). Jurcova and Vano [18] points out that this observation is consistent with data on the educational structure of migrants and the general assumption that the propensity to move for work increases along with educational attainment.
