500 jobs to go in Vahostav, and Doprastav may follow

The road to redundancy

Zilina-based construction company Vahostav has announced mass redundancies, which should see around 500 employees lose their jobs. This is roughly one quarter of the workforce. Vahostav is one of the largest construction companies in Slovakia, and like most companies in the sector, it is finding it hard to recover fully from last year’s crisis.

The redundancies should be put into effect gradually, starting on 8 August and going through to the end of January 2011, and will affect also technical and administrative staff. Vahostav took the decision to cut the labour force due to the ongoing decline in the construction sector over the past two years, and because certain projects like motorway construction have been held up.

Vahostav’s partner in the international consortium that won the tender to build 75 km of the D1 motorway between Martin and Presov, the company Doprastav, may also be taking the same steps soon. The rumours have yet to be confirmed, but at a construction sector conference on 17 June the management spoke about the possibility of dismissing about 1,000 of its 3,200 strong workforce.

The layoffs are being linked mostly to the halting of motorway construction along the said section of the D1 motorway, in which Doprastav has a 30% interest. The motorway project was arranged via a Public-Private Partnership project (PPP), where the costs were set at EUR 2.4 billion, but the  deadline for the project has been postponed several times and so has not been officially concluded.

Now that the new government is looking into PPP projects in more detail, the construction companies may very well lose out on this one, hence the layoffs.

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