Tripartite social agreement signed for 2003-5

In April 2003, the Slovenian government and social partners signed a 'social agreement' for 2003-5, setting the general direction for economic and social development over the next two years and defining the tasks of the signatories. The main stated aim of the agreement is to achieve a balance between economic efficiency and social and legal security. The accord includes important provisions on issues such as wage policy, employment, training, social dialogue, equal opportunities and taxation.

After over a year of negotiations (SI0206102F), the government, trade unions and employers' organisations signed a two-year national 'social agreement ' for 2003-5 on 22 April 2003. The agreement sets the general direction for economic and social developments and policies until 2005, and aims to supports balanced socio-economic development. The first such social agreement was signed in 1996.

In the negotiations, the most difficult task for the three sides was reaching a consensus on the agreement's taxation and wage policy chapters, but at the end of the talks the expectations of all sides were largely met. Trade unions managed to secure guarantees that redundancy pay be exempt from tax from the beginning of 2004, and that the tax-free part of earnings will be raised gradually to the level of the minimum wage by 2007. Employers yielded somewhat by agreeing to raise the threshold for taxable income from the beginning of 2005 (to SIT 150,000 per year from the current SIT 130,000), having initially demanded that this should occur in 2004 - however, the compromise reached provides that the possibility of earlier implementation will be examined in autumn 2003. It was also agreed that: the national minimum wage will be regulated by special legislation, to be agreed among the three sides; wage growth should be one percentage point below the rate of productivity growth; and, in setting pay increases, account will be taken of both domestic and EU inflation rates. Finally, the social partners made a commitment to direct all their activities towards the realisation of the agreement's goals.

On behalf of the government, the agreement was signed by the Minister of Labour, Family and Social Affairs, Vlado Dimovski. On the employers' side, the signatories were the four representative employers' organisations (SI0211102F):

• the Slovenian Employers' Association (Zdruzenje delodajalcev Slovenije, ZDS);

• the Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije, GZS);

• the Chamber of Crafts of Slovenia (Obrtna zbornica Slovenije, OZS); and

• the Slovenian Employers' Association of Crafts (Zdruzenje delodajalcev obrtnih dejavnosti Slovenije, ZDODS).

The signatories on the trade union side were the four representative union organisations (SI0210102F):

• the Union of Free Trade Unions of Slovenia (Zveza svobodnih sindikatov Slovenije, ZSSS);

• the Confederation of Trade Unions of Slovenia Pergam (Konfederacija sindikatov Pergam Slovenije, Pergam);

• the Confederation of Trade Unions ΄90 of Slovenia (Konfederacija sindikatov '90 Slovenije, Konfederacija '90); and

• KNSS - Independence, Confederation of New Trade Unions of Slovenia (KNSS - Neodvisnost, Konfederacija novih sindikatov Slovenije, KNSS).

Furthermore, the accord was signed by the other trade unions which signed the agreement on private sector pay policy for 2002-4 (SI0206102F): the Slovene Union of Trade Unions - Alternative (Slovenska zveza sindikatov - Alternativa, Alternativa); the Union of Workers - Solidarity (Zveza delavcev - Solidarnost, Solidarnost); and the New Trade Union of Slovenia - NSS (Novi sindikat Slovenije - NSS, NSS). Further 'co-signatories' of the agreement were the Police Trade Union of Slovenia (Policijski sindikat Slovenije) and the Trade Union of Health and Social Services of Slovenia (Sindikat zdravstva in socialnega varstva Slovenije).

Main points of the agreement

In the social agreement, the government and social partners set out common economic and social policy goals for the 2003-5 period, which should increase both the competitiveness of the Slovene economy and the social and legal protection of Slovene citizens. They also stipulate the actions aimed at achieving these agreed goals. The signatories agree that achieving the pact’s goals depends on fulfilling the following conditions:

1. economic development, based on stable economic conditions, greater competitiveness of the national and regional economies, social dialogue and peace among the partners, 'balanced and stimulating' wage policy and investments in health and safety at work;

2. social security, created by high employment and an appropriate wage policy, active social policy, family policy (including work-life balance) and appropriate housing policy; and

3. legal security, ensured by appropriate legislation, appropriate and efficient legal protection, efficient control of the implementation of laws and collective agreements, and introduction and encouragement of various forms of out-of-court dispute resolution such as conciliation and arbitration.

Economic development

To achieve stable economic conditions, the government will ensure steady price growth, employers will invest in knowledge and technology to increase labour productivity, while trade unions will encourage their members to seek solutions which provide the best working and business results.

Tax policy

The signatories agree that an appropriate tax policy is one of the most efficient mechanisms for creating a favourable economic situation. Some changes are needed in the current tax system to achieve a more just distribution of taxes and a more efficient use of tax sources. This involves amendments to legislation on corporate income tax, personal income tax and real estate tax. It is also seen as necessary to speed up the preparation of profit-sharing legislation, in order to promote a 'development function' for profits and to provide incentives for employees in successful companies.

Public finances

In the field of public finances, the government will create an environment that enables a gradual improvement in general welfare while reducing general government expenditure. It will: rationalise the organisation and management of the public administration (through abolition of 'dispensable' parts, modernisation of the management of public funds, anti-bureaucratic programmes etc); avoid any additional burdens on pension funds and the national budget; and propose legislation in line with the EU Directive 2000/35/EC on combating late payment in commercial transactions, in order to help resolve current problems in business payments. Employers will contribute in this area by ensuring respect for workers’ rights, financial discipline and implementation of tax legislation, while trade unions will contribute to the creation of relations between workers and employers that are based on social dialogue, by informing, consulting and training their members.

Competitiveness and restructuring

In order to achieve greater competitiveness and restructure the national economy and those of the regions (especially the most underdeveloped regions), the government will implement measures that will take into consideration:

• increasing the competitiveness of companies, through a programme of encouraging entrepreneurship and competitiveness, developing incentives to achieving higher productivity, establishing new companies and new high-quality workplaces, and assisting the 'internationalisation' of Slovene companies;

• encouraging harmonised regional development (ie encouraging new investments in underdeveloped regions) through an active policy; and

• completing the current transitional restructuring and privatisation processes (including legal possibilities for internal buy-outs of firms).

Both employers and trade unions will support investments in knowledge and new technology, and increase awareness of the need for continuing education and the importance of 'participative' organisational practices (such as new forms of reward and the intensive participation of workers in decision-making).

Education and training

In the field of vocational and professional education, the parties will support the greater openness of educational programmes to the needs of the labour market and business. In this respect, the government will enable deregulation and flexibility in the vocational education system and encourage cooperation between schools and the social partners at the regional level. The government will also: provide the conditions for strengthening the educational role of employers; provide budgetary funds to enable participation in European Structural Fund programmes; establish regional councils for the development of human resources; promote the introduction of a certification system; and introduce further improvements in the field of adult education.

Employers will strengthen their own educational role (by opening training workplaces, training 'mentors' for apprentices, pupils and students and establishing intra-company centres for practical training) and cooperate with schools at regional level and with the competent ministry (in determining and shaping courses of study, and proposing new vocational standards and catalogues of standards of professional knowledge and skills).

The trade unions will encourage professional workers to train as 'mentors' and to become members of the commissions for the examination and certification of knowledge for the purpose of awarding national vocational qualifications. Trade unions should also take part in the evaluation of vocational education (in interim tests and in the practical part of the final examination of apprentices and pupils) and in the examination and certification of national vocational qualifications.

Social dialogue

As the signatories agree that the social dialogue is the precondition for successful joint and individual actions, they will actively participate in the work of the tripartite Economic and Social Council (Ekonomsko socialni svet Slovenije, ESSS), which will remain the body for social dialogue in Slovenia (SI0207103F). The parties will promote the existing forms and practices of social dialogue at all levels (national, regional, industrial and individual organisation level) while developing new forms of cooperation - such as joint committees for different fields and social dialogue committees at the level of industries, regions, municipalities and institutions - and new institutions for the peaceful settlement of disputes (mediation, conciliation etc). The parties commit themselves to speeding up the work related to the preparation of the new Collective Agreements Act (SI0212101F) (to be completed by the end of September 2003) and also agree to take an active part in the realisation of an EU PHARE project on 'promoting social dialogue in Slovenia'.

Wage policy

With regard to wage policy, the chapter of the agreement that took longest to agree (see above), the parties pledge to operate a policy that will contribute to cutting inflation. When setting wages, the exchange rate between the euro and the Slovenian tolar will be taken into account, as well as inflation in chosen EU Member States and domestic inflation. The signatories agree that the statutory minimum wage should be retained as the lowest level of wage an employer may pay a full-time employe, while collective agreements are the key instruments for determining wages. Short-term wage policy goals are those laid down in the the agreement on private sector pay policy for 2002-4 (SI0206102F), while the new social agreement sets the following long-term goals: balanced, real growth in wages; resolving the problems of the disparity between the statutory minimum wage and collectively agreed basic wages; setting the minimum wage; strengthening incentive elements in pay; and introducing profit-sharing. The parties commit themselves to preparing a proposal for special legislation to regulate the minimum wage during the period of validity of the 2003-5 social agreement .

The annual leave bonus for 2003 will be at least SIT 132,170 while the maximum may not exceed 70% of the national average wage. In subsequent years, the minimum holiday bonus will be determined by increasing the amount for the previous year by the growth in retail prices.

Health and safety

The agreement commits the parties to contributing actively to safe and healthy working conditions. The government will prepare a national programme of safety and health at work and monitor the implementation of relevant regulations (focusing on prevention more than penalties). The employers' organisations will ensure that individual employers respect the relevant regulations, and trade unions will educate and inform their members on employers' obligations and workers' own responsibilities regarding health and safety at work.

Social security

In line with the general approach of the social agreement, the signatories agree that living and working conditions should be such as to enable people to provide for their social security through their own economic activity, while a good use of the resources of the social security system should provide a high level of welfare for those who are unable to provide for themselves. Three areas are stressed as important for providing a high level of social security: a family policy based on balancing work and family life; an appropriate health policy; and improved housing policy.

Employment/unemployment

One of the most important aims under the 'social security' heading is increasing employment and resolving the problem of unemployment. The parties will act in line with the current 2001-6 'National programme for the labour market and employment' and focus their activities on achieving its goals - ie achieving an annual level of employment growth of more than 1% and lowering the unemployment rate to 5% by the end of 2006. The government will provide a legal platform necessary for the achievement of policy aims, linking all the other policies (such as economic policy and education and training programmes) to employment policy. All three parties will promote life-long learning actively. Employers will create new jobs and modernise work organisation, while trade unions will encourage and motivate employees and unemployed people to contribute actively to their own employability (through continuing education, assisting in a successful modernisation of work etc).

Social exclusion

The signatories agree that the provision of social security for individuals and families who are deprived of the possibility to provide for themselves should be the responsibility of the state. The government will ensure the application of a programme to combat poverty and social exclusion adopted in 2000 and evaluate its implementation. It will also support programmes to reduce the risk of social exclusion, and create policies, programmes and measures to ensure and promote the reconciliation of the work and family obligations of women and men, and to achieve a more even distribution of the care, welfare and rearing of children between both parents. Employers' organisations will encourage their members to: conduct such business and personnel policies as will ensure the lowest possible rate of unemployment; and to create working conditions that will not cause 'social distress' to their employees. The trade unions will contribute actively to finding solutions to employees' problems, arising from their situation both inside and outside work.

Pensions and disability insurance

A new pension and disability insurance Act introduced in 2000 introduced a significant innovation into the system - the possibility of setting up voluntary and collective supplementary pension insurance schemes. In the social agreement, the parties support the greatest possible involvement of employees and employers in such collective supplementary insurance schemes in both the private and public sector over the coming years, though this should not diminish the solidarity among generations. Thus the government will: monitor the development of the system of supplementary insurance; promote its development by increasing awareness among the social partners; and encourage its development by an incentive-driven and territorially-balanced tax policy. Employers' organisations will encourage their members to introduce voluntary supplementary pension schemes, while the trade unions will make employees aware of the advantages of new types of pension insurance.

Healthcare

The agreement provides for a reform of the healthcare system, considered by the Minister of Labour, Family and Social Affairs as one of three most important topics covered, along with the wage policy and tax reform provisions. The government’s aim is to focus on strengthened solidarity in health insurance and on increasing people's rights under the obligatory health insurance system. Other topics to be dealt with by the reform will include the accessibility of health insurance rights and a cut in waiting periods for healthcare. Employers and trade unions will be actively involved in the establishment of a healthy working environment and support the application of the agreed reform of the healthcare system.

Work-life balance

The agreement states that the possibility of successfully combining work and private/family life is one of the conditions for balanced social and economic development. The government thus commits itself to developing the policies, programmes and measures that will ensure and promote reconciliation of the work and family obligations of women and men, by: establishing a network of services for all generations; adjusting childcare provision to changes in working and business timetables; offering services to facilitate parenthood; enabling flexible forms of employment for people with young children; and implementing a 'family-friendly company' campaign. Employers' organisations will encourage their members to take a more active attitude towards reconciling work and family life, and to prevent discrimination in recruitment and employment. Trade unions will offer their members the necessary support for resolving problems related to combining work and family obligations, and propose possible solutions for the resolution of those problems to employers.

Equal opportunities

In the effort to achieve equal opportunities for all people - regardless of sex, race or ethnic origin, religion or belief, disability, age or sexual orientation - the government will: support the operation of relevant non-governmental organisations; develop measures for preventing, detecting and eliminating discrimination against women on the labour market; and adopt a number of special support measures for women - such as promoting women's entrepreneurship and education/training, reducing segregation and pay inequality, and implementing the legislation on equal opportunities for women and men. Trade unions will monitor the situation in the working environment, warn employers of discriminatory situations and raise awareness about workers who face actual or potential discrimination. Employers will adopt measures to enable people with disabilities to access workplaces, achieve promotion or take part in training, and use examples of good practice in order to enforce equal opportunities for women and men.

Housing

Housing conditions, according to the agreement, affect the efficiency of individuals at work. The government will therefore promote the building of subsidised housing, encourage long-term saving to purchase housing, implement a policy of state-subsidised rents, and ensure the conditions for increased availability of housing. Employers' organisations will encourage their members to help, as far as financially possible, in resolving the housing problems of their workers, and trade unions will encourage workers to participate in national and corporate housing saving schemes.

Legal security

Legal security is said to represent an important element in the development of every society. The parties agree that such security depends upon the existence of appropriate legislation, efficient judicial protection, various forms of out-of-court dispute-resolution mechanism, and knowledge and observance of the regulations in force. The task of the government in this area is to ensure the clarity, comprehensibility and unambiguity of statutory provisions, while employers and trade unions will participate in the government's efforts to adopt appropriate legislation. To improve the legal security of employees and employers, it is necessary to reduce or abolish backlogs of court cases. The parties agree that the implementation of employment-related laws and efficient control over them represent a common task, which cannot be dealt with solely by means of inspection services.

The signatories believe that the judicial method of settling labour disputes represents the last resort, and will therefore seek the establishment, or more frequent use, of out-of-court resolution mechanisms, such as mediation and arbitration. The government will amend the labour and social courts Act in order to introduce settlement hearings, and will provide for appropriate training of judges in such proceedings. The employers' organisations and trade unions will encourage their members to use the available out-of-court procedures.

Reactions

All signatories expressed their satisfaction with the social agreement and underlined its importance for the further development of the Slovene economy. Minister Dimovski stated that the agreement brings Slovenia nearer to modern Europe and makes it possible to address the most important issues in an integrated way, and not partially as has been the case until now.

On the employers' side, the president of GZS, Jozko Cuk, thinks that in the next 10 years Slovenia could become one of 10 most developed countries in Europe if the 2003-5 social agreement is put into practice. The vice-president of GZS, Miro Sotlar, stated that the agreement would bring about social peace, which is needed at a time when Slovenia is entering the EU (in May 2004). He added that implementation of the accord would create a more competitive environment, enabling more innovation and the development of a knowledge-based society.

On the trade union side, the president of ZSSS, Dusan Semolic, underlined the importance of Slovenia being among the countries that have such social agreements. He thinks that, because of their efficient social dialogue, such countries are economically successful and pay considerable attention to social rights. He was also hopeful that economic and social development would be successfully integrated in the implementation of the agreement. Some other trade union representatives also stressed the importance of the implementation of the accord's stated aims. Boris Mazalin of Konfederacija '90 was more reserved in his opinions on the agreement and, while expressing satisfaction with the deal, pointed out that the real work awaits.

The agreement also attracted some attention outside Slovenia. The International Monetary Fund (IMF), which has called on Slovenia to reduce inflation (by lowering wages and abolishing the indexation of public sector pay) and strengthen its currency (the tolar, SIT), welcomed the social agreement for 2003-5, while encouraging the government and social partners to keep the cost of the new wage structure within the budgeted wage bill for 2004.

Commentary

The Slovenian practice of social dialogue has already played an important role throughout the difficult process of economic transition and change in the field of industrial relations in recent years. By signing the new social agreement, the social partners and the government have committed themselves to finding jointly the optimal solutions for the new challenges, risks and pressures on national competitiveness that Slovenia and its inhabitants are facing due to the process of European economic and monetary integration. While such an agreement does not in itself resolve economic and social problems, it sets the standards for what should be achieved and guarantees the necessary dialogue through which the issues that are important for Slovenia's socio-economic development can be tackled more easily. (Aleksandra Kanjuo Mrcela, Organisational and Human Resources Research Centre, OHRC)