Slovenia: New social agreement 2015–2016

After six years of contention, the Slovenian social partners have signed a social agreement for 2015–2016, with compromises on several key issues. The agreement covers areas such as finance, economic development, the public sector, healthcare, pay,  pensions, implementing the European cohesion policy, education and legal security.

Social partners sign agreement

The government, trade unions and employers signed the social agreement on 5 February 2015. The previous agreement expired in 2009, but until now, the social partners have been unable to agree on the economic and social reforms necessary to face the global financial crisis efficiently.

The agreement lists a number of goals in relation to 12 areas:

• finance;
• sustainable model of economic development;
• new investment cycle;
• public sector;
• healthcare;
• wages;
• labour market;
• retirement;
• implementing the European cohesion policy;
• education;
• legal security;
• social dialogue.

The agreement was signed by the Minister of Labour, Family, Social Affairs and Equal Opportunities, and by representatives of four employer organisations:

• Association of Employers of Slovenia (ZDS);
• Chamber of Craft and Small Business of Slovenia (OZS); 
• Association of Craft and Entrepreneur Employers of Slovenia (ZDOPS) 
• the Slovenian Chamber of Commerce (TZSLO) 

It was also signed by representatives of the following trade unions:

• Association of Free Trade Unions of Slovenia (ZSSS);
• Confederation of public sector trade unions of Slovenia (KSJS);
• Slovenian Alternative Association of Trade Unions (SZS Alternativa);
• Independence – Confederation of New Trade Unions of Slovenia (Neodvisnost KNSS);
• the Association of Workers' Trade Unions of Slovenia (Solidarnost).

Slovenia’s Chamber of Commerce and Industry (GZS) refused to participate in negotiations or sign the agreement. It believes the agreement lacks clear focus or an agenda for implementing its goals.

The Minister of Labour, Family, Social Affairs and Equal Opportunities, who headed the negotiations, sees the agreement as a compromise between the legitimately different interests of employers and workforce. The minimum wage and insolvency legislation proved to be the two most controversial issues during negotiations and were finally excluded from the agreement. The Minister suggested setting up a task force to look into union demands to separate bonuses from the minimum wage (which includes all extra payments except those for overtime).The Minister said the same group would also examine the question of  minimum wage taxation, with the government drawing up calculations for a tax reform to be implemented in 2016.

Content of the agreement

The agreement focuses primarily on Slovenia’s step-by-step fiscal consolidation, underpinned by a development-oriented budget. Other aims in this area include efficient performance of the banking sector, efficient management of state-owned companies, further privatisation and restructuring of companies.

The social partners have agreed that the nominal level of taxes and contributions must be kept at the current level and there must be no new taxes,  except in cases of force majeure, when the government has to act because of unexpected changes of macro-economic circumstances.

The agreement hopes to achieve  a sustainable economy through:

• support for economic growth;
• internationalisation of the economy;
• a more competitive business environment aimed at attracting domestic and foreign investment;
• a transparent, efficient and stable business environment without unnecessary administrative barriers;
• creation of new jobs with a particular emphasis on helping young people into work;
• preparation of a comprehensive economic development strategy;
• reindustrialisation;
• combating social dumping.

Investment cycle

The key aims that were agreed on to achieve a new investment cycle include:

• enhancement of competitiveness of the entire economy with a particular emphasis on the construction sector;
• an efficient system of public procurement;
• establisment of public-private partnership system;
• improvement of infrastructure related to a sustainable energy sector;
• regional development and traffic;
• increase in the use of Slovenian timber and greater competitiveness in the timber industries, including paper;
• making the country more attractive for investment;
• strengthening the tourist sector.

Public sector

The public sector has been recognised as a powerful social subsystem and an important developmental factor. Key aims in this area include:

• an efficient and user-friendly public sector;
• simple, effective legislation;
• cutting bureaucracy;
• satisfied citizens;
• establishing a sustainable and stable public sector;
• good quality, flexible, human resource management;
• developing professional and functional skills.

Healthcare

The fundamental aims regarding healthcare are to preserve entitlements arising from compulsory health insurance, strengthen the public healthcare system and ensure a financially sustainable system. This  is expected to be achieved through:

• improved performance at all levels;
• changes in the financing system without imposing new burdens on employers;
• separation of public and private healthcare activities;
• strengthening the role and responsibility of Slovenia's Health Insurance Institute in determining the scope and standards of entitlements.

Sectoral collective agreements are the basis for determining wages in the private sector. Wages are determined in the public sector according to collective agreements and by law. However, any increase in gross wages in the public sector cannot be higher than that in the private sector.

Labour market

The key aim for the labour market is to get more people in work,  particularly young people and other vulnerable groups, and also to focus on a sustainable retirement system, based on intergenerational solidarity and decent pensions.

Other areas

Activities regarding the European Cohesion Policy will be aimed at encouraging partnership and strengthening of social dialogue.

In education, the key aim is accessibility and matching educational programmes with the needs of society.

As for legal security, the aim is comprehensible and transparent legislation with an interconnected, harmonised and efficient legal system. Alternative ways of settling disputes will be encouraged.

Views of the social partners

Members of ZDS believe the agreement will ensure stable conditions for companies. They especially appreciate the commitment to no extra tax burdens or company contributions in the next two years. The Slovenian Chamber of Commerce has also emphasised the importance of establishing a stable business environment, free of unnecessary administrative barriers.

The president of ZSSS feels it is important that, despite their unsuccessful attempts to separate bonuses from the minimum wage, no definition of minimum wage was included in the agreement. He believes this gives unions the opportunity to achieve their aim through other actions. A similar approach will be taken on insolvency, where the unions insist that, when a company goes bust, workers are paid first. The president also emphasises the importance of the commitment that the branch collective agreement be the foundation for private sector wage policy. He does not believe that the signing of the Social Agreement signifies a greater level of trust between the social parters, but it certainly enables an increased level of social partnership.

The agreement expires on 31 December 2016.