Decline in workers’ bonus pay post-crisis

Slovenian workers are feeling the effects of the global financial crisis in their pay packets. Fewer workers have been receiving extra year-end payments (YEPs), whether the ‘13th month’ payment or the traditional Christmas bonus. Research carried out on the subject by Slovenia's Institute of Macroeconomic Analysis and Development has found that both the number of those receiving a bonus and the bonus amount in 2012 was significantly lower than in 2011. Estimates suggest that in 2013 less than 20% of all companies paid a YEP.

Bonus payments

Extra year-end payments (YEPs) were common in Slovenia until the onset of the global financial crisis in 2008. These were paid in addition to the regular monthly wage, and included the bonus generally referred to as the ‘13th month’ payment and the Christmas bonus. Every year in November and December, the Union of Free Trade Unions of Slovenia (ZSSS) (SI0210102F) (SI0412301N) calls on employers to pay workers these bonuses.

The 13th month payment is determined by sectoral collective agreements which set out criteria for determining the bonus, taking into account the profitability of a company. The Christmas bonus is either provided for by a collective agreement or a special agreement concluded between the employer and the representative trade unions.

13th-month bonus

The Law on Employment Relationships says that a wage shall be composed of a basic wage, an element of pay for job performance and additional payments. A further element of the wage is to be paid on the basis of business performance if set out in a collective agreement or in the employment contract.

As a rule, the employer is not obliged to pay the 13th month bonus. The majority of sectoral agreements stipulate that the employer and the representative trade unions must agree on what part of wages will be based on a company’s economic performance. The parties involved must reach written agreement on this issue at the beginning of the year, at the same time that the company’s business plan is adopted. In general, the agreement is drafted to say that if a company meets the goals of its plan, it will pay an agreed 13th month bonus.

For example, the metal materials and foundries sector agreement, settled on 29 December 2005, says: ‘Criteria for the determination of that part of the pay which is defined according to successful business performance are agreed by the employer and company trade unions when a company’s business plan is adopted.’

Trends in bonus payments

After the onset of the financial crisis, fewer workers were in receipt of a YEP. Before the crisis, the percentage of workers who received YEPs had ranged from 9% in 2002 to 23.8% in 2007. Figures from the Institute of Macroeconomic Analysis and Development (IMAD) show that in 2012, a lower proportion of those in paid employment received YEPs compared to 2011. In most sectors, the amount of bonus dropped too, particularly in public non-financial companies. The bulk of all YEPs were received by employees in non-financial companies, almost 92%. The total amount of bonuses paid declined by 15.3%.

Just 1% of all YEPs paid were given to workers in the government sector, and YEPs were down 14.5% year on year for government workers. The private sector paid 82.2% of all YEPs in 2012, although payments were down 10.5% compared to 2011 – in financial companies down by 54.3%; in non-financial companies, down by 6.8%.

In the public sector, the largest share of YEPs was received by employees in public companies (94.1%; non-financial 73.1%, financial 21.0%) and the rest in the government sector. The year-on-year decline in total YEPs was much larger in public non-financial (-45.5%) organisations than in financial companies (-19.2%).

It 2013, it is estimated, less than 20% of all companies paid YEPs. A Christmas bonus was received by the workers of the companies Brnik-Aerodrom Ljubljana (Slovenia’s central airport, 64.85% state owned), Gorenje (a major producer of domestic appliances, 22% state owned), Petrol (the main vehicle fuel supplier in Slovenia, more than 20% state owned), Krka (a major drug company, 25.18% state owned) and Telekom (about 75% direct and indirect state ownership).

No YEPs were paid in the banking sector where the mostly state-owned banks NLB, Nova NKBM and Abanka have made severe losses as a result of the crisis, or to postal and rail workers at Post of Slovenia and Slovenian Railways (both 100% state owned).

Štefan Skledar, UMAR

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