New public sector agreement to abolish pay differences

In July 2007, after five years of negotiations, the government and the public sector trade unions reached agreement on the overall intersectoral collective agreement for the public sector. On the trade union side, 24 trade unions took part in the negotiations and 18 of these signed the agreement. Trade unions and the government will now have to negotiate the provisions of the sectoral collective agreements.

The Law on the Pay System in the Public Sector (LPSPS), which came into force in July 2005, constitutes the basis of a new public sector pay system (SI0510304F). The purpose of the new pay system is to eliminate existing pay differences in the public sector. According to the LPSPS, its provisions will start to apply to the pay of public sector workers’ no later than three months after the adoption of all executive regulations and collective agreements required for calculating pay. The LPSPS therefore requires collective agreements for individual sectors of the public sector and a special collective agreement for the public Radio and Television of Slovenia (Radio Televizija Slovenija, RTV Slovenia), in addition to the overall intersectoral Collective Agreement for the Public Sector (CAPS). These supplementary agreements are necessary for executing the new pay system.

On 16 July 2007, after five years of negotiations, the government and public sector trade unions finally reached agreement on the CAPS. Some 24 trade union organisations took part in the negotiations and 18 of these signed the CAPS, which provides the basic framework for the sectoral collective agreements in the public sector. These sectoral agreements will determine the details of the normative aspects and pay elements in individual sectors of the public sector, which trade unions and the government are to negotiate now. Following successful negotiations, all the sectoral agreements will be ready for conclusion. The government thus expects the new pay system to enter into force on 1 January 2008.

Provisions of CAPS

In addition to general provisions, the CAPS also includes:

• a section on obligations’, which regulates the rights and obligations of the parties to the agreement, including dispute resolution ;

• a normative section on tariffs, which includes subchapters on basic pay, pay reflecting the employee’s job performance, and pay supplements (such as night work bonuses and other allowances).

According to the CAPS, public-sector employees will receive four wage increments between 1 January 2008 and 1 March 2010, amounting to a total increase of 9% in average pay, which is worth a total of €270 million. Calculations by the government Institute of Macroeconomic Analysis and Development (Urad RS za makroekonomske analize in razvoj, UMAR) indicate that public-sector employees will see real increases in their pay of 4.2% in 2008, 3.3% in 2009 and 4.8% in 2010. These figures are higher than the expected overall wage growth in Slovenia of 3.2% in 2008, 2.9% in 2009 and 3.4% in 2010.

Problem of pay differences

Under the new pay system, the government aims to eliminate existing pay differences among the various professions in the public sector by 2010. The most significant pay increases between 2008 and 2010 will be for workers in sectors such as culture, social security and healthcare, while workers in education will see their wages increase the least. In explaining this situation, the Minister for Public Administration, Gregor Virant, stated that education workers have seen their pay rise continually since 2002, which is why other sectors will be entitled to higher pay increments in the coming years.

Government opinion

Minister Virant highlighted that the outcome of the negotiations is a compromise between the interests of the trade unions and those of the government, which has to ensure that the introduction of the new pay system is financially and economically sustainable. The minister believes that the sectoral negotiations will be finalised in the autumn of this year, which means that the ministry has three months to prepare the implementation of the new pay system. This new system will be uniform and transparent, and it will prevent partial increases and extortions by trade unions in individual sectors of the public sector.

The government also reviewed a document assessing the costs of the new pay package. Minister Virant gave his assurance that it would not cause an increase in public spending.

View of trade unions

In general, the trade unions welcomed the conclusion of the CAPS; however, they believe that certain aspects – primarily in relation to bonuses – could have been negotiated better. The chief negotiator on the trade union side, Doro Hvalica, stated that the overall deal will only be concluded once all the changes to sectoral agreements have been agreed and the pay for every single worker can be determined.

Commentary

According to the daily newspaper Delo, many experts emphasise that wage growth should not rise above the growth rate of gross domestic product (GDP) in order to avoid a rise in inflation. The government should keep this in mind when negotiating the sectoral collective agreements, particularly in view of the general elections taking place next year.

Štefan Skledar, Institute of Macroeconomic Analysis and Development