Agreement reached on austerity measures in the public sector

On 10 May 2012, the government and trade unions in Slovenia signed an agreement on austerity measures in the public sector. The measures will have a major impact on more than 40 laws and other areas of legislation, and will affect various aspects of industrial relations, including pay and other benefits for public sector workers. Among the tough measures to cut the budget deficit is the reduction of public sector salaries by 8% brought in at the beginning of June 2012.

Background

On 10 May 2012, after a month of negotiations, the government and the public sector trade unions in Slovenia signed an agreement on austerity measures in the public sector. The Coordination of Strike Boards of the Public Sector Trade Unions and the Government of the Republic of Slovenia concluded the Agreement on the Resolution of Strike Demands (ARSD), agreeing on the following issues in order to balance public finances:

• Matters including pay, reimbursements and other income in the public sector, and the employment of public employees have been determined in a separate Agreement on Measures in the Field of Pay, Reimbursements and Other Incomes in the Public Sector for the Balance of Public Finances (AMFP);

• Measures in the field of the social state;

• Measures in the field of standards and norms in the public services, such as education, health care, social care, research and public administration, and the rebalancing of public expenses for these areas;

• Strike pay.

The ARSD will regulate matters between the Government and unions during strikes, and also provide the basis for alleviating the effects of some austerity measures in the Law on Public Finance Balance (LPFB). By signing the ARSD, the public sector unions have agreed not to lodge a demand for a referendum on the LPFB, and the suspended strike of public sector workers has been called off.

The ARSD was signed by 14 of the 21 trade unions. In addition 20 out of 33 trade unions signed an agreement on cutting pay and other austerity measures. The majority of trade unions ended the strike, which will be paid. Trade unions which did not sign the ARSD will be allowed sign it at a later date.

The government, meanwhile, has said it does not plan to intervene in the pay of public employees until the end of 2013.

Prime Minister Janez Janša thanked social partners, and said the ARSD provided a good basis for continuing negotiations on the new Social Agreement.

For the time being the following trade unions have still to sign the ARSD; the police forces’ trade unions, the Jurisdiction Workers’ Trade Union (SDP), the Ministry of Defence Trade Union (Sindikat MoRS), Municipality Constables’ Trade Union (SOR) and the Public Servants’ Trade Union of Slovenia (SJUS).

The separate AMFP was not signed by the Confederation of Trade Unions ’90 of Slovenia (SI0210102F). It is the third biggest umbrella trade union organisation and its members are private sector representative trade unions and four public sector representative trade unions.

Revised 2012 budget adopted by parliament

On 11 May 2012, parliament adopted the Law of Public Finance Balance (LPFB), intended to rebalance the state budget, proposed by the government. The LPFB includes a package of austerity measures (including the ARSD) valued at almost €800 million that are the basis of the revised 2012 budget.

The LPFB will, the government hopes, cut the budget deficit to 3% of GDP by 2013. Janez Šušteršič, Minister of Finance, said that the ARSD would save the public finances €500 million in 2012 and €750 million in 2013. The LPFB also includes provisions for raising the general value added tax rate in 2014 if the budget deficit is still more than 3% of GDP.

In his address to the National Assembly, Šuštaršič said that substantial adjustments in the public sector were necessary because the private sector had made greater adjustments in response to the financial crisis in recent years. Failure to adopt the austerity package would mean that Slovenia would continue with near-zero economic growth for the next few years, with unemployment rising to 15% or even higher.

The combined result of all the measures would lead to a budget deficit at the end of the year totalling €1.1 billion, 3% of GDP. The government deficit, calculated with the harmonised European methodology for the compilation of national accounts, the European System of Accounts (ESA95), will be between 3.5% and 4% of GDP.

The LPFB will have an impact on over 40 other laws and pieces of legislation, which shows the wide-ranging scope of the austerity measures. The pay of public sector workers was reduced by 8% from June 2012.

Commentary

The new Minister of Labour, Family and Social Affairs, Andrej Vizjak, said this was an important first step towards the resolution of the economic crisis in Slovenia. However, it was not the end of the process, and negotiations on the conclusion of the new Social Agreement for the Period 2012–2016 would have to continue.

On 30 March 2012 the tripartite Economic and Social Council of Slovenia (ESS) finished preparing the Starting points for the Social Agreement 2012–2016, and the government and the social partners agreed on the text. However, on 3 April 2012 the four biggest trade union confederations did not sign it even though they had supported the text. They were protesting against the austerity measures which had at that point been sent to the social partners for discussion.

The Government Communication Office has said that the adoption of the 2012 revised budget and austerity package is certainly good news, and at an international level. Finance ministers of other European countries were also supportive. At a meeting in Brussels the President of the Eurogroup, Jean-Claude Juncker, said that finance ministers welcomed the ambitious austerity measures adopted by Slovenia.

Addressing the news conference at the end of the Eurozone ministers’ meeting, Juncker explained that the Eurogroup had been informed about the latest developments in Slovenia at the talks. He said the Eurogroup welcomed Slovenia’s ambitious consolidation measures, and its government’s strong commitment to eliminate the budget deficit in 2013.

Štefan Skledar, UMAR