Evolution of a statutory minimum wage since 1995

The creation of a minimum wage in Slovenia can be traced back to 1995, when a broad tripartite agreement set down a pay policy for companies and organisations. It was not long before demands to legally determine the minimum wage were introduced, and since then workers have seen regular rises. In 2010, unions forced the government to look again at how minimum wage rates were set and negotiated a big increase, making Slovenia’s minimum wage one of the highest among Member States.

Beginnings of a minimum wage

Slovenia has had some form of statutory minimum wage since 1995. Broad tripartite agreements, subsequently incorporated into legislation, included regular increases in the minimum wage in its early days.

The tripartite Social Agreement for 1995 stated that a minimum wage ought to be determined by law. However, the term ‘minimum wage’ was not used in the law that implemented the 1995 Social Agreement or in the pay policy agreement which determined the highest and lowest pay rates, even though it did set a cash figure for the lowest permissible monthly wage, forbidding the payment of any lower amount. The law, being an instrument that gave binding effect to the provisions of that particular social agreement, was only valid for the length of the agreement.

Introduction of a formal minimum wage

The law adopted in 1999, following the conclusion of a Pay Policy Agreement for 1999–2001, introduced a formal national minimum wage for the first time. The validity of the part of the law that regulated it was not limited, as previously, by the duration of the social agreement. The law also determined that any increase was to be set by the tripartite Economic and Social Council of Slovenia (ESSS) (SI0207103F).

Since 2000 the MW has been adjusted in line with inflation forecasts rather than past inflation to prevent sizeable wage rises that might fuel price rises during inflationary periods. This system is also used for general pay rises. The tripartite Private Sector Pay Policy Agreement for 2002–4 (SI0206102F) set forecasts of consumer prices as the basis for calculating increases in the minimum wage. It would also be increased by the percentage growth in GDP in the previous year every August while the agreement was in force.

Minimum wage after 2006

In the Social Agreement for 2003–5 (SI0307101F), the government and the social partners agreed to prepare draft legislation to regulate the minimum wage. The last minimum wage fixed by tripartite agreement was determined by the Private Sector Pay Policy Agreement for 2004–2005 (SI0405103F).

On 26 October 2006, parliament adopted the Law on the Determination of Minimum Wage. It set a gross monthly minimum wage that applied to all employees working full time in both public and private sectors. It also set out the method of calculating adjustments and established the minimum wage for 2006.

The new law stipulated an annual increase on 1 August each year based on forecasts for consumer prices, also used by the government as a basis for the preparation of the national budget. The incumbent labour minister would set the minimum wage after consultation with social partners and publish it in the Official Gazette of the Republic of Slovenia. The method of adjusting the minimum wage and other pay was sufficiently restrictive to help prevent any significant rises in inflation when Slovenia adopted the euro in 2007.

Minimum wage rates since 2010

For some time, trade unions have been demanding that a framework law should regulate the minimum wage on a permanent basis, establishing the method of adjustment and ensuring that it is fixed annually in a tripartite consultation process. This would end discussions on whether a aminimum wage is necessary which inevitably arise every second year.

Unions have insisted that the needs of employees and their families are the criteria on which a minimum wage should be based, claiming that at the moment it doesn’t make it possible for workers and their families to lead a decent life. Employers have agreed, but say that companies in labour-intensive sectors have had difficulties in paying even these low levels of wages and a higher MW would endanger jobs in these sectors. Trade unions have responded that some companies in these sectors would go bankrupt whether or not they were forced to pay a more reasonable wage.

However, new minimum wage legislation took only some of these demands into account.

The Law on Minimum Wage adopted on 11 February 2010 considerably increased the gross minimum rate for 2010 from €597.43 to €734.15 a month, increasing the net rate from €460 to €562, although trade unions had demanded €600.

The Ministry for Labour, Family and Social Affairs (MDDSZ) attempted to calculate the average minimum living expenses of a Slovenian household and adjusted the rate to this amount. However, it was also acknowledged that the increase might put some employers in financial difficulties. The 2010 legislation made it possible for such companies to move gradually towards the payment of the full minimum wage during a transitional period with a deadline of 31 December 2011,

The law says that the indicators to be used to determine the minimum wage are:

• a rise in consumer prices;

• wage trends;

• economic conditions or economic growth;

• employment trends.

Once a year, it is to be adjusted at least in line with any rise in consumer prices recorded by the Statistical Office of the Republic of Slovenia for the previous December-to-December period.

The amount is determined by the current labour minister after prior consultation with the social partners, through the forum of the ESSS. The Labour Inspectorate of the Republic of Slovenia (LIRS) has the responsibility of supervising compliance with the legislation.

During the ESSS session on 13 January 2012, both employer organisations and trade unions agreed to increase the gross minimum wage to €763.06 for the period from 1 January 2012 to 1 January 2013 (the annual rise in consumer prices for the previous December-to-December period was 2%). Both agreed that during the current economic crisis there was no room for a larger increase.

According to Eurostat’s Minimum wage statistics, Slovenia belongs to the group with an intermediate level of minimum wage, from just over €550 to just below €1,000 a month, and which includes five Member States (Greece, Malta, Portugal, Slovenia and Spain) and the United States.

Compared to average gross monthly earnings in industry, construction and services in Member States in 2010, Slovenia’s minimum wage was among the highest along with Turkey, France, Slovenia, Malta and Luxembourg. Statistics show that in these countries the minimum wage more than 45% of gross monthly earnings.

According to the Institute of Macroeconomic Analysis and Development (UMAR) in 2010 and 2011, the growth of wages in the private sector was influenced mainly by the rise in Slovenia’s minimum wage which had, UMAR estimated, added approximately three percentage points to the rise in the gross wage in 2010 (5.1%). In 2011, the incremental rise in the rate had less influence (below one percentage point) on average wage growth in the private sector (2.6%).

In September 2011, 41,045 employees – 6.7% of all employees – were being paid the minimum wage.

From August 2009 to March 2010 the minimum wage increased by 18.6%; in the period from March 2010 to January 2011 it increased by 1.86%; from January 2011 to January 2012 by 1.96%; and from January 2012 to January 2013 it will increase by a further 2%.

Štefan Skledar, UMAR