2003 Annual Review for Slovenia

This record reviews 2003's main developments in industrial relations in Slovenia.

Political developments

The current government is a centre-left coalition, headed by Prime Minister Anton Rop. The coalition parties are Liberal Democracy of Slovenia (Liberalna Demokracija Slovenije, LDS), the United List of Social Democrats (Zdruzena Lista Socialnih Demokratov, ZLSD), the Slovenian People’s Party (Slovenska Ljudska Stranka, SLS-SKD) and the Democratic Party of Pensioners of Slovenia (Demokraticna Stranka Upokojencev Slovenije, DeSUS). The next general election is scheduled to be held in 2004.

Slovene citizens went to the polls on 23 March to vote in a referendum on accession to the EU and NATO. EU membership was supported by 89.61% of those voting and NATO membership by 66.05%. The turn-out in both referenda stood at 60.31%. Slovenia will join the EU in May 2004, and June will see its first European Parliament elections.

Collective bargaining

Tripartite agreements

Although these are not collective agreements as such, it should be noted that several important tripartite agreements were reached by the government and social partners during 2003. April saw the conclusion of an overall social agreement for 2003-5, setting the general direction for economic and social development over the coming two years and defining the tasks of the signatories. The main stated aim of the agreement is to achieve a balance between economic efficiency and social and legal security. The accord includes important provisions on issues such as wages policy, employment, training, social dialogue, equal opportunities and taxation (SI0307101F).

The government is seeking to abolish the indexation of pay in the public sector, with the aim of ensuring the sustainability of public finances and curbing inflation. A certain level of deindexation was achieved by the government and the trade unions in a new pay policy agreement for the public sector, which partially linked pay growth to EU inflation growth (SI0312102F).

The government also believes that the method of pay adjustment in the private sector is limiting the economy’s ability to adapt to its current slowdown. It also believes that it is causing inflation and is therefore not in accordance with the entry of Slovenia into the EU's Exchange Rate Mechanism 2 (ERM 2) at the end of 2004 or beginning of 2005. Therefore, the social partners have made a commitment to adjust pay in a new way from 2004 and the tripartite agreement on private sector pay policy that succeeds the current 2002-4 agreement (SI0206102F) should determine the indexation of wages in accordance with the new principle determined in the 2003-5 social agreement (see above). However, this principle is too loose to be directly applicable and difficult negotiations can be expected over putting it into practice in a new tripartite pay policy deal. The negotiations over this agreement started after a meeting of the tripartite Economic and Social Council of Slovenia (Ekonomsko socialni svet Slovenije, ESSS) on 17 December 2003.

General

The present collective bargaining structure is highly centralised. Within the framework of the tripartite social and pay policy agreements (see above), there is a general collective agreement for the whole private sector, and below this there are collective agreements for specific sectors (and then company collective agreements). A shift towards partial decentralisation is currently in prospect, and it is expected that the general collective agreement for the private sector will lose significance and eventually disappear, with sectoral collective agreements gaining in importance and become the cornerstones of the system. The Union of Free Trade Unions of Slovenia (Zveza svobodnih sindikatov Slovenije, ZSSS), the largest trade union organisation in Slovenia, is actively pursuing this. However, the employers’ organisations, and particularly the Chamber of Industry and Commerce of Slovenia (Gospodarska zbornica Slovenije, GZS), want to retain the centralised bargaining structure. This has led to delays in sectoral collective bargaining (SI0403101F). Only one sectoral collective agreement was concluded in 2003 - the agreement for post and courier activities, signed on 15 May.

It is impossible to obtain an overall picture of bargaining activity and to analyse collective agreements in detail because no central register/archive of collective agreements exists. The EU PHARE programme for the enhancement and development of social dialogue in Slovenia has recommended the establishment of such a register/archive (SI0401103F).

Pay

The 2002-4 tripartite agreement on private sector pay policy provided for a 2.5% increase in basic pay from August 2003. In addition, if the rise in consumer prices over the period January-June 2003 exceeded 2.8%, basic pay was to be increased from August 2003 by the amount that consumer prices had risen over 2.6%. Furthermore, from December 2003, basic pay was to increase by the difference between the rise in consumer prices over the period January-November 2003 and the increase awarded in August 2003. The actual average collectively agreed basic pay increase is difficult to estimate (SI0401103F).

The Institute of Macroeconomic Analysis and Development (IMAD) estimates that growth in overall real gross earnings per employee in 2003 will be 2.0% - 0.8% in the public sector and 2.2% in the private sector.

Pay policy in Slovenia has pursued the goal of keeping growth in real average monthly gross earnings per employee below the rate of productivity growth. Up until 1997 this was achieved only in 1994. However, because the tripartite pay policy agreement functioned effectively, this goal was reached over 1997-2000. In 2001, earnings growth exceeded productivity growth primarily because of public sector earnings, which climbed by 5% in real terms. Earnings in the public sector are higher than those in the private sector - the differential was 22.5% in 1991, rising to 33.4% in 2001. The 2001 rise was due to pay supplements introduced in state administration and education, representing the second wave of a growth in pay supplements that began in 1998. In the middle of 2002, a law on pay systems in the public sector was passed, with the effect that it was no longer possible to bargain over pay supplements within the framework of public sector sectoral collective agreements. Therefore, in 2002, earnings growth in the public sector slowed and overall earnings growth was again below the rate of productivity growth In 2002, overall gross earnings per employee rose by 2.0% in real terms - 1.1% in the public sector and 2.3% in the private sector. Private sector pay growth lagged behind labour productivity growth by 1.5 percentage points. The basic direction agreed by the government and the social partners in both pay policy agreements and the social agreement for 2003-5 (see above under 'Tripartite agreements') is that the growth in real gross earnings per employee should lag behind growth in labour productivity by at least one percentage point.

Working time

Sectoral collective agreements generally provide for a normal 40-hour working week, as laid down in he Law on Labour Relations (LLR). This was the case for 2003's only new sectoral agreement, that for postal services. The postal agreement also contains provisions on compensation for surplus hours worked, and lays down that matters such as the distribution of working time and shiftwork must be regulated in a company collective agreement.

Job security

Job security was a key issue in the year's most high-profile company restructuring event. On 19 January, a national referendum was held on the restructuring and privatisation of the debt-ridden Slovenian Railways, the country's largest employer. Of those voting, around 47% were in favour of keeping the company as a single unit, as supported by trade unions, while 51% endorsed the government's plan to split it into three units and partially privatise two of them. In December 2002, the Slovenian Railways supervisory board presented a long-term restructuring plan, of which a central part was a proposal for the state - which owns 100% of the company - to supply fresh capital of EUR 132 million while the company itself would assume EUR 152 million of old debt. The company, which was predicted to post an annual loss of EUR 24 million for 2003, is also expected to cut its workforce from the current 9,000 to about 7,000 by 2010. Employee representatives at Slovenian Railways sought to influence the restructuring process through their participation rights, including the 'participative agreements' that employees' councils may conclude with employers (SI0311102F). Slovenian workers have relatively strong participation rights and participative agreements at company level represent a channel through which they may influence company restructuring and job security. In addition, the Slovenian system of corporate governance may be seen as an 'insider' system (TN0209101S), while workers can in many cases influence decision-making in a company as co-owners (one of the consequences of the Slovene model of privatisation is that in a number of companies at least one-third of workers are co-owners of the capital - SI0312101F).

There are no specific collectively-agreed provisions on job security in the postal services agreement (2003's sole new sectoral collective agreement).

Equal opportunities and diversity issues

Collective agreements in Slovenia do not yet include measures to improve gender wage equality or to support female employment in the same way as occurs in some present EU Member States. However, the gender pay gap is narrowing in Slovenia. In 1991, women’s average monthly gross pay (on annual average) stood at 88.7% of men’s. This fell to around 85% in 1994 and 1995, but the proportion has been rising since, to 87.8% in 2000, 89.2% in 2001 and 90.4% in 2002. However, this information may be misleading, as it does not necessarily mean that women are better paid. The trend is most probably also a reflection of the fact that at the beginning of Slovenia's economic and political transition, the sectors of the economy with many low-skilled jobs predominantly occupied by men were shedding employment. Now, the sectors with predominantly female employment are shedding low-skilled jobs and therefore the pay gap is decreasing.

Training and skills development

There are various provisions on training and education in the new postal services collective agreement. For example, when workers embark on a course of education (at levels all the way up to a doctoral degree) that is in the interest of the employer, they receive paid leave for each exam and the reimbursement of costs. Other provisions concern apprentices who have concluded a training contract with the employer, trainers involved in practical teaching and pupils and students on work practice.

Legislative developments

The European Commission's November 2003 'comprehensive monitoring report ' on Slovenia’s preparations for EU membership states in its chapter on social policy and employment, that: 'as regards social dialogue, the administrative framework is in place and social dialogue is well advanced, especially at tripartite level. Autonomous bipartite social dialogue and free collective bargaining between social partners’ organisations with voluntary affiliation should be promoted at both sectoral and enterprise level. Efforts should be made to ensure the development of employers’ federations based on voluntary affiliation.' This highlights the fact that Slovenia must adopt as quickly as possible a new Law on Collective Agreements to replace the old legislation and establish the legal framework for free collective bargaining (SI0212101F). Commentators believe that, to make this possible, the new law must, among other changes, abolish the right of the Chamber of Industry and Commerce of Slovenia ( GZS) and other 'chambers' that have compulsory membership to represent employers in collective bargaining (and in industrial relations in general) (SI0211102F). In addition, all provisions in other laws which do not comply with the principle of free collective bargaining should be changed.

The new Law on Collective Agreements, which will mean a major change in Slovene industrial relations, is still in preparation. It seems that it will be much more difficult to prepare it and to achieve the consent of all social partners than initially expected.

No new laws on industrial relations and employment issues were adopted in 2003. However, a new Law on Labour Relations, adopted in 2002 (SI0206101N) came into force on 1 January. It governs individual employment relationships and covers matters such as: general definitions (of the employment relationship, worker and employer); contracts of employment; rights, duties and responsibilities arising from the employment relationship (including pay, working time etc); protection of certain categories of workers (such as pregnant, young, disabled and older workers); and enforcement and protection of rights, duties and responsibilities arising from the employment relationship).

On 21 September, a referendum was held on shop opening hours. The referendum, initiated by the Trade Union of Retail Workers, was on the question of Sunday opening, with the union seeking support for restrictions on such opening. The union's proposal was supported by conservative and left-wing parties, but opposed by businesses and the LDS, the leading party in the governing coalition. In the referendum, 57.5 % of those voting were in favour of a general ban on shop opening on Sundays, while 41.7% were against. Thus in line with Slovenian law, legislators must now pass regulations providing that only shops offering basic goods may open on up to 10 Sundays a year (with exemptions for smaller petrol stations and shops in hospitals, hotels, airports, border crossings, and bus and train stations). The results of the referendum are legally binding and parliament cannot pass any law that is not in line with the referendum outcome, nor hold another referendum on the same issue, within a year.

The organisation and role of the social partners

There were no significant changes in the organisation and role of the social partners in 2003 (SI0210102F, SI0211102F). The two chambers with compulsory membership among businesses - the Chamber of Industry and Commerce of Slovenia (GZS) and the Chamber of Crafts of Slovenia (Obrtna zbornica Slovenije, OZS) - continued to act as employers’ organisations, despite the problems identified with this situation. This will be changed by the adoption of a new Law on Collective Agreements (see above 'Legislative developments').

Industrial action

No particularly significant industrial action took place over the course of 2003 (SI0211101F).

Employee participation

There were no legislative or other significant developments in the area of employee information and consultation (or other forms of participation) in 2003.

The requirements of the EU information and consultation Directive (2002/14/EC) (EU0204207F) are thought to be met by existing Slovene legislation - predominantly the 1993 Law on the Participation of Workers in Management (LPWM) and the 2002 Law on Labour Relations (SI0206101N). The LPWM regulates employee participation (notably in the form of information, consultation and co-determination), providing for two channels of participation, similar to those found in many current EU Member States: worker representation on the supervisory and management boards of companies; and a representative body elected by workers - the employees' council - or a representative workers' trustee in smaller companies. Employees' councils may conclude 'participative agreements' with employers, which are regarded as a further form of employee participation supplementing the two main forms.

A special law to implement the employee involvement Directive (2001/86/EC) linked to the European Company Statute (ECS) (EU0206202F) is on the 2004 work programme of of the Ministry for Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve, MDDSZ). The extent to which companies headquartered in Slovenia intend to use the ECS to incorporate as a European Company is not yet known.

There were no significant developments connected with European Works Councils (EWCs) in 2003. Legislation to implement the EWCs Directive (94/45/EC) was adopted in June 2002 (SI0208103F) and will come into force when Slovenia joins the EU (on 1 May 2004). It can be seen as a natural extension of the LPWM, which does not take into account supranational company structures.

Stress at work

On 4 September, the government adopted a resolution on a National Programme on Safety and Health at Work. It contains a subchapter on stress, stating that the increasing role of psychological disorders in causing absence from work points to the consequences of stress. It notes that health and safety experts are calling attention to the emergence of signs of overload and chronic fatigue, which points to a need to prevent and eradicate stress at work. The resolution calls for a project to:

  • identify the activities where there is most evidence of an increase in absence due to stress;
  • on the basis of this analysis, identify the possible causes of stress;
  • propose concrete ways of overcoming the problem (including organisational, educational, personnel and technological changes);
  • propose an educational programme for identifying and overcoming stress; and
  • draw up a programme of identifying and eliminating stress in order to maintain ability to work and ensure better quality of life. The programme should be compatible with the European Commission's 2002-6 Community strategy for health and safety at work (EU0204203N).

This resolution was discussed in advance by the government and the social partners within the Economic and Social Council (ESSS) (SI0207103F) on 16 July, and then again on 23 July when the social partners commented on how their remarks regarding the resolution had been taken into account.

The 2003 collective agreement for post and courier activities refers indirectly to stress. The chapter on health and safety at work includes a statement that it is the duty of the employer to adapt the work to the individual worker by eliminating elements such as monotonous work or an imposed rhythm.

Undeclared work

The share of the 'grey' economy is, according to different estimates, between 17% and 25% of Slovenian GDP. This is thought to be relatively high, and efforts to curb undeclared work are extensive. In 1997, the government set up a commission to uncover and prevent undeclared work and employment, headed by a representative of the Ministry for Labour, Family and Social Affairs. It conducts various relevant activities and coordinates the work of other bodies active in this area. In addition, the Ministry has a state secretary responsible for this issue. Also in 1997, the government adopted a programme to uncover and prevent undeclared work and employment. In this framework, legislation has been adopted and numerous other activities carried out, led by the Ministry. More rigorous inspection of undeclared work as part of general inspection work is a particular focus. Additional, specific inspections also take place, involving cooperation between the Labour Inspectorate, the Market Inspectorate, the Traffic Inspectorate, the Tax Administration, the police and other bodies.

The legislation regulating this area is:

  • the Law on prevention of clandestine work and employment, passed in 2000; and
  • regulations on work activities counted as 'personal supplementary work' and on the procedure for notification of these work activities, which came into force in 2002.

In 2003, the abovementioned government commission drew up a report on activities and measures for the prevention of clandestine work and employment, covering the period from 1 July 2001 to 31 December 2002. The social partners and the government discussed this report on 16 April in the ESSS. The employers stressed that it is necessary to strengthen inspections because those employers, especially the small ones, that operate and pay taxes according to the rules feel disadvantaged and threatened by unfair competition from those that do not. The trade unions were of opinion that more information activities are needed to inform employers and unemployed workers about the consequences of undeclared work for them.

Slovenia’s draft National Employment Action Plan (NAP) on employment for 2004 includes (under the strategic goal 'Improvement of the quality and productivity of work') a subchapter on the transformation of undeclared work into regular employment. This states that Slovenia has developed an indicator to monitor undeclared work only in the process of adaptation of its labour market policies to the EU's European employment strategy. It will be possible to report on the extent of the problem more exactly only in the NAP for 2005. According to rough estimates, undeclared work exists particularly in crafts and related activities, catering and other services. An evaluation of the functioning of the Law on prevention of clandestine work and employment is not yet available. In order to stimulate the transformation of undeclared work and employment into regular employment, the draft Slovenian NAP envisages the following:

  • the abolition of administrative obstacles to the operation of the companies, which includes changes to legislation and the establishment of a system to make it easier for companies to register;
  • changes to tax legislation in terms of collecting contributions, in order to reduce the administrative burden on companies and in particular small companies;
  • the establishment of measures to promote entrepreneurship and develop an entrepreneurship-friendly environment; and
  • easing access to sources of finance for companies and making it easier to establish new business start-ups.

The prevention and uncovering of undeclared work will not only result in a reduction in registered unemployment but will also promote the transition of unregistered work to regular employment, it is stated. Pension reform should not be allowed to promote early retirement and undeclared work.

The draft NAP was discussed by the government and the social partners at the ESSS on 3 December 2003. Trade unions made comments on the chapter on undeclared work, to which the Ministry of Labour, Family and Social Affairs and Ministry for the Economy responded. The former Ministry is investigating the possibility of changing existing legislation in order to make it easier to transform unregistered work into regular employment. However, no concrete measures have as yet been included in the NAP.

New forms of work

In late April 2002, parliament passed the Law on Labour Relations (LLR), governing individual employment relationships, which came in force on 1 January 2003 (see above under 'Legislative developments'). One new aspect is that, unlike under the old legislation, all regulations on atypical forms of employment are placed in the LLR's chapter on the employment contract (in a subchapter on 'particularities' of the employment contract). The new LLR regulates the following atypical forms of employment: fixed-term employment; temporary agency work; public works employment, part-time employment; and home work.

With regard to part-time work, the LLR's provisions do not differ substantially in their content from the previous rules, but they are now set out in a more clear and precise way (SI0308201F). Part-time work remains relatively uncommon in Slovenia, affecting only around 6% of those in employment, compared with around 18% on average in the EU. Women's part-time work rate is somewhat higher, at around 8%, but this is even further below the EU figure of around one-third. Indeed, the level of part-time work has fallen in Slovenia in recent years, having stood at 8.7% in 1997. A key reason for the low level of part-time work among both women and men is that a full-time income is generally needed to achieve a decent standard of living in Slovenia. The draft NAP for 2004, issued in November 2003, includes a measure to promote part-time work. The provisions of collective agreements on part-time work repeat the LLR to a certain extent, though in some cases also refer to the reconciliation of work and family life. For example, it might be provided that the distribution of working time is to be determined by agreement between the worker and the employer where: a worker is working less than full time because this benefits their child; or the parent of a child up to the age of 17 months is working half time.

On temporary agency work, the LLR's provisions seek to both increase the flexibility of the Slovene labour market and provide adequate protection for temporary agency workers (SI0207101F).

According to Eurostat, 14.2% of total employment in Slovenia was on fixed-term contracts in 2002. This represents a rise from 13.0% in 2001, and from around 12% in 1998-9, but is still lower than the 14.6% recorded in 1997.

Other relevant developments

In November 2003, after a long period of preparation, the government presented the outline of a healthcare reform plan to the tripartite ESSS. One of the most contentious proposals is the transfer of premiums for voluntary supplementary health insurance to the compulsory health insurance system (SI0311103F).

In November 2003, the government adopted a programme aimed at the country's entry into ERM 2 at the end of 2004, and the subsequent introduction of the euro single currency, possibly in 2007. All the social partners support this move. However, ERM 2 and euro-zone entry will mean changes to current pay and social security benefit indexation systems, and there is considerable debate about how to protect poor people low-wage workers, with a forthcoming tax reform proving controversial. (SI0312102F).

Outlook

The issue most likely to dominate 2004 will be the preparation and the adoption of the new Law on Collective Agreements. This law will introduce free collective bargaining and provide that only employers’ organisations with voluntary membership can represent employers’ interests in the sphere of industrial relations.

Another important issue is the conclusion of a new tripartite agreement on pay policy for the private sector. Here, the deindexation of pay is expected to be the most controversial part of the debate (SI0312102F). The negotiation of a number of sectoral collective agreements will also feature during 2004. (Stefan Skledar, Institute of Macroeconomic Analysis and Development)

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