Slovenia: Employers withdraw from social agreement for 2015–2016

Slovenian employer organisations withdrew from the 2015–2016 social agreement at the end of November 2015, after Parliament approved amendments to the law on the minimum wage. Employers said the government had acted unacceptably and arbitrarily in making the changes. Trade unions, however, argue that vulnerable workers had to be protected.

Background

The social partners in Slovenia signed a new social agreement for 2015–2016 on 5 February 2015, after six years of contention. The previous agreement had expired in 2009, but the social partners up to that point had been unable to agree on the economic and social reforms necessary to cope efficiently with the global financial crisis. Two issues that were particularly controversial during negotiations were excluded from the new social agreement: a new definition of the minimum wage and insolvency legislation.

The agreement was signed by employer organisations, trade unions and the Minister of Labour, Family, Social Affairs and Equal Opportunities (MDDSZ). On the employers' side, the Slovenian Employers' Association (ZDS), the Chamber of Craft and Small Business of Slovenia (OZS), the Slovenian Association of Employers in Craft and Small Business (ZDOPS-GIZ), and the Slovenian Chamber of Commerce (TZS) signed. On the trade union side, it was signed by the Association of Free Trade Unions of Slovenia (ZSSS), the Confederation of Public Sector Trade Unions of Slovenia (KSJS), the Slovene Alternative Association of Trade Unions (SZS Alternativa), the Independent Confederation of New Trade Unions of Slovenia (KNSS), the Association of Workers’ Trade Unions of Slovenia (Solidarnost), the Confederation of Trade Unions 90 of Slovenia (KS 90) and the Confederations of Trade Unions of Slovenia Pergam (KSS Pergam).

The ZDS and the TZS said they signed the new agreement because they believed it would ensure a stable business environment for companies, while the ZSSS emphasised the importance of concluding the social agreement, despite its unsuccessful attempts to exclude payments for unsocial working times from the minimum wage. However, the Chamber of Commerce and Industry of Slovenia (GZS), one of the country’s largest employer organisations, which had signed every previous social agreement, refused to participate in negotiations for the 2015–2016 agreement because it felt the agreement lacked a clear focus or an agenda for implementing its goals.

Views of social partners

Employer organisations

The main reason all four employer organisations withdrew from the new social agreement was Parliament’s approval of amendments to the minimum wage legislation at the end of November 2015. The changes mean that allowances for unsocial working times (night, Sunday and holiday work) are now exempt from the minimum wage and paid separately. The government's support for trade union efforts to change the minimum wage system outraged the employer organisations. They argued that this was a violation of the signed social agreement and of Convention 131 of the International Labour Organization (ILO) concerning the minimum wage. They also said the government had acted unacceptably and arbitrarily. The ZDS, the TZS and the ZDOPS-GIZ were the first to go, saying it was the end of social dialogue in Slovenia. In December 2015, the last employer organisation, the OZS, withdrew.

Throughout 2015, the employer organisations had been demanding that the government should introduce financial incentives and tax relief to boost the Slovenian economy, but the government was mostly analysing the situation in the economy and planning the necessary measures for economic improvement. Employer organisations stressed that last year, when they signed the social agreement, all social partners had agreed that solutions to issues regarding the minimum wage would be sought by mutual consultation. The employers argued that since the law on the minimum wage is fundamental to labour legislation, changing it without the consent of all the social partners is a violation of the social agreement. The employers also pointed out that the level of the minimum wage in Slovenia was already higher than in other comparable Member States such as the Czech Republic, Slovakia, Hungary, Spain and Portugal.

The president of the OZS, Branko Meh, said they were withdrawing from the social agreement not just because of the changes to the definition of the minimum wage, but also because of the ‘lack of sensitivity for craftsmen and small entrepreneurs’. He said the government had not been willing to consider his organisation’s suggestions regarding recourse claims, the dual status of retired craftsmen and public procurement.

The GZS emphasised that changes to the minimum wage would be more beneficial to the government than the workers, and proposed a tax reform to reduce labour costs and, in turn, increase net wages. It suggested that the government’s redefinition of the minimum wage would affect employers in certain industries (such as construction and commerce) and would endanger many jobs and even the existence of some companies.

Slovenian government

The Minister of Public Administration, Boris Koprivnikar, stated that the employers’ withdrawal from the social agreement was not good for cooperation or for progress in stable development. He stressed that the social agreement was made between all three social partners. ‘It seems that we have a problem in Slovenia with an understanding of the real situation in which we are located,’ he said. Employers wanted a reduction in labour costs, while employees wanted additional bonuses and higher salaries.

The Minister of Labour, Family, Social Affairs and Equal Opportunities, Anja Kopač Mrak, also expressed disappointment at the decision of the employer organisations, but she commented that ‘if the social agreement was meant to fall, it was for a good reason, since the previous definition of the minimum wage was unfair to the employees with the lowest incomes’. She recalled that Slovenia’s citizens had voted in the referendum for a change of the law on minimum wage. However, employer organisations did not support the legislation changes of the statute of minimum wage from the beginning. When the Minister of Labour, Family, Social Affairs and Equal Opportunities convened the Economic and Social Council, the employers refused to attend the meeting. Social dialogue regarding changes of minimum wage was therefore not possible.

Trade unions

Trade unions regret the withdrawal of the employer organisations but say their exit from the social agreement is unjustified; the unions argue that the social agreement has not been violated since it deliberately does not mention the minimum wage or how it will be regulated. Trade unions decided to take this step in order to legally redress the unequal treatment of the most vulnerable workers. For the first time in 20 years, workers on the minimum wage will be now be paid a supplement for night, Sunday and holiday work.

The ZSSS emphasised that the employers’ withdrawal from the social agreement means that jointly agreed commitments on tax issues are no longer valid. Trade unions will now increase their efforts to raise taxation on capital and cut tax for workers. KSS Pergam pointed out that the social agreement presents an important basis for achieving consensus on the adoption of measures in key areas and topics discussed among social partners.

Commentary

Slovenia has a long history of successful social partnership, so it is probable that this development is not the end of social dialogue. However, the level of social dialogue will probably diminish at national as well as sectoral level. It will be much more difficult to reach consensus on legislative changes or other labour issues among the social partners, since the employers have lost trust in the government and trade unions. According to the Minister of Labour, Family, Social Affairs and Equal Opportunities, all three sides carry the same responsibility for the collapse of the social agreement. The consequences of this decreased social dialogue will soon be seen.

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