Slovenia: Impact of the crisis on industrial relations

  • Observatory: EurWORK
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  • Published on: 17 June 2013



About
Country:
Slovenia
Author:
Primoz Krasovec and Barbara Luzar
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

During the crisis, industrial relations in Slovenia did not undergo any major changes in their formal composition. Also, recent EU pacts (fiscal pact, six pack, EuroPlus Pact) did not yet impact Slovenia as far as wage setting mechanisms or abolishment of wage indexation is concerned. Thus, the main impacts of the crisis on industrial relations in Slovenia were: increasing breaches of collective agreements on the part of the employers, especially regarding bonus or holiday pay; increasing workers unrest and the number of strikes; rise in unilateral and hasty government interventions into public sector working conditions and rising militancy of the trade unions.

Section 1: Basic data on the impact of the crisis on industrial relations

1.1: Academic studies

The only Slovenian journal focused exclusively on industrial relations and labour legislation is Delavci in delodajalci (Workers and Employers) published by the Labour Institute at the Faculty of Law. Some articles pertaining to changes in industrial relations in response to the crisis have however also appeared in economic journals.

Katarina Kresal Šoltes: “Intervention by the authorities into collective bargaining.” (Workes and employers 4 (2010), 465-590)

The article presents a critical analysis of a series of measures of Slovenian government in 2010, acting unilaterally as a public sector employer to delay and freeze public sector wages in accordance with its “stabilisation” economic policy, but breaking the rules of collective bargaining (whereby government is not allowed to use laws to override what has been agreed in collective public sector contract).

Marijan Debelak: “Topical issues regarding the right to strike.” (Workers and employers 1 (2011), 7-18)

The author notes that 2010 was the most strike intense year since Slovenia’s independence. Not only has the number of strikes risen, they have also diversified to include numerous new industrial action approaches.

Barbara Kresal: “Flexible or precarious forms of employment.” (Workers and employers 2-3 (2011), 169-184)

The article deals with the rise of half-time or temporarily employed segment of the workforce. Precarious workers are in many ways precluded from fully participating in social dialogue and are undrepresented by the unions, thus, in author’s opinion, progressive changes in the labour legislation are necessary to guarantee their protection and inclusion and to prevent them from bearing a disproportionate burden of the crisis.

Marjan Senjur: “Some dilemmas regarding Slovenian fiscal consolidation in the context of economic recession and crisis of the Eurozone.” (Economic and business review 14 (special issue) 2012, 7-22)

Author calls attention to socially unjust and politically problematic shifting of the burden of the crisis on lower income earners and public sector employees through unilateral government measures.

1.2: Government and social partner research

Government:

In November 2011, the previous Slovenian Government under the authority of Prime Minister, Borut Pahor published the report “Key Achievements of the Government of the Republic of Slovenia 2008-2013”, where it stressed out that Slovenian economy was completely unprepared to deal with the shocks that accompanied the crisis. The structural reforms and economic policy measures were therefore necessary to undertake, but a lack of readiness on the part of society to embrace the proposed changes, resistance from trade unions and the opposition parties, and its shortened term of office meant that it could not fully push through all the reforms planned.

Trade unions:

Confederation of Public Sector Trade Unions (KSJS) has published a study on social dialogue, where they voice concern over the deterioration of collective bargaining and rise of unilateral public sector wage reductions and freezes.

Employer organisations:

Association of Slovenian Employers (ZDS) has published several studies on crisis and social dialogue. In most cases they argue for negotiated and coordinated transition to more flexible forms of employment. Chamber of Commerce and Industry of Slovenia (GZS) also emphasizes that continuous learning about the benefits of increased flexibility on the part of trade unions is the key to their acquiescence.

1.3: International comparative research

In ILO survey on social dialogue and pension reform (2012), Guardiancich notes that “despite a promising beginning ... external pressures (both from the EC and financial markets) led the [Slovenian] government to accelerate drastically the reform agenda in order to restore the sustainability of the pension system. It presented the resulting reform proposals to the National Assembly in haste and without the consent of either the unions or the employers’ organizations. The result was an effective breakdown of social dialogue in Slovenia, thus compromising the constructive relationship between government and the social partners built over the last 20 years”.

OECD in the report “Economic Policy Reforms, Going for Growth 2012” regarding its recommendations to Slovenia concluded that some priorities have not been realized. Namely, to ease employment protection legislation, Slovenia has taken no actions since the rejection of “mini-jobs” act by referendum in 2011, no actions to raise the statutory retirement age and reduce disincentives to work at older age since the rejection of new pension reform by referendum in 2011 and no actions to improve tertiary education outcomes since the national Higher Education Programme 2011-2020 was not adopted.

1.4: Grey literature

Saša Milivojević: “A comparation of Slovenian system of industrial relations with those in Germany and Italy.” (Faculty of Social Sciences, 2012)

To overcome the crisis, Slovenia needs to follow the example of more developed and longer lasting industrial relations models, such as Germany’s.

http://dk.fdv.uni-lj.si/diplomska/pdfs/milivojevic-sasa.pdf

Katja Oblak: “Increase in flexibility of work and employment in Slovenia – a way out of the crisis?” (Faculty of Social Sciences, 2012)

Although workers resist implementation of more flexible models of work and employment, from the companies’ point of view they provide means of easier adaptation to the crisis and, from national point of view, means of retaining and improving competitiveness.

http://dk.fdv.uni-lj.si/diplomska_dela_1/pdfs/mb11_oblak-katja.pdf

1.5: Relevance of debate

Please indicate if this topic is an issue for debate in your country, either in terms academic, political or debate among the social partners. Please tick the relevant box.

 a) academic debate

very relevant

relevant

not very relevant

 not relevant at all

Comment: academic debates mostly focus on fiscal and financial issues (economics literature) or social issues (rise of unemployment and poverty, declining incomes – social sciences literature), not so much on how the crisis impacts industrial relations.

b) political debate

very relevant

 relevant

not very relevant

 not relevant at all

Comment: same goes for the political debate.

c) debate among social partners

very relevant

relevant

 not very relevant

 not relevant at all

Comment: trade unions and some independent intellectuals are calling into questions attempts to by-pass or relax the established social dialogue procedures in the name of “objective necessity”, supposedly introduced by the crisis.

Section 2: Policies, instruments and regulations (500 words)

2.1 EU-level instruments

New economic governance at EU level did not impact industrial relations in Slovenia directly, but there were discussions on indirect impacts (through increased pressures calling for fiscal consolidation). Most discussed was the fiscal pact. Attempts to add it as a part of national constitution were publicly perceived as highly controversial and the ruling coalition was unable to secure the necessary parliamentary majority.

EuroPlus Pact did not result in any significant changes in industrial relations. Although they are planned, they haven’t been carried out (yet) according to the last published report by the Office of the Government of the RS for Development and European Affairs (SVREZ)

Caps on wage increases in the public sector and limits to minimal wage in the private one were not introduced, although there was a temporary agreement to lower the minimum wage for companies distressed by the crisis in 2010 (with the beginning of 2012 this agreement was terminated).

2.2: Governmental instruments

Numerous reports indicate that the Government of the RS is increasingly using the pretext of crisis to break the established industrial relations procedures. One highly visible example was pushing through an addendum to higher education legislature, which might severely impact pay and working conditions in that sector, against the opposition of trade unions, students and professors.

Slovenian government is also trying to (thus far unsuccessfully) prescribe the possibility of a legislative referendum, which can now be called for by trade unions to prevent the passing of legislature trade unions deem socially harmful, through a change in the Article 90 of the Slovenian Constitution. Such measure would seriously limit the political influence of the trade unions and civil society and contribute to a trend of ‘one-sided social dialogue’.

Trade unions also warn against government attempts to use urgent intervention laws to change certain arrangements, agreed upon in collective agreements, such as holidays, length of working day and social protection for the children and the elderly.

Regarding public sector pay, in June 2012 Slovenian Government reduced public sector wages by 8%.

2.3: Measures from social dialogue and/or bipartite and tripartite bodies

New Social Agreement 2012-2016 has still not been reached. Some trade unions refused to sign government proposals since they want to wait until the rebalancing of the state budget is complete, worrying that budget cuts might introduce measures, harmful to the workers. The old Social Agreement expired at the end of 2009, so social partners were without their main document for most of the crisis period.

Public sector trade unions went on a strike in April 2012 to protest unilateral government pressure on their working conditions and what they saw as erasure of social dialogue and welfare state.

Public and private sector trade unions also call for protests on 17th November 2012 to oppose pending labour market and pension reforms, which went into parliamentary procedure without being fully endorsed by the trade unions.

2.4: Severity of impact of policies, instruments and regulations

How severe do you think new policies, instruments and regulations (at EU, governmental ( central, regional or local level), or social partner level) resulting from the crisis have had an impact on industrial relations in your country ? Please tick the relevant box.

EU new economic governance

very severe

 severe

not very severe

 not severe at all

Comment: impacts were mostly indirect, resulting from increasing EU level pressure for fiscal consolidation, which sometimes translated into breaches of social dialogue.

National governmental instruments

very severe

severe

 not very severe

 not severe at all

Comment: the government is increasingly resorting to short-hand and urgent measures and tends to curtail both social partners interference and public scrutiny of the reform process.

National social partners’ measures

very severe

 severe

not very severe

 not severe at all

Comment: recently there were several strikes and big demonstrations are being called for, but social tensions and industrial actions are likely to increase.

Section 3: Impacts of the crisis

This section of the CAR will deal with the impacts of the crisis on industrial relations in your country. It is intended that the main focus of the CAR will be on the impact of the crisis rather than any measures taken in response to the crisis.

3.1: Impacts on industrial relations actors

3.1.1 The industrial relations actors in this section will principally be the social partners at all levels, including national, regional, sectoral and company. Please describe any relevant impacts. This could include impacts such as:

  • Reorganisations of the social partners, including mergers and changes in representation
  • of Craft and Small Business (OZS) has switched to voluntary membership in 2012, while Chamber of Commerce and Industry (GZS) has already switched from obligatory to voluntary membership before the crisis.
  • Changes in role and visibility of the social partners. Where relevant to your country, please also indicate any changes in the role of the social partners as stakeholders in the Public Employment Services (PES), including:
    • Changes to social partner consultation about the management and operation of the OES (for example, due to the government needing to act quickly in response to the crisis)

Public discussion and bargaining process were shortened and the number of intervention laws or laws, passed in a short time frame without prior consultation with public sector trade unions, has increased.

  • Changes in the involvement of the social partners in the PES, possibly due to the government wanting to act unilaterally in response to the crisis
  • Trends such as trade union or employer organisation membership (upwards or downwards), and how far this can be attributed to the crisis. Any impacts on other actors, such as central and local government, and NGOs, where relevant.

Since 2011 we could detect a rise in new social movements (partly joined by the NGOs), concerned with workers who were being hit by the crisis, but not represented or underrepresented by the unions (migrant, young, precarious workers).

Trade union membership has been declining before the crisis (from 43.8% in 2003 to 26.6% in 2008), while employer organisations membership, based on 2008 figures, during crisis still presented high share of member companies that employed 80%–90% of private sector employees (SI1004019Q). But with the recent change in the employer organisation OZS to voluntary membership, it is expected that the density rate will further decline.

3.1.2 Overall, how severe do you think the impact of the crisis has been on industrial relations actors in your country? Please tick the relevant box.

 very severe

 severe

not very severe

 not severe at all

3.2: Impacts on industrial relations processes

3.2.1 Please describe impacts in the following areas:

Impacts on:

In general, social dialogue is in decline and all social partners’ standpoints are becoming increasingly radical.

collective bargaining arrangements;

  • centralisation or decentralisation trends;

Collective bargaining in the public sector is still highly centralized, while in the private sector it became less centralized during the crisis, from 31st December 2009 on, when national private sector intersectoral agreement on extraordinary pay adjustment for 2007 and the method of pay adjustment, the refund of work-related expenses and other personal incomes for 2008 and 2009 (CAMPA), covering majority of workers in the private sector who were not covered by sectoral collective agreements, expired and social partners have not concluded a new on (SI0807019I).

  • the introduction of opening clauses;

In some sectoral collective agreements (Collective Agreement for the Metal Industry of Slovenia, valid from 2010 on and Collective Agreement for the Banking Activity of Slovenia, valid from 2011 on) social partners in 2009 and 2010 negotiated two derogation clauses, general clause (allowing the deviation from the minimum standards) and a more specific clause; in case of metal industry as a basic-pay clause and in case of banking sector as a bonus type of derogation clause.

  • changes in the extension of collective agreements;

Before the crisis, more than 90% of workers were covered by collective agreements (data for 2005 reports on 96% of coverage with collective agreements). Today, according to trade unions statistics, about 100.000 workers in the private sector are not covered by collective agreements, so the coverage has declined sharply. The number of collective agreements which acquired extended validity since 2006 on increased from two to six (SI1203021Q).

  • wage setting mechanisms;

There were no major changes due to the crisis, but both trade unions and employers are unsatisfied with existing wage setting mechanism; first, because wage growth in private sector lags behind increases in productivity and second, because wages often rise as quickly as or even quicker than inflation.

  • indexations mechanisms;

Previous government has endorsed the Eurozone ‘competition pact’, which, among other things, proposes the abolishment of wage indexation. Trade unions were critical of this proposal and it was not implemented.

The Bank of Slovenia has recently issued a warning that wage indexation leads to higher inflation.

arrangements for employee information, consultation and participation;

  • organisation of industrial action;

Since the beginning of the crisis, mass demonstrations at national level (in 2007 and 2008) have been jointly organized by six private sector trade union confederations. At the same time, workers in companies like Gorenje (2009) and Luka Koper (2011) also self-organized strikes, so called “wildcat strikes” due to unpaid wages or too low basic wages and non payment of overtime work.

  • procedures for dispute resolution;

In the case of company strike in Gorenje in 2009, company trade union and president of Association of Free Trade Unions of Slovenia (ZSSS) tried to mediate the conflict between workers and the management. After a one day strike, workers` representative, company trade union and company management signed a written agreement to increase the wages on the level before the lowering (10% rise) and for workers with the lowest income (including workers “on hold”) to receive a cost-of-living allowance.

But under legal terms, mediation as alternative dispute resolution for individual labour disputes was in Slovenia introduced by Labour Courts in 2009 (SI0910039Q).

  • changes in the relationship between the social partners, either leading to closer cooperation or more conflict.

Private sector trade union confederations began to cooperate in organizing the national strikes, leading to closer cooperation with the public sector trade unions, organisations representing pensioners and students, and many other civil society groups that took part in the rallies.

3.2.2 Overall, how severe do you think the impact of the crisis has been on industrial relations processes in your country? Please tick the relevant box.

 very severe

severe

 not very severe

 not severe at all

3.3: Industrial relations outcomes

3.3.1 Please describe any impacts on collective agreements at national, regional, sectoral or company level.

These impacts could take the form of agreements of shorter length, non-renewal of collective agreements, pay pauses, or the implementation of parts of collectively agreed increases only.

Trade unions warned that the new law on stabilisation of public finances (ZUJF), which included ‘forced’ retirement of public employees once they reach minimal conditions for retirement and lowering the amount of holiday allowance and public employee salaries under the agreed 8%, constitutes a breach of collective agreement.

Bargaining on new collective agreements has slowed down or been put on hold since social partners are waiting for new labour legislation reform. Breaches of collective agreements in form of non-payment of wages have jumped from the annual rate of 462 in 2007 to 2596 in 2010.

In 2010, the parliament changed the law regulating public sector wages, allowing for their freezes in 2011 and lowering the quota of trade union agreement necessary to pass similar laws in the future, thus allowing the government to change the public sector collective agreement with lower rating of approval from the trade unions.

3.3.2 Overall, how severe do you think the impact of the crisis has been on industrial relations outcomes in your country? Please tick the relevant box.

 very severe

severe

 not very severe

 not severe at all

3.4: Severity of impact on industrial relations

Overall, how severe do you think that the impact of the crisis has been on industrial relations in your country? Please tick the relevant box.

 very severe

severe

 not very severe

 not severe at all

Section 4: Views of the social partners

Association of Free Trade Unions of Slovenia in October 2010 published guidelines for strengthening the social dialogue in Slovenia. The report highlights two main threats to social dialogue; the structural economic change from industrial to post-industrial, knowledge based economy, where trade unions lose their classical role and need to reorganise to meet new challenges and secondly, the prevalence of neoliberal ideology and policies in recent years, which need to be reversed if social dialogue is to have any future.

Confederation of Public Sector Trade Unions published its position towards the new Social Agreement 2012-2016 with emphasis on full respect for bi- and trilateral negotiation and the need for social partners’ consent on all key aspects of economic and social policy in times of crisis (austerity measures, public sector pay, social security). At the same it warned that government is already acting against the spirit of the new Social Agreement.

Trade Union Confederation Pergam in their comment on the new Social Agreement emphasized the need for all wage negotiations to take place at collective level and for the expansion of existing collective agreements.

On the employer side, Chamber of Commerce and Industry of Slovenia is unsatisfied with the new Social Agreement and labour market reform proposals, which they find too focused on the harmonisation of the labour market and too little on the unburdening of the employers. According to GZS, more emphasis should be put on the flexibilisation and lowering the costs of labour force and more discretion should be awarded to employers to act unilaterally.

According to the Association of Slovenian Employers, new labour market reforms are still too rigid and not enough employer friendly. In their view, both existing and proposed new labour legislation remain too socialist, while employers should be given more flexibility and trade unions` power in industrial relations should be curbed.

Section 5: Commentary

The crisis has affected Slovenia quite badly. Real GDP growth in Slovenia decreased from 3.4% in 2008 to -2.3% in 2012, while unemployment rate increased from 7% in 2008 to 12% in 2012. Especially young people and those in irregular forms of employment were hit hard by the unemployment. According to data from Eurostat, the share of people facing the risk of poverty or social exclusion went from 18.5% in 2008 to 19.3% in 2011. The share of ‘working poor’ has increased from 5% to 6% in the same period.

In 2007, Slovenia was among the leading EU countries by degree of temporary and other atypical forms of employment. Their share has declined in 2008 and 2009 due to slowdown in economic activity (where flexible employees were the first to go) and then began to rise again in 2010 and 2011. Atypical work is especially prevalent among women and youth.

The main framework of social dialogue remained in place (tripartite and bipartite negotiations, wage bargaining being a part of collective agreements). There were, however, many breaches of its procedures, especially on the government’s side. Trade unions responded by strikes and protests. The new Social Agreement is still being delayed. How severe will the impact of the crisis on industrial relations be depends on the outcome of the proposed labour market and pension system reforms, as well as on the manner of implementation of additional budget cuts. Thus far, the situation is one of increasing tension, but without major formal changes in how industrial relations are being managed and coordinated.

The government has aggravated the impact of the crisis on industrial relations. Employers did not yet act as a class in changing the terms or manner of industrial relations, but individual breaches of collective contracts are on the rise. Trade unions are showing signs of radicalisation. In general, the state of the social dialogue in Slovenia has deteriorated since the beginning of the crisis.

Primoz Krasovec and Barbara Luzar, Organisations and Human Resources Research Center

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