Tripartite private sector pay policy agreement concluded for 2002-4

In June 2002, the Slovene government and social partners signed an agreement on private sector pay policy for the period 2002-4, which is due to be enacted by legislation. Under the deal, pay rises will be linked to increases in consumer prices, while from 2004 pay will be adjusted in a new way aimed at helping Slovenia make a smooth transition to EU membership. The pay policy agreement will form part of a forthcoming broader 'social agreement'.

In June 2002, the Slovene government, employers' organisations and trade unions concluded an 'agreement on pay policy for the period 2002-4' (Dogovor o politiki plac za obdobje 2002–2004) for the private sector. Since 1994 onwards, the Slovene government, employers' organisations and trade unions have concluded such multiannual agreements laying down the common elements of pay policy. Sometimes these agreements are part of a wider 'social agreement'.

The previous agreement on pay policy was concluded for the 1999-2001 period, and the parties agreed to enact this accord as the 'Law on minimum pay, methods of pay adjustment and holiday allowance for the period 1999-2001'. This law was amended by enactment of the provisions of an annex to the 1999-2001 pay policy agreement, which determined the pay adjustment in the private sector for January 2002, and by enactment of the provisions of a separate 'agreement on the method of pay adjustment in the public sector'. The law ceased to be in force in terms of pay adjustments from 31 January 2002, though its provisions concerning minimum pay remained in force until a different minimum pay rate was determined by law. Therefore, the government and social partners began negotiations to conclude a new agreement.

Agreement reached

After more than four months of negotiations, the parties concluded a private sector pay policy agreement for 2002-4 on 10 June 2002. They agreed to enact the provisions of the agreement in law, in order to ensure that all private sector employers will respect the rules determined in the agreement (the minimum proposed fine for employers that break the law is SIT 500,000, or around EUR 2,200). The agreement is valid because it was signed by the majority of employers' and trade union organisations which are members of the Economic and Social Council of Slovenia (Ekonomsko socialni svet Slovenije, ESSS). The agreement concerns the private sector only, because pay adjustments in the public sector are determined by the annex to the collective agreement for the public sector.

The government has submitted the draft law based on the 2002-4 private sector agreement (the draft 'Law on implementation of the agreement on pay policy for the period 2002-4') to parliament. Parliament will most probably pass the law at the end of June 2002 and its body responsible for labour matters discussed it on 19 June. Until now parliament has always passed such laws enacting agreements.

On behalf of the government, the agreement was signed by the Minister of Labour, Family and Social Affairs. On the social partners' side, it was signed by the organisations represented on the ESSS, along with some other organisations which took part in the negotiations .

On the employers's side, the signatories represented in the ESSS are the Slovenian Employers' Association (Združenje delodajalcev Slovenije, ZDS), the Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije, GZS) and the Chamber of Crafts of Slovenia (Obrtna zbornica Slovenije, OZS). A further signatory is the Slovenian Employers' Association of Crafts (Združenje delodajalcev obrtnih dejavnosti Slovenije, ZDODS).

On the trade union side, the signatories represented in the ESSS are: the Union of Free Trade Unions of Slovenia (Zveza svobodnih sindikatov Slovenije, ZSSS), the Confederation of Trade Unions Pergam of Slovenia (Konfederacija sindikatov Pergam Slovenije, Pergam), the Confederation of Trade Unions '90 of Slovenia (Konfederacija sindikatov '90 Slovenije, Konfederacija '90), and KNSS - Independence, Confederation of New Trade Unions of Slovenia (KNSS - Neodvisnost, Konfederacija novih sindikatov Slovenije, KNSS). Other union signatories are the Slovene Union of Trade Unions - Alternative (Slovenska zveza sindikatov - Alternativa, Alternativa), the Union of Workers - Solidarity (Zveza delavcev - Solidarnost, Solidarnost) and the New Trade Union of Slovenia - NSS (Novi sindikat Slovenije - NSS, NSS).

Main contents of the agreement

In the June agreement, the social partners and government determine common elements of pay policy for the private sector for 2002 and 2003. They have made a commitment to adjust pay in 2004 in a new way. In 2004, the pay adjustment will thus take account of the exchange rate between the EUR and SIT. Moreover, it will take account of the inflation rate in selected EU Member States, Slovenia's biggest trade partners, and of consumer price trends in Slovenia. In this way the common goal of a 1% gap between real growth of pay per employed person and labour productivity growth (with the latter being higher) should be reached. The social partners will determine more detailed mechanisms in a forthcoming broader 'social agreement'. They agreed to continue negotiations immediately after the conclusion of the pay accord over the conclusion of such a social agreement, which should come into force before 2003.

In addition the pay policy agreement determines:

  • the method of adjustment of basic pay (the pay determined in the pay scales set out in general and sectoral collective agreements - a worker's basic pay cannot be lower than this level) as set out in the general collective agreement for the private sector and sectoral collective agreements in the private sector;
  • the method of increasing minimum pay and 'guaranteed pay' (guaranteed pay is used to determine student grants only);
  • the amount of pay related to company performance;
  • the pay increases of employees not covered by collective agreements (managers with individual employment contracts etc); and
  • the method of monitoring pay movements.

Basic pay adjustment

In 2002 and 2003, basic pay will be adjusted in line with the rise in consumer prices (rises in the prices of alcohol beverages and tobacco products are not included) in the following way:

  • from August 2002, basic pay will increase by 4.2%.
  • from December 2002, basic pay will increase by the difference between the rise in consumer prices over the period January-November 2002 and the increase awarded in August 2002;
  • from August 2003, basic pay will increase by 2.5%. In addition, if the rise in consumer prices over the period January-June 2003 exceeds 2.8%, basic pay will be increased from August 2003 by the amount that consumer prices have risen over 2.6%; and
  • from December 2003, basic pay will increase by the difference between the rise in consumer prices over the period January-November 2003 and the increase awarded in August 2003.

The parties to sectoral collective agreements may provide that the overall pay increases in 2002 and 2003 may be distributed differently among employees.

In 2004, the next pay adjustment will occur after six months.

Minimum pay and guaranteed pay

Minimum pay, as determined by the 'Law on minimum pay, methods of pay adjustment and holiday allowance for the period 1999-2001', will be adjusted in line with rises in consumer prices (rises in the prices of alcohol beverages and tobacco products are not included). Furthermore, each August the minimum pay rate will additionally be increased by the percentage growth in gross domestic product in the previous year.

Guaranteed pay will be adjusted in line with rises in consumer prices in the same way as basic pay (see above).

Pay related to company performance

The social partners agree that greater dependence of pay on company performance has a positive influence on employee motivation. Therefore, they will promote the development of such methods of payment. Pay related to company performance is determined in collective agreements, individual contracts and internal company rules. All employees must be entitled to a share according to their contribution to company results.

Pay of employees with individual contracts

The pay of employees whose terms of employment are regulated by individual contracts of employment (such as managers who, unlike all other employees in Slovenia, are not covered by collective agreements) will rise on annual average in the same way as that of workers covered by collective agreements, and in accordance with their contribution to company performance.

Method of monitoring pay movements

The Minister responsible for labour will establish the percentage rises in basic pay and minimum pay in line with the above provisions and publish them in the official gazette. The minister will also issue an instruction on the presentation of pay data. Data on the pay rises of employees covered by collective agreements and of employees with individual contracts are to be presented separately.

Commentary

All three parties commented positively on the conclusion of the new private sector pay policy agreement. The Minister of Labour, Family and Social Affairs, Vlado Dimovski, stated in an interview in the Delo newspaper that he expects that the forthcoming social agreement, with the new agreement on pay policy as its central point, will stabilise circumstances in the private sector and make possible Slovenia's undisturbed transition and entry into the European Union.

The Institute of Macroeconomic Analysis and Development (Urad RS za Makroekonomske Analize in Razvoj, UMAR) is of opinion that the agreement on pay policy may perhaps cause a rise in unemployment because of higher minimum pay, especially in labour-intensive sectors such as the textiles industry. However, it will not influence the inflation rate - the Institute's forecast of the inflation rate has taken into account a certain pay growth rate, which the pay growth resulting from the new agreement will not exceed. (Stefan Skledar, on behalf of the Institute for Labour Law, University of Ljublana)

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