Minimum wage rises by 2.7%

The government has moved to increase the minimum monthly wage in Slovenia by 2.7% – to €783.66 – up to 31 December 2013. The Minister for Labour, Andrej Vizjak, had proposed decoupling the minimum wage from the consumer price index and was supported in this by employers, who claimed a further increase in the minimum wage would lead to job losses. However, following strong protest on the part of trade unions, who argued that food and non-alcholic drink prices had risen by 4%, it was decided to abandon this proposal.

Background

On 18 January 2013, at a sitting of the Economic and Social Council of Slovenia (ESS), the Government and the social partners decided that from 1 January 2013, until 31 December 2013, the minimum wage in Slovenia would be €783.66 – an increase of 2.7%. The Minister for Labour was given the go-ahead to publish the new minimum wage in the official Gazette of the Republic of Slovenia (in Slovenian) at end of January 2013.

The new figure was calculated in accordance with Slovenia’s Minimum Wage Act (32Kb MS Word), adopted on 11 February 2010, on the basis of published data on inflation during 2012. The Act stipulates that the minimum wage be adjusted annually in line with the rise in consumer prices. The official data from the Statistical Office of the Republic of Slovenia on the annual rise in consumer prices for the previous December-to-December period is used to calculate minimum wage adjustments.

In 2012 the minimum wage for full time working stood at €763.06.

According to information from the Ministry of Labour, Family and Social Affairs (MDDSZ), this is equivalent to €584.29 net after deductions for tax and social security. The net figure takes into account general tax relief, but not extra allowances for dependants.

The minimum wage has since 2008 been set at the following rates:

  • from 1 March 2008 to 31 July 2008 – €566.53€;
  • from 1 August 2008 to 31 July 2009 – €589.19;
  • from 1 August 2009 to 28 February 2010 – €597.43;
  • from 1 March 2010 to31 December 2010 – €734.15;
  • from 1 January 2011 to 31 December 2011 – €748.10;

Minimum Wage Act

The most important articles of the Minimum Wage Act are:

Article 2 (Definition of the right to the minimum wage)

  1. A worker employed full time by an employer in the Republic of Slovenia shall have the right to be paid at least the minimum wage determined according to this Act for work performed.
  2. The minimum wage shall be paid monthly for full-time work.
  3. A worker working part time shall be entitled to a proportionate share of the minimum wage.

Article 3 (Indicators used in determining the amount of the minimum wage)

The following shall be used in determining the minimum wage:

  • rise in consumer prices
  • wage trends
  • economic conditions or economic growth
  • employment trends

Article 5 (Regular adjustments to the minimum wage):

  1. Once a year, the minimum wage shall be adjusted at least to the rise in consumer prices. The official data from the Statistical Office of the Republic of Slovenia on the annual rise in consumer prices for the previous December-to-December period shall be used in calculating minimum wage adjustments.
  2. The amount of the minimum wage determined in accordance with the preceding paragraph shall apply to payment for work carried out as of 1 January of the current year.

Article 6 (Competence to determine the amount of the minimum wage and method of publication)

The amount of minimum wage in accordance with Articles 3 and 5 of this Act shall be determined by the Minister for Labour after prior consultation with the social partners; it shall be published in the Uradni list Republike Slovenije (Official Gazette of the Republic of Slovenia) not later than 31 January of the current year.

Disagreement over minimum wage definition

Workers and trade unions often complain about the definition of the minimum wage under Slovenian law. They say that some aspects of it are unfair: for example, in cases where a worker is entitled to extra payments, they still receive the same minimum wage as a worker who is not entitled to receive them.

According to the MDDSZ, the LMW determines that the minimum wage is a monthly salary for work performed during the full working time. It follows from this that the minimum wage contains all wage elements mentioned by the Article 126, Chapter 3,(Types of Remuneration) of the Remuneration of the Law on Employment Relationship (LER) (273Kb PDF):

the basic wage for a certain month, part of the wage for job performance and extra payments (laid down for special working conditions related to the distribution of working time, i.e. for night work, overtime, Sunday work and work on statutory holidays and free days etc.) except the extra payment for overtime work. A worker receiving minimum wage and working overtime must in addition to the minimum wage receive also extra payment for overtime work.

The minimum wage does not include reimbursement of expenses related to work (for example, for meals during work, for travel expenses to and from work and any expenses the worker incurs during business travel). The minimum wage also does not include the annual holiday allowance.

Changes proposed

During a session of ESS, Andrej Vizjak, the Minister for Labour, Family and Social Affairs, proposed a radical change of the Minimum Wage Act, removing the adjustment of the minimum wage in line with the growth of the consumer price index in 2013. He argued that the economic crisis made this a reasonable option. In a specially convened press conference, Vizjak pointed to the warnings of the Institute of Macroeconomic Analysis and Development (UMAR) and employers that the rise in the minimum wage would harm the competitiveness of the Slovenian economy and its businesses.

The employer associations supported the proposal. The President of the Chamber of Commerce and Industry of Slovenia (GZS), Samo Hribar Milič, warned about the ‘domino effect’ of the increase in the minimum wage. He said it would drive up other wages or lead to a diminished differential between pay scales. He said this ‘levelling of wages’ would lead to job losses.

The trade unions, however, protested strongly against the proposal. Speaking on behalf of the Federation of Free Trade Unions of Slovenia (ZSSS), ZSSS Adviser Andreja Poje said that in 2012 the price of food and non-alcoholic drinks increased by more than 4%. And she argued that the majority of the income earned by those on the minimum wage went towards food and other basis living requirements.

In the end, the government decided to leave the Act unchanged.

Commentary

According to the Slovenian Press Agency (STA), the European Bank for Reconstruction and Development (EBRD) predicted a 2% contraction of Slovenia’s economy in 2013. The EBRD has also corrected its estimate of last year’s contraction to 2.1% from 2.5% of GDP.

Štefan Skledar, UMAR

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