Slovenia: Latest developments in working life Q2 2019

Labour force shortages, a plan to raise the retirement age reform and the widening of the gender pay gap are the main topics of interest in this article. This country update reports on the latest developments in working life in Slovenia in the second quarter of 2019.

Employers warn of labour shortages

Employers have been struggling to find qualified employees for some time and warn that the labour force shortage is more severe than it was before the 2008 economic crisis. This is particularly the case in the catering and tourism industry, where more than 5,000 additional workers are needed (including more than 2,200 waiters and 1,315 cooks). However, the Catering and Tourism Workers’ Union of Slovenia (GiT) believes that the true number is at least twice as large as this, and points to the unfavourable conditions in the sector: unsocial working time, difficult working conditions and low wages. The shortage of labour is also very pronounced in the restaurant (69%), construction (62%), social and health care (62%), and manufacturing (56%) sectors.^[1]

Statistics show that more than 5,000 work permits were issued in the first four months of 2019, which is 78% more than in the same period last year. Foreign workers mostly come from Bosnia and Herzegovina, Croatia and Serbia. Despite this, employers complain that there is still a lack of candidates for technical jobs requiring specific skills and criticise the length of the hiring process for foreign employees. According to Samo Hribar Milič, Executive Director of the Chamber of Commerce and Industry of Slovenia (GZS), employers expect the government to facilitate the recruitment procedures and ratify the treaties that would enable citizens from countries such as Belarus and Ukraine to be employed in Slovenia.^[2]

Social partners debate retirement age and pension reforms

Social partners are in the final stage of negotiations regarding legislative changes to the pension system. In March, the Ministry of Labour, Family, Social Affairs and Equal Opportunities proposed to raise the retirement age for people without 40 years of pensionable service from the current 65 years to 67 years by 2034. The ministry also proposed to increase pensions to 63% of the long-term average wage for both men and women in the next six years (the current rate is 57.25% for men and 63.5% for women). Furthermore, the ministry proposed to encourage people of retirement age to continue working after meeting the conditions for an old-age pension, by providing them with a 3% pension increase for each additional year of work. For the first three years, the person would also receive 40% of their pension alongside their monthly wage and, after three years, they would receive 20% of their pension.^[3]

The Association of Free Trade Unions of Slovenia (ZSSS) expressed reservations about the proposed retirement age raise, but welcomed the proposal that people who continue to work after meeting the conditions for an old-age pension also receive 40% of their pension for three years. The Chamber of Commerce and Industry of Slovenia (GZS) welcomed the proposals as a good basis for better pensions^[4], while the Chamber of Craft and Small Business of Slovenia (OZS) demanded full pensions for retired people still active in the labour market. The Confederation of Trade Unions of Slovenia (PERGAM) noted that people of retirement age who continue working while also receiving a pension (known as having ‘double status’) would lead to unfair competition. At present, 9,000 insured people who fulfil the conditions for retirement still work and receive 20% of their pension.

In July, the ministry decided not to pursue raising the retirement age, and social partners supported the proposal. The retirement conditions therefore stay unchanged and the only open issue remains the dual status of those of retirement age.^[5]

Gender pay gap increasing at fastest rate in the EU

The gender pay gap in Slovenia has been increasing rapidly over the last decade, growing from 0.9% in 2010 to 8% in 2017 (although this is still below the EU average of 16%). Andreja Poje, Executive Secretary of the ZSSS, noted that

women’s wages lag behind men’s, most severely in the financial and insurance services (24.5%), health and social care (23.2%) and education (16%). The situation is worse in the public than private sector (12.8% vs. 8.8%).^[6]

The gender pay gap also affects the gender pension gap and leads to a higher number of women being at risk of poverty. ‘The EU average gender pension gap was at 39% in 2017, while in Slovenia the figure stood at 24%,’ said Živa Humer from the Peace Institute, adding that Slovenia was among the countries with the highest rate of older women at risk of poverty.^[7]

Andreja Poje believes that the issue can only be solved by monitoring data on wages by gender, collecting data on specific jobs, and analysing where and why these differences are created.

Commentary

The pension reform and the labour force shortage are among the most important topics being discussed by social partners in Slovenia. Both sides agree that the government should adopt the necessary changes as soon as possible by promoting economic migration, easing the procedures for hiring foreign employees, introducing shorter working hours and improving the system of long-term care to avoid people having to retire to take care of their older relatives (i.e. to motivate those over 55 to stay active in the labour market for longer). Compared to the EU, Slovenia has a lower share of people in the 55–64 age group who are still working (47% in comparison to 59%).