Tatjana Pajnkihar, advisor Chamber of Commerce and Industry Slovenia Policy learning and experimentation in EU economic governance: Laboratory federalism in practice? SOCIAL PARTNERSHIP IN SLOVENIA – HOW USEFUL FOR EMU? London, March 2006

SOCIAL DIALOGUE IN SLOVENIA BIPARTITE Collective agreements on national level on activities level at companies level TRIPATITE Social and Economic council Social agreement : 1996, 1997, , 2006-in progres) Wage policy agreement (private & public sector) other tripartite bodies a system of social partnership introduced in 1994 to promote consensus between employers and employees organisations Consensus also promoted by Slovenian constitution

Monetary policy – i.e. adopting of the Euro Fiscal policy – i.e. tax reform Income policy, i.e. wage adjustements, minimum wage Public expenditures Etc. The social partnerships does not comprise only basic industrial relations. Social and Economic Council is also acquainted with specific macro-economic issues, such as:

ADOPTING THE EURO IN SLOVENIA June 2004: ERM2 regime; central parity SIT per EUR January 2005: Joint Slovenian scenario of adopting the euro June 2004 – till this moment: exchange rate SIT/EUR stable, close to central parity Since October 2005: meeting the convergence criteria January 2007: final introducing of the Euro - Big bang scenario

SLOVENIA AND MAASTRICHT CRITERIA December 2005 CRITERIASLOVENIA Inflation (12-month average)2,5% Long term interest rate5,37%3,81% Public finance deficit (% GDP)< 3%2,1% Public debt (% GDP)< 60%29,8% Source: Bank of Slovenia, January 2006

WHY REFORMS ? Stable economic growth The states with implemented reforms had higher economic progress Very slow restructuring – high % of state in the economy Dramatic fall of competitiveness: 35 52/60 (IMD 2005) Ageing population – the possible collapse of the pension system High youth unemployment Problems in the health system Etc.

SLOVENIA- ECONOMIC GROWTH REAL GDP GROWTH 1995 – 2006, in % 79% of EU-25

COMPETITIVENESS ADVANTAGES – POSITIVE Access to the buying markets Access to capital Price of capital Political stability MOST NEGATIVE Taxation Administration and regulations Additional labour costs Industrial policy

SET OF ECONOMIC AND SOCIAL REFORMS Slovenian Government put forward the proposition of the framework of INTEGRAL ECONOMIC AND SOCIAL REFORMS in October 2005 Slovenian Government adopted the reforms on A public debate followed Economic sector AGREES with the neccessity of the reforms – taking into consideration certain shortages unions (employees representatives) on the other hand expressed HIGH DISAPPROVAL

KEY AREAS OF THE REFORMS TAX REFORM LABOUR MARKET REFORM WAGE POLICY REFORM PENSION & HEALTH SYSTEM REFORM SOCIAL TRANSFERS SYSTEM REFORM

THE NEW SOCIAL AGREEMENT dynamic economic growthdynamic economic growth, competitivenessenhanced competitiveness investmentsnew investments, new and better employment social securitysocial security, quality of lifeenhanced quality of life; business environmentBetter business environment tax and labour regulationremove obstacles in tax and labour regulation low inflation, balanced and comparable interest rates, lowering public finance deficit knowledge, entrepreneurship and innovation ECONOMIC GROWTH AND EMPLOYMENT

1. TAX REFORM i.flat tax rate (around 20%? %) i.personal income tax unions NO! ii.VAT unions NO! employers SPECIAL CONSIDERATION OF CERTAIN ACTIVITIES! ii.Abolishment of payroll tax unions & employers agree! iii.simplifying the tax procedure unions & employers agree! iv.change of corporate tax (lower rate without any tax deductions) v.real estate tax (real estate register, was to be adopted by 2005 already, then prolonged to 2007)

2. MORE FLEXIBLE LABOUR MARKET i.more flexible employment contracts - part time, fixed term employment ii.Promote employment agencies iii.scolarship programmes iv.Abolishment of the bonus on the years of employment v.active employment policy – more regional emphasis, job rotation programme

3. WAGE POLICY Common goals: real gross wage growth 1pp behind productivity growth wage moderation, employment friendly wages minimum wage - an integral part of the wage system its escalation clause in line with low inflation in Slovenia Government: Tripartite dialogue for both public and private sector Wage agreement, enforced by law Employers and unions: bipartite dialogue for private sector Collective agreements-where wage policy should be set

4. SOCIAL TRANFERS SYSTEM more transparent and fair social transfers system i.one point of control mechanism and unified way of adjustment ii.Unemployment bonuses – more restrictive? iii.upper limit of sick leave bonus – upper limit of contributions paid? iv.… THE QUESTION OF FLEXICURITY?

5. HEALTH & PENSION SYSTEM GOVERNMENT i.diminishing sick leave only after first 30 days ii.Enlarging the basis for employers social contributions iii.Increasing the retirement age iv.Combinig employment and retirement v.2nd & 3rd pillar separated completely EMPLOYERS i.The basis for social contributions must not be enlarged ii.Lowering of the sick leave bonus from the 1st day on iii.Exuse the pay of contributions for employers who employ elderly and invalid persons iv.Lower the dependence of people on financial help of the state by creating new workplaces UNIONS i.Against any diminishing of sick leave bonus ii.Against Increasing the retirement age

6. other… i.cheaper and more effective state ii.further privatisation iii.rationalistation of public administration iv.energetics v.promoting technological development and investments vi.….

Thank you for your attention!

SOCIAL AND ECONOMIC COUNCIL Established in 1994 Consists of three groups of representatives: Employers (among them CCI) Trade unions (6 confederations on national level) Government Regular sittings, rotating presidency The opinion of council is respected in parliament when adopting a certain act!