Guy Norton in Zagreb -

The last time that Slovenia successfully managed to cobble together a social pact that satisfied government officials, trade union leaders and employers representatives was way back in 2009. After employers walked out of talks on December 2,  a comprehensive social pact  remains as elusive as ever, as the country grapples with the aftermath of its self-inflicted banking crisis.

On December 2 the centre-left administration led by Prime Minister Miro Cerar announced that it had finally managed to come to terms with public sector trade union officials over the terms of the 2015 budget and thus avoided the threat of nationwide industrial action ahead of the Christmas/New Year period. However, any hopes that the authorities in Ljubljana would be able to ink a deal with employers were instantly dashed when the Gospodarska zbornica Slovenije (GZS), the country’s chamber of commerce and industry, announced it would boycott talks on a new social pact in protest at what it claimed was the inequitable pressure being placed upon entrepreneurs in the country.  

After protracted and often tense negotiations with the unions, a final meeting conducted by a troika of Cerar,  finance minister Dusan Mramor  and chief government negotiator, public administration minister Boris Koprivnikar,  managed to secure verbal agreement with union leaders on a mutually acceptable deal which will mean estimated  cuts of €20mn-€30mn in the public sector wage bill next year.

That’s far short of the €130mn of savings that the government was initially looking to make, but pending the official agreement of individual trade unions, which should be secured by December 9, it is thought to be enough of a compromise by the government to avert threatened strike action by public sector unions. 

“We have shown that we are capable of achieving smart, meaningful and constructive deals through dialogue and compromise,” Cerar told Slovenian state news agency STA, adding: “The effort put in by both sides to reach an agreement was great and I think we have achieved a deal that is still acceptable for both sides, but which will also require additional efforts to get us through 2015 financially.”

For his part the finance minister was more cautious about the outcome of the talks, describing the terms of the deal as falling at the “extreme edge” of what was necessary for the 2015 budget to satisfy  the government primary’s goal of cutting the budget deficit to under 3% of gross domestic product (GDP) next year, but welcoming the fact that the verbal compact with the country’s public sector trade unions would avoid industrial unrest and thus have a “positive effect on consumption and consequently [economic] growth”. 

Meanwhile, Branimir Štrukelj, who co-headed the trade union negotiation team, claimed that while workers representatives had agreed to an extension of austerity measures that they had previously declared to be unacceptable, they had successfully argued for the abolition of a ban on promotions, effective from December 2015.  

As a trade-off for that concession by the government, syndicate officials agreed to spending cuts in areas such as performance bonuses and pension contributions. For example, under the agreement to be inked next week, performance bonuses will in future be capped at a maximum of 40% of basic salary, rather than 60% at present.

Meanwhile, both sides agreed to a review of working hours in the public sector, which could lead to a voluntary shortening of the working week, whereby public sector employees could see their working week trimmed from 40 to 36 hours, with a corresponding reduction in pay.

However, Tuesday’s announcement of a compact with the public sector unions earned an immediate rebuke from employers' representatives at GZS, which announced a boycott of further talks with the government over what it termed was the continued unfair punishment of the private sector designed to shore up the rickety public finances in Slovenia. The GZS demanded that the authorities withdraw budget proposals that will impose an additional financial burden on entrepreneurs in 2015. 

GZS head Samo Hribar Milic said that while the government had effectively abandoned €100mn n worth of spending cuts in the face of trade union threats, in 2015 the business community would face an additional €100mn  burden in new costs that Hribar Milic claimed would imperil jobs in the private sector and drive away investors.

At a GZS board meeting that approved the boycott, which Hribar Milic described as a “form of pressure, a strike if you will”, the GZS claimed that since 2009 the public sector workforce in Slovenia had increased by around 3,400, while the private sector had been forced to shed 90,000 jobs as a result of added fiscal and administrative burdens.