STA, 26 July 2019 - Slovenia's model of temporary posting of workers to other EU countries has been subject to sharp criticism about exportation of cheap labour. The country has seen an exponential growth in such postings over the past ten years and is reportedly third in the EU by the number of posted workers.
The Health Insurance Institute (ZZZS), which issues forms to employers posting workers abroad, issued 17,668 such forms in 2008, 103,370 in 2014 and as many as 159,136 in 2017, but the figure fell to 127,059 last year. A worker may be posted abroad several times a year, which means several forms.
The social contributions paid by Slovenian employers for the workers sent abroad do not correspond to the actual pay they earn but to what they would if they did the same work in Slovenia. Posted workers as a rule also get extras such as allowances for separation and higher living costs, so their earnings are higher than if they performed their job in Slovenia.
The strong growth in the number of postings and deductions on social contributions paid by employers has provoked criticism from European interest associations.
The European Federation of Building and Woodworkers (EFBWW) has calculated that Slovenia posts at least 100,000 construction workers to the EU even though it has only 55,000 domestic workers in the industry. Most of them come via Slovenia from the Western Balkans.
This is why the federation submitted a request to the EU Commission at the end of May to investigate the practice and its regulation in Slovenia.
"Slovenia has built a money-spinning business model based on social fraud and worker exploitation. This is totally unacceptable and should be stopped at once," said the EFBWW president Dietmar Schäfers.
The commission has also received complaints from interest groups in Austria, while the country itself has said it will try to engage in dialogue with Slovenia before taking any such step.
Slovenian posting companies have been accused of exporting workforce to the EU at dumping prices as Slovenian labour costs are lower, which makes workers from Slovenia cheaper.
Meanwhile, the Slovenian government has acknowledged that the situation provided food for thought regarding necessary measures.
Slovenia's regulation entails that posting companies need to obtain an A1 document which allows posting temporary workers to other member states and is issued in accordance with the EU legislation by a relevant district unit of the ZZZS.
According to the Labour Ministry, a special task force is examining relevant regulations from 1970, including those governing the social contribution deductions for employers, and drawing up measures to reform them.
Responding to the criticism of the increase in the number of posted workers and worker exploitation, the Labour Ministry told the STA that the transnational provision of services act, which tightened regulations for issuing A1 documents, had been adopted last year.
The law aims to prevent cross-border posting of workers by mailbox companies or employers, particularly in construction and industry, who have already violated regulations, thus tackling worker exploitation, which has been a critical issue.
According to the Labour Inspectorate, there have been 20 violations of the act in 2018.
On the other hand, the ZZZS, which is in charge of revoking issued A1 documents, recorded more than 17,450 irregularities, including over 6,400 tax-related and over 6,300 pertaining to employment contracts.
Foreign authorities have been submitting requests about checking conditions compliance of posting companies or revoking their posting permits to the institute, which has received around 10 such requests by June this year.
According to the ZZZS, the issue is complex and hard to tackle, while Goran Lukič of the Workers' Counselling Office told the STA that the new act somewhat improved the situation even if he is still sceptical about its enforcement.
Meanwhile, Slovenian employers' associations deny the accusations of Slovenia being a kind of gateway for social dumping in Europe.
The Slovenian Employers' Association (ZDS) told the STA that given the amount of labour costs in Slovenia one could not speak about dumping, while the Chamber of Commerce and Industry (GZS) said that it was key that foreign workers who got work permits in Slovenia and ended up working in other EU countries were paying their social contributions and income tax in Slovenia.
STA, 15 July 2019 - The average gross salary in Slovenia was at EUR 1,728.12 gross in May and EUR 1,113.88 net. Compared to May 2018, average gross salary was 3.9% higher in nominal terms and 2.5% higher in real terms. Net salary was 3.4% higher in nominal terms and 2% higher in real terms compared to the May of last year, according to the Statistics Office.
The highest net wages were paid out in the financial and insurance sector, EUR 1,556.92 net. Compared to April, average gross and net pay was 0.1% lower in nominal terms and 1% lower in real terms.
In the public sector, net salaries went up by 0.7% on average in May over April, while in the private sector, the average net pay went down by 0.6% compared to April.
STA, 4 July 2019 - The Ministry of Labour has come up with a calculation of the effect of the planned rise in the minimum wage in 2020 on the entire economy, establishing that, coupled with the elimination of bonuses from the minimum wage, it would cost the private sector EUR 197.1 million or 1.77% of the wage bill.
The calculation comes as a response from the government to the criticism from employer representatives about it having failed to make proper projections before adopting legislative changes raising the minimum wage.
In a recently published document, the ministry says that the effect of the raise of the gross minimum wage could be estimated relatively precisely based on data from previous years, while it is much harder to estimate the effect of the elimination of bonuses, as there are no relevant databases.
The ministry has established that the financial effect of the expected raise of the minimum wage in 2020 would be EUR 63.6 million or 0.57% of the wage bill, and the elimination of bonuses an additional EUR 133.5 million or 1.2% of the wage bill.
In commerce, where the number of employees on minimum wage is the highest, the added cost is expected to be EUR 37.3 million or 1.81% of the wage bill.
The ministry has assessed that the cumulative financial effects at the level of the entire economy will not be significant, while it is aware that they could be higher in industries with lower wages and a higher number of permanent bonuses.
It does not expect that a large number of companies will get into trouble considering that the total net profit posted by Slovenian companies last year increased by 16% and that the economic situation and the situation on the labour market are favourable.
Employer representatives are disappointed with the calculation, with Jože Smole, the secretary general of the Employers' Association, telling the STA that the analysis was very modest, featuring only three pages of text.
Smole is convinced that it does not take into account the complexity of the matter and is critical of the ministry for relying too much on the general data about profit and disregarding the possibility that companies which do not make profit would get into further trouble.
The Chamber of Commerce and Industry (GZS) reiterated in its response that it was against the changes to the minimum wage act, which it believes will hurt vulnerable individuals and companies the most.
The changes, which were passed last year without the approval of all social partners, raised the minimum wage this year from EUR 638 net to EUR 667 net, and next year it is expected to increase to EUR 700 net.
All our stories on pay in Slovenia are here
STA, 10 June 2019 - The shareholders of NLB bank on Monday confirmed the proposal to pay out EUR 142.6 million in dividends at EUR 7.13 per share, and endorsed all new candidates for the supervisory board.
Mark William Lane Richards, Shrenik Dhirajlal Davda and Gregor Rok Kastelic have been appointed new supervisors and Andreas Klingen was reappointed effective on 11 June.
The management has been authorised to buy NLB up to 36,542 own shares on the organised market over the next 36 months to be used in remuneration packages.
It also received a discharge of liabilities despite a counterproposal by a shareholder who also proposed that the shareholders task the management with making provisions for lawsuits brought by wiped-out junior creditors.
The motion was rejected because it is not within the purview of the shareholders to do that.
Chairman Blaž Brodnjak described 2018 as a very special year since the bank was privatised, which will allow it to conduct business free of limitations imposed by the EU due to state aid commitments once the state has reduced its stake to 25% plus one share.
"When another 10% is sold, it will be able to breathe with full lungs and start competing on a level playing field," he said.
As for business prospects, Brodnjak said the trends were good but indicated the bank was remaining vigilant since the region where it operates is very open and hence susceptible to external shocks.
Since last year's initial public offering, NLB's ownership is dispersed among small domestic shareholders and foreign institutional investors.
The state's stake has been reduced to 35%, but it is expected to be reduced further by the end of the year to 25% plus one share.
One benefit of the state no longer exerting majority control is that the board members are no longer subject to pay restrictions imposed on managers of state-owned companies.
Supervisory board president Primož Karpe said the debate about future remuneration packages has been concluded and pay levels will range from EUR 340,000 to EUR 420,000 gross starting with salaries for June.
This is a significant improvement from current levels: the annual report for 2018 shows that CEO Brodnjak got EUR 192,000 last year, while foreign board members got slightly more, up to EUR 210,000.
"We reached a consensus in the end, bearing in mind that we wanted a stable and motivated board," Karpe said about the new remuneration packages.
STA, 6 June 2019 - Slovenia's gender pay gap is relatively low when compared to EU average, however, it has been increasing at the fastest rate, warned participants of an international conference in Ljubljana on Thursday.
The latest figures put Slovenia's gender pay gap at 8% for 2017, which compares to EU average of 16%, but the gap expanded from only 0.9% in 2010, according to Eurostat data.
The figures were cited as a reminder of the escalating issue at the Equal Pay for Equal Work conference, held by the German political foundation Friedrich-Ebert Stiftung and the trade union confederation ZSSS.
Andreja Poje, the ZSSS executive secretary, said that equal pay had been a human right ensured by international acts since 1948. She pointed out that despite EU and national regulations aimed at tackling the gap, those acts had not proved effective in practice.
The gap has been closing very slowly and, based on the International Labour Organisation Data, if it continues to do so at the current pace, it will take 70 years to completely bridge it, said Poje.
According to her, women's gross hourly earnings are lagging behind men's most severely in financial and insurance services, health and social care and education. Surveys show that the situation is surprisingly worse in the public sector and not the private one.
Živa Humer of the Peace Institute pointed out that the gender pay gap affected the gender pension gap and resulted in the feminization of poverty. The EU average gender pension gap was at 39% in 2017, while in Slovenia the figure stood at 24%, said Humer, adding that Slovenia was among countries with the highest rate of older women being at risk of poverty.
According to Humer, mitigating measures include setting up record mechanisms, reporting and sanctioning gender pay gap cases in sectors and companies, implementing bans on the gender pay gap in collective agreements, encouraging the young to opt for gender-atypical professions, raising the status of care work, raising awareness, and co-funding research as well as pensions to keep them above the poverty line.
Silvia Maja Melzer of the German Bielefeld University said that despite the growing trend, Slovenia belonged to the group of countries with the lowest gender pay gap, labelling that as a strong foundation for the fight against inequality, considerably better than the ones in countries such as Germany and Czechia, which, according to her, still had a long way to go.
The 2017 gender pay gap in Germany was at 21%, while the Czech figure stood at 21.1%, the second highest rate recorded in the EU. Both countries have started developing action plans and legislation amendment proposals to tackle the issue.
Maruša Gortnar of the Labour Ministry pointed at the government's measures for narrowing the gender pay gap, including integrating the gender equality index, determined by the European Institute for Gender Equality, into the country's development strategies. One of the sub-indicators of the index is the pay gap, which assists the ministry in developing its action plans.
Executive director of the Slovenian Managers' Association Saša Mrak said that the association had been striving to ensure equal pay and gender equality by awarding equal treatment in projects.
She pointed out that last year women managers were granted support by the association's management board in tackling this issue legally for the first time.
The ZSSS president Lidija Jerkič said that, according to her experience, such discrimination was usually covert and an issue that escalated gradually.
Female workers may be treated the same way as their male co-workers at the beginning, getting equal pay and benefits, but over time the former are less likely to get promoted than the latter due to their alleged lower level of competitiveness, said Jerkič.
STA, 5 June 2019 - Slovenia ranks ninth among 22 EU member states that have statutory minimum wages in terms of the gross minimum wage rate. This year's increase of the country's figure to EUR 886.63 was among the modest ones, says the annual report on minimum wages in the EU and Norway, published by Eurofound on Monday.
The highest rate was registered in Luxembourg (EUR 2071.10), while Bulgaria has the lowest (EUR 286.33).
The report of the EU Agency for the improvement of living and working conditions placed Slovenia among the countries with the lowest share of minimum wage earners - 4.1%. The country ranked sixth in this category, with Czechia (2%) ranking the lowest and Poland ranking the highest (13.7%).
The survey registered big differences among all participating countries in this category, noting that in 2016 the average share of minimum wage earners in the EU was 7.2%.
Eurofund also pointed at considerable differences between the gross and net rates, saying that in Slovenia a share of 24.77% of the total minimum wage value is contributed to the social security system, including taxes and contributions. The country's share is among the higher ones in that respect.
The survey said that almost all countries, excluding Latvia, had increased the minimum wage rate since January 2018, with Slovenia raising it by 5.2% in nominal terms. The increase was quite modest, listing the country as third in the group of six countries with mid-level minimum wage rates - Slovenia ranked behind Malta (1.93%) and Portugal (3.45%).
The issue of minimum wage rate has been in the spotlight recently. The National Assembly adopted the Left's proposal for the minimum wage act in December 2018 despite employers' opposition, thus raising the rate.
The act stipulates that all allowances will be excluded from the statutory rates as of 2020 and will thus have to be paid on top. It also regulates the rate's lower and upper limit, setting the bar at at least 20% and top 40% above calculated minimum living expenses.
Employers argue that the adoption was rash and will have a detrimental effect on the whole society, while trade unions are willing to protect the act by any means necessary. Meanwhile, the government keeps insisting that the risks are manageable.
STA, 8 May 2019 - The opposition Democrats (Slovenska demokratska stranka, SDS) have initiated a motion to exclude healthcare and the army from the uniform system covering wages across the entire public sector, in what could be the dismantling of a complex scheme put in place by an SDS-led government in 2008.
A decade after it was established the system is causing dissatisfaction, in particular when it comes to incentivising the best performers and those with the biggest workload, SDS deputy Jelka Godec told the press on Wednesday. "The most severe anomalies, discrepancies and warnings come from defence and healthcare," she said.
The SDS demands an emergency session of parliament to debate its motion. It proposes that the government prepare an analysis of the system complete with a set of proposals on how to tackle them, which should include the possibility of excluding healthcare and soldiers from the single system.
Janez Janša, the leader of the SDS, wrote on Twitter yesterday that "after 11 years you can see from the Moon what works and that doesn't". He said the single pay system should be preserved for the public administration but "healthcare, the army, police... must go their own way".
The motion comes in the midst of one of the most severe crisis in healthcare, which is faced with the prospect of dozens, perhaps even hundreds of general practitioners leaving the public system due to what they claim are unreasonable workloads.
At several community health centres around the country most if not all GPs have handed their notices in a final escalation of tensions with the government and the public health insurer ZSSS.
In Kranj, one of the areas hit the worst by the doctors' action, almost all GP offices are closed as the doctors use up their remaining holiday days before their notices become effective, leaving the emergency service to do the work of GPs, which has led to long waiting times.
In recent weeks the government has been scrambling to come up with a solution that would be financially sustainable while also placating the doctors, but at this point a solution is not in sight.
The SDS motion dovetails with the demands of doctors, who have long argued that the single pay system is too restrictive, even as they managed to win considerable pay rises in the last few years above what other public sector employees have received.
One trade union of doctors, Praktikum, was even found to have egged on doctors to quit in order to force community health services to hire them as sole proprietors, which would liberate them from some of the bureaucracy while removing any pay restrictions.
But many in government fear any one portion of the public sector leaving the single pay system would lead to its collapse and trigger unbridled pay demands across the public sector that may jeopardise the stability of public finances.
Alenka Forte, who heads the SDS's health committee, however said today that exclusion of healthcare from the single pay system would be "a condition without which it is impossible to start improving Slovenian healthcare."
"Those who want improvements in healthcare must stop with ideology, they should not compare us to Venezuela. We need to look at best practices in the EU and start working on making healthcare serve the patients," she said.
The Public Administration Ministry said in a response that individual profession groups or parts of the public sector leaving the uniform system was not a guarantee that their pay would be regulated in a more appropriate way.
The ministry said that the SDS probably assumed that partial negotiations would make it easier for an individual profession group to get higher pay.
It meanwhile believes that the uniform system provides better possibilities for rewarding best performers and those with the biggest workload. It will soon present to public sector trade unions and negotiate relevant changes to the system.
The ministry also noted that Public Administration Minister Rudi Medved and PM Marjan Šarec had stressed on several occasions that the exit of one or more profession groups from the system could cause it to collapse.
The system would become non-transparent and hard to manage, it said, adding that the "assessment that the wage bill for public sector employees would increase even further is justified."
Mladina: Low Salaries in Slovenia are Because of Company Policies, Not Taxes
STA, 11 January 2019 - The weekly Mladina says that wealthy entrepreneurs are preparing the battle field ahead of a tax reform planned by the government. They are narrating a story of an engineer who is paid poorly due to high taxes and decides to leave the country to work abroad where taxes are lower. This, as it turns out, is nothing but a myth, Mladina says.
Under the headline “Abused Engineers”, the latest editorial of the left-leaning magazine says that engineers do make less in Slovenia than they would, for example, in Austria.
But this is not because of higher taxes but because company owners, Mladina specifically points to the owner of a successful exhaust maker Igor Akrapovič, do not give them higher pay.
Moreover, engineers are actually paid far less than what the entrepreneurs claim, the paper says, suggesting the bosses are actually talking about themselves.
In fact, income taxes for what engineers actually make in Slovenia are lower than in Austria. Only if they were paid as much as company owners claim they are, would the income tax be higher, a Mladina journalist has found.
He also busted the myth that engineers are leaving the country, providing numbers that only 70 engineers left Slovenia between 2012 and 2017. Most of them went to Croatia, which suggests that they were Croatian citizens studying in Slovenia who returned home after graduation.
"Will we allow yet another coup of demagogy? Will they abuse our empathy again?" the weekly wonders.
Reporter: President Pahor is an inclusive statesman
Note: this editorial is actually from last week
STA, 31 December - The right-leaning weekly Reporter commends President Borut Pahor in its latest commentary for his effort to be a voice of reason and a statesman who wants to build bridges rather than ostracise.
As he addressed an open day at the Presidential Palace to mark Independence and Unity Day, the president said he wanted more mutual respect in the coming year, editor-in-chief Silvester Šurla notes in More Respect in 2019!
He adds that Pahor had asked at the national holiday more than 500 visitors to carry on his call for mutual respect, understanding and respect of differences.
The president's words are welcome and they again confirm that Pahor is or at least tries to be the president of all Slovenians more than any of other presidents before him.
"He is making an effort to be a voice of reason, a statesman who does not exclude, but connects."
According to Šurla, in the increasingly politically polarised world, full of ostracising and hatred, such a stance by the president is not always welcomed, unfortunately.
Pahor is being attacked more from the left than from the right, which is very telling. What the leftist ideological extremists have been bothered by most during Pahor's reign is his normal relationship with the political right, concludes the commentary.
All our posts in this series can be found here
STA, 29 November 2018 - The first reading in the National Assembly of a bill raising the minimum wage by overhauling the way it is calculated indicated that the changes, proposed by the opposition Left with the tentative support of the coalition, are likely to be watered down somewhat during the adoption process.
While all parties agreed the minimum wage, currently at EUR 638 net, was too low, they mostly found issues with the bill.
The motion, coming after basic welfare allowance went up from EUR 297 to EUR 393 earlier this year, would increase the minimum wage by roughly 5% in 2019 and just as much in 2020. In 2021 it introduces a calculation formula that would keep it 20% above minimum living costs.
The main objection raised on Thursday by most coalition parties and the government as it held a correspondence session had to do with to the timeline of the raise, which is closely linked to the exclusion of individual bonuses and allowances from the calculation of the minimum wage.
"A predictable business environment is crucial for the economy in Slovenia, which is why the minimum wage needs to be raised in a well though-out, predictable and gradual way. When considering predictability, it is inappropriate that changes adopted in December 2018 already enter into force in January 2019," the government wrote.
All our stories on Slovenia’s minimum wage are here
It highlighted the need to phase out the bonuses - employers have been including various bonuses into the minimum wage - gradually, arguing "this would give the public as well as private sector enough time to adjust".
While asserting it was in favour of the goals of the proposal, the government reached out to employers, who have been complaining the changes were drafted without social dialogue.
It said that "it would make sense when searching for the most appropriate solutions in the next stages of the legislative procedure to consider social dialogue to the highest extent possible and adjust the enforcement's dynamics for individual solutions".
The proposal in general was rejected only by the opposition New Slovenia (NSi), whose Jožef Horvat said the rise would disrupt the balance of the wage scale, and by the opposition Democrats (SDS) whose Karmen Furman identified a misguided wage policy combined with a misguided social transfers policy as the reason for this disruption.
The two parties also highlighted the absence of social dialogue, while Jerca Korče of the senior coalition Marjan Šarec List (LMŠ) said the Economic and Social Council had had a number of opportunities to discuss a higher minimum wage.
"I have the feeling that the time will never be right for this debate," she said, also rejecting accusations that an effort was under way to revive "an outdated social model" and to meddle in the economy.
"The state has to see the whole picture, which is comprised of both business and the recipients of the minimum wage. Because the wage did not increase on its own, politics assessed it was time to intervene," she said.
Joining the Left in supporting the changes in their current form was the opposition National Party (SNS), whose Dušan Šiško was however simultaneously critical of the raised welfare allowance.
In the end, the bill was endorsed in a unanimous vote with the SDS and NSi abstaining.
STA, 7 November 2018 - Employers were quick to condemn the planned overhaul of the minimum wage law, especially the way it is to be pushed through parliament. The Employers' Association stressed that any changes to minimum wage should be harmonised with social partners at the country's main industrial relations forum, the Economic and Social Council.
The Left presented on Wednesday a proposal to overhaul the way minimum wage is determined. The opposition party that acts as a partner to the minority government proposes raising the minimum wage to EUR 667 next year and to EUR 700 in 2020, before a new formula to calculate the wage is introduced in 2021.
The Employers' Association is unhappy with the way the bill was presented, "bypassing any dialogue with social partners". According to a press release, employers have experience with this practice, which has had serious consequences for companies.
Determining the minimum wage must be a matter of discussions and harmonisations among social partners, but the new bill has not even been presented to the Economic and Social Council, the association said.
Even stronger reaction came from the Chamber of Commerce and Industry (GZS), the country's biggest trade association, which called the proposal dangerous and expressed "shock" that the coalition should have backed it.
"It's trampling international agreements on social dialogue, something that government officials committed to at the first session of the Economic and Social Council over a week ago."
The GZS noted that only over a week ago it had "received a clear assurance from the prime minister that any change to the minimum wage would be agreed with the social partners".
The figures in the chart show the gross minimum wage. Data: Eurostat
The Left's leader Luka Mesec said today that the party had agreed with Prime Minister Marjan Šarec for the bill to be discussed at the Economic and Social Council.
Nevertheless, employers are unhappy: "It is the middle of November, and companies and employers still do not know what kind of arrangement awaits them next year," the Employers' Association said.
The GZS said that most large companies would not feel the planned rise in the minimum wage, but that the increase would hurt companies where value added per employee was below EUR 20,000 and which employed 70,000 people.
The chamber argued that politics was interfering with the minimum wage all the time even though the share of those receiving it had been falling steadily and that even though the minimum wage in Slovenia was one of the highest in the EU.
"Each rise in the minimum wage generates more employees who earn minimum wage because it includes all those who had been in higher bracket until then," GZS said.
According to its data, average gross pay in the country has increased by 11% since 2010, while the minimum wage has risen by 41%.
The Chamber of Trade Crafts and Small Business (OZS) meanwhile said that it strives not only for raising the minimum wage but also for workers to have decent wages.
However, the state should cut labour costs to enable the workers to get higher net wages. "The difference between the gross and the net pay is too big. The state will get the most from raising wages," OZS head Branko Meh was quoted in a press release.