Tatjana Pajnkihar, advisor Chamber of Commerce and Industry Slovenia

1. London, 30-31 March 2006 Policy learning and experimentation in EU economic governance: Laboratory federalism in practice? SOCIAL PARTNERSHIP IN SLOVENIA – HOW USEFUL FOR EMU? Tatjana Pajnkihar, advisor Chamber of Commerce and Industry Slovenia

2. SOCIAL DIALOGUE IN SLOVENIA • a system of social partnership introduced in 1994 to promote consensus between employers’ and employees’ organisations • Consensus also promoted by Slovenian constitution • TRIPATITE • Social and Economic council • Social agreement : 1996, 1997,2003-2005, 2006-in progres) • Wage policy agreement (private & public sector) • other tripartite bodies • BIPARTITE • Collective agreements • on national level • onactivities’ level • at companies’ level

3. The social partnerships does not comprise only basic industrial relations. Social and Economic Councilis also acquainted with specific macro-economic issues, such as: • 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.

4. ADOPTING THE EURO IN SLOVENIA • June 2004: ERM2 regime; central parity 239.64 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

5. SLOVENIA AND MAASTRICHT CRITERIA December 2005 Source: Bank of Slovenia, January 2006

6. 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.

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

8. 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 COMPETITIVENESS 2005

9. 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 3.11.2005 • A public debate followed unions (employees representatives) on the other hand expressed HIGH DISAPPROVAL Economic sector AGREES with the neccessity of the reforms – taking into consideration certain shortages

11. THE NEW SOCIAL AGREEMENT 2006 - 2009 “ECONOMIC GROWTH AND EMPLOYMENT”

12. 1. TAX REFORM • flat tax rate (around 20%?.....17%) • personal income tax  unions NO! • VAT unions NO! employers SPECIAL CONSIDERATION OF CERTAIN ACTIVITIES! • Abolishment of payroll tax unions & employers agree! • simplifying the tax procedure unions & employers agree! • change of corporate tax (lower rate without any tax deductions) • real estate tax (real estate register, was to be adopted by 2005 already, then prolonged to 2007)

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

14. 3. WAGE POLICY • 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 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

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

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

17. 6. other… • cheaper and more effective state • further privatisation • rationalistation of public administration • energetics • promoting technological development and investments • ….

18. Thank you for your attention!

19. 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!