Labour Market Reform Passed

Features,  06 Mar 2013  / By STA, T. M.

The National Assembly passed two pieces of legislation aimed at overhauling Slovenia's labour market in a unanimous vote on Tuesday. The reform aims to reduce the market's segmentation and make it more flexible.

Huge success for outgoing Labour Minister Vizjak (Photo: STA)
Huge success for outgoing Labour Minister Vizjak (Photo: STA)

The reform employment relationships and labour market acts are the product of five months of negotiation between trade unions and employers. They are designed to make it easier for youths to get full-time jobs and encourage companies to hire by making it less expensive to lay off employees.

Key provisions involve cutting the maximum notice period to 80 from 120 days, and introducing redundancy pay for fixed-term contracts in a bid to lower the segmentation of the labour market. Also introduced is a 25% cap for temping agency workers, except for small employers.

Severance pay will be reduced on a graded scale depending on years of service. Retirement allowance, special payments that employees are entitled to when they retire, will be restricted to only those employed by a company for the last five years.

The reform also simplifies hiring and dismissing proceedings, including by waiving the obligation that every job vacancy needs to be registered with the Employment Service, and introduces temporary work for pensioners.

Provisions designed to curb abuse include making the paycheck an official document enforceable in court and allowing employees to leave without obligations if the employer does not pay social contributions for three months in a row.

Contrary to initial proposals, unemployment benefits are not being changed, while employees will continue to benefit from a paid lunch break and years of service bonus.

While the reform labour market act was backed by 83 of the 84 MPs present, the reform employment relationships act was supported by 68 out of 77 with abstentions due to disappointments entertained either by the unions or by employers.

Outgoing Labour and Social Affairs Minister Andrej Vizjak hailed the "constitutional majority" with which the reform was adopted, saying it showed maturity on the part of politics.

Last minute misgivings were that the reform was not fully agreed from the unions' point of view and that the Chamber of Trade Crafts and Small Business (OZS) has not signed on to the deal - the OZS claims that instead of flexibility, the reform will bring expensive rigidity and higher unemployment.

Igor Antauer, secretary general of the Association of Employers, said that the adopted changes were the maximum that could be agreed at this moment. He however doubts that they will bring any real results in terms of competitiveness and that a real reform still awaits Slovenia.

This was echoed by the Manager Association, which is convinced that it will only be possible to speak of reform when the tax legislation is overhauled and a cap on social contributions introduced.

Vizjak rejected claims that the reform was not fully coordinated with the unions, while he dismissed opposition by employers as based on "unrealistic expectations".

Meanwhile, MPs from the Social Democrats (SD) and Positive Slovenia (PS) were critical of the failure to include a last-minute amendment that would introduce extra safeguards for older workers.

Andreja Černak Meglič of the SD noted that the new employment relationships act brought 38 measures to the benefit of employers and only 15 for the unions.

Rihard Braniselj of the Citizens List (DL) meanwhile pointed out that the OZS, whose members he said were essential in kick-starting the economy, did not sign the agreement on the reform.

He does not think the legislative changes are a real reform, which is why he expects the new government to start drawing up new changes to labour legislation as soon as possible so as to take the burden of welfare off employers.

Jasmina Opec of the People's Party (SLS) agreed with the view that the employment relationships act has not been tailored to the needs and expectations of companies, and that more consideration ought to have been given to the grievances of entrepreneurs and small businesses.

But MPs from the Democrats (SDS) and New Slovenia (NSi), the remaining partners in the outgoing ruling coalition, praised the reform as a result of a compromise between trade unions and employers.

A call for a follow-up to the reform has also come from the Chamber of Commerce and Industry (GZS) as it welcomed the passage of both reform laws, which it however only described as the first step.

The adoption of the reform proves that more necessary reforms can be adopted in Slovenia, including tax and health reforms, but the GZS is "far from being satisfied with what has been achieved".

The GZS expects negotiations to resume to tackle remaining open issues, including sickness benefits, transport allowance, paid lunch break, regulation of student work and measures to crack down on informal economy.

Similarly, the ZSSS group of trade unions described the reform as but the first step in introducing greater order in the field. The union now expects a reform of supervision over abuse of labour legislation, i.e. an overhaul of the labour inspectorate and boosting prosecution of worker rights abuse.

ZSSS boss Dušan Semolič underscored the importance of social dialogue as manifested in the passage of the reform. "These two laws are not ideal, but they could be worse if we didn't cooperate," the unionist told a news conference.

Moreover, the Pergam confederation expressed disappointment with the introduction of temporary work for pensioners, expecting it to have "disastrous consequences", while the K-90 confederation argued the 25% cap on agency workers was insufficient.

Both reform laws will become effective 30 days after their publication in the Official Gazette.

Tags: Slovenia, labour reform, labour market, unions, parliament, National Assembly, segmentation, flexibility




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