The Slovenia Times

Study shows time to overhaul pay policy


Public sector wages are roughly a quarter above private sector wages on average, which is no surprise given that about 60% of public sector employees have higher education versus 35% in the private sector.

But there are significant differences in terms of education: while those with higher education are paid 5-15% less than in the private sector, those with lower education are paid up to 20% more in the public sector, shows the study presented on Tuesday.

The existing public sector pay system is also too rigid. During the crisis, remuneration policy in the private sector shifted towards a greater share of variable pay, whereas in the public sector austerity measures prevented any such restructuring.

As austerity measures are phased out, it is necessary to leave some wiggle room for variable pay and make sure wages rise in line with productivity rather than being indexed to inflation.

The study comes just as the government prepares to address pent-up pay demands in the public sector, where trade unions have been waiting since spring to re-start negotiations about pay demands that are estimated to total EUR 300m annually.

As these talks start, it is necessary to bear in mind that public sector pay increases spill over into the private sector, IMAD director Boštjan Vasle said as he presented the document.

According to Vasle, it is also crucial to remember that companies laid off workers during the crisis and the wages of those who stayed on remained level, whereas in the public sector there were no layoffs but wages were cut across the board.

In a debate that accompanied the release of the study, representatives of business called for far-reaching measures.

"Businesses and citizens adjusted to the new circumstances during the crisis, the state has not done its homework," said Sonja Šmuc, the director general of the Chamber of Commerce and Industry (GZS).

Tomaž Vesel, the president of the Court of Audit, said it was necessary to "launch a serious debate to explore in which sectors we need fresh hiring and new departments, and which departments we no longer need because society is changing."

In practice, this would mean shutting down some agencies and offices, which has been discussed before but was never carried out, he said.

Trade unions should not restrict themselves to talking about increasing wages, they should also discuss distribution. The public sector needs a model of incentives for those who deserve to get higher pay and disincentives for those who underperform.

The current system of automatic promotions based on seniority is unsustainable. "You cannot reward those who are doing a good job or fire those who do not work well," according to Vesel.

Aleksander Zalaznik, the head of the Manager Association, also highlighted the need for improvements in productivity. "Why are our wages lower than Germany's? Because in Slovenia productivity is 20% below the EU average," he said.

The wage study is seen as an important reference document in pay talks with the public sector, and public sector unions protested ahead of today's event at not being invited to the panel.

In a public letter addressed to Prime Minister Marjan Šarec, they said that "social dialogue is finishing before it has begun in earnest."


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