The Slovenia Times

Higher Minimum Pay Has Not Increased Unemployment



The figures for July showed that around 98,400 were out of work. This is a fall of from the 99,570 unemployed in January. In the first seven months of 2010, 12,928 people lost their job due to redundancy or bankruptcy of their company, while the number reached 18,846 in the same period last year. Similarly, the number of those unemployed because their contract ran out dropped from around 27,630 to 21,700 for the same period.

No impact

The minimum wage was increased by EUR 102 to EUR 562 net in March. Supporters of the hike argue the new unemployment figures prove it has not had a negative impact.

"Raising minimum pay did not and will not... affect unemployment," says ZSSS boss Dušan Semolič, adding that it can even spur positive processes as employers develop new products and services with high added value instead of exploiting workers.

Even the Office for Macroeconomic Analysis and Development (UMAR) has changed its first projections that unemployment could grow in the long run by over 17,000 due to the increase in minimum pay, according to Semolič.

Some are still cautious

The Chamber of Commerce and Industry (GZS), however, remains concerned about the increase. It predicts the jobless number will soar towards 120,000 as a result of the recent collapse of several large companies and the sudden and steep rise in the minimum wage.

Minister of Labour, Family and Social Affairs Ivan Svetlik has downplayed those assumptions, saying that the number of unemployed will peak at around 105,000 and even if the figure does go above 105,000, there would still be no reason to panic.

"But I believe that this number should not exceed 105,000 by too much, despite the possibility of problems in some sectors," Svetlik has said.

GZS general manager Samo Hribar Milič is nonetheless standing by his organisation's estimates. He did note, however, that the projected unemployment increase of 75,000 people was only the worst-case scenario, while other analyses also predicted other outcomes.

He argues that regular employment has continued to fall and self-employment has risen. He says the increase is because some have been "forced" into self-employment to reduce company costs and others have opted for it so as to benefit from the self-employment subsidy. Hribar Milič also notes the number of work permits for foreign citizens has been further reduced, meaning foreign workers have had to leave Slovenia.

Data of the Agency for Public Legal Records and Related Services (AJPES) shows that in June 42,590 people in Slovenia were on minimum wage, over 39,000 of whom work in the private sector, which employs a total of 460,300 people.

A number of companies in Slovenia, including foreign firms with foreign ownership, raised concerns when the wage was increased, arguing it was "uneconomical". However, developments thus far suggest that the minimum wage raise is forcing companies to invest in high added value workforce. For now, the policy seems to be working even on the job market.

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