The Slovenia Times

Not Retired Yet



Slovenian Prime Minister Borut Pahor knew that pension reform was never going to be an easy sell. Last year - after Labour, Family and Social Affairs Minister Ivan Svetlik presented the government's plans for reform - Pahor conceded that pushing for the changes was "political suicide". But, he added solemnly, "we are going ahead because there's no alternative".

Pahor might have anticipated a tough fight but it is unclear whether he was also expecting a lengthy one. That's what he has got, though. Twelve months after Svetlik announced plans for reform, they still have not been implemented.

It is not for wont of trying. In the past twelve months, the Prime Minister and Svetlik have dedicated significant time and effort to emphasising why they believe reform is crucial. They cite spiralling public debt; point to the aging society; argue that without a change the pension system will not be financially sustainable past 2020; press the point that the outdated current arrangement is harming Slovenia's competitiveness. They have made revisions to their proposals in the hope of appeasing those who are opposed to change - while the original plan was to raise the retirement age to 65 for both men and women the proposal now is to allow men to retire at 60 so long as they have 43 years of service and women at 58 with 41 years of service.

Heavyweight support

And the government's case has heavyweight backing. The European Commission has warned that pension expenditure is so high as to place Slovenia's entire public finances at risk. The head of the International Monetary Fund has argued that without pension reform Slovenia's economic growth will slow due to growing government expenditure and the increased costs of borrowing. The Organisation for Economic Cooperation and Development (OECD) has said that making people work longer is the only way governments can keep pension systems in existence without cutting other benefits.

The problem for Pahor and his ministers is that the case against reform is also being made strongly. When Svetlik first announced his plans, the head of the country's biggest trade union confederation vowed to take the matter to a referendum, arguing that the proposals "provably hurt the majority of the Slovenian working class". After a year of campaigning - and a month of collecting signatures - Dušan Semolič has now succeeded in this goal. In May, the matter will be put to the public.

The government had been hoping it wouldn't come to that. They took the matter to the Constitutional Court, arguing that if the vote rejected the government's reform the state would become incapable of providing pensions - something which is guaranteed in the constitution. But the court unanimously rejected the argument, leaving Pahor and his colleagues wondering how to convince the public that this unpopular change is necessary.

A tough task

"We face the extremely difficult task of convincing citizens who are not yet convinced that the new pension and disability insurance bill is necessary and useful, and of highlighting the dangers of the existing system," Svetlik.

The opinion polls suggest it will indeed be an uphill battle. Last month, 56 percent of those questioned by daily free newspaper Žurnal24 said they plan to vote no on the referendum. Only 31.1 percent said they would back the reform.

A paradox

However, there was one figure which may give the government cause for cautious optimism: 61.2 percent of those surveyed believe that Slovenia does need pension reform. The problem, it seems, is not with the principle of the proposals but with the content of them.

The government might also take comfort in the opinions of those who brought about the referendum in the first place - the Constitutional Court judges. When giving his opinion on the legality of the vote, Constitutional Court President Ernest Petrič noted that: "The current social, economic and financial system make me believe that reforms, including of the pension system, are necessary and urgent." The sentiment was echoed by fellow judge Etelka Korpič-Horvat: "With respect to demographic trends it is only logical to conclude... that if we live longer, we must also work longer."

Both the government and the trade unions are already preparing to work longer on the debate over pension reform. With an eye on the referendum, they are bringing their arguments to the public. The outcome of their campaigns of course won't be known until May, but whichever way the vote goes it is tough to imagine it bringing an end to the matter. This debate is far from retiring.

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