The Slovenia Times

The Death of a Welfare State?


Janković thinks the government is merely "scaring people" with its proposal for a 15% across-the-board public sector pay cut. He also wonders how the cabinet will explain to pensioners living on 300-400 euros that their annual bonus in the form of a recreational allowance will be cut.

The PS president labelled the proposed measures as "one-sided", focussing too much on
expenditures. He said his party was not against austerity but believes that stimulus is required in the next four years modelled on Germany.

The goal of the fiscal rule and the proposed austerity measures should be to raise Slovenia's credit ratings and lower interest on debt, which presently costs EUR 650m annually. If the interest rate were cut by a third, this would save EUR 200m, Janković pointed out.

He added that a rise in VAT by one or two percentage points would bring in some EUR 300m.

He was also critical of the possible scrapping of some major investments. Without projects such as the construction of the second rail between Koper port and Divača, the third pier at the Port of Koper and a hydro plant on the Sava, there will be no prosperity.

"These investments are worth EUR 11bn and they will enable us to employ some of the 116,000 people who are currently jobless."

Janković also urged banks to convert claims to builder Primorje and paper producer Radeče papir into equity and enable them to do business. The bankruptcy of Primorje would cost the state EUR 150m over two years, he added.

PS MP Alenka Bratušek said that there was no need for moves as radical as the government is proposing. The EU does not demand Slovenia cut its deficit in half to 3% of GDP in one year, but to reduce it by 0.75% a year, she stressed.

The other opposition party, the Social Democrats (SD), would not comment on the government proposal, saying that they would wait for the start of the social dialogue, which they expect will happen at Friday's session of the Social and Economic Council.

The SD expects the government to make sustainable cuts and distribute the burden fairly, deputy group head Janko Veber said. He added that the government's move was expected, given that the reforms of the previous, SD-led government had been rejected.

MP of the ruling Democrats (SDS), Andrej Šircelj, rejected the PS' criticism that the government was scaring people and pressuring them into accepting the proposed measures. In order for the austerity measures to be implemented, a compromise will need to be reached but costs will need to be cut, he said.

Commenting on the proposal for raising VAT, he said the situation did not call for such measures yet. Higher VAT would be a blow for the poorest and would make Slovenian products uncompetitive, which would prompt people to buy abroad.

On the other hand, Šircelj welcomed what he termed a "constructive response" from the SD.


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