The Slovenia Times

Sweeping Changes on the Table


The massive bill, comprising 325 pages, will be read by parliament along with the austerity budget for this year, with the government proposing to adopt it in an urgent procedure.

This is the first attempt at a comprehensive reduction in public expenditure in Slovenia, which unlike many other EU countries has not undergone major reform or cuts in public spending, the government says, adding that the goal is to increase the potential for growth as a condition for long-term development.

The measures fall into three categories: internal savings through organisational changes to streamline the state apparatus; adjusting the workings of the public sector in terms of pay and costs in education and health care; and cuts in investments and welfare.

The cabinet is proposing to increase the number of hours worked in the public and private sectors by abolishing bank holidays on 2 January and 2 May.

Public sector pay is to be cut by 10%, while public employees would benefit from the third quarter of the rise aimed at tackling pay disparities as of 1 June.

Regardless of the inflation rate, there would be no adjustment in the value of pay brackets until 1 January 2014, and public employees would not be eligible for performance bonuses or promotion in 2012 and 2013.

The government proposes that the lunch allowance be cut by 10% to EUR 3.52, and the travel allowance to be capped at the minimum wage, calculated based on petrol prices and only for distances exceeding 3 kilometres.

The holiday allowance would depend on the pay bracket with the cap at EUR 692, while the annual leave would be reduced to a maximum of 32 days.

Also proposed are measures to curb employment, hiring of freelancers and students. Once public employees are eligible for old-age retirement their employment contracts would expire.

The changes affecting salaries, labour costs and other earnings are estimated at EUR 640m.

Transfers to individuals and households are to remain frozen until the end of 2014 with the explanation that the number of welfare beneficiaries is increasing while revenues are falling.

Parental leave bonuses would be reduced except for those in lowest income brackets, from 100% of pay over nine months to 90% in the first six months and 80% in the last three months. The maternity leave allowance for the first 105 days would remain at 100% of pay.

The right to free kindergarten for more than one child per family would be scrapped on 1 July, but the government promises other adjustments to make kindergarten financially accessible.

Changes would also affect primary education with an increase in the average number of children per class and a rise in the workload for teachers. Places with more than one primary schools are to form joint school districts.

There are changes affecting national examinations and introducing earlier foreign language classes, while subsidised school meals would be limited to those in the lowest income brackets.

In healthcare, the minimum percentage of services covered by obligatory health insurance would be reduced, as would sickness benefits.

Changes would also affect drug categorisation; the lump sum compensation paid into the health purse by insurance companies would be raised.

Contributions for health care, funeral costs and death grants for the unemployed would be transferred from the Employment Service to the municipalities.

A reduction or a write-off of contributions for obligatory health insurance would no longer be possible. Meanwhile, top-up health insurance is being brought in line with EU legislation.

Eligibility for unemployment benefit is being shortened to 18 months at the most with the maximum benefit reduced to EUR 892.5.

Prompted by the trade unions, the government also included in the bill some of the proposals for a higher taxation of assets and capital gains, which is to bring in an estimated EUR 40m a year.

By the end of 2014 a special austerity tax on real estate is to be introduced, to be paid by owners of real estate in a combined value of over EUR 1m when the property is not used for business.

The proceeds from the tax are estimated at EUR 10m. The annual tax rate would be 0.1%, but payable at half the rate this year.

Also being introduced is a tax on profits from change in the category of land.

The tax, whose financial effect cannot be assessed yet at this point, is targeting profits arising from speculative purchase of farmland and use of insider information about planned changes in municipal zoning acts.


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