After months of talks on public sector pay reform, the government and trade unions have signed a tentative agreement to set out the points they have managed to agree on, but many thorny issues are yet to be tackled.

The non-binding document provides for the new pay system to start being phased in on 1 January 2025, enshrining a 1:7 ratio between the minimum and maximum wage across the public sector.

Salaries would not be adjusted to inflation next year. During a transitional period, an adjustment is foreseen if consumer price increases exceed a certain threshold.

However, when the new system is fully phased in, which is expected in 2029, there would be an automatic adjustment of pay to 80% of consumer price inflation from 1 May each year, unless a different agreement is reached prior to that date.

Wages to rise by 25-30%

The transition to the new wage system is expected to raise public employees' pay by 25-30% on average. The agreed increase would be divided into six instalments, the first to be paid on 1 January 2025 and the last on 1 January 2028. 15% would be paid in the first five instalments and the rest in the last one.

The tentative agreement also sets out that employees, who currently get an extra five days of annual leave when turning 50, would instead receive those additional five days after the age of 55, which would be fully implemented after 2030 following a transitional period.

As the document was signed on 17 July, one of the two negotiators for the unions, Branimir Štrukelj of the KSJS confederation described the transition to a new wage system as a key element of the agreement, saying there was consensus on how to implement it.

Finance Minister Klemen Boštjančič pointed out that no public employee would have base pay below the minimum wage in the new system. "It has been agreed that the effects of the provisions on this minimum wage will be reviewed every four years," he said.

Tough issues still ahead

However, negotiations on job classifications and other details for each of what are five wage pillars for different groups of employees are yet to be agreed on with the negotiations expected to resume in the last week of August.

The five wage pillars represent elected or appointed office holders; employees in state and local government administration and bodies, including police and the army, and public agencies; staff in healthcare and social care; staff in education, research and culture; and employees in public utility companies and such.

Some of the toughest issues yet to be tackled include pay disparities, such as for example headteachers being paid less than some teachers at the same school or hospital directors earning less than doctors.

In the meantime, doctors have been on strike for more than six months demanding higher pay, in particular for senior doctors, and better work conditions. While agreement with the government seems to be elusive, the impact of their industrial action has been limited with legislation introducing new urgent services required to be performed during strike.

Progress, but not end of talks

Although the document they signed is not binding, Štrukelj said it was extremely important for the negotiators "so that we can proceed with the negotiations with this inventory of what we have agreed on and what we still need to agree on".

He said that by initialling the agreement today he and Jakob Počivavšek of Pergam, as leaders of the trade union negotiating groups, were endorsing what had been agreed so far, but that the agreement itself would ultimately be signed by the trade unions.

"The signing of today's agreement is of course not the end of the negotiations, it is not the final agreement ... but it shows that in all the complexity of the issues, the negotiators have managed to come close together," Počivavšek stressed.

Asked whether the money for the wage reform, estimated at €1.4 billion, has been ringfenced, Boštjančič said it would be frivolous of a finance minister to negotiate without a calculation of the financial impact. It is precisely these constraints that make the negotiations so complex and so long, he added.