Finance Minister Uroš Čufer has previously said that it will be hard to compensate for the EUR 200m in tax revenue lost with the annulment of a new real estate tax last week.

To make up for the lost tax revenue, Čufer has proposed a new VAT hike and added today that additional spending cuts will also be needed.

The draft programme says that labour cost will be restricted by extending the existing measures through 2015 and strict implementation of measures to cut the wage bill by 5% which already include cutting the number of employees.

The two biggest public sector trade unions rejected any additional pay cuts immediately after the draft programme was released.

The KSJS confederation said that they were open to extending the exiting savings measures but will not agree to additional cuts. Such a proposal is "an open invitation to a fistfight," said KSJS head Branimir Štrukelj.

A similar view was voiced by Janez Posedi, the head of Pergam trade union confederation. He said that the extending of measures alone will demand a lot of willpower from the trade unions.

Posedi, who explained that the draft will be discussed by the social partners next week, said that it was "unrealistic to include such proposals in documents intended for Brussels because the government cannot meet these goals".

Apart from the wage bill cuts, the draft reform programme contains a number of measures with which the government wishes to boost growth. It aims to see a structurally balanced budget by 2017 and the number of working population increase to 850,000 from some 791,000 in February, among other things.