The Slovenia Times

Dombrovskis Brings Message of Reforms


The economy is growing at above-average rates but "there are still weaknesses that need to be addressed," he said after talks with Prime Minister Miro Cerar.

The talks revolved around the European Commission's recent recommendations that Slovenia should continue fiscal consolidation, overhaul the system for determining the minimum wage, reduce the overhang of bad debt in banks, and reduce the backlog of pending court cases.

Dombrovskis also called for continuation of privatisation given the high share of companies in state ownership, and a long-term reform of the pension system to make it sustainable beyond 2020.

Cerar thanked Dombrovskis for the praise and noted he had experience with reforms from his time as Latvian prime minister. "He truly understands the efforts that Slovenia is investing into emerging from the difficult situation."

Turning to the Commission's recommendations, Cerar said the government was taking them "very seriously" and described them as being "in line with our policies, which are geared towards fiscal consolidation and, in particular, additional structural reforms."

The recommendation on the minimum wage in particular raised unions' eyebrows, but Dombrovskis pointed out in talks with Cerar that the gist of the recommendation was that "the right balance" should be struck, suggesting that Slovenia tackle this issue in talks with social partners.

What the Commission suggests is not that the minimum wage is lowered, but that it be tied to productivity. The minimum wage is currently indexed to inflation, which he said was "unusual" and unique in the EU.

The issue was high on the agenda as Dombrovskis met trade unionists. He was quick to point out that what the Commission was doing was issuing recommendations, not orders.

Dušan Semolič, the head of the ZSSS union confederation, noted that the minimum wage was set down in a law that none of the social partners have so far questioned.

What the unions are now doing is trying to make sure the minimum wage covers the basic pay while workers get additional allowances for night shifts and weekend work. "This will not undermine Slovenia's economy," he said.

Talks with the unions also touched on pension reform, which Dombrovskis said needed to be tackled sooner than later, before problems appear.

Semolič, on the other hand, stressed that the 2013 pension reform was producing results, with every hint of new reform upsetting people, "who know that reforms bring worse conditions" form retirement.

It is necessary to create conditions so that those who can work stay in employment longer. "But don't threaten with a stick," he said.

In talks with members of the finance and EU affairs committees Dombrovskis presented the Commission's recommendations, which were challenged in particular by the leftist parties.

Most notably, Janko Veber of the Social Democrats (SD) mentioned the story run by Mladina today alleging that EU decisions clearing state aid for Slovenian banks prevent them from crediting.

Dombrovskis denied the claim saying such covenants only applies to activities of Slovenian banks abroad, not their domestic lending operations.

The United Left (ZL) meanwhile argued that Slovenia, like France, should be granted certain concessions in fiscal consolidation.

The recommendations were however welcomed by the opposition New Slovenia (ZL), whose president, Ljudmila Novak, asked Dombrovskis to confirm they were adopted for Slovenia's benefit. Dombrovskis obliged.


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