Parliament passes eight stimulus law worth EUR 320 million

Ljubljana – Parliament passed in the early hours of Wednesday the eighth economic stimulus law that is to deliver boosts, worth around EUR 320 million, to mitigate the impact of the epidemic. The key measures are state shouldering of the minimum wage rise, the extension of the furlough scheme and introduction of fines for vaccine queue-jumping.

The furlough scheme, which has been in place since last spring, will be extended until the end of April, with the option of another two one-month extensions.

The measure, which has been well received by employers and has had a positive effect on the labour market, according to Labour Minister Janez Cigler Kralj, may be used by employers registered by 31 December 2020 whose revenue this year is estimated to drop by more than 20% year-on-year due to the epidemic.

The novelty in the furlough scheme is the state covering not only 80% but 100% of the wages in companies which are closed due to government-imposed restrictions.

The minimum wage increased this month to EUR 1,024 in gross terms. As companies are already struggling as it is, the government decided to temporarily cover part of the cost of the rise.

In line with the eighth relief package, a subsidy of EUR 50 per minimum wage worker is envisioned for the first half of the year, while in the second half, employers will be exempt from paying a part of social security contributions for their workers.

The opposition Left warned during the debate in parliament that the former would promote paying out low wages since those who would pay higher wages would not get anything.

The SocDems (SD) and Alenka Bratušek Party (SAB) meanwhile proposed shouldering part of the cost only for those employers who are struggling due to the rise.

Both amendments were turned down by MPs.

In July, the minimum base for social security contributions will be temporarily lowered until the end of the year from 60% of average wage to the minimum wage amount.

The parliamentary Labour Committee proposed an amendment on Monday that the difference would be covered by budget funds to ensure that the workers in question would not be later deprived when it comes to their pension payments.

The proposal was thrown out though at the initiative of the coalition.

Moreover, the lowered base will be in place only for workers who are in employment relationships and not also for the self-employed. “This means unequal treatment,” warned Andreja Zabret of the Marjan Šarec List (LMŠ).

The law also sets down that employers will not be permitted to make any redundancies for business reasons during the period of receiving the minimum wage rise subsidy and also three months afterwards.

The package expands the groups eligible for a one-off allowance to include secondary schools students aged 18 or more (EUR 50) and university students studying abroad (EUR 150), as well as some disabled workers and war veterans (EUR 150). Those who became unemployed after 12 March 2020 will also receive EUR 150.

The crisis bonus, worth EUR 200, will be paid out to employees who did not get it with their December pay because they received a performance bonus.

During the discussion, the opposition was again critical of what it saw as “cuckoos” inserted in the package, referring to measures that do not mitigate the ramifications caused by Covid-19, according to opposition MPs.

They pointed to a fine for legal persons who would act in violation of programmes for preventing, containing and rooting out infectious diseases or programmes that are related to the vaccine rollout.

Mojca Žnidaršič of the coalition Modern Centre Party (SMC) said that this would enable sanctioning violations regarding vaccine distribution, such as vaccine queue-jumping, whereas Dejan Židan of the SD raised the possibility the measure would be challenged with a constitutional review.

The labour minister meanwhile highlighted measures that aim to help the elderly. Those who have recovered from Covid-19 and need more hospital treatment after the illness and those who cannot be discharged home will be eligible to prolonged treatment and care, including physical and work therapy.

The Red Cross and Slovenian Caritas will also receive additional funds, whereas religious workers will get their social security contributions temporarily covered by the state.

The short-time work scheme could be used also by farmers who employ workers. Aid provided to passenger transport services has also been extended.

A provision setting down that all employers could use up to three days of medical leave without contacting their GP has been extended until the end of 2021. The measure was introduced by the fifth stimulus package, passed in October 2020.

An amendment sponsored by the Left to temporary remove a provision saying that the government must okay the call for applications to enrol in university courses has been scrapped. “I hope that is not the beginning of the end of public education,” said Lidija Divjak Mirnik of the LMŠ.

A total of 51 MPs from the ranks of the SDS, New Slovenia (NSi), Modern Centre Party (SMC), Pensioners’ Party (DeSUS), National Party (SNS) and two minority MPs endorsed the package, whereas the Left and one MP of each the LMŠ and SD were against it. The rest of the opposition MPs abstained.

During the discussion, the opposition said that the measures were too little too late, ineffective and did not include all the vulnerable groups. Moreover, dialogue with social partners has been non-existent, warned the opposition.

Meanwhile, the coalition said the measures had been upgraded and would continue to significantly mitigate the impact of the epidemic.

“The eight coronavirus package is urgent and effective,” Matej Lahovnik, the economist heading the taskforce preparing the mitigation measures, said at Tuesday’s government briefing.

He noted that the government would shoulder the cost of two-thirds of the minimum wage rise for the first six months of the year.

“The minimum wage law is bad, but it’s been passed and is valid,” he said, adding the subsidy was the most the government could do for employers with respect to the matter in the given moment.

He also suggested it was now time to start thinking about an exit strategy. “Our view is that the second half of the year will be marked by a strong recovery. The epidemiological situation will definitely get much better as early as spring, which will allow a reopening of the services,” he said.

“The money will then start circulating again, which will bring about a revival of the activities that have been closed the longest,” he added.

He believes government departments should draw up targeted public calls for applications to revive economic activities, which should allow for an efficient recovery. He mentioned a couple of already prepared or emerging boost schemes by the state-run export and development bank SID and the SPIRIT investment agency.