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25 April 2018

Slovenia: minimum wage increase, but austerity still dominates public sector pay

After the country increased the statutory minimum wage by 4.7% to a monthly 843 euro, the Chamber of Commerce and Industry predicted a shock to the wage system and to competitiveness. However, indicators for 2017 indicate that there is financial scope for wage improvements. Meanwhile, public sector workers ask for the abolition of the austerity measures that have restricted their wages during the crisis.

In January 2018, the government decided to raise the monthly statutory minimum gross wage with 4.7% to 843 euro (net 638 euro), arguing that such an increase would reflect the economic growth the country was enjoying. The argument was not shared by the finance minister who claimed that the increase would exceed inflation and productivity growth. However, in conformity with the legislation, the minimum wage for the year is determined by the labour minister who announced the decision after consultations with trade unions and employers. The increase per 1 January 2018 is substantially higher than the increase that was applied in 2017 when the minimum wage improved with plus 1.7%. 

The social partners did not come to an agreement. The employers’ side reacted with criticism; the Chamber of Commerce and Industry said that, based on this increase the cost of a worker (on a minimum wage) for companies would go up with 5.3%. According to the Chamber, an increase of 2.6%, which was the average wage growth in 2017, was more appropriate.

However, economic indicators that were published late February 2018, revealed that the country had moved up to be one of the fastest-growing economies in the Eurozone in 2017. Growth in annual terms jumped to 6.0% in the fourth quarter of 2017, due to a strong domestic demand and robust, double-digit export growth. The estimate of GDP-growth for 2017 was corrected to 5.0% for the whole year.  

One of the structural problems is the income situation of public workers. The country has been confronted with several public sector strikes for higher wages. Workers are asking for the lifting of wage restrictions imposed during the height of the financial crisis in 2012; according to the workers it is time to re-distribute the fruits of economic growth accumulated over recent years.

(September 2018)

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