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Slovenia Business Week no. 21/2005: Employers Oppose Changes to Pension Legislation

Employers have voiced their opposition to government-sponsored amendments to the pension insurance act that would see quicker growth of pensions in relation to wages

Employers have voiced their opposition to government-sponsored amendments to the pension insurance act that would see quicker growth of pensions in relation to wages.

"There is understandable concern among employers that faster pension growth...could place an additional burden on the Slovenian economy thereby making it less competitive globally," Cveto Stantic, vice president of the Chamber of the Commerce and Industry of Slovenia (CCIS), told the public debate in Ljubljana on Wednesday, 18 May.

Officials from the CCIS, which hosted the debate, said they were particularly concerned by the fact the government had failed to prepare long-term financial estimates for the legislation.

The CCIS estimates that the additional burden on the pension purse in the first year would amount to SIT 9bn (EUR 37.6m) from quicker pension growth plus an additional SIT 5bn (EUR 20.9m) because of the proposed annual allowance.

According to Stantic, the demographic trends in Slovenia are alarming, as the country has a fast-ageing population and a very low birth rate. These trends could stunt economic growth in the future, he added.

For this reason, Slovenia needs to undertake speedy reforms and upgrade its social security system, particularly the pension system, he said.

Despite their opposition to the government proposal, Stantic said employers were not indifferent to the social status of pensioners, particularly those with the lowest pensions.

"But I don't think it's fair that the government has put forward a short-term solution that benefits the current generation of pensioners whilst forgetting about future pensioners," Stantic added.

Meanwhile, Tine Stanovnik of the Ljubljana Faculty of Economics, an advocate of the changes, said there would be no need for a new reform as a result of these changes. He said the reform designed in 1999 was producing results.

The changes drawn up by the Ministry of Labour, Family and Social Affairs - they are awaiting parliamentary debate - would reduce the gap between the growth of pensions in relation to wage growth.

Labour Minister Janez Drobnic claims that the changes would make the system fairer for pensioners, who have seen their pensions eroded compared to wages because of an unfair formula used to work out pension growth.

Meanwhile, some economists have warned the long-term consequences of this change would require that a second pension reform be undertaken in the near future as the system would no longer be sustainable.

Source: Slovene Press Agency STA

Author: STA