The government of Robert Golob has tackled the economy from two ends. First, with the reform of the tax laws, which brings lower wages for all, including those with the lowest incomes, and then at the regulatory levels, with the Minister of Labour, Mesec’s proposal for compulsory “punching-in” in the workplace. Both measures were met with resistance both from the employees and the professional organisations, with the unfortunate exception of the Slovenian trade unions, which are fighting hard for wage cuts, as they publicly announced in the last mandate when they opposed Janša’s tax reform, which increased wages for everyone. So, now that the calculations of the new tax legislation of the Golob government are known, and we can see that everyone – including the lowest paid workers – will earn less, will the trade unions continue to support the impoverishment of workers?
Before coming to power, Robert Golob announced that he would repeal Janez Janša’s tax reform. He justified his belief in a media appearance before the elections by saying: “I honestly do not see what I would gain from lower taxes, except that I would have even more money in my bank account and maybe spend it on more stupid things.” Today, we know what his tax reform will look like in practice. Those who have the lowest income will be the ones who will suffer the most, as the income tax scale will no longer be adjusted for inflation. The poorest will already have around 100 euros less per year next year and will even lose much more in the years to come. If the amendment is adopted, the middle class and those with the highest incomes will also be hit.
Anže Burger said that this is an anti-reform. “The new tax legislation proposal goes in the wrong direction. The previous regime was more appropriate because it reduced the tax burden on labour, since, in Slovenia, we have trouble staying competitive. We are not succeeding in any way in becoming an attractive location for jobs with higher added value and higher wages because, as far as the tax burden is concerned, we are too expensive. This anti-reform that is now underway is another step in the wrong direction; it is definitely bad for the long-term development of Slovenia,” the professor explained.
Does Minister of Labour Mesec want to turn the public sector into public administration?
We also asked the professor what he thinks about a measure being prepared by the Ministry of Labour. As we know, proposals are currently being gathered for a reform that would require employees in private companies to record every minute of the time they spend working in a consistent and compulsory manner. Entrepreneurs have already reacted to this announcement, with Dr Aleš Štrancar, the CEO of Bia Separations company from Ajdovščina, jokingly saying that now is the time of freedom and that in the name of freedom, we will even have to record how many times per day we go to the toilet while at work. Burger also commented on this idea, saying: “The measure of recording working time seems to me to be too much of an interference in the economic freedom of companies and other economic entities. If we are talking about private companies, it is up to them to decide how they record the work and time of their employees, whether they allow more or fewer lunch breaks or flexible working hours.” He also said that this measure goes against the modern trend of flexible working hours, where some employees can also carry out their duties from another location or even while working from home. “This measure is totally inappropriate for the time we live in,” he concluded.
It is going to be a very difficult autumn!
“With inflation reaching new highs, interest rates rising quickly, and the rising costs of food, energy and other commodities, we can expect a very difficult autumn. Further interest rate hikes by both the FED and the ECB will make borrowing more expensive, which will reduce disposable income for households and businesses, which may lead to lower consumption and lower investment rates, and this will cool economic activity. It will, however, also have the effect of lowering inflation, at least to the extent that it is not dependent on supply-side factors linked to the war in Ukraine and energy supply constraints. It will be difficult to avoid at least a cooling of economic activity, if not a recession. In the most developed countries, this has already happened; technically speaking, negative growth has already been recorded for two consecutive quarters. And the outlook for the European Union is similar,” said Burger.
He concluded by adding that the future is going to be difficult, as too many negative factors have accumulated – from the tightening of monetary policy, the problem energy supply and the rising prices, China’s zero growth and its problems with supply chains and a real estate sector that is bursting at the seams, the high indebtedness of developing countries due to the low cost of borrowing, the strong dollar – all of these are acting as a drag on economic activity and also on the sentiment of consumers and investors.
What do the trade unions think about all of this?
In the introduction of this article, we wrote that during the term of the Janša government, Slovenian trade unions opposed the tax reform. According to the new calculations prepared by the newspaper Finance, which we published in a different article, those whom the trade unions are supposed to primarily represent, meaning the employees with the lowest incomes, are not in for a good autumn either. That is why we sent these trade unions the following journalistic questions:
- Do you support the proposal for tax legislation which, according to new calculations that have recently been published in the media, actually reduces the income of the lowest paid in the country?
- Do you think that a measure which actually reduces the disposable income of the poorest is an appropriate measure at a time when the basic necessities of life are becoming more expensive?
- Do you think that raising taxes at a time when highly educated people are emigrating from Slovenia is an appropriate measure?
We will publish their answers when we receive them.
Andrej Žitnik
