During the epidemic, in response to the coronavirus crisis, the government prepared ten anti-corona packages (PKP) to help much of the population in various forms. Economist Dr Matej Lahovnik emphasised that the PKP aid was the one that saved our economy during and after the epidemic. After the epidemic started subsiding, we faced an energy and inflation crisis due to the war in Ukraine. The government responded quickly and helped in the form of energy vouchers, proving that the government works for the people. A poll by the Mediana Institute found that people are very much in favour of government action.
Even though we have a right-wing government in Slovenia, it has a much more pronounced social sense for the people than any other left-wing government. The latter have done the opposite in the past, raising taxes, stifling the economy and individuals, and pouring money into “quasi” institutes, withered banks, impoverished state-owned companies and bottomless bags. If they come to power, however, they would take people’s money again. “They demand that people and companies return corona aid so that there is more money for various quasi-institutes,” commented economist Dr Matej Lahovnik on the intention of the LMŠ party and the political activist March 8 Institute.
In 2020, the state spent the largest share of expenditure on social protection, at 18.7 percent of GDP. These were nominally 10.1 percent higher than in the previous year; from 7,966 million euros, they rose to 8,774 million euros – according to the latest data, last year the state even spent the most money on social protection in the history of Slovenia. The main reason for such an increase in these expenditures was the payment of social benefits in connection with intervention measures. Students, recipients of cash social assistance and childcare allowance, were entitled to 150 euros in crisis allowance, and the number of recipients of social assistance was also higher.
More than half of expenditures in this area were earmarked for old age (especially old-age pensions), while expenditures for old age increased by 8.4 percent (from 4,764 million euros to 5,163 million euros). Namely, an amendment to the Pension and Disability Insurance Act was adopted, which regulates exceptions from the additional period under ZPIZ-2. On this account, more than 103 thousand retirees received a higher pension. In December 2020, pensions were adjusted by 2%, while pensions increased twice last year, and in February 2020 they were 3.2% higher.
As part of the first intervention law in April last year, pensioners were also entitled to a one-off solidarity allowance, which provided the government with higher social security for the weakest pensioners whose pensions are less than 700 euros. The supplement was paid in three different amounts: 300 euros for pensions up to 500 euros, 230 euros for pensions from 501 to 600 euros, and 130 euros for pensions from 601 to 700 euros.
Expenditure on family and children rose from 890 million euros to 936 million euros. The government provided free kindergarten for a second child, and as part of the first intervention law, large families received an allowance of 100 euros, and families with four or more children a 200-euro higher allowance in addition to the allowance they were already receiving. Expenditure on illness and disability increased by 15.9 percent compared to the previous year (from 972 million euros to 1,127 million euros).
Expenditure on economic activities was also higher
Expenditure on economic activities increased from 4.6 percent of GDP to 8.1 percent of GDP. These expenditures in 2020 were 1.575 million euros higher than in 2019. The higher expenditures were mainly the result of measures taken in response to the covid-19 epidemic. The largest part of this amount was the payment of subsidies to support the labour market (1,409 million euros), and the smaller part was the payment of tourist vouchers (128 million euros).
Economist Dr Anže Burger and Dr Matej Lahovnik believe that the government’s measures have prevented excessive consumer savings, encouraged consumption, provided liquidity to companies, prevented corporate bankruptcies, and increased bad debts in banks, and mitigated job losses. A poll by the Mediana Institute found that people are very much in favour of government action.
In this area, the state invested the most to cover pension and social insurance contributions, to preserve jobs and to pay wage supplements. As part of this, the financing of compensation for waiting for work and subsidising part-time work was also included. We must also not forget to help the self-employed, who have declared themselves affected by the crisis and received 350 euros for March 2020. If they proved a decline in income compared to February 2020 by at least 25 percent, they received 700 euros each for April and May 2020. This assistance was later extended.
We spent 7.9 percent of GDP on health care, and 1 percent of GDP on defence
We allocated 3,716 million euros or 7.9 percent of GDP for healthcare. Expenditures for this purpose were nominally higher by 15.2 percent or 489 million euros last year, also due to allowances for work with covid patients. Expenditure on hospital services increased the most, by 336 million euros. In total, we allocated 16.6 percent of GDP for other purposes. In 2020, we allocated 5.8 percent of GDP for education. Compared to the previous year, expenditure on this purpose increased by 2.2 percent in nominal terms (from 2,644 million euros to 2,702 million euros).
In 2020, we allocated 5.4 percent of GDP to public administration. The main part of expenditures for public administration was expenditures for servicing public debt (interest); expenditures for this purpose decreased by 8.9 percent in 2020 compared to the previous year (from 860 million euros to 783 million euros). We spent 1.8 percent of GDP on public order and security, 1.4 percent of GDP on recreation, culture and religion, one percent of GDP on defence, and 0.6 percent of GDP on environmental protection and housing and spatial development.
Without the adoption of measures, we could have faced mass closures and a social crisis
It is true that the state has increased its expenditure, but with the help of funds allocated to the economy and individuals, it has enabled them to survive and help others to reopen and revitalise activities such as hospitality and tourism. Abolishing funds overnight would place an additional burden on employers in paying employee contributions, paying costs, and financing their over-indebtedness (the PKP also allows companies a moratorium on loans), which could make them illiquid, last but not least, this would be reflected in the rise in unemployment and the mass closure or liquidation of companies, and as a result we would still have to face a severe social crisis if the government did not act in time.
Due to the growth of the economy and the growing crisis in Ukraine, energy prices are skyrocketing. To help tackle the energy crisis, the government adopted a set of measures in January to help households and businesses. Households are already reporting lower electricity bills, which will be lower until the end of April. Exemptions from network charges and lower excise duties have also been promised to companies, and farmers will also receive aid.
