Slovenia is facing a decline in interest among German investors, according to a survey by the German-Slovene Chamber of Commerce and Industry, reports the Slovenian Press Agency (Slovenska tiskovna agencija – STA). The survey ranked Slovenia as the ninth most attractive country for investment in Central and Eastern Europe, which is very different from first place last year. The main negative factors remain the high tax burden and high labour costs.
Slovenia has a “mixed profile” within the Central and Eastern European region. On the one hand, it is a leader in areas such as digitalisation and innovation, while on the other hand, it has one of the highest tax burdens in the region, according to German companies, Dagmar von Bohnstein, President of the German-Slovene Chamber of Commerce and Industry (AHK Slowenien), summarised the findings of the survey at Tuesday’s press conference in Ljubljana.
A big drop in the rankings
The survey ranked Slovenia ninth on the list of the most attractive business locations in the Central and Eastern European region, which includes 15 countries. Last year, Slovenia was ranked first. In a survey of 108 companies carried out in March this year, respondents highlighted the same negative factors as in previous surveys. The main negative factors remain the high tax burden, high labour costs, labour shortages, complex administrative procedures, and the unpredictability of economic policy. As the Chamber notes, labour shortages and rising labour costs emerge as the biggest obstacles to further development.
“Slovenia remains a highly rated business location, in particular, due to its efficient digital infrastructure and innovation-friendly environment. However, there is a serious risk that the country will gradually lose its attractiveness to foreign investors due to chronic location deficiencies,” warned von Bohnstein.
Bulgaria and the Czech Republic are much more attractive
Among the respondents, 80 percent of companies would choose Slovenia again as an investment location. According to von Bohnstein, this result does not look bad at first glance, but when compared to some other countries, such as Bulgaria and the Czech Republic, where the shares are 95 and 91 percent respectively, it is not good enough. 17 percent of companies are considering moving their regional headquarters to another country in the Adriatic region. Of these, most see Croatia and Hungary as alternatives. Around a third of the companies surveyed are also planning to reduce their investments in Slovenia, and a quarter of them are planning to reduce the number of jobs.
According to Andraž Brodnjak, a member of the board of directors of AHK Slowenien and director of the company Siliko, it is difficult to blame foreign companies for choosing other locations in view of the high tax burden. We should think about how to make ourselves more attractive to foreign investors, he stressed. By relaxing certain bureaucratic and tax restrictions, he said, things could be much better. Von Bohnstein recommends that Slovenian decision-makers listen to the private sector and engage in an active dialogue with it.
The survey holds up a mirror
Unlike Slovenian state-funded surveys, the German-Slovene Chamber of Commerce and Industry survey does not hesitate to point out the consequences of the decline in interest in Slovenia as an investment destination. Repressive tax legislation and high labour burdens are to blame.
These are not things that governments from 30 years ago could be blamed for. The Golob government deliberately created this situation. The situation was bad before, but it has gotten much worse under the current, Golob government. What is more, Robert Golob had already announced before the elections that there would be an additional burden on wages.
Namely, in the run-up to the elections, he announced that he would abolish Janša’s income tax reform, which had increased wages for all Slovenians. And his government did just that – right after the elections. At the same time, the new coalition added the burden of supplementary health insurance to our wages, and soon, they will add the long-term care contribution. That is to say, these are things that have directly increased labour costs, and which people see on their pay slips at the end of every month and employers see on their gross labour cost statements.
The Golob government has also increased taxes on corporate profits and capital gains. It is terrorising entrepreneurs and, at the same time, workers who have to keep records, with bureaucratic laws such as the notorious ‘time recording law’.
So, this is not some esoteric global shift. The things that the Chamber is referring to are directly linked to the actions of the Robert Golob government. Our problem is not the shrinking of global consumption, as Finance Minister Klemen Boštjančič claims. In reality, all the misery we are experiencing is the result of the harmful actions of the current government. That is also why we will see fewer and fewer foreign investments.
I. K.
