Introduction
• Labour market (LM) reforms – the pillar of
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economic reforms (in EU and elsewhere)
Renowned economists: The manifest on
unemployment; Reforms – Now! Courage to
Reform!
Unemployment (U) in EU and USA since the
1980s and how to explain the differences
Do Americans prefer work and Europeans leisure
The answer is in incentives for work. These are
lower in EU – higher taxes, income redistribution
and generous welfare state which spoils people
and artificially increase their expectations
LM and Slovenia in the EU
• The transition – undo of the previous revolution
• Why to talk about the reforms after so big
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changes so quickly? The main paradox for many
“Youngsters” with some not very much
appreciated knowledge of the economics and
their apology for reforms
The response of the politicians: from a
negligence to the hesitation
The legislation has been late with mild changes
only or absent (the collective bargaining law)
No respect for modern labour economics at all
LM and Slovenia in the EU, cont.
• Some characteristics of the LM in Slovenia in the
last decade:
– The normalization of the unemployment
– A large difference between registered and ILO
unemployment – declining recently
– Grey economy/LM
– Early retirement and buying of social peace
– Low employment of the elderly
– The chaotic LM of the young and the transition from
school to work
– Student work and unemployment of the graduates
– Increasing number of foreign workers
LM and Slovenia in the EU, cont.
• Widespread illussion: social partners can
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guarantee welfare, peace and harmony
The reality: the buying of social peace on the
account of the future generations
In the society which had been self-managed for
decades almost no one has noticed that major
trends in modern developed world are different
The reform committee: 3 LM measures: to
activate unemployed; to ↑ efficiency of the active
LMP; to ↑ LM flexibility/to facilitate employment
Right direction but partial and insufficient measures
THE LISBON STRATEGY AND
LABOUR MARKET REFORMS IN
SLOVENIA
Prof. Janez Malačič
Faculty of Economics
University of Ljubljana
The LM reform paths and good practices in
EU
• There are large differences in U in EU member
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states despite the overall high U level
Considerable U decline in Spain/Finland, GB/The
Netherlands, Denmark/Sweden
The decline has been the result of well designed
and efficiently managed reforms of the
employment legislation and the LMP
The reforms should ↑ flexibility and adaptability
with lower employment legislation protection,
more efficient LMP and ↑ incentives for work
Policy types: Anglo-Saxon, Scandinavian, South
European, Mixed, etc.
LM reforms
• The position of the labour economists: their LM
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reform design is far more profound and wide
than politicians and general public are able to
accept and realize in the political process
The agreement of the economists: incentives for
work are central. They speak about the
alternatives between work and social transfers
and also about compromising between
incentives and equality
The reforms should focus on LM regulation,
active and passive LMP and Δ welfare state
The use of serious research work
IZA proposals for Germany
• 7 main proposals (divided in 30 detailed
measures):
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Removing work disincentives
Reforming the U insurance system
Reorganizing active LMP
Towards decentralized bargaining procedures
Stepping towards LM flexibility
Education as key to the LM
Meeting demographic challenges
Some comments for Slovenia: Unions and
the demographic situation
• IZA proposal for unions:
• 1. Abolishing the general validity of wage
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agreements
2. Redefining the favourability principle
3. Giving priority to internal company
agreements
Slovenia: IZA proposals more than needed
Unions in the constitution and legislation
Unions’ minister
Some comments for Slovenia: Unions and
the demographic situation
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IZA addressing demographic challenges:
1. Systematic funding of social insurance
2. Taking a pension reform a step further
3. Raising the legal retirement age
4. Creating competition in health and long-term
care insurance
5. Introducing a point system for immigration
Some comments for Slovenia: Unions and
the demographic situation
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Slovenia: Do we have the demographic crysis?
My answer is YES
The lowest-low fertility
Ageing of the population and the active
population
Changing nature of modern migration
IZA proposals are more than needed. However,
they are hardly sufficient
Conclusion
• Without LM reforms the goals of Lisbon strategy
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are out of reach
LM reforms should manage the interdependence
of LM legislation, LMP, education and training
and the changes of the welfare state
The LM reforms should be fine tuned with the
findings of modern labour economics
More research work and political and general
public trust in this work are needed
LM reform postponement would bitter the
medicine and increase its intake