The recent increase in the minimum wage and mounting demands for higher pay in the public sector, most of which are being heeded, risk throwing the country’s public finances in disarray amidst a slowdown of economic growth, warn Slovenian economists.
Matej Lahovnik, a professor at the Ljubljana School of Economics and Business and former economy minister, says that the government will have great difficulty getting all expenditures within a stable framework at the current rate of wage increases.
“We have to take into account that the projected budget deficit for this year is already at 5.5% and is one of the highest in Europe,” he told the Slovenian Press Agency.
Davorin Kračun, the chair of the Fiscal Council, also warned about the high deficit, noting that, although taxes will rise, it is difficult to predict whether this will also lead to an increase in general government revenue.
“There’s great uncertainty, great inflation, we don’t know what the actual GDP growth will be like,” he added.
Slovenia’s minimum wage recently increased by €100 net to €878 net per month, a move that came amid several pay deals in the public sector, including with doctors, kindergarten assistant teachers and judges, which has in turn triggered pay rise demands in other parts of the public sector.
While the Finance Ministry said last week that the country’s fiscal stability was not at risk due to these pay deals, critics are warning that unlike most of his predecessors, Finance Minister Klemen Boštjančič has failed to keep spending appetites in check.
(Sebastijan R. Maček | sta.si)
Source: euractiv.com
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