SEATTLE — In its May 2016 report on life in Slovenia, the Organisation for Economic Co-operation Development (OECD) found that average earnings in the Eastern European country exceed those of all other OECD member countries in the region. In a wider, international context, however, average earnings and average household disposable income are still relatively low.
Between 2009 and 2014, the unemployment rate reached 5.3 percent and still remains above the OECD average of 2.6 percent. Despite a slight reduction, the Slovenian at-risk-of-poverty rate was 14.3 percent in 2015, leaving 287,000 people below the at-risk-of-poverty threshold. In order to further lower this poverty rate, it is necessary to look first at some of the main causes of poverty in Slovenia.
Between 2007 and 2014, conditions in the Slovenian labor market deteriorated. While the employment rate fell for workers of all ages, unemployment particularly impacted the country’s young people. In 2014, half of all employees between the ages of 15 and 29 were employed only on a temporary basis.
There are more temporarily employed young people in Slovenia than in any other country in the European Union. Seventy-two percent of Slovenians between the ages of 15 and 24 were temporarily employed in 2014, while the European average for this age group was 43 percent.
Youth unemployment is particularly important when considering the causes of poverty in Slovenia, as 11.5 percent of the country’s young people between the ages of 18 and 24 were found to be at risk of poverty in 2012. A comparative study conducted by the Association of Free Trade Unions of Slovenia (ZSSS) between 2012 and 2013 found that there were more young employees receiving minimum wage in Slovenia than in Norway. To put this in perspective, the minimum wage in Slovenia is four times lower than the minimum wage in Norway.
In order to combat youth unemployment in Slovenia, both ZSSS and the Chamber of Commerce and Industry of Slovenia agree that the skills of those entering the workforce must be tailored to meet labor market needs, possibly by reviving a system of apprenticeship in Slovenia.
Slovenia also appears to suffer from the economic phenomenon known as “brain drain.” Brain drain is a term coined by economists meant to describe the emigration of highly trained people from a country. Between 2008 and 2012, the number of young people between the ages of 20 and 29 who emigrated nearly doubled from 692 emigrants in this age group in 2008 to 1,231 emigrants in 2012.
In order to combat youth unemployment, the Slovenian government has put in place a number of labor reforms including the simplification of hiring and firing procedures and reduction of the costs of ending permanent contracts. The goal of these reforms is to reduce the difference in the cost of permanent employment and to limit the consecutive renewal of fixed-term contracts.
In 2014, the Slovenian government reported that the number of permanent employment contracts held by young people aged 15 to 29 increased by 78 percent due to the more flexible labor regulations that encouraged the employment of young workers.
Healthcare must also be addressed when considering causes of poverty in Slovenia. The current system is not based on any kind of income solidarity where the cost would be distributed fairly across high earners and those with lower incomes. Health insurance companies have also been criticized for spending millions on administrative costs and advertising instead of on health services.
New healthcare reform proposals, presented by the Slovenian Minister of Health, Milojka Kolar Celarc in January 2017, would increase government spending on healthcare to €250 million by 2022. This would increase the percentage of the national budget that goes to health services from the current 3 percent to 7 percent. The objective of these reforms is to provide people with access to a comprehensive package of healthcare rights, establish a stable system of funding, and ensure fairness when raising funds for that system.
With a focus on reducing the unemployment rate, particularly that of young people, and creating a more equitable healthcare system, the causes of poverty in Slovenia may continue to be reduced.
– Amanda Quinn