Slovenia to liberalize labor laws, but not keen on bank privatization

LJUBLJANA – Slovenia hopes to liberalize its labor law and overhaul welfare benefits by the end of this year to boost employment and make its economy more efficient, a government minister said last week. But Development Minister Ziga Turk could not say if and when the newest eurozone member would step up the slow sell-off campaign of the remaining state assets, particularly banks. The new labor legislation is expected to make it easier to hire and fire employees and enable older workers to stay employed beyond retirement age, while the welfare system reform should stimulate people to work, Turk told Reuters in an interview. «With more flexible hiring and firing of employees, we will initiate higher employment because companies will not fear to hire new people,» Turk said. Unemployment in Slovenia stood at 8.4 percent in February, down from 10.4 percent a year earlier. Turk said the new welfare system should take into account all the assets of applicants rather than just their wages. «The goal is to make the system more just and not necessarily to save some money. The goal is also to stimulate people to work.» He said the new legislation, expected to be passed by the end of the year, should also improve business initiative in the country and mark a further break with its communist past. Until independence in 1991, Slovenia was part of Socialist Yugoslavia, whose command economy and liberal welfare system promised to provide for everyone according to their needs. «There is some heritage of socialism (in Slovenia), a lack of entrepreneurship, stiffness, the expectation of what the state will do for someone or for some sector,» said Turk. Turk said Slovenia was not in any hurry to privatize further its banking and insurance sectors, which are still largely controlled by the state. «Looking from a development point of view, the question is what you achieve by selling. Slovenia at present does not need to privatize to pay back debt or cover budget deficit,» he said. The government is a large or majority owner of the two largest banks which together have a market share of some 50 percent. «The advantage of Slovenia is that it sometimes takes smaller and more careful steps and still has results. But again one must not be too conservative,» said Turk. Last year Slovenia refused to allow Belgian banking and insurance group KBC to acquire majority in the country’s largest bank, NLB, in which KBC has owned 34 percent since 2002. Slovenia said it should keep control over most of its financial system to ensure its stability. However, the country plans to sell up to 39 percent of state-owned telecom operator Telekom, in the present government’s largest sell-off to date. Slovenia expects gross domestic product to expand 4.7 percent this year. Its budget deficit is seen at some 1.5 percent of gross domestic product or well below the 3 percent ceiling allowed for eurozone members.

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