Slovenia’s National Action Plan for Employment

Calouste Gulbenkian Foundation (UK Branch) This case study is part of a series of international policies that focus on easing the transition to retirement and later life. The case studies and the accompanying report were produced for the Calouste Gulbenkian Foundation (UK Branch).

Slovenia has struggled with high rates of long-term unemployment and low rates of employment among the elderly since the early 1990s. To combat these challenges, and others, the country adopted the National Action Plan for Employment (NAP) in 2004. This plan, which was developed on the basis of the European Employment Strategy (EES), included and formalised a number of previous employment programmes. Its overall objective was to meet the aim of the Lisbon Strategy of achieving a 70 percent employment rate among 20- to 64-year-olds by 2010.

Evidence suggests that the NAP has had a positive public impact and was partially successful in achieving its goals. Since the early 2000s, when most measures comprising the NAP were first implemented, unemployment rates have decreased to a level well below the EU average, the share of long-term unemployed has declined, and the number of older workers in employment has increased. Despite these positive developments, Slovenia still underperforms in comparison with the average of the EU28 on the issues of long-term unemployment and the employment of older people.

The challenge

Many studies have shown that as a result of the transition reforms of the early 1990s, countries in Central Europe have struggled with persistently low rates of employment, high rates of long-term unemployment, strong regional disparities, and the development of the informal economy. [11][19] This is certainly the case in Slovenia, a small country in south central Europe with a population of approximately 2 million. While in the early 2000s, unemployment rates in Slovenia were low in comparison to other transition economies and to the EU more broadly, the country fared less well with regard to the proportion of the unemployed who were classified as long-term unemployed. This was one of the highest in EU and OECD countries – for workers aged 15-65 it stood at 54.7 percent in 2001, although it had dropped to 44.5 percent by 2004.[4]

Similarly, Slovenia reported particularly low employment rates among women and elderly workers aged between 59 and 64. The employment rate of workers in the 59-64 age group stood at 22 percent in 1999 and 29 percent in 2004, compared to 36.2 percent and 42 percent in the EU28 as a whole.[11] Another problem was caused by demographic changes in the country, namely declining birth rates and increased life expectancy. In this context, the early retirement age – requiring men in 1990 to have worked only 36 years and 7 months and women 31 years and 8 months before retirement – was an additional issue.[21] The challenge for policymakers in Slovenia in the early and mid-2000s was therefore to increase the involvement of elderly workers and women in the labour market in order to reduce long-term unemployment and to sustain economic growth.

The initiative

Slovenia adopted the NAP in 2004 – the same year it joined the EU – in order to address the structural issue of long-term unemployment and low levels of employment among elderly and other marginalised workers. However, many of the initiatives that were included in and formalised by the NAP did not start in 2004, but had been launched in the late 1990s and early 2000s in preparation for Slovenia’s EU accession. The foundational document in this regard was the National Development Programme (NDP) for 2001-06, which defined reducing unemployment and increasing employment as one of its five priority tasks.

As part of the NDP, the government – in collaboration with a number of stakeholders – designed an extensive scheme of different programmes and sub-programmes for the realisation of these goals. It also adopted three additional strategic documents:

  • “The 2001 National Programme for Development of the Labour Market and Employment (until 2006)
  • “The Employment Action Plan
  • “The Programme of Active Employment Policy Measures.”[1]

In addition, the NAP was based on the EES and a Joint Assessment Paper (JAP) with the European Commission. The EES dates back to 1997, when the EU member states established a set of common objectives and targets for employment policy, with the main aim of creating more and better jobs throughout the EU. The EES then served as a basis on which the European Commission and countries applying for EU membership drafted a JAP, which analysed the main challenges and served as a guideline for national employment policies. Slovenia signed its first JAP in 2000.[11] The overarching aim of the NAP 2004 was the complete adoption of the EES and a harmonisation of its goals with the Lisbon Strategy, with the overall objective of achieving 70 percent employment in the 20-64 age group by 2010.[10]

The formalisation of existing employment programmes and the adoption of the EES and the goals of the Lisbon Strategy also entailed a shift in direction from passive policies, such as early retirement or financial support for the unemployed and enterprises in difficulties at the outset of transition reforms, to “active measures”.[1] These active measures consisted of three broad types of initiatives that aimed to achieve the goals set out as part of the NAP: training, intervention programmes, and public works.[16]

To improve labour supply, the NAP focused on promoting the involvement of people aged over 50 in the labour market. It framed this under the umbrella term of “active ageing”, which the statistical office of Slovenia defines as “a continuous engagement in the economic, social, cultural and civil spheres, a way of upgrading (experience) of what has been achieved and not as prolonged physical activity for the elderly or prolongation of employment”.[21]

The NAP used this active measures approach in five priority areas, which it identified after the review of previous employment programmes and the analysis of the EES and the Lisbon Strategy:

  1. Encouraging employment in Slovenia, especially for women, older and marginalised social groups
  2. Raising the level of education and qualifications of the labour force, as well as the level of occupational qualifications
  3. Reducing structural disparities, which entails reducing the number of long-term unemployed and the number of unemployed people without vocational education
  4. The inclusion in active employment programmes of the young unemployed who do not secure new employment with 6 months and all others who do not find employment within a period of 12 months
  5. Reducing regional disparities in the labour market, supervising the fulfilment of the requirements of the registered unemployed, and preventing undeclared work and employment.[16]

The overarching objectives set out by the NAP, including reducing unemployment and increasing employment among older people and marginalised groups, were subsequently adopted in Slovenia’s Development Strategy for the years 2005-2013 and the subsequent Development Strategy 2030.

The public impact

Evidence suggests that the NAP has had a positive public impact and was largely successful in achieving its goals. Since the early 2000s, when most initiatives aimed at achieving those goals were first implemented, unemployment rates have fallen to a level well below the EU average, the proportion of long-term unemployed has declined, and the number of older workers in employment has risen. Nevertheless, despite these positive developments, Slovenia continues to underperform in comparison to the EU28 average on the issue of long-term unemployment and old-age employment. It should also be noted that the global financial crisis of 2007-08 negatively affected Slovenia’s economy, which explains the temporary worsening of employment indicators in the following decade.

The NAP succeeded in reducing unemployment – including long-term unemployment – increasing employment rates, and helping women and elderly workers to be active in the job market. With the exception of employment for older workers, all targets of the 2010 Lisbon Strategy were achieved. Between 2004 and 2008, unemployment dropped from 6.3 percent to 4.3 percent. The share of long-term unemployed also decreased – from 47.3 percent in 2004 to 42.2 percent in 2008. At the same time, the employment rate grew from 65.9 percent in 2005 to 70 percent in 2008, meaning that the country reached the goal set out by the EU Lisbon Strategy two years early.

Employment among marginalised groups also grew following the implementation of the NAP. With 61.3 percent of women employed in 2004, Slovenia reached the 2010 Lisbon goal of 60 percent six years early. This share has since increased further (to 69.7 percent in 2017). The employment rate of those aged between 55 and 64 has significantly increased – from just 29 percent in 2004 to 38.5 percent in 2016 – although it fell short of the 50 percent target set by the Lisbon Strategy.[6]

While the NAP was therefore mostly successful in achieving its goals, Slovenia still underperforms on several issues in international comparison. The impact of the NAP was also somewhat lessened by the effects of the global financial crisis on Slovenia’s economy. After having declined for ten years straight, unemployment rose again in 2009, peaking at 10.11 percent in 2013.  Subsequently it dropped to 8.1 percent in 2016.[6]

The share of long-term unemployed has grown since 2008, reaching 54 percent in 2016. The numbers of long-term unemployed also compare negatively to 30.5 percent in OECD countries and an average of 46.8 percent in the EU28. [15] Similarly, employment statistics for older workers in Slovenia do not perform well in international comparison. While the employment rate for 55 to 64 year-olds has increased since 2004, it stood in 2017 at 44.5 percent, much lower than the EU28 average of 57.7 percent and the OECD average of 60.4 percent.[6]

Even though pension ages and years of necessary contributions have gradually increased over the past years – in 2018 they reached 60 for men and just over 59 for women, upon condition of 40 years of contribution payments – Slovenia stands out on the basis of its relatively low effective retirement age, with most pensioners retiring immediately on fulfilling their retirement conditions.[20] According to the OECD, in 2015 men left the labour force at an average age of 62.8, which is 1.9 years below the OECD average, while women left the labour force at an average age of 60.8 years, which is 2.5 years below the OECD average.[3]

Written by Mirjam Büdenbender

This case study is part of a series of international policies that focus on easing the transition to retirement and later life. The case studies and the accompanying report were produced for the Calouste Gulbenkian Foundation (UK Branch).

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Public Confidence Fair

Meetings at which government representatives presented strategy documents to researchers, NGOs and social partners reflect some effort to promote public confidence in the NAP.[13] For example, in 2006 the government's Working Group on Reform of the Labour Market presented a draft document at a meeting of NGOs, where they discussed the Strategy for the Protection of the Elderly by 2010. In 2007, the same Strategy was presented at the conference for Lifelong Learning and Active Ageing, organised by the National Council. Both presentations were attended by social partners (representatives from trade unions and employers’ organisations) as well as other actors, especially researchers. These stakeholders complained, however, that the strategy document was already mostly finished and that they were not given the opportunity to contribute meaningfully to updating or revising it.[13] Overall, this criticism by stakeholders and civil society organisations about insufficient involvement in designing the NAP served to weaken public confidence in the programme.[11]

Stakeholder Engagement Fair

Initially the EES, which was basis for the NAP, did not involve domestic stakeholders. However, owing to the strength of Slovenian trade unions and employers’ organisations as well as a revision of the EES at the European level in 2003, the design of the NAP eventually involved some stakeholder engagement.[11]

The EES had initially been developed by the EU member states in 1997 with the involvement of their own domestic stakeholders. Slovenian stakeholders were not initially involved when adopting the EES as the basis of the formalisation of the NAP in 2004. Domestic trade unions and NGOs therefore objected that the EES, and subsequently the NAP, were imposed “from the top down”.[11] After a midterm review in 2003, the EES became explicitly committed to involving domestic stakeholders in the aspiring EU member states in the design of NAPs.

Consequently, multiple groups were eventually involved in discussing Slovenia’s NAP, under the umbrella of the Economic-Social Council, before the government finally adopted it. The Economic-Social Council included the following institutions:

  • The Chamber of Commerce of Slovenia
  • The Chamber of Trades
  • The Slovene Association of Employers
  • Representatives of trade unions
  • The government in its entirety as well through its ministries
  • A number of NGOs.

To further improve cooperation with NGOs as crucial representatives of societal concerns, the government also adopted the Strategy for Cooperation with Non-Governmental Organisations in 2003. While the government expressed its commitment to “systematically strengthen cooperation with NGOs”,[12] in practice it did little more than invite NGOs to occasional discussions.[13]

This has led researchers to argue that civil society actors played only a marginal role in the design stage of the NAP, which was restricted to limited consultations about already drafted strategy documents and participation in peer learning activities at the EU level.[13] For example, even though a draft document on the strategy of active ageing was presented by government officials at a meeting with NGOs, social partners, and other actors such as researchers, civil society actors objected that they had not been sent this document in advance, which prevented them from preparing for the discussion.[5] Similarly, a report by the independent study and research group Notre Europe suggests that stakeholders were not given sufficient information “to enable them to realise how much is at stake” and to become actively involved in employment reforms.[11]

Political Commitment Good

The commitment to the NAP by the government and political leaders from the centre-right government – which came to power in 2004 – was demonstrated by their persistent efforts to harmonise its legislation with the European Social Chapter and to prepare for the implementation of the EES. The NAP was not made law by the National Assembly as a single programme. Instead, the government officially adopted it as policy in 2004, after which the National Assembly passed different laws that pertained to specific elements of the programme over a period of several years.[11]

However, despite the commitment displayed from government leaders, some initiatives – such as the strategy on active ageing – took a lot of time to be passed by the National Assembly, indicating a low level of cross-party political will to adopt them.[5] This can best be explained by a conflict in the National Assembly between the governing centre-right SDS party and the centre-left social democrats, who were closely aligned with the unions.[22] Hence, the reluctance of individual politicians to support the NAP was linked to the power of social partners, who criticised it as a top-down implementation of the EES and what they saw as its neoliberal agenda.[11][23] However, there is little overall evidence of significant or even coordinated opposition to the NAP.

Policy

Clear Objectives Strong

The NAP’s long-term goal was to reduce unemployment and increase employment, which it pursued through five priority areas (see The Initiative above). These drew on and formalised previous programmes and EU employment strategies. Based on previous programmes and the EES, the NAP then developed a number of sub-goals, which it sought to address through a number of active measures.

For example, in order to encourage the employment of older people, as defined in priority area 1, the NAP put forward a number of active measures, including:

  • Jobseeking clubs
  • Local employment programmes
  • Public work programmes
  • Subsidies for employing more difficult-to-employ persons
  • Encouraging employment (subsidising a portion of wages) of first-time jobseekers
  • Cofinancing projects in regional programmes for the development of human capital
  • Cofinancing the education and training of the employed.[16]

The Employment Service of Slovenia (ESS) and the EES constantly monitored these measures, the results of which were then published in different documents, including the NAP annual report.[12] This allowed the NAP’s policies to be reviewed and adjusted in order to ensure the success of its long-term goal.[11]

Evidence Strong

Evidence underpinning the design of the EES, from which the NAP was derived, was initially based only on data collected from existing EU member states. This led to a certain mismatch between the needs of the new member states that joined in 2004 and the policies they were supposed to implement. However, a midterm review of the EES 2003 changed this, and careful studies were carried out to examine the specific conditions in the new member states.[11] In addition, the NAP was based on previous programmes of the Slovenian government, which had involved the collection of employment data as well as the exchange of ideas with different stakeholders through conferences and meetings.[25]

With regard to the active ageing strategy, the Directorate for the Labour Market and Employment within the Ministry of Labour, Family and Social Affairs (MDDSZ) coordinated the collection of evidence both in the form of consultations with social partners and NGOs within Slovenia and in studies of best practice of other member states. For instance, it studied the policies of Finland, which had successfully “activated” its older citizens, i.e. helped them become more active in the job market.[13]

Moreover, the performance of the NAP was reviewed annually, and these reviews provided up-to-date information, enabling the NAP to assess and adjust the measures to meet its objectives. The annual reports drew their evidence from questionnaires of civil servants working in ministries involved in NAP measures, updated statistical information and indicators, and an assessment of possible changes in strategic objectives in the context of changed political relations in the country.[12]

Feasibility Strong

The overall feasibility of the NAP was strong, owing to significant financial support through various EU mechanisms – the active employment policy programmes, for instance, were cofinanced by the European Social Fund – and continued processes of review and revision which included stakeholders and social partners.[12] The key limitation of the programme was posed by the initial difficulty in transforming the EES from a strategy devised by and for the older member states into an initiative that reflected the realities and interests of the new member states and their stakeholders.

When the NAP was in an early stage of development, this led to complaints from domestic stakeholders about “top-down instructions” on how to design the NAP. This had the effect – as Notre Europe reported – that the attitude of the European Commission during preparation for the member states’ accession did not encourage a relationship of mutual trust with the national governments, nor – as a consequence – did it facilitate better expression of the priorities and objectives of the EES. This problem was at least partially solved after a review of the EES in 2003, which explicitly encouraged exchange with domestic stakeholders in developing the NAP.[11]

Action

Management Strong

The NAP is managed through a complex, multilevel system – reaching from the European Commission to regional offices of the ESS in Slovenia. However, central power lies with the country’s National Assembly, which decides on the amount and the purpose of funding for NAP programmes.[16]

In the national management hierarchy of the NAP, sitting below the National Assembly is the ESS, the central institution in the labour market, which assumes the leading role in the execution of the active employment policy. The directors of the regional offices of the ESS became the managers of developing human resources in individual regions, heading Councils of Partners for the development of human resources. The objective of these councils was to improve the quality of the treatment of unemployed and increase cooperation with companies in reducing unemployment and developing hiring schemes.[16] Moreover, the purpose of these councils is to formulate regional or local developmental coalitions, which together define labour market and employment strategies in line with local requirements.[1]

Measurement Strong

Measurement of the NAP has been very effective. Adopting the “open method of coordination”, developed during the 2000 Lisbon Council, the NAP organised peer reviews and set up feedback mechanisms which enabled it to monitor and measure the performance of its policies.[11] Progress was evaluated through its annual report and the European Commission. Domestically, the ESS monitored the effectiveness of the NAP by collecting all employment-related data and asking the unemployed and employers for feedback through surveys and questionnaires. This information was then fed back into the NAP/EES review process. The European Commission also annually reviewed the performance of the NAP and made recommendations with regard to its potential for improvement.[16]

Alignment Good

A number of measures supported strong alignment of all the actors and stakeholders involved in the NAP. Between the European Commission and the EES on the one hand and the Slovenian government and ESS on the other, alignment with regard to the NAP was sought through the open method of coordination.[11] The aim was to allow both sides to better understand each others’ requirements while also reviewing their common objectives.

At the regional level, the ESS cooperated especially closely with regional development agencies and the Centre for Social Work, organising regular meetings and training and ensuring close alignment.[16] To support alignment with prospective jobseekers and other stakeholders, the ESS launched various initiatives that connected the unemployed and employers and developed feedback mechanisms to gauge their opinions. Involvement of stakeholders does not, however, automatically result in alignment, as Notre Europe has argued. The research institute found that while unions were involved in many of these initiatives, their interests were not aligned with the ESS or the NAP but were focused on promoting specific interests, especially concerning wage bargaining.[11]