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Ljubljana, 21 March 2014, Hotel Mons

Guest speakers:

Dejan Levanič, State Secretary, Ministry of Labor, Family, Social Affairs and Equal Opportunities of the Republic of Slovenia

Nevenka Oštarjaš, HR IBM and co-chair of the AmCham Labor Committee

Bogdan Radaković, HR Director, Goodyear Dunlop CSEE

Branko Žibret, Partner, A.T. Kearney

The discussion was moderated by Petra Kocjan, Director, Ypsilon Institute.

A high turnout at the AmCham Business Breakfast proved that the issue of unemployment and of how to obtain new and to retain existing jobs attracted a high level of attention of Slovenian business leaders and the representatives of Slovenian politics.

Guest speakers discussed the following topical issues:

Slovenia is nearing the highest rate of unemployment since its independence.

Are we sufficiently aware of this fact? Although we are talking about all the topics that concern us in one way or another, it seems as if no one is noticing what is actually happening with the employment in Slovenia.

One of the biggest challenges is how to obtain new and to retain existing jobs.

How to achieve a turning point and increase employment?

What are the biggest problems the employers are faced with? Is a highly educated workforce really still the advantage of Slovenia?

How to involve young people whose unemployment is rapidly growing?

All corresponding solutions need to be implemented in reality

Dejan Levanič, State Secretary, Ministry of Labor, Family, Social Affairs and Equal Opportunities of the Republic of Slovenia to the question raised by great moderator Petra Kocjan, about concrete government measures to reduce the high unemployment rate in Slovenia, explained that their ministry has already from the start of their mandate set a clear focus on the reduction in the unemployment rate: ” In 2012, the unemployment rate especially among young people increased significantly, which was a sign for a red alert. Since then, we have prepared many programs for employers, informing them on how to obtain grants of the Ministry to promote the employment of the young. We have also prepared concrete programs for the employment of young people which are as well funded. We are however aware that this is by far not enough. First and foremost, I would like to emphasize the need for cooperation between our Ministry, the Ministry of Education, the Ministry of Economy and the Ministry of Finance.

Most urgent problems have occured:

1 When we ceased to employ young people in the public sector, the unemployment rate has risen, as the economy can` t absorb new generations of young people that graduate every year.

2 Relationship between the three ministries: not only as concerns the subsidies, we also need a strategy for the future, for the next 20 years. We have to decide which industries we will support, what we will do with the timber industry due to the recent natural disaster…

Levanič said that he is aware that the Ministry has all the relevant strategic documents – but this is not sufficient, because they need to be implemented in reality.

The new labor law is still not flexible enough

Bogdan Radaković, HR Director, Goodyear Dunlop CSEE, said that he has been regularly observing the changes in the legislation and that in his opinion there were some good moves made by the government, however believes that the new labor law is still not flexible enough: “The new Employment Relationships Act did bring some procedural simplifications and reduced some terms as regards dismissal, but there can` t really be any major improved flexibility seen.”

Radaković commented on the advantages and weaknesses of the Slovenian labor market:

“From the perspective of investors, the decision on the locations of where to invest is multi-layered. Slovenia has a very well -educated workforce, exceptional knowledge of foreign languages and a relatively high standard of living. On the other hand, there is a rigid labor law, which does not allow the employers a sufficient flexibility for achieving competitiveness. We are faced with high labor costs and high taxation of wages, unfavorable for both -employers and workers. There are also long administrative procedures, e.g. obtaining a work permit and a residence permit – which I knew as a foreigner to my cost as well,” pointed out Radaković.

“In order to raise the competitiveness of your country, you need a more user-friendly administration, a little lower labor costs and lower taxation – i.e. at the end of the year you get a bonus, the state takes 65% of it, while 35% remain to you. However, this should be a bonus for successful employees – not for the state!” was determined Radaković.

The government does not create jobs, but only an appropriate framework for the economy to create jobs

Branko Žibret, Partner, A.T. Kearney expressed his belief that the government does not create jobs, but only an appropriate framework and conditions for the economy to create jobs: “Investments create jobs,” pointed out Žibret. “How attract investments? In Slovenia, enterprises do not invest enough, but I ask each of you, in what circumstances would you invest your personal savings into a certain business? You would probably decide for an investment if you knew that you would get an income and if you were convinced in the safety of the investment. So do the enterprises! Foreign direct investors go to markets where there is a lot of consumer purchasing power. In Slovenia, there certainly is not enough. In order to attract foreign direct investment (FDI), we have to rely on completely different advantages – foreign investments come to Slovenia only because of the highly educated and powerful labor. That’s all we have.

State investments certainly play a big role as well, however are not sufficiently implemented by the state. Also the savings measures are radical and the structure of savings is not the proper one – we should not save on investments, it would be much wiser to save on wages in the public sector,” believes Žibret.

He also pointed out the vulnerability of people who have lost their jobs: “For people who lose their jobs, the situation is much more difficult and stressful than for young people who are faced with unemployment at the outset, therefore they deserve a special program to be trained and educated for a new job.

Levanič replied that in the past, when there were programs made against unemployment, they did not evaluate actual problems, whereas now they first want a feedback on specific actions: “It is not enough to merely introduce the program and say “work is done”, but it is our task to observe the consequences and the impact of these programs as well the implementation of appropriate corrections and changes.”

Žibret pointed out that at this point we urgently need a predictable business environment, national leadership, positive atmosphere and a lot of entrepreneurial spirit, in order to improve the economic indicators.

For multinationals important issue of labor mobility and global adaptation

Nevenka Oštarjaš, HR IBM and co-chair of AmCham Labor Committee, said that all multinationals have clear guidelines and goals set when looking for opportunities in foreign markets: “They are particularly interested in the level of GDP as well as information assisting them in deciding how many jobs will be opened in each country. They are interested in what competencies, skills, work experience, knowledge and capabilities has the workforce in a certain country, and of course what are the costs of workforce. At the IBM, they think globally – often it happens that they employ someone for a local workplace, however after only three months he can be offered to pledge himself to three states and travel, or is a lot on the road. For us, the issue of mobility is of a great importance as well how the employees adapt globally. Sometimes this can be very difficult.

Foreign investors in the first place check how much available workforce they have, and at what wages the employees are willing to work. She pointed out the important and significant differences as regards the net / gross salary by countries Romania, Slovakia and Serbia in comparison with Slovenia. She also said that foreign investors are considering in which jobs in Slovenia it makes sense to invest.

“IBM Slovenia has so far kept jobs successfully because we have a very educated, trained workforce with a high level of knowledge and experience. Our services are at a high level – not on a low.”

1st QUESTION raised to the participants of the AmCham Business Breakfast:

Are the measures taken by the Government to reduce unemployment efficient?

In the active voting 7% of all participants answered with YES, whereas 93 % of them replied with NO.

Dejan Levanič said that he had expected a similar result of the vote: “We know that the economy has a lot of comments. In any case, we will explore the possibilities of what can be done to increase the level of flexibility, therefore a feedback and advice on what to do are of utmost importance for our future work, as we are aware that only economic growth can create jobs.”

To the remark from the audience that the Employment Relationships Act applies to both public and private sector, however the public sector does not want changes that are expected from the private sector, Levanič replied: “We are familiar with the expectations of the economy, however do not understand the basic needs of employment. On one hand we must protect the interests of employees, but also the interests of employers. Therefore, we have sent questionnaires to detect the effects of changes in legislation. However, every time we want to make a positive step to one side, we immediately encounter negative feedback and problems on the other side.

We are also aware that labor costs are very high, and together with the Ministry of Finance, we need to figure out what we can do to reduce them.

The AmCham Labor Committee is of a great help with its proposals.”

2nd QUESTION raised to the participants of the AmCham Business Breakfast:

Will the employment rate in the next 12 months increase?

In the active voting 45% of all participants answered with YES, whereas 55 % of them replied with NO, which denotes a slightly more optimistic assessment of all the present for the near future .

“Homeopathic medicine” does not help in such acute cases!

H.E. Kieran Dowling, the Ambassador of Ireland to the Republic of Slovenia, compared the situation in Slovenia with the one in his homeland: “Slovenia is small, but also Ireland is not much larger in size, but we have after serious lessons of recent history reached a huge success because we have managed with whole package offers and flexibility to attract a lot of foreign companies. We had a really severe lesson and I tell you that only “homeopathic medicine” in such acute cases does not help! Therefore, the highest priority of the Irish Government at the moment is the creation of new jobs with an action plan and the second priority is in the government` s aid to mainly export -oriented enterprises.

AmCham Business Breakfast, 21 March 2014 – VIDEO CLIP