SLOVENIA ADDRESSING ISSUE OF AGING POPULATION

UNCLAS LJUBLJANA 000150

SIPDIS

SIPDIS

EUR/NCE SSADLE

E.O. 12958: N/A
TAGS: SOCI ECON TBIO SI
SUBJECT: SLOVENIA ADDRESSING ISSUE OF AGING POPULATION

REF: A. SECSTATE 29783


B. LJUBLJANA 75


1. (U) SUMMARY. Slovenia faces the need to revise pension
reforms in light of an aging population and the heavy public
expenditures this entails. The Government of Slovenia (GOS)
implemented labor reforms in 1999, extending the retirement
age. Then in 2001, stop-gap labor reform measures went into
effect, extending the retirement age yet again. The GOS has
until 2013 to implement permanent pension and healthcare
reforms. The GOS states that the current pension system is
sound and can last as-is for at least 20 years. Other
officials and experts claim that the current system is
teetering on a knife's edge and could face a crisis within
five years. END SUMMARY.


2. (U) The Slovenian Statistics Office estimates that 35
percent of Slovenians will be over 65 by 2050, in contrast to
the current 15 percent. Slovenia must deal with a number of
tough labor issues: a large number of pensioners from the
Yugoslav days that need to be supported, generous retirement
packages that undermine motivation for individuals to remain
in the workforce, and difficulty for foreigners in obtaining
work permits. In 1999, the GOS implemented the first set of
labor reforms, which led to raising the retirement age and
abolishing early voluntary retirement. In 2001, the GOS
introduced a new pension reform plan formulated specifically
to reduce financial burdens on the public of Slovenia's aging
population. This included increasing the retirement age each
year until retirement age reaches 63 for men by 2008. The
retirement age for women will increase to 61 by 2013. This
plan will be extended or revised in 2013.


2. (SBU) There is a debate in Slovenia as to the health of
the current pension plan. Slovenian officials firmly state
that the pension system is in good shape and can last in its
present condition for another 20 years. Other experts,
former Minister of Finance Dusan Mramor among them, believe
that if nothing is done, the pension system will collapse in
five years, as the percentage of retirees continues to grow.
In March 2006, European Commissioner Joaquin Alumnia stated
that Slovenia will need to implement reforms to its public
finance system in order to combat the "well-known effects" of
an aging population. The European Commission entered the
pension debate, issuing several calls for Slovenia to shore
up the sustainability of its pension system. In a report
released December 2006, the Commission criticized Slovenia's
decision to gradually increase the pension age and the "weak"
financial incentives to work longer. Prime Minister Janez
Jansa declared that 2007 is the year for labor reform. To
that end, the new Minister of Labor, Barbara Cotman, has
already started meeting with employers and labor unions to
implement the labor reform mandate (Ref B).

COLEMAN