Enterprises’ and people’s perception of the Slovenian labour market

Structural Challenges of the Slovenian Economy, Ljubljana, 8 July 2014

Helena Schweiger

2

The enterprises’ view: BEEPS 2013

8 July, 2014

3

BEEPS 2013 in Slovenia

8 July, 2014

BEEPS 2013Geographical dispersion of completed interviews

• Fieldwork: February-September 2013

• 270 completed interviews, across manufacturing, retail and other services, establishments with at least 5 employees

4

Main business obstacles in Slovenia

2013

Political instability

Labour regulations

Access to finance

2008-2009

Access to finance

Informal sector

Labour regulations

polit

ical

inst

abili

ty

tax

rate

s

labo

r re

gula

tions

acce

ss t

o fin

ance

tax

adm

inis

trat

ion

info

rmal

sec

tor

corr

uptio

n

cour

ts

elec

tric

ity

wor

kfor

ce s

kills

tele

com

s

crim

e

acce

ss t

o la

nd

tran

spor

t

busi

ness

lice

nsin

g

cust

oms&

trad

e

0

1

2

3 2013 2008-2009

8 July, 2014

Labour regulations are a more serious obstacle in Slovenia than in any other EU member country

8 July, 2014 5

Latvia

Estonia

Czech Republic

Lithuania

Bulgaria

Romania

Slovak Republic

Croatia

Hungary

Poland

Slovenia

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Rank of labour regulations (out of 16 obstacles)

6

Labour regulations are slightly more binding for old than for young enterprises

Young enterprises Old enterprises

Political instability Political instability

Access to finance Labour regulations

Labour regulations Access to finance

polit

ical

inst

abili

ty

acce

ss t

o fin

ance

tax

rate

s

labo

r re

gula

tions

tax

adm

inis

trat

ion

info

rmal

sec

tor

corr

uptio

n

cour

ts

elec

tric

ity

tele

com

s

wor

kfor

ce s

kills

tran

spor

t

acce

ss t

o la

nd

crim

e

busi

ness

lice

nsin

g

cust

oms&

trad

e

0

1

2

3

<5 years old 5+ years old

8 July, 2014

7

Labour regulations become more binding as the business grows

Small enterprises Medium enterprises Large enterprises

Political instability Political instability Political instability

Access to finance Labour regulations Labour regulations

Labour regulations Tax administration Tax administration

polit

ical

inst

abili

ty

tax

rate

s

acce

ss t

o fin

ance

labo

r re

gula

tions

tax

adm

inis

trat

ion

info

rmal

sec

tor

corr

uptio

n

cour

ts

elec

tric

ity

tele

com

s

acce

ss t

o la

nd

wor

kfor

ce s

kills

crim

e

tran

spor

t

busi

ness

lice

nsin

g

cust

oms&

trad

e

0

1

2

3

small medium large

8 July, 2014

8

The people’s view: LITS 2010

8 July, 2014

9

Connections viewed as very important or essential to get a good job in the government sector…

8 July, 2014

0 20 40 60 80 100

SwedenGreat Britain

EstoniaPoland

Czech RepublicFrance

LithuaniaItaly

GermanySlovakiaRomaniaSlovenia

LatviaHungaryCroatia

Bulgaria

Importance of having support of influential peopleto get a good job in the government sector

Not important at all Somewhat importantModeratly important Very importantEssential

> 60%

10

… somewhat less so in the private sector

8 July, 2014

0 20 40 60 80 100

Great BritainPoland

SwedenCzech Republic

ItalyEstonia

LithuaniaRomaniaSlovakia

GermanyFrance

SloveniaCroatiaLatvia

HungaryBulgaria

Importance of having support of influential peopleto get a good job in the private sector

Not important at all Somewhat importantModeratly important Very importantEssential

Almost 50%

11

People are more willing to move abroad for employment reasons

8 July, 2014

0 .1 .2 .3 .4 .5

PolandCzech Republic

GermanyLithuaniaHungarySlovakiaEstonia

ItalyLatvia

BulgariaRomania

CroatiaGreat Britain

SloveniaFrance

Sweden

Share of respondents willing to moveabroad for employment reasons

12

Labour market in Slovenia: Challenges

8 July, 2014

• Activity rate decrease trend continued in Q1 2014

• Labour productivity below the EU average

• Labour market segmentation

• Distortive use of student work

• High minimum wage can be a barrier to employment of youth and low-skilled workers

• Ineffectiveness of labour market policy and wage setting

13

EPL reforms 2008-2013

8 July, 2014

• Step in the right direction

― Stringent hiring and firing regulations tend to reduce the pace of job creation (and destruction) (Haltiwanger et al., 2014)

USA

CAN

AUS

GBR

IRLCHENZLJPN

HUN

DNKISLMEXBELAUTOTO

SVK

POLTUR

ESP

NORLUXKORISRFIN

SVN

SWECHL

EST

ITAFRA

GRC

DEUNLDCZE

PRT

SVN

0

1

2

3

4

5

2013

0 1 2 3 4 52008

Regular contracts: individual dismissals

CANUSAGBR

IRLSWEAUS

NZL

NLDJPNISLCHE

DEUISR

DNK

CZE

FINHUNOTO

SVK

AUT

EST

PRTPOLBELCHL

SVN

KORITA

NOR

GRC

ESP

FRALUX

MEX

TUR

SVN

0

1

2

3

4

5

2013

0 1 2 3 4 52008

Temporary contracts

14

Labour market reform is necessary, but not sufficient on its own

8 July, 2014

• Reforms in other areas also needed to help reduce labour market challenges:

‒ Mismatch between students’ field preferences and labour market needs

‒ Better business environment

‒ Better corporate governance and greater transparency

‒ Improvement of the efficiency of public administration