After independence in 1991, Slovenia, unlike other countries of the region, embarked on a more gradual transition of the economic system. The main reasons for following such a strategy were the early introduction of some economic reforms in the end of the 1980s, when Slovenia was still part of Yugoslavia, the country’s relatively high level of development, and the rather easy separation from Yugoslavia when compared to other successor states. This relatively smooth transition enabled Slovenia to avoid major shocks and to benefit from steady growth.
Slovenia became the first former Yugoslav republic to obtain EU membership in 2004 and was the first new EU member state to join the Eurozone in 2007. While in the early 1990s, per capita income was 50% of the EU average, it now reaches almost 90%, the second highest in Central and Eastern Europe after Czechia.
The robust economic growth of past years also boosted the labour market. The unemployment rate fell to less than 5 % in 2019 and has remained there even throughout the pandemic. The employment rate is higher than the EU average (76% vs 72% in 2020). Strong demand for labour and a quickly ageing society have been contributing to labour shortages. The country also performs well in sharing the gains. Income inequality, the risk of poverty, and the gender pay gap are all relatively low.
The Covid-19 pandemic caused a strong GDP contraction in 2020 of 4%, but still lower than the EU average (-6%). First estimates show a strong recovery with nearly 7% growth in 2021, but the outlook is more subdued due to continued supply chain strain and inflation fears. The short-term impact on labour markets was high with 6.4% of all working hours lost when compared to 2019 (one percentage point below the EU average). This was equivalent to 60,000 full-time jobs. However, employment and unemployment rates did not change much when compared to pre pandemic times. Only the youth employment rate fell significantly stemming largely from a strong increase in youth unemployment (from 8% in 2019 to 14% in 2020), but has started to recover in 2021. The negative impact of the pandemic on employment would have been much more severe without the strong government response amounting to 6.5% of GDP. This package focused on short-term working schemes benefiting almost 600,000 workers (total population of the country: 2,1 Mio) and income support for the vulnerable. However, Slovenian trade unions voiced their concern about a lack of consultations on the response package.
Slovenia and the ILO
Slovenia is a member state of the ILO since 1992.
The ILO has assisted Slovenia in its economic and labour market transformation and in its accession to the EU in 2004. Main areas of work included support to independent workers’ and employers’ organizations, social dialogue, new active labour market policies, labour law reform, regular labour force surveys, and pension reforms.
After 2004, the ILO support covered youth employment and an impact assessment of the Great Recession on social dialogue, industrial relations, and the pension system.
Text last edited on 03/22