How to Make Slovenia More Competitive?

AmCham Business Breakfast
Read more

Post-pandemic recovery and ways of taking Slovenia among the world's 15 most competitive economies were in the focus of the AmCham Business Breakfast. The panellists also discussed the planned cap on social security contributions, with Finance Minister Andrej Šircelj hoping the latest attempt to introduce it will succeed.

The starting point for AmCham's business breakfast was PM Janez Janša's statement that given its potential, Slovenia could become one of the world's 15 most competitive countries. Minister Šircelj said he was happy there was more optimism in the business community but believes the epidemic subsiding would largely depend on vaccination. Šircelj agreed Slovenia is better off now than a few months ago, with more favourable macroeconomic forecasts, and a slightly better GDP estimate for 2020. He thus hopes the time is right to discuss an exit strategy, which he said would be based on investments, some of the money for which will come from the EU. The government will also help business by reducing administrative burden. It will not rise taxes, but lower them in some areas while upgrading the tax system, he said.

Barbara Žibret Kralj from Deloitte said changes in taxes and administrative burdens could "take us forward". However, she noted the debate on tax changes going on for too long, so she said it was time for action. "Highly educated young people are flirting with the prospects of going abroad all the time, and they only come back when they want to start a family." She said the expectations for the corona-year had been significantly bleaker than they showed in companies' financials now. However, it is still not clear how things will unfold in 2021 and 2022, which makes an exit strategy all that important.

Pointing to a number of advantages of Slovenia's business environment, Žibert Kralj and Robert Ljoljo, pharmaceutical company Lek CEO, also warned of the disadvantages such as high labour taxes, administrative obstacles, transport infrastructure, and an environment not conducive to business and to keeping talent at home or attracting it from abroad. Ljoljo also warned Slovenia was among the countries where automation and digitalisation would change jobs significantly. "We'll have to adjust to it and plan measures."

Cap on social security
The panellists also talked about a cap on social security contributions planned as part of the government's drive to simplify bureaucratic procedures. Ljoljo welcomed the news a bill was in the making to cap social security contributions at EUR 6,000 gross, but would like the cap to be lower, at EUR 4,500. This is to avoid creating an impression that the measure is designed just to lower taxes on managerial pay but also to include staff driving development, he argued. Žibret Kralj, too, believes that if the cap was slightly lower, it would encourage employment of highly skilled staff. Šircelj expressed hope the latest attempt to introduce the cap will succeed, which was echoed by both Ljoljo and Žibret Kralj. He explained the majority of countries had such a cap for pension insurance contributions, less so for health insurance contributions. The idea is that a maximum pension is set, whereas maximum contributions for it are not set, so the logic behind the cap is to be just, he explained.

The debate also called for more flexible jobs and for remote work not becoming subject to more administrative procedures, as well as for effectively using green transition EU funds, among others. Ljoljo said the guiding principle should be development, of either a company or a country, being friendly to all stakeholders.

Source: STA