By: C. R.
Due to higher costs, which have in a short time placed a heavy additional burden on companies, the existence of 16,000 businesses and 66,000 jobs is at risk, GZS warns. It says that production adjustments, a decline in added value and consequently in investments, as well as price increases, will follow. The chamber calls for government measures to preserve jobs and maintain the competitiveness of exporters.
Due to the additional burdens the government has imposed on the economy, companies will have fewer resources for modernising equipment and expanding production, research, development and innovation, financing growth, entering new markets, repaying debt, as well as for long‑term wage growth, employee rewards, and returns to owners, warned Vesna Nahtigal, Director‑General of the Chamber of Commerce and Industry of Slovenia (GZS), at a press conference in Ljubljana today, after the GZS Management Board convened an extraordinary session due to rising labour costs.
She emphasised that labour costs for companies increased by more than 20 percent in just the second half of last year, partly due to the introduction of the long‑term care contribution, the winter holiday allowance, and the increase in the minimum wage, reaching a record share of added value.
She rejected statements by government representatives claiming that the economy is in excellent condition, generating record profits, and failing to recognise the importance of employees. According to her, company profits – excluding the energy, banking, insurance, and pharmaceutical sectors – have been declining since 2023. Wages can rise, she said, only if added value rises as well; otherwise, the consequences are felt in employment levels. “We all want higher wages, but we do not achieve them through decrees and political slogans,” she said critically.
The GZS analytical department estimated that an employee earning the minimum wage “costs” a company around €29,000 per year, meaning that companies generating less than €29,000 in added value per employee are endangered by the minimum wage increase. In 2024, 16,000 such companies existed, providing more than 66,000 jobs, said GZS chief economist Bojan Ivanc.
According to him, the increase in costs could, for companies unable to adjust final prices, result in the closure of production in Slovenia or relocation abroad, as well as reduced funds for investments that enable higher added value.
Ivanc added that the minimum wage increase flattens wage structures, reduces employee motivation, makes it harder to hire young workers, and leads to higher prices of services and products. He cited data showing that after the more than 20‑percent minimum wage increase in 2010, over 60,000 jobs were lost within four years. He acknowledged that the financial crisis and the collapse of the construction sector also played a role at the time, but noted that today’s circumstances are also difficult, high energy costs, Asian competition, and the loss of market share by European manufacturers in third markets.
Representatives of several sectors also warned about the consequences of higher costs. Aleš Bizjak, Director of the Metal Industry Association at GZS, said that 60 percent of surveyed companies in the sector are considering at least partial relocation of production, 80 percent expect a decline in sales, and 70 percent expect a reduction in jobs.
Igor Milavec, Director of the Wood and Furniture Industry Association at GZS, noted that after 2010, employment in the furniture sector fell by half to 4,500, and major companies collapsed. “The combination of the crisis and the minimum wage increase was fatal for most,” he warned. Among surveyed companies in the association, about one‑third believe they will survive long‑term through adjustments, including in investment and staffing. Two‑thirds expect a complete halt to investments and are leaning toward either shutting down or relocating abroad.
Janko Širec, President of the Chamber of Public Utilities of Slovenia, argued that other wages in municipal companies will also have to adjust to the higher minimum wage, and that higher labour costs will sooner or later – since municipal service prices are approved by municipal councils – be reflected in higher service prices, meaning higher household bills.
As short‑term measures to ease the burden of the minimum wage increase, the GZS Management Board proposes that the government introduce subsidies for sectors in which the minimum wage represents a large share of costs, increase non‑refundable funds for digitalisation and process automation, and reduce labour costs through lower employer social contributions.
As medium‑term measures, it calls for the introduction of a development cap at 2.5 times the average wage, the promotion of investment in breakthrough and high‑risk innovations through a technological innovation fund, the establishment of a Slovenian industrial data space, and the preparation of a new national economic development plan for Slovenia up to 2035, which should incorporate as many measures as possible from the 10‑year economic programme Made in Slovenia 2035, prepared by GZS.