By: Jože Biščak
Given the fact that the Financial Administration of the Republic of Slovenia (FURS) collected a tenth more taxes in the first half of the year (14.4 billion euros) than in the same period last year, left‑wing commentators have once again demonstrated a lack of understanding of public finances. They argue that Janša’s government is announcing cuts completely unjustifiably, since revenues are higher, and they insist that Golob’s government did a great deal on the revenue side of public coffers. On paper this may indeed look like a victory, but in reality, it is just another confirmation that more collected money does not mean the budget hole will be smaller. On the contrary. The deficit will be larger. Which is no surprise if spending grows faster than revenues.
The increase in public revenues was driven mainly by payroll contributions and income tax. And this is precisely where the problem lies. Wages in the private sector did not increase enough to significantly contribute to the strong growth of public finances. But wages in the public sector increased sharply. And if we know that employees in the public sector receive their salaries only after the state first collects taxes in the private sector and then redistributes them into the wallets of public employees, it becomes clear that this is merely shifting money from one pocket to another. The real taxpayers are those employed in the economy, while the taxes “collected” in the public sector are merely an accounting trick.
Golob’s government, with its “pay reform,” justified as a “correction of old injustices,” heavily burdened the budget. From 2022 until today (mid‑2026), the public‑sector wage bill (all expenditures for gross wages, bonuses, performance pay, and contributions among budget users) has inflated significantly. In 2022, the gross wage bill in the public sector was around 5 billion euros; last year it already amounted to 6.6 billion. For this year, further increases are planned under Golob’s “pay reform,” which will conclude (with the sixth and final wage increase) on 1 January 2028, when the total wage bill will approach eight billion euros. This tap, opened by the left‑wing government, will be difficult for the new centre‑right government to close. Nevertheless, it will have to do something. The least painful path will be to reduce the number of public employees, as the share of public‑sector employment already exceeds a quarter of Slovenia’s entire working‑age population. My opinion is that the constitution should stipulate that this share must not exceed 10 (or 15) percent. There are certainly far too many people whose salaries are paid by private‑sector taxpayers.
This insatiable public‑sector mechanism is a classic example of what Friedrich von Hayek called the “fatal conceit” of central planners: the belief that the state can create prosperity through public‑sector employment, higher taxes, and redistribution without destroying the incentives of the private sector. In reality, every additional public‑sector salary means fewer resources for investment in the economy, fewer innovations, and slower productivity growth. The private sector is not an infinite source of money; it is the engine of every country. Even more worrying is that the trend is not stopping. While private‑sector companies struggle with high labour costs, taxes, and regulations, the public sector expands like a cancer. New institutes, agencies, consultants, and other “experts” – all paid from the same source. The result is a paradox: more taxes, a larger deficit, and more debt. The state collects more but spends even faster. This is not governance; it is political clientelism at the expense of future generations.
This is why Janša’s government has an important task: reduce the size of the state, eliminate unnecessary subsidies, privatize what can be privatised, and give more space to the market. Hayek repeatedly warned that the road to serfdom is not an impulsive revolution, but the gradual expansion of bureaucracy accompanied by promises of security, social justice, and equality. Today in Slovenia we see exactly this: a public sector that feeds on itself while the private sector bears the burden. The reality is very simple: whoever does not create cannot give permanently.
