Pension Reform

16. 02. 2011

Pension Reform


 

 

In a rare open session dedicated to hearing oral arguments from the two sides, Slovenia's highest court was told by the president of the ZSSS trade union association Dusan Semolic that the people should be given a right to have a direct say on important matters. The trade unions maintain that by banning the referendum on the pension reform law, the Constitutional Court would be curtailing a fundamental right of the people.


"Does the Constitution contain a basis for curtailing one constitutional right, in this case the right to a referendum, in the name of protecting another?" the advocate for the unions, Bojan Bugaric, told the court. But government officials countered by saying that a failure to implement the pension reform passed by the National Assembly would result in a violation of the Constitution as the state would no longer be able to pay out pensions.

 

Pension costs currently represent a little less than 11% of GDP, but "if that number were to surpass 11%, the burden on the economy would simply be too great", said Development and European Affairs Minister Mitja Gaspari.

Minister of Labour, Family and Social Affairs Ivan Svetlik stressed that the pension purse was already under strain and that indexation of pensions had to be curbed with emergency legislation in the past two years. In weighing up the views, the constitutional judges quizzed the sides about the pension reform. Presiding Justice Ernest Petric asked officials how the government planned to deal with defaults on pension contributions. Svetlik said that the new pension law banned the practice of putting off payments and included provisions guaranteeing pensions to workers whose employers break the law by failing to pay contributions. Gaspari stressed that companies that are unable to pay workers their full salary, including pension contributions, should not be allowed to operate. Additional measures to prevent defaults on pension contributions will be built into other laws, including changes to the VAT act and public procurement act which the government is planning to adopt on Thursday, added Gaspari.

 

Responding to warnings from the unions that the government should have built in greater bonuses into the pension reform for people who want to stay active beyond the general retirement age, Justice Jadranka Sovdat asked officials why this did not suffice to keep the pension purse sustainable. Svetlik warned that the proposals put forward by the unions would have meant retaining the current system, which is unsustainable. "This falls short of adapting to the new conditions. People live longer now and stay healthy for longer," he said, adding that bonuses have proved to be mostly ineffective. The decision to extend the working age to 65 is a suitable measures, the labour minister maintained. "The new standard in Europe is 67 years." But Semolic said that such proposals were bad for the people. Apart from being inhumane to the majority who will not be able to stay active for so long, it also ignores the fact that old people already have trouble finding jobs.

 

This was also highlighted by the trade unions in a protest staged in front of the Constitutional Court during the session.The rally prompted Justice Petric to say that "protests are not needed...as the Constitutional Court will decide on the basis of the Constitution and not on the basis of political or other pressure."

 

Source: THE SLOVENIA TIMES

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