development report 2012 - UMAR

58 Development Report 2012
Development by the priorities of SDS – A modern welfare state and higher employment
Over the last year, the participation in lifelong learning
dropped, with the rates of participation of the elderly
and low-skilled people remaining particularly low 155 .
The issue of increased labour market segmentation
poses a great challenge in the labour market policy and
the promotion of flexicurity. To deal with this issue, it
would be necessary (i) to reduce substantial differences
in the rights arising from fixed-term and permanent
employment, and (ii) to regulate student work in a
different manner.
4.2. Modernisation of the social
protection systems
Social protection expenditure 156 is increasing, and
so are the problems for funding it. In 2009 (the latest
available data) this expenditure increased by 6.6% 157 in
real terms, which by far exceeded the average recorded in
some previous years (3%). This high increase can largely
be attributed to the growth of pension expenditure (by
7.2%) and the expenditure on various social transfers that
in 2009 began to increase rapidly due to the economic
crisis, as well as to expenditure growth in health care
as a result of the public sector wage reform. Expressed
as a share of GDP, the increase in the social protection
expenditure was also quite substantial (to 24.2% of
GDP, which is almost 3 p.p. more than the year before).
Alongside expenditure growth, this situation was also the
result of a substantial GDP decline in 2009. Since similar
trends were also typical of other EU Member States, the
share of the social protection expenditure continues
to remain substantially below the EU average (29.5%).
Despite the applicability of intervention measures in
2010 and 2011 that restricted the growth of expenditure
for cash allowances under the social protection
programmes 158 , these allowances continued to increase
in real terms owing to further rise in the number of
pensioners and the beneficiaries of certain social
transfers (mostly because of increased unemployment).
Given a modest economic growth, this trend is expected
to result in a further increase in its share against the GDP.
The problems of providing public resources to cover
this expenditure have been escalating year by year.
The volume of transfers from the state budget to the
pension fund to cover pension expenditure is increasing,
while the revenues of the healthcare fund in 2011 did
not suffice to cover current liabilities for the third year
in a row. Out of many systemic changes expected to be
implemented for quite a while, the reform of the system
of means-tested social transfers was the only one that
Slovenia began to implement in 2012. This reform aims
at achieving more target-oriented transfers which under
the new regulation do not only depend on the income
but also on the property of potential beneficiaries.
Further problems in ensuring stable funding of social
protection expenditure are also indicated by new longterm
economic and budgetary projections related
to population ageing. The European Commission, in
cooperation with the EU Member States, updates the
relevant projections every three years 159 . The most
recent projections of March 2012 do not substantially
differ from the previous ones. They show that without
Table 7: Long-term projections of ageing-related public expenditure, Slovenia and the EU (as % of GDP)
Share of GDP (%)
AWG reference scenario*
Change in p.p. of GDP
Risk scenario
Change in p.p. of GDP
2010 2010–2020 2010–2060 2010–2020 2010–2060
SI EU SI EU SI EU SI EU SI EU
Total 23.5 25 1.7 0.2 10.3 4.1 1.9 0.4 10.8 4.9
Pensions 11.2 11.3 1.0 -0.1 7.1 1.5 NP NP NP NP
Healthcare** 6.1 7.1 0.3 0.3 1.1 1.1 0.5 0.5 1.7 1.7
Long-term care*** 1.4 1.8 0.3 0.2 1.6 1.5 0.3 0.3 1.6 1.8
Education 4.7 4.6 0.1 -0.3 0.5 -0.1 NP NP NP NP
Unemployment benefits 0.3 1.1 0.1 -0.1 0.0 -0.3 NP NP NP NP
Source: European Commission and Economic Policy Committee: Draft 2012 Ageing Report: Economic and budgetary projections for the EU Member States (2010–2060); Ministry
of Finance: Country Fiche on Pension Projections for Slovenia.
Note: *AWG – Ageing Working Group at the Economic Policy Committee. The reference scenario related to healthcare expenditure and long-term care only takes into account the
effects of ageing and the assumption that one half of the remaining years of life we live without disability. **Public expenditure for healthcare according to SHA methodology,
however, without expenditure for long-term care. ***In addition to long-term care public expenditure according to SHA methodology (0.9% of GDP in 2009), AWG projections also
include certain cash benefits according to ESPROSS methodology (disability allowances). NP – no projection.
155
For more details on this topic, see Chapter 2.1. – Education and Training.
156
According to ESSPROS methodology. All social protection expenditure covered by public funds and complementary health insurance
funds is included.
157
The latest data made available by SORS.
158
In 2010 the statutory level of indexation of population's pensions and cash benefits from public sources was cut by half by way of
intervention measures, and in 2011 to one quarter. Expenditure for pensions and social transfers has at the same time been increasing
in real terms by a solid 2% p. a.
159
The drafting of these projections is coordinated at the EC level within the Ageing Working Group at the Economic Policy Committee.