Slovenian Trade Union Seeks Court Ruling on Austerity Moves

Slovenia’s austerity measures are under threat by another trade union, risking a delay in the country’s plans to lower its debts.

“Due to unjust and unconstitutional provisions in the austerity legislation we are demanding the Constitutional court to decide on the matter,” the union representing soldiers and other Defense Ministry employees wrote in an e-mailed statement today. The austerity measures and the revised budget spending were set to come into force on June 1.

Slovenia, whose public debt more than doubled since the 2007 introduction of the euro, pledged to cut spending by about 800 million euros ($994 million) this year to allay investors’ concern over its debt as the inconclusive vote in Greece sparked renewed concern that the 17-member currency bloc may fall apart.

Two police unions, also critical of wage cuts, will probably abandon their bid for a referendum on the austerity program after reaching a deal with the government today, Finance newspaper reported, citing leaders of the groups Radivoj Urosevic and Zoran Petrovic.

Lawmakers on May 11 adopted the reviewed budget spending and other savings measures that foresee public-sector wage cuts and reduced benefit payments as the euro-region nation seeks to implement the so-called fiscal compact inspired by Germany just as other European nations seek measures to boost economic growth.

‘Referendum Season’

“It’s referendum season here and everybody wants a piece of the pie,” Andraz Grahek, head of asset management at KD Funds LLC in Ljubljana, said by phone. “The current system is jeopardizing the state’s ability to stabilize public finances.”

Slovenia is seeking to limit the scope for a referendum. The main political parties in the former Yugoslav nation agreed that results should only be recognized if more than 35 percent of voters turn out, Finance reported, citing Prime Minister Janez Jansa.

Voters in Slovenia rejected pension changes in a referendum last year that would have extended the retirement age to 65. That decision and the intensifying debt crisis in Europe caused a collapse of the government of then-Prime Minister Borut Pahor in September. After that, Slovenia had its credit ratings cut and saw its borrowing costs on the benchmark bond surge to over 7 percent.

Police unions demanded a popular vote on May 18 even though the majority of public-sector unions endorsed the deal with the government.

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