Slovenia’s biggest trade union is threatening to organize a referendum on the government’s spending cuts that are meant to allay investors’ concern over the euro-region nation’s debt.
If the government of Prime Minister Janez Jansa fails to take into account the union’s demands and the savings measures are deemed as “unjust,” the union will seek signatures from the public for a vote, the workers’ collective Zveza Svobodnih Sindikatov Slovenije said in an e-mailed statement today.
“The proposed measures are unjust to the people and follow the ideology of neoliberal capitalism,” the Ljubljana-based group said in a statement. “We will do everything in our power to prevent their adoption or enforcement.”
Premier Janez Jansa’s administration, which took power last month after early elections in December, pledged to lower public spending by about 800 million euros ($1.06 billion) and cut the budget deficit to below 3 percent of gross domestic product by year’s end by reducing public sector wages, benefits, pensions and jobless payments.
The first post-communist nation to adopt the euro saw its public debt surge to 47.4 percent of economic output last year from 23 percent five years ago, according to Finance Minister Janez Sustersic.
Slovenians have voted down several government bills in referendums, including pensions changes in June which would have extended the retirement age to 65. That rejection marked the beginning of the rise in the country’s borrowing costs and credit rating downgrades.
The yield on the government benchmark bonds maturing in 2021 rose from 4.456 percent in June to 5.232 percent at 3:48 p.m. in Ljubljana today, according to mid-pricing data compiled by Bloomberg. The yield surged above 7 percent in November, when the debt crisis was threatening neighboring Italy.
Slovenia, which adopted the euro in 2007, has a credit rating of A+ with a negative outlook at Standard & Poor’s. The assessment was cut in two steps from AA, the third-highest investment grade, after the pension changes were rejected.
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