Administrative re-organisations can also yield savings

Some countries have announced savings by re-organising the way the public administration functions, but only two countries (Greece and the United Kingdom) have detailed plans for such re-organisation. It is understood that Slovenia is looking at opportunities to re-organise the way its public administration functions. This issue is covered in more detail in the OECD’s Public Governance Review of Slovenia.

Implementation of Slovenia’s strategy for fiscal consolidation requires decreasing the cost of the public sector workforce

Slovenia has submitted an update to its Stability Programme to the European Union and has adopted a strategy for an exit from the present fiscal problems (Government of Slovenia, 2010a; 2010b). The strategy includes a consolidation of public finances supported by structural measures, institutional adjustments and improvements in labour relations. The implementation of this strategy depends on Slovenia having a sufficient capacity for active fiscal policies. Central government expenditure is to be reduced from 24.9% of GDP in 2010 to 21.6% in 2013 (Government of Slovenia, 2010b).

As part of its fiscal consolidation plans, Slovenia is looking to reduce the cost of its public sector workforce through three key measures:

• • amendment of rules and criteria regarding the number of organisational levels and unification of procedures relating to the adoption of job classification acts;
• • reduction of the number of employees in the public sector by 1%, i.e. approximately 1 600 public servants per year; and
• • measures regarding salaries and other receipts from employment, in force until November 2011 (Government of Slovenia, 2011b). Specifically, Slovenia has looked to cut operational spending through staff reductions, wage and performance pay freezes and spending freezes - and also proposals to re-organise government.

Limiting public wage and consumption increases, which made a consolidation contribution of 0.8% of GDP in 2010, are the most important operational expenditure measures. The government also had a goal of reducing public sector employment by 1% in 2010 and by the same amount in 2011. Pension reform and reduced investments are also important measures. Increased excise duties drive the revenue enhancements. A new tax information system is expected to enhance revenues by up to 0.8% of GDP in 2013 (OECD, 2011d) (see Table 1.3).

Millions EUR (as % of GDP¹)

Table 1.3. Major consolidation measures in Slovenia

Table 1.3. Major consolidation measures in Slovenia (cont’d) millions EUR (as % of GDP¹)

Notes: 1. OECD calculations using OECD forecasts of nominal GDP for 2010-2013. 2. Not included in calculations.

Source: OECD (2011), “Restoring Public Finances”, Special issue of the OECD Journal on Budgeting, 2011/2, OECD Publishing, Paris.