How coronavirus changed Slovenia
Author: Nikola Papak, Director of the Serbian Chamber of Commerce in Slovenia
Slovenia is in the group of European countries that have already started opening up economies and loosening drastic measures imposed to protect the population. All stores up to 400 square meters have been opened, factories, artisans, technical goods stores, furniture shops are reopening... Restaurants and hotels are expected to open in mid-May, but there are also announcements that the measures may be extended until June, depending on the situation. Of course, masks are a must everywhere. The number of newly infected with the COVID-19 virus is in a drastic decline and so far all data indicate that the pandemic is under control.
However, all this has caused a great disruption in the Slovenian economy, and a realistic picture of how difficult the situation really is will be seen in the coming months. The negative economic consequences are still not at their peak because the projects that started in January and February before the crisis, are still ongoing. Bearing in mind that the Slovenian economy is predominantly export industrial (80% of Slovenian products are exported), the development of the situation depends, to a large extent, on the recovery of the EU and other international markets.
There are still no more accurate analyzes, but the National Bank estimates that Slovenia is losing between EUR 20 and 60 million a day, so this crisis could cost this former Yugoslav republic between EUR 3.7 and 8 billion. For illustrative purposes, every Slovenian will have 4,000 euros less in his pocket, and GDP will fall from 6 to 16%. The largest decline is expected in the transport, tourism and trade sectors by up to 35%. As in other countries, e-commerce, energy, telecommunications and banking sectors will profit from the crisis here.
There is no doubt that Slovenians will spend less in the off-line world in the coming period. Hard days are coming, especially for hospitality, hotels, beauty salons, gyms, the transportation sector, culture... for everyone who rely on face-to-face contact. Currently, none of them work, and the state covers 80% of workers' wages. This won't last forever. Even when the economy opens, people will travel less, go to restaurants less... The optimistic estimate is that this year the average Slovenian will spend about 10% less. Currently, a citizen's consumption has fallen by 25%.
In addition to e-commerce, which is in the progressive development, leading to new consumer habits after the crisis, working from home has become a new reality. One in three Slovenians "works from home" and almost everyone became fans of Zoom or Skype. Banks have finally begun to approve consumer loans online.
For the time being, there are no mass layoffs because the state covers the cost of wages for workers who cannot work because of the crisis, but this measure is limited in time. At the moment, it is "saving" about 300,000 workers, who reported to the Employment Service in Slovenia till now. Unfortunately, the first announcements of major layoffs have begun. One of the largest companies in Slovenia, the famous Gorenje, plans to reduce the number of employees by 1000 by the end of the year.
The economy is inevitably going towards digitalization, and companies in Slovenia are aware that the survival and success tool is a quick adaptation, not the ability to predict because no one can say for sure what tomorrow will be like.
Measures of the Government of the Republic of Slovenia
The Slovenian parliament has adopted a three billion euro package deal to mitigate the impact of the coronavirus on the economy and population. The Umbrella Law provides assistance to businesses and workers affected by the epidemic, as well as to self-employed, retirees, students, large families, and welfare recipients. Key measures that help the companies include compensation of 80 percent for temporarily laid-off workers and covering two months of social security costs for those who remain employed, STA reports. The measures do not apply to financial and insurance companies. Companies will not be required to pay income tax and will be able to postpone loan payment for 12 months. The Law provides a two-month temporary basic income of € 350 and € 700 for certain categories, such as religious workers and farmers. There is also compensation for individual groups, so students will receive € 150 each and pensioners with pensions below € 700 between € 130 and € 300. An additional € 150 will also be provided for welfare recipients. Private sector workers are set to receive pay bonuses of up to 200 euros, which will be partly funded by the state through a contribution exemption, while public office owners expect a pay cut of 30 percent. On the other hand, bonuses of 10-100 percent of basic hourly earnings are foreseen for those working in the public sector.
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