Pension Reform Awaits Landmark Ruling And/Or Referendum

I know this is starting to look a bit like Groundhog Day, but I’m afraid it cannot be helped. As of tomorrow Slovene labour unions led by DuÅ¡an Semolič will be collecting 40 000 signatures necessary to hold a referendum on the recently passed pension reform.


Wars are not won in the battlefields but in the temples – Sun Tzu (Constitutional court, source)

So we will have not one but two referendum bids, the other one trying to kill the law on menial work. While both laws are a part of “reform legislation” the pension reform is obviously crucial, which is why the government is doing everything in its power to impede this latest referendum. And with good reason too, as the unions made it abundantly clear that they will draw no punches in this fight. As a result both sides are now tangled into a complicated multi-sided tug-of-war where a whole lot of players who have their own agendas might get sacrificed as pawns in a much larger game called The Relative Stability of Public Finances.

In fact it is quite possible that some sacrifices have already been made. The one thing PM Borut Pahor and labour minister Ivan Svetlik must avoid at all cost is to make the referendum on pension reform a referendum on the current government. Which is precisely what labour unions leaders are aiming to do. Should the succeed, the pension reform would be as good as dead, especially with the government’s popularity points being at an all-time low, barely reaching mid-20s.

So it seems (and I am being cynical here) that plan B, which is being implemented just in case, is to make the people vent as much anger as possible before the referendum on pension reform comes up and possibly make proponents of the referendum look bad for wanting the referendum in the first place. Case in point being the referendum on RTV Slovenia which PM Pahor basically fore-fitted and left minister of culture Majda Å irca to fight her own battle. The same might very well go for the referendum on law on menial work, especially since both referendums will – should the proponents collect the necessary signatures – be probably held only a week apart, with a vote on menial work first and pension reform second, by which time the voters just might have vented enough. Combined with an effective PR onslaught the government might just barely make it.

So, this looks like plan B (if it exists at all, that is). What’s plan A? Not having a referendum in the first place.

Namely, the government has asked the Constitutional Court to rule whether the referendum on pension reform is constitutional in the first place. The argument goes along the line of pension reform being necessary if Article 50 of the Constitution (the right to social security). In other words, if the pension reform is nixed on the referendum, then the state cannot fulfil its welfare role any longer, hence an unconstitutional situation would occur. Additionally, the state will also try to argue that the pension reform is a question of state budged, as the law on referendums prevents holding a referendum on several issues, one of them being the budget.

Obviously the unions will claim the above is not worth a pair of fetid dingo’s kidneys, despite the fact that they will be told that the government increased the minimum wage when crisis struck for real and that it should be the unions who should compromise this time around.

Can the government pull it off? Unknown. This will be a landmark decision by the Constitutional court. Should it side with the government, this will really take the wind out of unions’ sails and pave the way for a speedy adoption of the rest of the reform package (or whatever is left of it). On the other hand, should the court deny the government and the referendum goes fort, then the government is back to plan B (insofar it even exists) and then hope that people will vote against their instincts and support the pension reform.

And while we’re on the issue, many people – including some whose opinion pengovsky values – think that the reform, such as it was passed is not really a reform. Which is probably true. What we have here is a very watered down version of the original proposal which probably ensures solvency of the pension fund for the next decade or so (that’s two-and-a-half terms) and then the whole thing will start all over again. But maybe combined with everything else, this might give this country just enough of a kick to eschew falling down. Whether this will be enough to break the gravity pull and go for the stars? Well, things and projects are brewing, but they have little to do with welfare state. That’s more of a innovation thing.

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