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Report: Dual Labour Market a Key Challenge for Slovenia

Ljubljana, 13 February (STA) - One of the key long-term challenges that Slovenia faces in reducing unemployment is the two-tier labour market, the growing gap between poorly protected forms of short-term employment on the one hand and permanent jobs with relatively high security on the other, according to a report by the government's economic think-tank.

The dual labour market is becoming increasingly difficult to manage, as legislation making employment more flexible is enacted for temporary forms of employment while permanent forms of employment have been left intact, says "The Flexibility of the Slovenian Labour Market", a working paper issued by the Institute of Macroeconomic Analysis and Development.

This has created a market in which some jobs are more protected than others and groups with a weaker link to the labour market are in danger of being more affected by labour market changes that increase job flexibility, say the authors Urska Lusina and Arjana Brezigar Masten.

Almost 37% of employees in the 15-24 age group work part-time and over two-thirds are on fixed-term contracts. This indicates that the labour market is more flexible for young employees and more rigid for older workers, the authors claim.

The paper proposes several solutions to address the growing dualism: relaxation of legislation protecting permanent employment, reform of regulations on severance pay and adoption of the Austrian system of individual severance accounts.

The other key long-term problems that the authors identify are low employment rate of the older population, a result of early retirement, and low employment of the youths.

To keep people working longer, the paper quotes OECD guidelines that involve abolishing incentives for early retirement and making partial retirement more attractive.

Raising the employment rate of the youths requires reducing the length of study by introducing tuition fees and putting in place a system of guaranteed student loans for poor students. According to the authors, this would motivate youths to finish their studies earlier.

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