Primož Dolenc

Fiscal sustainability of EU Member States in the context of current financial crisis

Abstract This paper tackles the question of fiscal sustainability in current times of financial/economic crisis. Our literature review leads us to conclusion that when fiscal sustainability is being considered, putting fixed limit to public debt-to-GDP and budget balance-to-GDP ratio is a too simplified solution and that sustainable fiscal policy might be defined with public debt-to-GDP and budget balance-to-GDP ceilings, but taking into account some underlying country specific parameters. Our empirical analysis shows that most EU Member States entered year 2008 with healthy public finances. However, most EU Member States now face fiscal difficulties. Even more: almost all EU Member States would have to decrease budget deficit in 2009 and 2010, in order to achieve sustainable budget position. The extensive jumps in fiscal deficits in 2009 and 2010, compared to 2007 (before crisis), are mainly due to lower fiscal incomes as a consequence of lower economic growth and policy measures for tackling financial/economic crisis. We argue that these changes in fiscal deficits are not sustainable. Our analysis shows that in 2009 about 2/3 of the economies in question should have budget surplus, taking into consideration other relevant macroeconomic variables, such as economic growth, etc. In 2010, however, a more loosened fiscal policy would be possible, but still significantly lower fiscal deficit than forecasted would be sustainable.

Utječu li mjere fleksigurnosti na rezultate na tržištu rada? Analiza zemalja članica EU

The idea of fl exicurity has become one of the most prominent recommendations in the fi eld of employment in the European Union (EU). As it strives for fl exibility while maintaining high level of social security, it poses a great challenge to rather rigid European labour markets, especially in the context of demographic ageing and labour market segmentation problems, intense globalization and rapid technological developments. Namely, on one hand, fi rms need fl exible labour market to quickly adapt their workforce to changing conditions and stay competitive. On the other hand, labour market should ensure security in terms of protecting employees from losing their jobs and enabling them to enter, remain and progress in employment through their life-cycle (see European Expert Group on Flexicurity, 2007). The EU promotes fl exicurity through four policy elements: (i) fl exible and reliable Do Flexicurity Policies Affect Labour Market Outcomes? An Analysis of EU Countries

Does labour taxation affect unemployment? Croatian worker in international perspective

Abstract The paper examines the issue of labour taxation of Croatian worker in comparison to workers in OECD and EU Member States. By using hierarchical cluster analysis it studies the relations between tax wedge and labour market outcomes, whereas with panel regression analysis, performed on data for 39 countries during 2000–2008 period, estimates the impact of tax wedge on unemployment rate. The empirical estimates show that Croatia classifies among countries with higher unemployment and lower employment rate, characterized with higher tax wedge. Furthermore, the estimates of the regression analysis showed that the tax wedge at all three wage levels (i.e. 67 %, 100 % and 167 % of average wage) has a significant positive impact on unemployment rate. This signifies that Croatia, as other studied countries, should continue with reduction of tax wedge, as this would alleviate unemployment problems and stimulate job creation.

Corporate purpose in a small post-transitional economy: the case of Slovenia

Abstract Firms are driving forces of economic and social development; therefore it is important to understand what is their primary goal or purpose. The aim of the paper is twofold. First, the paper presents baseline theoretical concepts on the firms’ purposes. Secondly, the paper presents the results of the empirical study in Slovenia with which we tried to determine how firms’ purposes are perceived by their managers and how they see their responsibility to owners and other stakeholders. The empirical study was based on a survey that was sent to the management of 1400 Slovenian medium-sized and big companies, of which about one third responded. The survey questionnaire was pre-tested through interviewing five top managers in five Slovenian firms with different ownership structure. On the basis of the empirical study it is possible to conclude that, on average, Slovenian firms put the interests of all stakeholders before the interests of only shareholders. So it seems that the majority of managers follow the stakeholder approach in the governance model.

Taxing wages and sustainable labour market performance: empirical evidence from OECD and EU countries

The paper assesses characteristics of labour taxation, employment and unemployment rate in the OECD and in the EU Member States and analyses relationship between tax wedge and labour market outcomes, i.e., employment and unemployment rate. The empirical analysis shows that the non-EU OECD countries are, on average, characterised with lower labour taxation than the EU OECD countries. Moreover, with regard to employment and unemployment rate, OECD and EU Member States can be classified in three groups, by which countries with lower unemployment and higher employment rate have, on average, lower tax wedge at all studied wage levels, and vice versa. The detrimental effect of tax wedge on labour market outcomes was also confirmed by the panel regression analyses performed on the sample of 38 countries over the 2000-2009 period. The empirical findings therefore suggest that policies of further reduction of labour taxation would have a stimulating effect on sustainable labour market performance, especially among countries with higher labour taxation levels.

HOW DO NEW EU MEMBER STATES COMPLY WITH THE FLEXICURITY CONCEPT

Abstract. The paper analyses the state of implementation of flexicurity policy components in the NMS and, by using panel regression analysis, estimates the impact of employment protection legislation, expenditures for active employment policies, participation in lifelong learning and net replacement rate on labour productivity and on long-term unemployment. The empirical analysis has shown that the labour markets in the NMS, on the overall, are not more rigid as compared to the EU-15; however, problematic remains low expenditure on active labour market policies, education and social protection, and the low participation in lifelong learning. NMS must, according to the results of the panel linear regression, improve their performance in the mentioned areas in order to improve their labour productivity and decrease long-term unemployment. Key words: flexicurity, labour market, labour productivity, long-term unemployment, European Union

The Pension System in Slovenia in Light of Current International Macroeconomic Changes and Trends

The Pension System in Slovenia in Light of Current International Macroeconomic Changes and Trends The paper presents the results of a study that sheds light on the pension system and its dilemmas in Slovenia in light of current international macroeconomic changes and trends. We found that Slovenia has a pension system similar to that of other comparable economies (with the exception of the second pillar) and that it currently faces similar dilemmas as other economies that are resulting in inevitable reforms of the pension system. On the basis of international comparison and current demographic trends in Slovenia we proposed some policy recommendations for future reforms of the pension system in Slovenia.