Labour Market Reforms in the Context of Political Power Theory: The Case of Slovenia

The rigidity of labour market has several important negative economic consequences: it stifles job creation, increases discrimination of those it is actually aimed at protecting (young, women and low skilled), hurts the unemployed, slows down economic restructuring and damages its global competitiveness. But reforms are slow and often marked with disputes among partners in the collective bargaining process. Afraid of social security loss, unions usually oppose the reform, while governments usually give in to the union pressures and negative image of reform consequences created by unions and assisted by media. The characteristics of the labour market and labour market reform with respect to bargaining among power groups are examined both theoretically and empirically in the case of Slovenia.