On 4 November 2020, Zdravko Počivalšek, Slovenian Minister of Economic Development and Technology, tweeted: “The assessments of the international financial institutions show that the measures taken so far have made it possible to maintain social stability and jobs.” We rate this claim as mostly true.
In a tweet from the official account of the Slovenian Minister of Economics Development and Technology, Zdravko Počivalšek, spoke about the situation around the Covid-19 pandemic in the country, specifically how the measures taken by the government positively affected Slovenian employment rating. After we contacted minister Počivalšek via e-mail, his team answered us rather quicky. Počivalšek’s team said that in the tweet the minister (who is also the author of the tweet) is referring to all economic and social measures that have been taken in order to help Slovenian economy. We point out just some of those measures for greater understanding in the next paragraph:
Some of the measures taken by the government to mitigate the impact of the epidemic are as follows: those who lost their jobs during the epidemic receive temporary salary compensation; employers whose income will fall by more than 10 percent this year compared to 2019 are entitled to compensation of wages for workers; those self-employed whose income will fall by more than 10 percent this year compared to 2019 are entitled to a monthly basic income and exemption from social security contributions; students receive one-time solidarity aid in the amount of EUR 150; tourist vouchers for all residents of Slovenia (adults EUR 200, minors EUR 50), estimated at EUR 345 million; introduction of a mobile health protection application for informing about contacts with infected people; Partial coverage of fixed costs to the companies most affected by the epidemic etc.
Credit rating agencies
To explain coronavirus’s impact on Slovenian economy, we must begin with the fact that the Slovenian government has declared pandemic twice and offered help packages to certain economic subjects (the content of those packages was partly described in the previous paragraph). The indicators of economic activity in Slovenia have improved markedly since May and indicate a strong rebound in the third quarter, but in August and September the recovery already slowed considerably in most sectors. With the worsening of the epidemiological situation in September and October, confidence indicators indicate uncertainty about further recovery. The European Commission has forecast that Slovenia’s economy would contract by 7.1% this year, roughly on par with its previous estimate. A rebound of 5.1% is expected in 2021.
However, as explained by his team – the claim made by minister Počivalšek was based on the assessments of the financial institutions, such as Fitch, Moody`s, DBRS Morningstar and Standard & Poor`s. A credit rating agency is a company that assigns credit ratings, which rate a debtor’s ability to pay back debt by making timely principal and interest payments and the likelihood of default. The government has posted all four on its official webpage, but as you can see if you open the following links – Fitch, Moody`s, DBRS Morningstar and Standard & Poor`s – there were just a few information.
That is why we also checked original articles on webpages of original authors, which are hyperlinked in the first sentence. From that we could conclude that mentioned financial institutions had given Slovenia either a good stable rating or even improved it. As this does show overall good economic state that Slovenia is in – it does not necessarily reflect the state of unemployment and “social stability” as defined by Počivalšek’s team (in short: they claim social stability means that the income of the citizens had stayed more or less the same or has not drastically decreased). In Fitch ratings, it was stated that “The improving outlook is in part due to the effective containment measures that allowed a relatively short period of lockdown and to the authorities’ extensive support programmes”, and also added that “overall, we expect only a moderate increase in unemployment in 2020, to 6.8% from 4.5% in 2019, still well below the previous peak of 10.2% in 2013.”
Which confirms what Počivalšek has claimed, although it has no mention of “social stability” (also no other research mentions social stability) as well as no undisputedly clear correlation between government measures and rate of unemployment. Two other assessments were not freely accessible, so we could not examine them further, and the fourth research had no mention of social stability or unemployment data.
Employment ratings got better
Because the first part did not give us enough relevant information to reach conclusions, we have reached out to Employment service of Slovenia, where we got some relevant data. At the start of the pandemic in Europe in spring, unemployment started to rise in Slovenia (see Figure 1). But then since July it started to drop and has been dropping ever since. Although the drop was not so fast as the rise, the official published numbers show, that it actually got better in the field of employment again.
Since we still did not have any information about improvement on the field of social stability, we also contacted economist and professor at the Faculty of Economic Ljubljana Jože P. Damijan, who is also candidate for prime minister in the possible upcoming technical government, supported by opposition parties. He said: “Počivalšek’s claim about jobs is true, since his analysis shows low correlation between the intensity of measures taken and growth of unemployment. Closing of public life and lockdown have not been followed by immediate growth of unemployment. Despite that manufacturing has been decreased because of the situation, people did not lose jobs. All that because the efficiency of the measures taken by a lot of governments, such as compensation at salary for those that are on standby from work, co-financing of firms and subsidizing of part-time work. That has given the employers the chance to keep their workers and not let them go. But this effects temporary and time limited, because government will not finance firms forever. So, when that stops, the firms will be forced to let workers go, especially at firms which will recover slowly. That is also the reason, that percent of unemployment raised till June and started falling afterwards.”
In short, the assessments of financial institutions, which we got during the research, have shown, that Slovenia got positive evaluation on field of economics. But it did not strictly connect with employment rates and social stability. Furthermore, additional research has shown, that field of unemployment actually got better, so we can conclude that it also upgraded social stability in the country. Still, information gained during process cannot confirm Počivalšek’s claim 100%. Therefore, we graded it as mostly true.
RESEARCH | ARTICLE © Nina Manfreda, Jaka Mikoletič, Marcel Nahtigal in Pia Bedene, Faculty of Social Sciences, Ljubljana, SI
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