Austerity and Cutback Management in the Public Sector: A Case Study for Slovenia

Abstract

This paper describes cutback-management practices in the Slovenian public sector in the period 2008-2013 and focuses both on an analysis of measures being implemented and on governance issues when managing austerity. Austerity measures in the public sector were introduced almost immediately after the crisis emerged. The first incumbent government (2008-2011) implemented cutback measures related to the public sector that were rather incremental and oriented towards only parts of the structure, whereas the second incumbent government (2012) introduced a more holistic approach in their cutback measures, which was reflected through the fiscal balance-act implementation. Nonetheless, the third incumbent government (2013) faced predominantly market-based pressures for fiscal consolidation in order to avoid potential bailout. Accordingly, budgetary flexibility was lost, and tax hikes were increasingly utilized to balance the budget. The crisis has also affected decision- making mechanisms of the government, as concentration of powers within the Ministry of Finance occurred, centralization pressures reinforced, and the politicization of governance increased.