LJUBLJANA: Slovenian business groups urged the centre-left government on Monday to resist demands from public sector trade unions for higher wages, saying they would hurt investment and lead to higher taxes in the small eurozone country.

Strong economic growth has encouraged the higher wage demands, but in an open letter to Prime Minister Miro Cerar, who faces a parliamentary election in June, the business groups said the government should instead focus on cutting taxes on labour.

“Meeting trade union demands would have long-term consequences ... and would mean that the country would stand still instead of growing, increasing added value, exports and living standards,” the letter said.

“Public sector wages already exceed wages in the private sector, and the difference is increasing.”

Next week Slovenian police officers, nurses and teachers plan to hold separate strikes for higher wages. In January some 30,000 public servants held a one-day strike over salaries.

The government has previously said all the public sector wage demands represent about 1 billion euros - in an economy worth about 40 billion - and are mostly not acceptable as they are not justified by improved productivity and would threaten fiscal consolidation.

Slovenia’s economy is expected to expand by 3.9 per cent this year versus some 4.4 per cent in 2017, says the government, which aims to end 2018 with a budget surplus of about 0.4 per cent of national output versus a deficit of some 0.8 per cent last year.

The five business groups behind the letter are the Chamber of Commerce, the Chamber of Craft and Small Business, the Association of Managers, the British-Slovenian Chamber and the German-Slovenian Chamber.

Reuters