Slovenia must repay up to 50 million euros ($65 million) in unpaid holiday allowances to public sector workers, a Ljubljana court ruled Tuesday, striking a new blow to a government already struggling with its finances.
"The government violated the collective agreement concerning the holiday allowance and must pay the remaining money in 30 days," Slovenia's higher labour and social court said.
The teachers' union sued last year after the government cut the 13th-month holiday allowance of about 670 euros for public sector workers under its austerity programme.
The ruling comes only a day after the new centre-left cabinet, appointed last month, started talks with unions over an additional 158-million-euro cut in public sector spending for this year.
Interior Minister Gregor Virant, the top negotiator with public sector unions, said the ruling represented "a new blow to public finances."
"If we have to extend that right to all public sector workers, that will represent an additional 50 million euros," he told state radio.
The former centre-right government, in power for just 12 months, adopted a series of austerity measures that enabled it to bring the public deficit to 3.7 percent of gross domestic product in 2012 from 6.4 percent a year earlier.
The European Commission predicted however that it could rise again to 5.1 percent this year.
Both the commission and the OECD have urged Slovenia to take urgent steps to stabilise its public finances and shore up its banking system.
Markets fear it could be the next eurozone country after Cyprus to require a bailout.