By Marja Novak
LJUBLJANA, Jan 29 (Reuters) - The governor of Slovenia's central bank urged fast reform of the labour sector on Tuesday to help stabilise the euro zone member's finances, saying trade unions were 'irrational' in opposing the measures.
The conservative government is in talks with unions to ease rules governing the hiring and firing of employees and cut redundancy payments, but agreement has so far proved elusive.
Embroiled in a corruption scandal, Prime Minister Janez Jansa last week lost his majority in parliament, further threatening the pace of reforms seen as crucial to Slovenia avoiding the need for a bailout.
'The labour market needs to be reformed,' central bank governor Marko Kranjec told a business conference. 'More flexibility would bring new jobs and reduce unemployment.'
Kranjec, who also sits on the European Central Bank governing council, said trade unions were 'irrational' in opposing any redundancies even in companies in urgent need of restructuring.
On Jan. 10, Labour Minister Andrej Vizjak told Reuters the government was planning to implement the labour reform by April, but this was thrown into doubt last week when a junior member of Jansa's coalition quit, stripping the government of its majority.
Jansa has vowed to hang on at the helm of a minority government, saying a second snap election in little over a year would be disastrous.
Slovenia was badly hit by the global crisis due to its dependence on exports and fell into a new recession in 2012 amid lower export demand and a drop in domestic spending due to budget cuts.
Unemployment rose to 12.2 percent in November, the last data available, and is expected to climb further throughout the year with national output forecast to contract 1.4 percent.
Kranjec also said bad loans in local banks were expected to keep rising in 2013 after they reached some 6.7 billion euros or about 19 percent of gross domestic product (GDP) in September last year.
The banking sector will only recover with the revival of the real sector, he said.
'The problems should be solved where they are, not so much in banks as in the real sector of the economy,' Kranjec told the forum.
(Reporting By Marja Novak; editing by Stephen Nisbet) Keywords: SLOVENIA ECONOMY/
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