Since the collapse of the Yugoslav Socialist Federation and Slovenia’s declaration of independence in 1991, the political field in Slovenia has been dominated by liberal and conservative forces. Until 1992, The Democratic Opposition of Slovenia (Demokratična opozicija Slovenije-DEMOS), a wide coalition of right wing, left-liberal and social-democratic parties united under the banner of patriotism, was in power. During its short rule, the first steps towards the fundamental reconstruction of the Slovenian economy were made. The reconstruction was launched with a drive to privatize state owned property, a process introduced in a disorganized manner, and often via illicit means. This coincided with a severe economic depression, combined with high inflation and rising unemployment that accompanied the collapse of the Yugoslav markets. In 1992, mass workers’ strikes helped to stop the so called «wild privatization» period and contributed to the fall of the DEMOS government. After 1992, a coalition of moderate left parties, along with the party Liberal Democracy of Slovenia (Liberalna demokracija Slovenije-LDS), with Janez Drnovšek at the fore, took power. With the exception of the brief reign of a right-wing conservative government in the year 2000, headed by the Christian-democrat leader Andrej Bajuk, the LDS managed to preserve their dominant role in Slovenian parliamentary politics, and were the most influential force in all government coalitions until 2004.

The period from 1992 to 2004 was characterized by a social-democratic development model. This was made possible by a gradual process of transition that avoided the most detrimental social effects witnessed in most of the other Eastern and Southern European post-socialist countries, namely those that undertook a swift «shock-doctrine» approach to transition. The liberal government continued with the process of privatisation, but in a rather peculiar manner: by means of internal buyouts and the direct distribution of shares to workers, the managers and workers retained majority shares in most of the small and medium-sized companies. The government, on the other hand, retained majority shares in most of the large-sized and strategically important companies and banks. When the depression grinded to a halt, a period of economic growth followed, during which workers’ wages rose in real terms and many social benefits, including relatively high unemployment benefits and the possibility of early retirement, were preserved. Moreover, most of the institutions of the welfare state, i.e. public healthcare, education and the pension system, were kept intact throughout the nineties. During this period, the Central Bank of Slovenia was committed to a policy of currency depreciation aiming at nurturing the backbone of the Slovenian economy, its export sector. This monetary policy - made possible by the flexible exchange rate of the domestic currency, the Tolar ‒ also curtailed pressure on worker’s wages due to competition from abroad.