Issuu

13 January 2022, Bratislava www.oecd.org/economy/slovak-republic-economic-snapshot/ @OECDeconomy

@OECD

Key messages

Continue efforts to accelerate vaccinations Maintain targeted policy support Design a consolidation strategy to ensure long-run fiscal sustainability Address the challenges of population ageing Boost productivity and sustainable growth

The pandemic has hit progress in living standards

Source: OECD Economic Outlook: Statistics and Projections database.

Supply disruptions have led to volatile production

Source: Statistical Office of the Slovak Republic.

Inflation has surged

Note: Inflation series refer to harmonised CPI. Core inflation refers to the overall index excluding energy, food, alcohol and tobacco. Source: Eurostat.

Vaccination needs to be accelerated

Note: Unweighted averages for OECD aggregate. Source: OurWorldinData; and OECD calculations.

Active labour market policies should be stepped up

Note: ALMP refers to active labour market programmes. Source: OECD Labour Market Programmes database.

The tax wedge is high for low-income earners

Note: The OECD aggregate is an unweighted average of the countries in the group. The tax wedge is the sum of personal income tax and employee plus employer social security contributions together with any payroll tax less cash transfers, expressed as a percentage of labour costs for a single person (without children) on average earnings. Source: OECD Taxing wages database.

Substantial inflows of EU funds will support the recovery

Source: National Bank of Slovakia (2021), Economic and monetary developments, Winter 2021.

The recovery is set to continue Annual percentage change unless noted otherwise

2020

2021

2022

2023

-4.4

3.2

5.0

4.8

Unemployment rate (% of labour force)

6.7

7.0

6.4

5.8

Inflation (HCPI)

2.0

2.8

5.4

2.6

Gross product

domestic

Source: OECD Economic Outlook: Statistics and Projections database

Main policy recommendations to support the exit from the crisis  Continue efforts to accelerate vaccinations  Continue to provide targeted fiscal support until the recovery has become self-sustained  Expand active labour market programs, in particular re-training measures for the low-skilled  Reduce the tax wedge in particular for low-income earners  Streamline public procurement verification and control procedures. 11

 Further strengthen cost-benefit analysis and oversight of public investment over the project life-cycle.

Tackling the challenges of population ageing

The population is ageing rapidly

Source: European Commission (2021), "The 2021 Ageing Report: Economic and Budgetary Projections for the EU Member States (2019-2070)", Directorate-General for Economic and Financial Affairs, Institutional Paper 079, Luxembourg..

Ageing-related public expenditures are expected to increase rapidly…

… and impact fiscal sustainability

Source: Adapted from OECD (2021), OECD Economic Outlook: Statistics and Projections (database), June; Guillemette, Y. and D. Turner (2018), "The Long View: Scenarios for the World Economy to 2060", OECD Economic Policy Paper No. 22., OECD Publishing, Paris; and European Commission (2021), "The 2020 Ageing Report - Economic and Budgetary Projections for the 28 EU Member States (2016-2070)" Directorate-General for Economic and Financial Affairs.

Prolonging working lives is crucial

Source: OECD Pension at a Glance database..

Statutory retirement ages matter for retirement decisions

Note: The reference is an individual with the most common characteristics in the modelling sample, i.e., not entitled to any benefits, with secondary education, working in manufacturing, living in a city, not Roma, without health impairment, married, aged 57, with two children, working in 2013 and male. Source: Fodor et al. (2022).

Health outcomes can be improved

Source: OECD Health Statistics database; and Eurostat.

Few mothers with young children are working

Source: Eurostat; and European Union Labour Force Survey.

Paid leave entitlements for mothers are long

Source: OECD Social Expenditure database..

Older workers benefit little from training opportunities

Note: Data refer to workers aged 54 and above. Belgium refers to Flanders only, United Kingdom to England and Northern Ireland; formal and non-formal job-related education and training. OECD is an unweighted average of the countries in the chart. Source: OECD Dashboard on priorities for adult learning database.

Main recommendations to safeguard fiscal sustainability and address population ageing  Design a medium-term fiscal consolidation strategy  Implement multi-annual expenditure ceilings  Link the future statutory retirement age to life expectancy  Tighten pathways to early retirement  Implement the hospital network reform and create a system for quality assessments, monitoring and evaluations  Improve funding for and quality of home- and community based care  Reduce the maximum duration of parental leave and make part of it conditional on father’s participation  Strengthen lifelong training targeted at older workers

Boosting productivity and sustainable growth

Few firms use digital technologies

Source: OECD ICT Access and Usage by Businesses database.

The potential productivity gains from technology adoption are large

Note: For each of the underlying indicators, it is assumed that half of the gap to the best performing country in the sample is closed. It is also assumed that policy factors in each group are largely independent from each other. Source: Based on Sorbe, S., et al. (2019), "Digital Dividend: Policies to Harness the Productivity Potential of Digital Technologies", OECD Economic Policy Papers, No. 26, OECD Publishing, Paris, https://doi.org/10.1787/273176bc-en.

Educational outcomes can be strengthened

Source: OECD (2019), PISA 2018 Results (Volume I-III), OECD Publishing, Paris; OECD (2016), PISA 2015 Results (Volume I-III), OECD Publishing, Paris; OECD (2013), PISA 2012 Results (Volume I-III), OECD Publishing, Paris; OECD (2010), PISA 2019 Results (Volume I-III), OECD Publishing, Paris; OECD (2008), PISA 2006 Results (Volume I-III), OECD Publishing, Paris; and OECD calculations..

Enrolment in childcare and pre-school education is low…

Source: OECD Education database.

…particularly among the Roma

Source: Ministerial IS; Central Labour Office; Ministry of Interior; and the Atlas.

Business R&D spending is low

Source: OECD Main Science and Technology Indicators database. 29

Regulations are complex in some areas

Note: The Product Market Regulation (PMR) indicator is a composite index that encompasses a set of indicators that measure the degree to which policies promote or inhibit competition in areas of the product market where competition is viable. Scores range from 0 to 6 and increase with restrictiveness. Data refer to 2018. Source: OECD Indicators of Product Market Regulation database.

Carbon reductions need to be accelerated

Note: The greenhouse gas (GHG) emissions include those from the land use/land use change and forestry sector (LULUCF). Source: OECD Environment database; Eurostat; and OECD calculations.

Air quality needs to be improved

Source: OECD Environment database; and OECD Green Growth database.

Main recommendations to boost productivity and green the recovery  Expand the supply and affordability of high-quality childcare facilities  Strengthen teacher training with a focus on vulnerable students, increase the number of teaching assistants speaking Roma  Expand the use of direct R&D support and make the tax allowance refundable for small and young firms  Reduce the administrative burden on start-ups by introducing “silence is consent” licensing rules  Introduce an explicit carbon tax in sectors not covered by the EU-ETS. Redistribute revenues towards the most vulnerable households 33

For more information

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