Economics Department

Economic Survey - Slovak Republic 2004: Is Slovakia doing enough to augment its human and physical capital?

 

Results will be particularly critical in education services…

A thorough reform of the education system is necessary, as emerging human capital needs are not well serviced at present. The government has decided to decentralise the ownership of primary and secondary schools to municipal and regional governments, and to fund expenditures according to the number of pupils in each region. Sub‑central governments will be left with a wide discretion in the management of education institutions. International experience suggests that this is an appropriate choice. But this same experience suggests that the central government needs to define performance standards in order to preserve the quality of education across the entire territory. This is particularly important for the Roma children who face the double-handicap of weak support from family environments and high failure rates in the school system. The decentralised approach should allow sub‑central governments to experiment with more effective policies to meet the set standards, including on the basis of increased competition between public and non‑public schools. In the area of tertiary education, available capacity falls short of demand, and the government aims at encouraging pluralism and new entries by transforming universities into autonomous institutions and putting in place tuition fees and student loans. The authorities should ensure that professional and academic bodies which control the creation of new universities do not slow the adaptation of supply. Reforms are also necessary in the training and re‑training system for the existing labour force. While large firms are well‑equipped to cater to their own training needs, better performing market services would support the entire society. Market‑relevant re‑training is particularly important for adults with low or obsolete skills and government schemes should be targeted in priority towards these groups. The government can nurture a more effective training culture by directing existing subsidies on a competitive basis and according to provider performance.

Roma vs. non‑Roma educational performance

Failing pupils as a percentage of total pupils in the group

Source : Statistical Office of the Slovak Republic.

… in infrastructures…

Small and medium sized firms need to obtain better access to fairly priced and high quality infrastructures. Programmed regulatory reforms in energy, telecommunications and transportation should be fully enforced and completed, in order to give firms of all sizes swift access to competitive services across the territory. Benefits of competition should be made available not only to large‑size eligible customers, and to enterprises with strong bargaining power vis‑à‑vis incumbent utility firms, but to the entire business and household sectors. In certain areas such as railways, Slovakia could move more rapidly than the gradual calendar of EU directives. Following the recent separation of the track infrastructure as a state‑owned company, the quality of the transportation system could be considerably strengthened by proactively opening passenger services to competition, and privatising the freight arm of the national railway company to a qualified international enterprise. Road construction should also be upgraded in better match with neighbour countries’ networks and, possibly, with wider recourse to private investment. But lessons from public‑private partnerships in road operation in the neighbouring Czech Republic and Hungary should be taken into account in designing projects so as to maximise public benefits while limiting fiscal liabilities.

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