Economic Survey of the Slovak Republic 2012

 

The next Economic Survey of Slovak Republic will be published on 5 November 2014

OECD Economic Surveys: Slovak Republic 2012 | OECD Free preview | Powered by Keepeek Digital Asset Management Solution

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The ‌Slovak economy recovered very strongly after the global financial and economic crisis and will remain among the strongest in the OECD. However, job creation is disappointing, domestic demand remains subdued and the external drivers of growth risk fading away. The fiscal room gained in the run-up to euro accession quickly evaporated during the crisis, and public debt has increased considerably since 2008.

The main priorities now are to restore public finances while fostering domestic drivers of growth and ensuring the funding of items to promote growth, such as education and active labour market policies. The government has put together a credible consolidation programme for debt stabilisation, but long-term fiscal sustainability issues remain unresolved. This Economic Survey makes recommendations on how to improve the fiscal framework, raise labour market performance, and strengthen outcomes of the education system.

Improving the fiscal framework

The fiscal framework has a pro-cyclical bias and does not facilitate prioritisation according to the outcomes of the government programmes. The government should introduce spending ceilings as planned and adhere to them. It should strengthen monitoring and evaluation of spending programmes, for which the recently established Fiscal Responsibility Board can play a useful role. The structure of taxation should be made less harmful to growth, notably by raising property and environmental taxes and lowering taxes on low wages. The efficiency of the tax system should also be improved by combating tax evasion further and unifying the tax collection as planned. Finally, monitoring the sustainability and adequacy of old age income replacement is crucial.

Raising educational outcomes in a cost-efficient way

Educational outcomes are below the OECD average and the education system should be made more inclusive. Efficiency could be improved by using already available school evaluations to raise the quality of teaching. More resources should also be allocated to teacher remuneration and to support of disadvantaged pupils, in particular for the development of pre-school education and the integration of Roma children in the mainstream education system. Transition from school to work of vocational education graduates is weak. Cooperation with employers needs to be enhanced and the acquisition of professional experience during studies should be fostered by developing work-based vocational training.

Reducing unemployment through activation and better targeted support

The crisis raised unemployment, which has increased by 4 percentage points since 2008. Long-term unemployment and regional disparities are high by international standards. The labour market experience of youth, the low skilled and the Roma population is particularly poor. More emphasis should be placed on activation and other active labour market policies, which are currently insufficiently developed. The public employment service needs to be reformed to better implement activation measures, with more resources allocated to the placement services and to the evaluation of programmes. The registration of social benefit recipients with some ability to work should be made mandatory to encourage job search activities and encourage them to enrol in active labour market measures.

‌‌‌Slovak Survey 2012 figure in Eng

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For further information please contact the Slovak Republic Desk at the OECD Economics Department at eco.survey@oecd.org.

The OECD Secretariat's report was prepared by Artur Radziwill and Caroline Klein under the supervision of Andreas Wörgötter. Research assistance was provided by Béatrice Guérard.

www.oecd.org/eco/surveys/slovakia2012

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