Opening remarks by Angel Gurría
OECD Secretary General
20 July 2020 - Paris, France
(As prepared for delivery)
Excellencies, Ministers, Ladies and Gentlemen,
It is my pleasure to launch the 2020 OECD Economic Survey of Slovenia. I would like to thank you, Minister Šircelj, for the excellent collaboration and support of your Ministry during the preparation of this Survey.
The launch of this Economic Survey takes place against the backdrop of the Coronavirus pandemic. In Slovenia, the pandemic created a health crisis that was dealt with effectively by the health sector and the government’s confinement measures. The pandemic also halted one of the best economic performances in the OECD, leading to a slump, as in other countries. Before COVID-19, we expected Slovenia’s GDP to grow steadily by around 3% a year in 2020 and 2021. Today we project GDP to be lower in 2021 than it was in 2019, by about 4% if there is no major second wave of infections in OECD countries, and by some 8% if there is.
With the withdrawal of confinement measures, economic activity is now recovering, but the economy may still need a fiscal kick-start to get back on a dynamic and sustainable growth path, one delivering better living standards and improving environmental outcomes.
Our Survey points to some of the challenges ahead and puts forward policy recommendations to tackle them. Let me highlight four that I consider crucial.
Better regulation of product markets bolsters competition. It also fosters more internationally competitive firms and stronger productivity growth, while consumers benefit through lower prices and larger choice.
Better regulation means adopting OECD best practices, including simplifying and reducing the regulatory burden on start-ups. Competition would also benefit from better corporate governance of state-owned enterprises and greater privatisation efforts to attract FDI and transfers of productivity-enhancing new technologies.
Pension spending is projected to increase by more than 4.5 percentage points of GDP by 2050, more than in most other OECD countries. This reflects a higher number of pensioners that retire earlier than elsewhere. Last December, pension benefits were increased, making these long retirements more expensive.
Increasing the statutory retirement age to 67 and, if needed, linking further increases to gains in life expectancy would improve pension sustainability. In addition, the bonus/malus system should encourage working beyond the statutory retirement age.
The health system serves well the needs of the population, but it does so at high cost compared with peers. The Survey identifies areas where the system’s efficiency can be improved.
For example, there are relatively few GPs, creating access concerns and excessive referrals to more expensive hospitals. This can be addressed by making GPs per-patient payments and fees for services cost-reflective.
In addition, the many small general hospitals carry out some interventions too infrequently to secure efficiency and patient safety. Hospitals should perform a required minimum number of interventions for maintaining services.
Ageing also increases the demand for long-term care. More equal access can be secured by introducing common financing and eligibility criteria across all service providers, and home-care should be developed by integrating community nursing and home help.
Future growth will be dependent on both higher employment and a more efficient allocation of labour. For example, many experienced older workers too often use special age-dependent rules in the unemployment and disability systems to leave the labour market. Curtailing such special rules for older workers will improve their work incentives.
Moreover, many low-skilled job-seekers search in vain. They can be helped by focusing job and training support on those with higher needs. Lower labour taxes would increase work incentives and could be financed by broadening the tax base and increasing property taxes.
Social partners could also take a greater role in wage bargaining, encouraging workers to move to better-paid and higher-productivity jobs. This means that framework conditions, such as minimum wages and second pillar workplace pensions, should be determined at the sectoral level.
Ladies and Gentlemen:
A short while ago we celebrated Slovenia’s 10th anniversary of OECD membership, and we highlighted the many economic successes that the country has notched up in the past decade. To some extent, the challenge now is to get back on the favourable trajectory that was interrupted by the COVID-19 pandemic.
Like other OECD countries, Slovenia needs to bring about a recovery that is inclusive and sustainable and that delivers greater resilience. It is a difficult task, but Slovenia has shown skill and determination in policy making in the past, and you can count on the OECD to support you every step of the way and to help you design, develop and deliver better policies for better lives.
Press release: Slovenia: keep supporting the economy until growth is fully restored, says OECD