Labour market outcomes have improved markedly in the past years as the beneficial effects of the
economic upswing were reinforced by important structural reforms.With the economy on the verge of a
severe economic downturn, it is important to avoid alleviating measures that adversely affect the
functioning of the labour market in the long run. Moreover, several structural challenges remain which
require further reform efforts. Firstly, to raise labour force participation of the elderly the pension system
needs to be reformed by removing incentives for early retirement and facilitating gradual exits from the
labour force. Secondly, to increase employment rates of younger age cohorts, the length of tertiary studies
needs to be reduced by strengthening incentives for rapid graduation. Moreover, potential negative
employment effects associated with the relatively high minimum wage compared to the average wage
should be avoided. Thirdly, to combat increasing labour market dualism, employment protection
legislation on regular work contracts needs to be eased once the current economic crisis subsides and the
preferential treatment of student work should be phased out. This Working Paper relates to the 2009 OECD
Economic Survey of the Slovenia (www.oecd.org/eco/surveys/slovenia).
