The Banská Bystrica Region faces acute demographic challenges, characterised by sustained natural population decline and high levels of youth outmigration. These trends are driving the overall population decline and are contributing to population ageing, both of which are expected to continue over the coming decades. The region faces persistent long-term unemployment, partly linked to the social and economic exclusion of the Roma community, while also experiencing growing labour shortages. Addressing these challenges calls for a comprehensive and forward-looking policy response that promotes long-term economic sustainability, including targeted efforts to foster the labour market inclusion of the Roma community and attract and retain talent.
Preparing for Demographic Change in the Banská Bystrica Region, Slovak Republic
Abstract
By 2050, two-thirds of EU regions including the Banská Bystrica region (BBSK) are expected to have smaller populations than in 2019, with nearly 90% experiencing a higher median age. Low fertility rates, outmigration, and an ageing population threaten to reduce the workforce, lower tax revenues and increase per capita costs of providing infrastructure and essential services, creating a “scissors effect” where revenues shrink as expenditures rise (OECD, 2022[1]). In BBSK, these dynamics are particularly acute, with the outflow of young talent and a growing elderly population straining healthcare systems, intensifying labour shortages and hindering economic growth. Retaining and attracting youth talent in key sectors for BBSK requires targeted policies to address and adapt to the demographic reality (Box 2.1), by adjusting spatial planning to meet territorial needs, fostering efficient operation across all levels of government or guaranteeing access to services to ensure a sustainable and inclusive future for the region (OECD, 2024[2]; European Commission, 2024[3]).
By 2050, two-thirds of EU regions are projected to have less population than in 2019, while nearly 9 of 10 regions are projected to have a higher median age. Population shrinking, ageing and outmigration of youth is negatively impacting many regions and risks leaving these places in a development trap.
Harnessing talent in Europe’s regions
In recognition of this challenge, the European Commission issued the Communication Harnessing Talent in Europe’s Regions (European Commission, 2023[4]) in January 2023. This Communication led to the establishment of the Talent Booster Mechanism (European Commission, 2025[5]) and the Harnessing Talent Platform (European Commission, 2025[6]), which aim to support regions facing a sharp decline in the working age population, a low and stagnating share of people with tertiary education and a significant departure of young people. These initiatives offer tailor-made, place-based and multi-dimensional solutions to support regions most affected by the demographic transition.
Source: European Commission (2025[5]), Talent Booster Mechanism, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform/talent-booster-mechanism_en (accessed on April 2025).
Smart adaptation of regions to the demographic transition
Pillar 2 of the Talent Booster Mechanism targets regions at risk of falling into a ‘talent development trap’, which are regions that have historically faced a high rate of departure of young people. Ten regions, including the BBSK, were selected based on an open call to receive support to address their demographic challenges with a targeted study focusing on land use and spatial planning, multi-level governance, subnational government finance and public investment, and public service delivery.
Adapting to demographic change to remain attractive
Meeting the challenge of demographic change requires focusing on both adaptation and attractiveness. Adaptation strategies seek to ensure policies, governance structures and public services are aligned with a changing demographic structure. Attractiveness initiatives aim to address quality of life factors to create an attractive environment and opportunities for current and potential residents.
These approaches reinforce one another:
Adapting land use to be more efficient can not only make public services easier and less costly to provide but can also transform neighbourhoods into more attractive and lively environments that better serve current needs and attract residents and visitors.
Adapting multi-level governance structures, public finances and investment in line with population changes can help to limit fiscal pressure from population ageing and facilitate more efficient public services, creating fiscal space for investment in attractiveness.
Adapting public service delivery through digitalisation and mobile solutions, for example, can keep costs in check while also attracting younger populations and remote workers seeking residential mobility.
The necessity of adaptation thus becomes an opportunity to rethink and improve what makes places attractive and sustainable in the long-term.
Source: European Commission (2023[4]), Harnessing talent in Europe’s regions, https://ec.europa.eu/regional_policy/information-sources/publications/communications/2023/harnessing-talent-in-europe-s-regions_en (accessed on April 2025); European Commission (2025[5]), Talent Booster Mechanism, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform/talent-booster-mechanism_en (accessed on April 2025); European Commission (2025[6]), Harnessing Talent Platform, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform_en (accessed on April 2025).
The report is structured into four chapters, each addressing key dimensions relevant to demographic change. Chapter 2 sets the stage by reviewing BBSK’s socio-economic context, including the main labour market trends, its institutional arrangements and its overarching policy framework. Chapter 3 delves into land use, exploring spatial planning, zoning and sustainable urban development strategies. Chapter 4 examines subnational finance, infrastructure investment and multi-level governance (MLG), focusing on the fiscal and administrative mechanisms. Finally, Chapter 5 assesses the delivery of key public services, highlighting the efficiency, equity and effectiveness. Together, these chapters provide a comprehensive analysis of the challenges and opportunities to help BBSK adapt to the demographic challenge.
Understanding the socio-economic landscape of BBSK is crucial for identifying the region’s opportunities and challenges. This section provides a comprehensive overview of BBSK’s geography, economic structure and current and future demographic trends, offering essential context for policymakers to identify patterns that shape regional growth and inform strategic policy action, on which the next chapters will elaborate further.
BBSK is a mountainous region in the centre of the Slovak Republic
BBSK is one of the eight small (TL3) regions (Samosprávne kraje) in the Slovak Republic. It is located in the centre of the country and part of the Central Slovakia region, a large (TL2) region. BBSK is bordered by the small regions of Žilina to the north, Trenčín to the northwest, Nitra to the west and Prešov to the east. BBSK also has an external border with Hungary to the south. BBSK is predominantly mountainous, including sections of the Low Tatras, Slovak Ore Mountains (Slovenské Rudohorie), and Poľana and valleys of the Hron and Ipeľ rivers.
In 2023, BBSK had 617 777 inhabitants, 11% of the Slovak Republic population1. BBSK has the lowest population density in the country, with its population being sparsely distributed across 9 454 km2 of territory, the largest in the Slovak Republic and representing one-fifth of the national territory. The population includes a large Roma minority and an important Hungarian community, especially in the southern districts near the Hungarian border.
The region is governed by the BBSK Self-Governing Region (also referred to as Higher Territorial Unit). It is also divided into 13 districts (okresy), which serve as State territorial administrative units and act as intermediaries between the central government, regional authorities and municipalities. The region's population is spread across 516 municipalities (obce), including 24 larger municipalities called towns (mestá). In BBSK, the homonymous capital city Banská Bystrica is the most populated municipality in the region, with 73 500 inhabitants in 2023, i.e. 12% of the regional population (Figure 2.2). It is followed by Zvolen (40 000 inhabitants) and Lučenec and Rimavská Sobota, together accounting for 26% of the BBSK population. BBSK is a predominantly rural region with sparse population density and settlement patterns. Overall, municipalities are small, with 91% having fewer than 2 000 inhabitants and 55% fewer than 500 inhabitants.
Number of inhabitants by municipality (2021)
Note: Only the names of cities with more than 5 000 inhabitants are displayed.
Source: Statistical Office of the Slovak Republic (2021[7]), “Population census 2021”, Number of population by sex in municipalities Banskobystrický kraj at 1. 1. 2021, https://data.statistics.sk/api/v2/dataset/om7006rr/om7006rr_obc/om7006rr_obd/om7006rr_ukaz/om7006rr_poh/om7006rr_vsk?lang=en (accessed on October 2024).
BBSK is economically lagging behind the national and OECD average
BBSK is one of the least economically productive regions in the Slovak Republic and the OECD. In 2022, BBSK was the region with the second lowest GDP per capita in the Slovak Republic, at 79% of the national average, only after Prešov (61%) and the region ranked in the bottom 20% of regions in GDP per capita across TL3 OECD regions.2 The labour productivity in the region, in addition, is among the lowest in the OECD, ranking in the bottom 10% of OECD TL3 regions in terms of labour productivity in 2021.3
The industry structure explains BBSK’s below-average economic performance
BBSK’s industrial structure broadly aligns with that of the Slovak Republic (Table 2.1) and has experienced comparable structural shifts over the past two decades (Annex Table 2.A.1). However, notable differences persist. Historically, the region was a centre for metallic mineral mining, with gold, silver and copper extraction dating back to the 13th century in towns such as Kremnica, Banská Štiavnica and Banská Bystrica. Over the decades, mining activities have declined in importance, with the sector shifting towards non-metallic mineral extraction. Today, significant deposits of silicates near Lučenec support the production of ceramics, glass and stoneware, while magnesite ore is mined and processed near Revúca. The region also has notable reserves of building stone in the north, clay raw materials in Poltár, gravel sand in the south and quartzite in Žiar nad Hronom. Seven districts (Banská Štiavnica, Brezno, Revúca, Rimavsská Sobota, Zvolen, Žarnovica and Žiar nad Hronom) in BBSK are eligible for funding from the Just Transition Fund (JTF), a major EU additional source targeted at areas most affected by the transition away from coal and carbon-intensive industries. Alongside this evolution and although BBSK’s economy has diversified into manufacturing (metal products, food and beverage and machinery), tourism and agriculture and forestry, reflecting broader national trends in economic transformation, the region’s economy exhibits larger employment shares in sectors associated with relatively lower income and productivity than the Slovak average, such as agriculture, forestry and the fishing sector and in public administration.
Share of employment by economic activity (%, 2021)
Source: OECD (2024[8]), OECD Regions, cities and local statistics, http://oe.cd/geostats (accessed on 25 October 2024).
Micro firms dominate the economy of the region and limit its economic potential
BBSK’s economy is characterised by a high prevalence of low-productivity micro firms, which dominate most sectors outside industry and transportation, limiting the economic productivity and growth of the region (OECD, 2022[9]). Micro firms have a limited absorption capacity of the technology available among large, mostly foreign-owned firms concentrated in industrialised areas near the capital city of Banská Bystrica. The firm size distribution limits the spillovers and knowledge diffusion arising from foreign direct investment (FDI)4, a form by which innovation takes place in rural regions where frontier innovation is limited (Annex Table 2.A.2). Non-frontier innovation can also arise from education and training systems or through firms engaging in production within global value chains (OECD, 2020[10]; Radosevic, 2018[11]).
Targeted policy support aimed at enhancing the innovation capacity of micro firms can foster economic growth and help retain talent in BBSK. In particular, BBSK can create learning opportunities among firms by facilitating the exchange with leading SMEs and large firms on how to leverage digital technologies and AI, promote the knowledge flow between education institutions and the private sector or support micro firms with exporting potential to navigate the international markets. For example, industries like forestry already employ remote monitoring systems and digital technologies, providing a strong foundation to integrate more advanced solutions, which can contribute to the sector’s productivity and become a pillar of regional economic growth (Box 2.2). Furthermore, leveraging local wood production to move up the global value chain can generate additional employment opportunities, like in Upper Austria, well-known for its timber industry, including wood harvesting, processing, and the production of wood-based products such as furniture, paper and wood-based textiles like TENCEL.
BBSK is home to the largest forested area in the country, covering 56% of its total land area (Figure 2.3). The region’s extensive forest resources offer a comparative advantage for forestry, an industry with a long-standing tradition in BBSK. Overall, BBSK accounts for up to 45% of the national wood production and wood logging activities are primarily concentrated in the northern and north-eastern parts of the region.
Land cover in the Slovak Republic (2018)
Source: European Union (2018[12]), CORINE Land Cover 2018 (vector), Europe, 6-yearly, https://doi.org/10.2909/71c95a07-e296-44fc-b22b-415f42acfdf0.
The region has a well-established technical, educational and scientific research base supporting the forestry industry. Banská Štiavnica is home to the Secondary Forestry School established in 1919. The Technical University in Zvolen houses the Faculty of Forestry, which traces its origins back to 1807, and the Faculty of Wood Science and Technology. Alongside the National Forestry Centre, also located in Zvolen, these institutions focus on research in forestry and woodworking, and offer vocational training, undergraduate and graduate degrees.
Strengthening the connections across all main players in the forestry industry could create employment opportunities, particularly for young workers with technical degrees in areas such as sustainable forest management and environmental conservation. Enhancing the formal and informal collaboration between micro firms and educational institutions and innovative companies, such as Foresta SK, which provides tools to digitalise tracking systems, and SPACETREES, a Czech firm specialising in satellite image processing for enhanced forest monitoring and reforestation, could promote technology adoption and drive innovation. Partnerships with Rain for Climate, a Slovak startup employing AI and drone technology to analyse aerial data for the restoration of natural water cycles and ecosystem stability, offer additional learning opportunities for firms in forestry. Integrating AI and satellite monitoring within Slovak forestry agencies could improve sustainability efforts and policy enforcement, and in turn, create additional employment opportunities. Collaborations with international education institutions and forestry firms in regions with forestry tradition such as Lapland (Finland), Central Sweden, British Columbia (Canada) or Styria (Austria) could further enhance the development of the local industry by fostering cross-border knowledge exchange.
Long-term unemployment and labour shortages point to severe skill mismatches in BBSK
BBSK has a high share of long-term unemployed. In 2023, nearly 70% of the working-age population was employed in the region, close to the national (72%) and EU (70.4%) averages. However, the region’s long-term unemployment rate in 2023 was 6.7%, significantly higher than the national (3.9%) and EU (2.1%) averages. Long-term unemployed individuals accounted for 50% of total unemployment in BBSK in 2024, compared to the national average of 39% (Figure 2.4). Long-term unemployment has been stable since 2022, in contrast to the declining trend observed, on average, in other Slovak regions. Long-term unemployment is particularly high in the economically least-developed southern districts of the region, where the economy is based on agriculture and forestry and where investment and job opportunities are limited. In 2022, women continue to represent a slightly higher share of the unemployed population, with a national female unemployment rate of 7%, compared to 5.9% for the total population. In BBSK, the rate is higher, reaching nearly 10%.
Share of long-term unemployed among unemployed (%, 2015-2024)
Note: Long-term unemployed have been unemployed for at least 1 year. The Slovak Republic represents the average among the eight Slovak TL3 regions.
Source: OECD calculations based on data provided by BBSK
Central Slovakia, the TL2 region comprising the TL3 regions of BBSK and Žilina, has a greater number of unfilled vacancies for every unemployed person than the national average, suggesting the existence of substantial skill mismatches in the region, which can dampen economic growth if persistent. In Central Slovakia, the labour market is 13% tighter than the national average, despite having a greater incidence of long-term unemployment.5 The labour market tightness is particularly salient in elementary occupations (such as labourers in mining, construction, manufacturing and transport, elementary agricultural occupations, cleaners and hotel housekeepers or caretakers and personal care workers), which are twice as tight as the average occupation in the region. Professional occupations (including teachers and doctors) and managerial roles are also tighter than the average occupation in the region, by 24% and 16%, respectively. The top three occupations in terms of tightness are the same as in the rest of the Slovak Republic (Figure 2.5. ). Addressing these labour shortages is key for sectors like the tourism sector, with growth potential if the region successfully capitalises on its natural and cultural heritage (Box 2.3).
Relative labour market tightness to the regional average for the top three occupations (2022)
Note: Relative labour market tightness by occupation is calculated at the regional level as the number of vacancies over employment for a given occupation and region, divided by the average labour market tightness in the region.
Source: OECD calculations based on Lightcast (n.d.[13]), Lightcast, https://lightcast.io/ (accessed on October 2024); Eurostat (2022[14]), EU Labour Force Survey, https://ec.europa.eu/eurostat/web/lfs (accessed on October 2024).
BBSK is known for a range of natural assets, including four national parks, diverse natural landscapes, ski resorts, thermal springs and historic towns that make the region attractive to tourists. The Low Tatras, Muránska, Veľká Fatra and Slovak Paradise Natural Parks together with the Donovaly, Chopok South and Mýto pod Ďumbierom ski resorts, attract a large share of visitors. The region also has several spa towns Sliač, Kováčová, Dudince, Brusno, Číž, and Sklené Teplice, with thermal springs, each known for their unique mineral composition. A key cultural asset in the region is the historical town of Banská Štiavnica, a UNESCO World Heritage site recognised for its artistic heritage and historic mining tradition. Another significant attraction is the Gothic Route, a 276-kilometre cross-border trail linking Spiš and Gemer with Poland and Hungary that spans across 9 towns and 24 rural communes, featuring 270 interpretative panels that showcase the region’s rich Gothic architectural and historical legacy. In addition, traditional folklore events, such as the long-running annual Detva Folklore Festival featuring 1 500 performers every year, attract a significant number of visitors to the region.
The region is actively enhancing its tourism appeal through targeted visibility, infrastructure and accessibility initiatives. A dedicated promotional website, "In a Land Far, Far Away" (or Za horami, za dolami in Slovak), showcases the region’s cultural and natural heritage, highlighting its historical sites, folklore and notable figures. Investments in cycling infrastructure, including new cycling centres, service facilities and conservation-focused amenities, aim to support sustainable tourism. To improve accessibility, cycle buses have been introduced on weekends and public holidays, facilitating transport for visitors. Comprehensive promotion and branding efforts, such as digital information systems, outdoor activity planners, regional maps, mobile applications and marketing campaigns, further strengthen the region’s position as a tourist destination.
Before the COVID-19 pandemic, BBSK accounted for approximately 10-12% of the Slovak Republic’s total domestic and international tourist arrivals, with annual visitor numbers ranging between 600 000 and 700 000. Overnight stays followed a similar trend, driven by both domestic visitors and tourists from neighbouring countries, including the Czech Republic, Poland and Hungary. The pandemic led to a sharp decline in tourism activity, with some quarters experiencing a drop of over 50% compared to 2019. While the sector began to recover in late 2021 and 2022, particularly in domestic tourism, visitor numbers remained below pre-pandemic levels. By 2024, the occupancy rate of permanent bed places was at 37%, reflecting moderate tourism activity in the region.
The expansion of advanced manufacturing and automation industries presents new opportunities for tourism development. The establishment of major firms, such as the Winkelmann Group and the Volvo plant in the neighbouring Košice region, is expected to create thousands of jobs, increasing local purchasing power and demand for leisure and hospitality services. In addition, the increased number of professionals could further increase the demand for tourism services in the region, with business travel, conference tourism and corporate hospitality sectors.
Source: Statistical Office of the Slovak Republic (2025[15]), Banskobystrický kraj - Characteristic of the region, https://slovak.statistics.sk/wps/portal/ext/themes/regional/bansko%20bystricky%20kraj/about/!ut/p/z1/jZLLUoMwGEafxQVLyE-4BXexTikOXlpKrdk4KUZKC0mFWKxPL626cEZrs0om58vkOwliaI6Y5Nuy4LpUklf9-oH5j7Pkjlxc2BSiYGpDfHOTZjMydq4HGN0fgEFER26QAJAk8iCmo2wSjh0HqIPYKXn4Y1 (accessed on 24 February 2025).
The integration of the Roma community is key to unlocking BBSK’s economic opportunities
In 2019, 12.8% of the population in BBSK had Roma background, representing the third largest Roma community in the Slovak Republic, only after Košice (16.5%) and Prešov (15.3%). In BBSK, the 82 389 people with Roma background live in 210 municipalities in the southern districts of Krupina, Veľký Krtíš, Lučenec, Rimavská Sobota and Revúca (World Bank, 2024[16]; Atlas of Roma Communities, 2019[17]).
The majority of the Roma population in BBSK lives segregated and faces social and economic exclusion. In 2019, 76% of the total Roma population lived segregated from the majority population and in ethnically homogeneous cities (World Bank, 2024[16]), lacking basic infrastructure and adequate housing conditions. Additionally, high levels of long-term unemployment, lower educational attainment and discrimination in the labour market translate into persistent socio-economic disparities (World Bank, 2024[16]). Many Roma, particularly the young, remain outside formal employment and training systems, often due to a lack of qualifications, limited access to vocational education and geographical isolation from economic centres. The share of young Roma who are not in employment, education or training is 67%, compared to 12% of the general population in the same age group (16-24) (European Commission, 2024[3]; Markovič and Plachá, 2022[18]). Unemployment is also a significant issue for women in the two southern districts with the highest share of Roma in the population, with unemployment rates for women reaching 20.6% in Revúca and 21.9% in Rimavská Sobota in 2022.6 These figures are considerably higher than in the two cities of Banská Bystrica and Zvolen, where unemployment rates for women are relatively low, at 4.1% and 4.6% respectively. Social enterprises play a crucial role in BBSK's efforts to promote the labour market integration of the Roma community by providing targeted employment opportunities. Benefiting from wage subsidies and financial support, the region has received the highest allocation of national funding for social enterprises in the Slovak Republic (Box 2.4).
Social enterprises are a key player in BBSK’s social economy. Operating with a business-oriented model (unlike social cooperatives and associations), they foster the labour market integration of the Roma community and create employment and economic opportunities locally.
The social enterprise status is granted by the Ministry of Labour, Social Affairs and Family and social enterprises are regulated within Slovak law.7 In the Slovak Republic, social enterprises receive wage subsidies to employ specific population groups. Granted by the Offices of Labour, Social Affairs and Family, wage subsidies incentivise the employment of school graduates younger than 26 years old, persons older than 50 years old, long-term unemployed, low-educated, disabled or the recipients of social services. The wage subsidies are financed from the National Project “Providing Financial Contributions to Integration Enterprises”, co-financed by the European Union under the Slovakia Program.
In December 2024, 91 social enterprises were legally registered in BBSK representing 17% of the total in the Slovak Republic, 2 of which were managed by the regional government and 13 by municipalities in the region. Podnik medzitrhu práce established by the city of Banská Bystrica provides agriculture, forestry, construction and cleaning services since 2018. In 2022, the public social enterprise had 30 employees. In Valaská, the enterprise Wasco provides laundry services to businesses in the area since it was established in 2014. Currently employing 28 people, the company delivers 20 tons of laundry per month to 42 business partners. Wasco also trains its workers and gives back to the community with workshops and education activities organised on a regular basis.
Between 2018-24, the Office of Labour, Social Affairs and Family in BBSK allocated the largest share of funding to support social enterprises among the eight Slovak regions, with a total disbursement of EUR 31 million. This represented 22% of the national funding, underscoring the significant contribution of social enterprises in creating local employment opportunities in the region.
To further support the sector, BBSK offers complimentary advisory services to the social enterprises in the region to support their development and sustainability. This initiative includes networking with existing social enterprises and advocating for the use of social clauses in public procurement.
Source: BBSK (2024[19]), Internal communication regarding social enterprices; Wasco (n.d.[20]), Wasco.sk, https://wasco.sk/ (accessed on 3 March 2025); Podnik medzitrhu práce (n.d.[21]), O nás, https://pmpbb.eu/o-nas/ (accessed on 3 March 2025).
BBSK’s population has been decreasing and ageing
Between 2000 and 2023, the region experienced a population decline of 6.8%, the largest decrease among Slovak regions and equivalent to a loss of about 45 000 inhabitants. While the region’s population remained relatively stable during the 2000s, the pace of depopulation accelerated significantly in the 2010s and further intensified in the 2020s (Figure 2.6.). Depopulation has been widespread within the region from 2002-22, affecting nearly two-thirds of municipalities, including the largest cities in the region (Figure 2.7).
Population change (persons) by year (1997-2022)
Note: The 2021 decline in population reflects “net migration and statistical adjustment” (-18 000) and “natural change” (-3 000).
Source: OECD (2024[8]), OECD Regions, cities and local statistics, http://oe.cd/geostats (accessed on 25 October 2024).
Population (persons) in 2002 (x-axis) and 2022 (y-axis)
Note: Each dot represents a municipality in the BBSK. The municipalities that increased their population from 2002-2022 are above the 45-degree line while the municipalities that decreased their population over the period are below.
Source: OECD (2024[8]), OECD Regions, cities and local statistics, http://oe.cd/geostats (accessed on 25 October 2024).
These population dynamics are explained by a negative natural population change, or the number of births below that of deaths, adding to negative international migration and more local residents leaving BBSK for other Slovak regions than those arriving (i.e. negative inter-regional mobility) (Figure 2.8.).
Decomposition of population change (persons) by year (1997-2020)
Note: The correction refers to a statistical adjustment to align the different data sources.
Source: OECD (2024[8]), OECD Regions, cities and local statistics, http://oe.cd/geostats (accessed on 25 October 2024).
BBSK is ageing rapidly. Since 2000, the share of population under 35 dropped from 51% to 37% in 2023, while the share of over 60 years old increased from 16% to 26% over the same period. As a result, in 2023, the old-age dependency ratio in BBSK was the third highest across Slovak regions at 28.5 above 64 years old for every 100 working-age inhabitant (15-64 years old), only lower than in Trenčín (30.2) and Nitra (29.2).
In contrast with other OECD regions, the southern districts of the region that are more rural are younger than the urban ones in the north. This is explained by the larger presence in the rural areas of the Roma minority with higher than average fertility rates and lower life expectancy. These are the districts of Rimavská Sobota, with 24.8 above 64 years old for every 100 working-age inhabitants, Revúca (25.2), Krupina (26.1), Lučenec (27.7) and Veľký Krtíš (28.4), all with old-age dependency ratio below that of the region8.
Population projections suggest the region will continue depopulating and ageing in the next two decades
The region is projected to continue to lose population at a faster pace than the rest of the country in the coming decades. The region’s own population projections indicate a 4% population decline from 2023-40, while Eurostat expects a slightly higher decrease of 5% over the same period, and an additional 7% decline from 2040-509. All 13 districts in the region are expected to lose population, with those in the south and the largest Roma communities projected to experience the smallest population declines (Figure 2.9).
Projected change in population by district (%, 2020-2040)
Source: OECD calculations based on Banska Bystrica Self-Governing region (n.d.[22]), Portál otvorených dát, https://opendata.bbsk.sk/ (accessed on October 2024).
Furthermore, the population is projected to age fast. The population pyramid in 2050 is projected to have a much larger top than in 2023, showcasing a substantial increase in the population aged 65, and a smaller base, driven by a further contraction in size of the younger age population groups in the region (Figure 2.10.). As a result, the old-age dependency ratio is projected to grow steadily from 28.5 in 2023 until peaking at 67 above 64 years old for every 100 working-age inhabitants (15-64 years old) in 2062. The projected rise in the old-age dependency ratio is the result of the increase in the share of 65 and above in the region of 60% by 2050 compared to 2019 and the decline in the working-age population, including the young (15-39 years old) (Annex Figure 2.A.2).
Population and projected population, by age group and sex (2023 and 2050)
Source: OECD calculations based on Eurostat (2021[23]), Population on 1st January by age, sex, type of projection and NUTS 3 region, https://ec.europa.eu/eurostat/databrowser/product/page/PROJ_19RP3 (accessed on October 2024).
These population projections will impact the labour market in the region. The ability of firms to fill in vacancies in the region, as measured by the labour market tightness is projected to rise by 32% in 2050 while on average in other Slovak regions it will do so by 11 percentage points less (21%). Only West Slovakia is projected to have higher levels of labour market tightness than Central Slovakia. However, the labour market in Central Slovakia is only projected to be tighter than that of Nord Vest in Romania by 2050, compared to the other seven regions participating in the project for which data are available.10
In some regions, challenges due to demographic change are compounded by a shrinking base of highly educated individuals, leaving the regions without the talent needed to drive change. In its 2023 Communication on Harnessing Talent in Europe’s Regions, the European Commission identifies BBSK as one of the 82 regions most exposed to this risk of falling into a “talent development trap” undermining the region’s long-term development.
BBSK is characterised by sustained net outmigration of its young population
BBSK’s talent development trap is marked by the outmigration of young, educated individuals due to limited local job opportunities and weak alignment between education and labour market needs (Figure 2.11). Since at least 2010, more people have left the region than have moved in. The residents migrating are seeking better academic and economic opportunities in other Slovak regions and abroad. Although no data are available for BBSK, Central Slovakia, the large TL2 region that BBSK is part of, Data on net outmigration are available for Central Slovakia, comprised of BBSK and its neighbouring TL3 region Žilina. Central Slovakia experienced a net migration of -0.4% of its youth population (from 15-39 years old) during 2022, compared to -0.04% nationally and 1.3% in the EU27 average in 2022.11
Net migration rate for population aged 15 to 39 in Central Slovakia, Slovak Republic (2012-2022)
Note: Net migration for the population aged 15 to 39 is estimated based on yearly population by age and deaths, using the following formula, which corresponds to the residual between population change and natural change for the age group 15-39: (POPF_Y15T39 - POPI_Y15T39) – (POPI_Y14 – POPI_Y39 - DEATHS_Y15T39), where POPI_Yk is the population aged k on January 1, POPF_Yk the population aged k on December 31, DEATHS_Yk the number of deaths at the age k
Source: Eurostat (2025[24]), Deaths by age, sex and NUTS 2 region, https://ec.europa.eu/eurostat/databrowser/view/demo_r_magec/default/table (accessed on February 2025), Eurostat (2025[25]), Population on 1 January by age, sex and NUTS 2 region, https://ec.europa.eu/eurostat/databrowser/product/view/demo_r_d2jan?lang=en (accessed on February 2025).
Persistent mismatches between education and labour market needs undermine talent retention
The labour market in BBSK is particularly tight, meaning it is difficult for people to find jobs, for elementary occupations, while many young, educated graduates from Matej Bel University seek more qualified positions, often prompting them to migrate in search of better opportunities. Young people are leaving the region regardless of their employment status, pointing to a structural mismatch between the skills acquired through education and the demands of the local labour market, rather than a simple lack of job opportunities (Figure 2.12). Strengthening vocational education and training (VET) systems could help align the skills of the youth with market needs, thereby supporting talent retention. Labour shortages in key professional sectors such as education and healthcare, particularly among teachers and doctors, underline the need to enhance the attractiveness of these careers for younger generations beyond VET. The combined pressures of skills mismatch and ageing threaten the region’s ability to retain talent and sustain long-term development.
Growth of the population in each labour market category by region and age group (2011-2022)
Note: Age groups change to due data availability. Data on inactive and unemployed population is only available across these age groups, as opposed to data on employed population which available at a more granular level. Statistics in red represent the percentage change in the employed population
Source: OECD elaboration based on OECD Regions and Cities databases http://oe.cd/geostats.
The Slovak Republic underwent decentralisation reforms throughout the 1990s and early 2000s, however it remains a centralised country. As a result, subnational governments often lack autonomy to steer policy. This is a challenge for both BBSK and its municipalities as they strive to create forward-looking policies that mitigate and adapt to demographic change.
Institutional arrangements
The Slovak Republic is a unitary country with two tiers of subnational government that comprises 8 Higher Territorial Units (HTU or self-governing regions) and 2 927 municipalities (Figure 2.13). Municipal autonomy was reinstated following the adoption of the 1991 Slovak Constitution which laid the foundation for “territorial self-administration.” In 2001, a new decentralisation reform expanded municipal responsibilities - covering social assistance, urban planning, housing, environment, primary education, recreation, and more - and established the 8 self-governing regions. Under the 2001 Act on Self-Governing Regions, these newly formed regions received competences in secondary education, social welfare, regional roads and transport, regional economic development, and territorial planning. Subsequently, the 2005 Act on Local Financing significantly reshaped the subnational financing system. Additional reforms aimed at improving subnational competences, financing, and territorial organisation were proposed under the 2020 “Modern and Successful Slovakia” plan but were postponed due to a combination of political and practical factors (OECD/UCLG, 2022[26]).
Following these reforms, the Slovak Republic’s territorial state administration was restructured in 2013-2014 to create districts that replaced central government territorial entities. In 2024, there were 79 of such districts with offices which represent the Ministry of the Interior as deconcentrated administration in the different regions (Ministry of the Interior of the Slovak Republic, 2023[27]). This includes 13 districts in BBSK. While lacking direct political representation, districts play a pivotal role in delivering public services, hosting branches of central government agencies and facilitating judicial and law enforcement operations.
Institutional arrangements in the Slovak Republic
Source: OECD elaboration based on OECD/UCLG (2022[26]), Slovak Republic Country Profile, https://www.sng-wofi.org/country-profiles/slovak_republic.html; Council of Europe (2024[28]), Monitoring of the application of the European Charter of Local Selfgovernment in the Slovak Republic, https://rm.coe.int/monitoring-of-the-application-of-the-european-charter-of-local-self-go/1680acd751.
The legal basis for these subnational governments is provided in Chapter Four of the Slovak Constitution (Art. 64 to 71). Article 64 of the Constitution states that municipalities are “independent territorial and administrative units” and are the basic unit of local democracy. Article 65 specifies the legal personality of municipalities and HTU which, under conditions laid down by law independently manage their own property, financial resources and fund their activities through a combination of own revenues and central government grants and subsidies.
Regions in the Slovak Republic are governed by a council which is composed of members elected for a four-year term. The regional council is the legislative and decision-making body. The representative and statutory body is the regional president (predseda) who is elected every four years Elections at the municipal level are also held every four years and citizens and permanent residents vote for the local council and the mayor (starosta/primátor) (OECD/UCLG, 2022[26]). Elections The number of councillors varies from 3 for municipalities with up to 40 inhabitants and 23-41 for municipalities with up to 100 000 inhabitants (Council of Europe, 2024[28]). In addition to self-governing regions and municipalities, the “local government sector” in the Slovak Republic includes entities such as budgetary and semi-budgetary organisations, 26 non-market enterprises, 19 hospitals, and various non-profit entities (IMF, 2023[29]).
Vertical and horizontal co-ordination across and among levels of government
The Slovak Republic has mechanisms in place, including the national sectoral ministries which have direct oversight responsibilities on subnational governments. The Ministry of the Interior also have important competences related to internal affairs, including related to regions and municipalities. Some progress has been made with the recent creation of the Ministry of Investment, Regional Development and Informatisation of the Slovak Republic (MIRRI). The MIRRI ensures the co-ordination of the preparation of regional development policies, adopts measures to support the economic and social development of the less developed territories. The MIRRI also co-ordinates the preparation of the national and local regional development strategies and their implementation (Government of the Slovak Republic, 2020[30]).
The MIRRI also ensures co-operation with the European Union bodies, in particular for EU Cohesion policy, (the Managing Authority role), with 10 other ministries and agencies being involved as intermediate bodies. In fact, EU Cohesion Policy and recovery funds have acted as a catalyser for vertical coordination, even if EU funds remain managed centrally, regional and local governments still having limited roles in setting priorities or designing programmes, and mostly act as project applicants. For example, there are several positive developments. Intermediary structures (e.g., Integrated Territorial Investments, regional development agencies) are being strengthened to improve coordination. The Slovak Recovery and Resilience Plan also includes elements aimed at enhancing multilevel governance and administrative capacity.
Self-governing regions and municipalities also engage with the central level via their national and regional associations to discuss and advocate for their interests to the central level. BBSK participates in the SK8, which is a voluntary interest-based association of self-governing regions of the Slovak Republic, independent of the state and political parties. Municipalities may participate in two principal associations, ZMOs (Association of Cities and Towns of Slovakia) and UMS (Union of Cities of Slovakia). The former is designed for all municipalities, while the latter is only for those that have the legal status of a city. UMS thus represents larger cities and complements ZMOS in advocating for urban interests (European Committee of the Regions, n.d.[31]). The ZMOs also have 8 regional associations called RZMOs which represent municipalities in their respective region. At the regional level, vertical coordination between central and subnational governments takes place through the district offices.
Horizontal co-ordination mechanisms are particularly important considering the high level of municipal fragmentation in the Slovak Republic, which is one of the highest in the OECD alongside the Czech Republic and France. The average municipality in the country had 1 900 inhabitants in 2022, while 84% of municipalities had fewer than 2 000 inhabitants, compared to 28% in the rest of the EU (OECD, 2024[32]). Moreover, municipalities in BBSK had even higher levels of municipal fragmentation with 91% of municipalities having fewer than 2 000 inhabitants and 55% with fewer than 500 (Figure 2.14.). Despite this high degree of fragmentation, municipal mergers remain unpopular among both citizens and politicians (Council of Europe, 2024[28]). This resistance is partly rooted in historical experience, as municipalities were forcibly merged in 1960 before being re-established following the fall of communism in 1989.
Percentage of municipalities by population class size (2022)
Source: OECD (2024[33]), Municipal level government by population size (Database), https://data-explorer.oecd.org/vis?fs[0]=Topic%2C1%7CRegional%252C%20rural%20and%20urban%20development%23GEO%23%7CSubnational%20government%20finance%20and%20employment%23GEO_SNG%23&pg=0&fc=Topic&bp=true&snb=17&df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_DASHB (accessed on 2024) and (OECD, 2024[32]); Slovak Republic (2024[34]), Number of the Population by Sex - Municipalities (yearly) [om7101rr], https://datacube.statistics.sk/#!/view/en/vbd_dem/om7101rr/v_om7101rr_00_00_00_en (accessed on 2024).
Article 66 of the Constitution states that municipalities have the right to associate with other municipalities. Inter-municipal cooperation enables municipalities to pool resources, share service costs, and jointly manage projects that would otherwise be difficult or inefficient to handle independently. In the Slovak Republic, inter-municipal cooperation is regulated by Act 369/1990 chapters 20b-20f (Ministry of Justice of the Slovak Republic, 2025[35]), allowing municipalities co-operate in the framework of voluntary joint-municipal offices (JMO), joint municipal companies, micro-regions, euro-regions, local action groups (LAG), engage in contracts for particular tasks and project cooperation (Klimovsky and Nemec, 2021[36]).
JMO in particular exist for the execution of delegated tasks from the state administration, implementing co-ordination arrangements covering 21 different domains. JMOs may also be divided into sections, where each section may specify tasks that only a subset of the municipalities cooperate on. Micro-regions typically cooperate in the areas of development planning, project cooperation, environmental protection, and tourism. They are funded directly through the municipal budgets, own fundraising, and EU funds and are generally associated to the use of EU Structural Funds. Joint municipal companies deal, for example, with waste management, water, sewage disposal, and local tourism (Congress of Local and Regional Authorities ;, 2023[37]; OECD/UCLG, 2022[26]; OECD, Forthcoming[38]) (OECD/UCLG, 2022[39]). Other forms of cooperation have emerged, supported by EU funds and initiatives (Local Action Groups, Sustainable Urban Development areas and INTERREG), including the new Integrated Social and Health Centres and Shared Services Centres.
Role of different levels of government in service and infrastructure provision
Following the decentralisation process, the allocation of responsibilities across levels of government is structured through a decentralised governance system. The central government has, however, kept important responsibilities, being in charge of national policy-making, defence, social security, taxation, major infrastructure and it oversees and regulates regional and municipal actions through ministries and state authorities. Subnational governments have exclusive and delegated competences, i.e. tasks performed on behalf of the central government, typically with earmarked funding. As a result, several responsibilities are shared between the national and subnational levels of government, including in functions key for mitigating and adapting to demographic change. For example, the central government has most of the responsibilities for health which will be covered in Chapter 5, while it is also responsible for higher and specialised education. The allocation of competences is often considered problematic in terms of clarity, efficiency and coordination. In some policy areas, such as education and health, unclear divisions of competence or overlaps create inefficiencies and governance gaps. This is particularly challenging when designing policies to address demographic change. This ambiguity is exacerbated by overly fragmented municipal structures, the weak role of the regional level, limited fiscal resources and capacity of subnational governments overall (see below), and the lack of effective multi-level governance mechanisms (Table 2.2). The regional level is responsible for secondary education, social care for children and the elderly, regional development/spatial planning and regional transport amongst other functions. At the municipal level, municipalities oversee pre-primary and primary education, local spatial planning, local roads and public transport, administrative services, waste and water management as well as sharing some functions in social protection, such as elderly care (OECD/UCLG, 2022[26]).
The allocation of competences is often considered problematic in terms of clarity, efficiency and coordination. In some policy areas, such as education and health, unclear divisions of competence or overlaps create inefficiencies and governance gaps. This is particularly challenging when designing policies to address demographic change. This ambiguity is exacerbated by overly fragmented municipal structures, the weak role of the regional level, limited fiscal resources and capacity of subnational governments overall (see below), and the lack of effective multi-level governance mechanisms.
Allocation of main competences across levels of government
Source: OECD based on (OECD/UCLG, 2022[26]) and project’s questionnaire.
Adapting services and infrastructure to demographic trends - while also attempting to mitigate their effects - will create tensions and require political choices and coordination at the national, regional, and municipal levels. On one hand, strong ageing trends are likely to reduce demand for primary education while increasing the need for social and healthcare services. However, these broad trends mask important localised dynamics: for instance, the population of Roma communities continues to grow, often with a younger age structure and distinct socio-economic needs. This will require targeted efforts to ensure inclusive access to quality education, housing, and employment opportunities, especially in areas with a high proportion of Roma communities. On the other hand, retaining and attracting residents may require greater investment in childcare, secondary and higher education, and housing. Additionally, a stronger focus on economic development - particularly in key growing sectors such as tourism, forestry, and new industrial activities - will be essential to creating high-quality jobs. A future increase in seasonal populations driven by tourism could also place significant pressure on both tourism-related and general infrastructure and services.
Subnational government finances
Despite the broad range of responsibilities that have been decentralised to subnational governments during the different decentralisation reforms in 1991, 2001 and 2005, the Slovak Republic still has a low level of expenditure decentralisation and revenue. In 2022, subnational governments in the Slovak Republic accounted for 18.8% of general government expenditure. This was lower than the 34.4% in the EU and 39.5% in the OECD (Figure 2.15).
Similarly, subnational public investment accounted for 37.1% of total public investment, compared to 53.0% in the EU and 57.7% in the OECD in 2022 (OECD, 2024[32]). The primary area of subnational government spending is by far education. Other significant areas of subnational government spending are general public services and economic affairs & transports. The level of compensation of employees is quite high (around 38%) for a centralised country, which is explain by the fact that the regional government and municipalities are responsible for paying teachers’ salaries. On average, municipalities with less than 250 inhabitants spend more than half of their budget on administrative costs (OECD/UCLG, 2022[26]). Municipalities account for the vast majority of subnational expenditure, representing 66.2% of the total, while regions contribute approximately 30.9% (INEKO, 2025[40]). Despite the regionalisation process, regional governments have still few spending responsibilities.
Percentage of general government expenditure, compensation of employees, investment, tax revenue and debt (2022)
Note: Max : OECD country with the highest ratio and Min : OECD country with the lowest
OECD Uni Avg stands for OECD unitary averages and EU Avg for all EU countries (federal and unitary)
Source: OECD (2024[32]), Subnational Government Structure and Finance Database, https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/subnational-finance-and-investment/subnational-governments-infrastructure-finance-2024.pdf/_jcr_content/renditions/original./subnational-governments-infrastructure-finance-2024.pdf, (accessed on 26 May 2025).
Like on the expenditure side, subnational governments in the Slovak Republic have low levels of revenue decentralisation. Subnational governments account for 18.9% of public revenue, i.e. 7.6% of GDP in 2022. They also have a low level of fiscal autonomy, as they rely heavily on grants and subsidies from the central government and the EU, which made up close to 80% of their total subnational revenues in 2022, to be compared with 44.2% in the EU on average (OECD, 2024[32]). The share of grants and subsidies in subnational government revenue is one of the highest amongst OECD countries (OECD/UCLG, 2022[26]). The main transfer is the share of the Personal Income Tax (PIT12), redistributed from the central government to regional governments and municipalities. Since 2016, regions receive 30% of total PIT receipts and municipalities receive 70% according to an allocation formula, calculated on the basis of population and some additional factors, to take into account some specific needs (Chapter 4). This is a major source of regional and municipal revenues, representing almost half of total regional revenues and nearly one-third of total municipal revenues in BBSK. These transfers are for original competences (i.e., competences that are not transferred from the central level) and are not earmarked. This PIT allocation is supplemented by other specific grants allocated by competent ministries to fund certain delegated services or “so called “transferred execution of the state budget”, especially for education, but also for state administrative services (registry, construction permit, etc.), social housing, environment, forestry, etc. They account for around 30% of total regional and municipal revenues. They can reach almost 40% of small municipalities’ total revenues but remain lower than the real costs of these delegated services (Council of Europe, 2023[41]). They are also complemented by EU funds (Box 2.5).
During the 2021–2027 programming period, Slovakia benefits from approximately €12.6 billion in EU Cohesion Policy funding under its national Partnership Agreement, with funds drawn primarily from the European Regional Development Fund (ERDF), European Social Fund Plus (ESF+), the Cohesion Fund, the Just Transition Fund, and complemented by national co-financing. This funding is implemented via the unified “Programme Slovakia 2021-2027” (instead of six in the previous period), which integrates thematic and territorial investments, emphasising a multidisciplinary and integrated approach.
The key areas of support under Programme Slovakia 2021-2027 are as follows:
Objective 1: a more competitive and smarter Slovakia: science, research and innovation, digitalisation, SMEs, skills development and digital connectivity.
Objective 2: a greener Slovakia: energy efficiency, greenhouse gas emission reduction, renewable energy and energy storage, climate change adaptation, access to water, strengthening nature protection, biodiversity and green infrastructure, sustainable urban mobility
Objective 3: a more connected Slovakia: smart, safe, sustainable trans-European transport network, as well as national, regional and local mobility.
Objective 4: a more social and inclusive Slovakia: accessible labour market, quality and inclusive education, acquisition of skills for better adaptability and inclusion based on labour market needs, active inclusion and support of available social services for disadvantaged and most deprived groups of the population, including marginalised Roma communities, family counselling, social innovations.
Objective 5: a Europe closer to its citizens: culture and natural heritage, sustainable tourism, public sports facilities and safety.
Just Transition Fund
The remaining €410 million is earmarked for technical assistance.
Source: https://eurofondy.gov.sk/program-slovensko/
In BBSK, EU funds are primarily delivered through the Integrated Territorial Strategy (IÚS), which translates regional priorities into investment pipelines. The region is subdivided into five Strategic Planning Regions (SPRs), which serve as internal coordination units to structure stakeholder engagement and project development. While SPRs are not mandated by the EU, they help ensure balanced territorial development and alignment with the region’s long-term strategic plan (PHSR 2022 - 2030). In parallel, Sustainable Urban Development Areas (SUDAs) are designated urban areas (Banská Bystrica, Zvolen, Lučenec, and Rimavská Sobota) that receive ring-fenced ERDF allocations via Integrated Territorial Investments (ITIs). These are mandatory under EU regulations and enable urban municipalities to co-manage EU-funded projects in their functional urban areas.
BBSK also accesses other EU funding. Through the Just Transition Fund (JTF), Slovakia receives over EUR 459 million, with a significant share (EUR 56.4 million) allocated to coal-affected areas in BBSK. Seven eligible districts (Rimavská Sobota, Revúca, Zvolen, Banská Štiavnica, Brezno, Žarnovica and Žiar nad Hronom) can receive both ERDF-linked support and Just Transition Fund interventions, with preferential financing conditions, to support economic diversification and reskilling in response to the phasing out of coal.
The Interreg programmes, such as Interreg Slovakia-Hungary and Interreg Central Europe, support cross-border and transnational cooperation, with BBSK municipalities eligible for funding in areas like innovation, culture, mobility, and environment. In rural development, the LEADER approach (Local Actions Groups financed through the European Agricultural Fund for Rural Development, EAFRD) plays a vital role in BBSK.
Additionally, Slovak actors, including those in BBSK, participate in the Recovery and Resilience Facility (RRF) and programmes under direct and indirect management (HORIZON, ERASMUS +, LIFE, InvestEU, etc.), although these are centrally managed at the national or EU level.
There is only one managing authority: the Ministry of Investments, Regional Development and Informatisation of the Slovak Republic (MIRRI), but many intermediate bodies such as ministries and national agencies. The new governance model for 2021-2027 reflects a blend of national oversight and regional and local initiatives, with BBSK and urban SUDAs directly shaping and delivering place-based strategies.
Source: EU and BBSK websites
By contrast, subnational government tax revenues are low, accounting 2.6% of public tax revenue, 0.5% of GDP and 6.9% of subnational government revenue in 2022 (vs respectively 26.7%, 7.2% and 42.2% in the EU). Regional governments are not allowed to raise taxes, since a reform in 2016 that abolished the only own-source tax revenue they had (motor vehicle tax), which has been recentralised under state control in January 2016. Since then, municipalities are the only subnational level to raise own-source taxes, including the recurrent tax on immovable property (land, building and flats), the tourist tax (accommodation tax) and other smaller taxes on goods and services, as defined in the Act on Local Taxes and Local Fee for Municipal Waste and Small Construction Waste (Act No. 582/2004 Coll.). Municipalities are free to decide whether or not to levy and to set the rates of local taxes. They may have some discretion to grant exemptions and tax reductions (beyond the mandatory ones), for example, for specific land types, certain property uses (like cultural or community services) and for certain categories of taxpayers, such as seniors or low-income individuals, to address local needs and policy objectives.
The property tax is the most important local tax. It accounts for around 62% of municipal tax revenues on average and 5% of total municipal revenues but represents only 0.4% of GDP. The tax is levied on three categories of assets: land (around 23% of property tax revenues in 2021), buildings (69%) and residential apartments (8%). Land tax is value-based with a nationally set tax rate of 0.25%. Municipalities can increase or decrease this tax rate set by law and differentiate tax rates for different location zones and for land categories. The rate of the tax on buildings and the apartment tax is set at EUR 0.033 per m2. This rate can also be increased or decreased by specific rules based on the building category (there are nine categories) and zone.
Meanwhile, other own-source revenues, like user charges and fees and income from assets are also low in the Slovak Republic, making up 11.9% and 0.7% of total subnational government revenues respectively. Since Act No. 447/2015, they include a development fee which has been established land in the territory of the municipality, for which a valid building permit has been issued. The payer is a natural person or a legal entity (e.g. property developer) for whom a building permit has been issued. The collected revenues are earmarked for capital expenditures and serve as a tool to finance infrastructure and public services necessitated by new developments.
Since 2005, subnational governments must follow a balanced budget rule. The Fiscal Responsibility Constitutional Act of 2011 and the Law on Budgetary Responsibility of 1 March 2013, which came into effect in 2015, further strengthened these fiscal rules. With accounting for 3% of GDP and 4.6% of public debt in 2022, subnational government debt is well below the EU average. This low level of debt is the result of the Golden Rule (the possibility to borrow only to cover capital expenditure), additional debt prudential rules, and a system of penalties for non-compliance (OECD/UCLG, 2022[26]).This limited level of fiscal decentralisation constrains subnational governments’ ability to respond effectively to demographic shifts through relevant investments. As outlined above, the central government has devolved many tasks to regional governments and municipalities, however this has not been accompanied by sufficient fiscal decentralisation, resulting in an inadequacy of financial means to fulfil those responsibilities (Council of Europe, 2024[28]). This is of particular concern in the context of demographic change which will have impacts on public finances, as expenditures increase, and revenues decrease.
Policy framework for demographic change in country and region
In the Slovak Republic, all levels of government engage in cross-sectoral strategic planning to address demographic challenges. At the national level, the MIRRI plays a key role in co-ordinating with lower levels of government. The MIRRI designed the National Regional Development Strategy, or the Vision and Strategy for the Development of Slovakia until 2030 in 2021, which is the country’s overarching regional development strategy. It also sets out the basis for regional and municipal governments to elaborate their programmes for economic and social development. Furthermore, the ministry has developed comprehensive methodological guidance on how to produce these plans in-line with the national level priorities (MIRRI, 2021[42]). As a result of this co-ordination and guidance, the plans of subnational governments tend to align well with those at the national level.,
Demographic change is primarily viewed through the lens of persistent brain drain and ageing (Table 2.3). Vision and Strategy for the Development of Slovakia until 2030 proposes certain measures to counteract brain drain by, for example, by improving the quality of education and by supporting families through affordable housing (MIRRI, 2021[42]). At the regional level, BBSK’s Programme for Economic and Social Development highlights challenges associated with the outflow of skilled human capital as well as ageing and low birth rates. The region seeks to solve this by increasing high-quality employment opportunities, among other initiatives (BBSK, 2022[43]). Meanwhile, municipal governments acknowledge population trends, referring to ageing and outmigration (Mesta Banská Bystrica, n.d.[44]).). To mitigate these trends, the City Development Programme 2030 of the Banská Bystrica municipality also looks to improve attractiveness, for example, by developing cultural and creative industries.
List of sectoral and cross-sectoral plans and strategies in the Slovak Republic and BBSK by level of government
Note: This is an indicative list of plans and is not meant to be exhaustive, highlighted in blue are cross-sectorial plans.
Source: OECD elaboration on policy documents.
Like cross-sectorial plans, sectoral plans across the country incorporate measures to mitigate population decline and promote regional vitality. National strategies target key demographic challenges, including initiatives to enhance youth opportunities, foster the inclusion of the Roma population, and support active ageing, social services, and foster care. At the regional level, efforts concentrate on improving education, youth engagement, and social services to create a more dynamic and supportive environment. Meanwhile, municipal governments complement these efforts with community-based social service plans, aiming to enhance local quality of life and make their regions more appealing for both current and future residents.
In addition to strategic planning, BBSK participated in Slovakia’s Catching-Up Regions Initiative (CuRI) to implement policy solutions, some of which have helped improve the attractiveness of the region. The CuRI is a European Commission initiative that aims to support regions to enhance their capacity and design and pilot place-based solutions tailored to local needs. For example, this initiative sought to improve attractiveness by linking industry and research to increase R&D activity in the region as well as to improve social services through inter-municipal co-operation.
BBSK is implementing policies and leveraging EU funds to attract talent, support female employment, and strengthen cooperation on labour market challenges. Through its participation in the EU–World Bank Catching-Up Regions Initiative (CuRI), the region has invested in modernising vocational education and training (VET), enhancing youth counselling services, and fostering collaboration between schools and local businesses (Box 2.6). These efforts aim to align skills development with regional labour market needs, thereby improving job prospects and retaining young talent. In addition, while not targeted exclusively at women, several initiatives, particularly those supported by the European Social Fund Plus (ESF+), contribute to improving female labour market participation by promoting access to training and inclusive employment pathways
Launched in 2018 by the European Commission and the World Bank, the Catching-up Regions Initiative (CuRI) supports lagging EU regions in strengthening their competitiveness and making more effective use of EU Structural and Investment Funds. BBSK joined the initiative in March 2019 during its second phase and continued its participation through phases III to V.
Under the EU’s Catching-up Regions Initiative (CuRI), BBSK has undertaken several targeted interventions to address long-standing territorial disparities and improve public service delivery. Notably, BBSK has focused on key areas: the digitalisation of public transport, improving vocational education and training (VET), and developing integrated social, health services for seniors and promoting the inclusion of Roma communities.
Digitalisation of public transport
In the area of public transport, BBSK is implementing a comprehensive digitalisation strategy aimed at creating a unified, real-time information system for its bus network. This includes mapping and upgrading 2,600 bus stops, collecting geospatial and accessibility data, and improving service reliability and user information. These efforts are expected to facilitate more effective multimodal coordination between bus and rail services and contribute to a more efficient, user-friendly transport system.
Vocational education and training
On the skills and education front, BBSK has launched a project to align secondary vocational education and training (VET) with labour market needs. Through extensive employer engagement and assessments of 63 VET schools, the region identified key mismatches in skills provision and developed targeted investment packages for eight pilot schools. These packages aim to modernise school facilities, update curricula, and strengthen the link between education providers and local businesses.
Health services for seniors
In response to demographic ageing and limited access to services in rural areas, the region mapped existing service gaps and piloted new approaches that combine health and social care at the community level. These pilots promote home- and community-based care, reduce reliance on institutionalisation, and strengthen coordination between healthcare providers, social workers, and municipalities, with the goal of enabling ageing in place and improving service efficiency.
Promoting the inclusion of Roma communities
CuRI has supported inclusive initiatives like the award-winning SPACE centres, which provide social support and community engagement. The centres were financially supported and established through the OP Human Resources and REACT-EU. While other regions (e.g. Prešov) built housing for Roma under CuRI, BBSK chose not to due to tight project timelines. However, housing remains a critical issue. Following this, BBSK and the World Bank began developing protocols for disaster response in marginalised communities.
Source: (World Bank Group, 2022[45])
Change in share of employment by economic activity (in percentage points), 2001-21
Source: OECD (2024[8]), OECD Regions, cities and local statistics, http://oe.cd/geostats (accessed on 25 October 2024).
R&D investment in Slovak regions, the Slovak Republic and OECD country average, 2019
Note: The total R&D personnel OECD country average refers to (28) OECD member countries for which data are available, including AUT, BEL, CHE, CHL, CZE, DEU, DNK, ESP, EST, FIN, GRC, HUN, IRL, ITA, JPN, KOR, LTU, LUX, LVA, NLD, POL, PRT, SVK, SVN, SWE and TUR. The total R&D expenditure OECD country average refers to (34) OECD member countries for which data are available and definitions comparable, including AUS, AUT, BEL, CAN, CHE, CHL, COL, CZE, DEU, DNK, ESP, EST, FIN, FRA, GBR, GRC, HUN, IRL, ISL, ITA, JPN, KOR, LTU, LUX, LVA, NLD, NOR, NZL, POL, PRT, SVK, SVN, SWE and TUR. The government R&D expenditure OECD country average (GBARD) refers to (31) OECD member countries for which data are available and definitions comparable, including BEL, CHE, CHL, COL, CZE, DEU, DNK, ESP, EST, FIN, FRA, GBR, GRC, HUN, IRL, ISL, ITA, KOR, LTU, LUX, LVA, MEX, NLD, NOR, POL, PRT, SVK (360 108), SVN, SWE, TUR and USA.
Source: OECD (2022[9]) and OECD Science, Technology and Innovation Database.
Population change (in %) by municipalities, 2011-21
Note: Only the names of cities with more than 5 000 inhabitants are displayed.
Source: Statistical Office of the Slovak Republic (2021[7]), “Population census 2021”, Number of population by sex in municipalities Banskobystrický kraj at 1. 1. 2021, https://data.statistics.sk/api/v2/dataset/om7006rr/om7006rr_obc/om7006rr_obd/om7006rr_ukaz/om7006rr_poh/om7006rr_vsk?lang=en (accessed on October 2024).; Statistical Offcie of the Slovak Republic (2011[46]), “The 2011 Population and housing census”, Resident Population by sex and age, by municipalities, 2011 Census, https://slovak.statistics.sk/wps/portal/ext/themes/demography/census/indicators/!ut/p/z1/lZHdjoIwEIWfxRegU35Ke1lYKZiKhQLr9sawG2NIBL0wGt_exhiTze6Ce-4m-c6c-UEGrZEZ2nO3a0_dYWj3tv4wZNNIRaMIc6DpEkOWSNWoeYXLCND7HYgFT_1QAlApAsh4Wpes8DzgHjKv-OEPcXjN_wREWFkgz3Xd0M (accessed on October 2024).
Projected population change from 2019 (in %), by age group, 2020-2100
Source: OECD calculations based on Eurostat (2021[23]), Population on 1st January by age, sex, type of projection and NUTS 3 region, https://ec.europa.eu/eurostat/databrowser/product/page/PROJ_19RP3 (accessed on October 2024).
Projected labour market tightness given evolution of net working-age population, 2022-2100 (2022=100)
Note: Labour market tightness is computed as the number of vacancies in 2022 divided by the projected working-age population in any given year. Tightness is normalised to the value in year 2022.
Source: OECD calculations based on Lightcast (n.d.[13]), Lightcast, https://lightcast.io/ (accessed on October 2024); Eurostat (2022[14]), EU Labour Force Survey, https://ec.europa.eu/eurostat/web/lfs (accessed on October 2024.
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← 1. OECD Population Regional Database accessed 19 June 2024. Information presented for the last available year (2023).
← 2. OECD Economy Regional Database accessed 19 June 2024. The GDP information is computed as USD per person, PPP converted, constant prices (2015) and presented for the last available year (2022).
← 3. OECD Regional Economy Database.
← 4. FDI accounted for only 2% of the country’s total FDI stock in 2019 (OECD, 2022[9]).
← 5. Tightness computed for Central Slovakia (TL2) as per data availability, referring to 2022. OECD calculations based on Lightcast and EU-LFS (2022).
← 6. OECD elaboration based on data provided by the Central Office of Labour, Social Affairs and Family, https;//www.upsvr.gov.sk/statistiky/nezamestnanost-mesacne-statistiky.html?page_id=1254
← 7. The social economy has been regulated in the Slovak Republic since 2018 by the Act on Social Economy and Social Enterprises, which established the framework for setting up social enterprises. In addition, the 2020 OECD Global Action “Promoting Social and Solidarity Economy Ecosystems” and the 2021 European Commission’s “Action Plan to Support the Social Economy” outline the measures to create favourable conditions for the social economy to realise its potential in driving fair, sustainable and inclusive growth.
← 8. OECD calculations based on 2023 population data from the Statistical Office of the Slovak Republic.
← 9. Eurostat (2021[20]), Demographic balances and indicators by type of projection and NUTS 3 region, https://ec.europa.eu/eurostat/databrowser/view/proj_19rdbi3/default/table?lang=e
← 10. The projected labour market tightness is computed relative to national averages and normalised to 2022 (2022=100) for all the regions in the project for which data are available Castilla y León (ES), Extremadura (ES), Norte (PT), Nord Vest (RO), Campania (IT), Central Slovakia (SK), Centre Val de Loire (FR) and Thessaly (EL).
← 11. Eurostat data demo_r_d2jan and demo_r_magec. The net migration rate is computed as the difference between (i) the population at the end of the year and (ii) the sum of the population at the beginning of the year and the natural change, divided by the population at the beginning of the year.
← 12. Since 2014, and the implementation of the SNA 2008 accountability system, Personal Income Tax (PIT) proceeds redistributed by the central government to subnational governments are no longer considered tax revenue in the form of a shared tax but considered as transfers. One reason for this change is that the shared revenue is not connected to the PIT generated in the territory of the regional and local governments. It explains the drop in ratios related to tax revenue since 2013.