As in other catch-up countries inflation is likely to stay high going forward due to nominal
convergence. To better cope with the risk of a too rapid pick up of wages during the convergence process
on the one hand and to raise the adjustment potential of the economy to macroeconomic shocks on the
other, labour and product market flexibility is essential. Three main areas for improvement are discussed in
this chapter. First, wage flexibility should be safeguarded by avoiding significant increases in minimum
wages and by abolishing legal extension of collective wage settlements. Second, competition needs to be
strengthened, especially in the liberal professions where entry and conduct regulation should be eased. In
addition, the points of single contact that already exist for small enterprises should be extended to
entrepreneurs of the liberal professions. Third, a wider use of information and communication technology
(ICT) could lead to important productivity gains. Removing obstacles to the spread of e-business and a
swift implementation of e-government are imperative.
This Working Paper relates to the 2009 OECD Economic Survey of the Slovak Republic.
