Economic Survey of Slovenia 2011

 

OECD Economic Surveys: Slovenia 2011 | OECD Free preview | Powered by Keepeek Digital Asset Management Solution Click to READ

Slovenia has been deeply affected by the global crisis, but is now recovering gradually along with the rest of the OECD area. As Slovenia is a small open economy within the euro area, it is crucial for it to rapidly rebalance its economy and restore competitiveness. The proposed pension reform is a first step in the right direction to improve fiscal sustainability and boost labour supply. However, a further comprehensive pension reform is needed. To get closer to the technology and efficiency frontiers, reforms of the education system and policies to promote innovation, labour market flexibility and a friendlier environment for foreign direct investment (FDI) would be helpful.

A sustainable consolidation of public finances is necessary to maintain investor confidence. The fiscal targets of the government’s consolidation plan are appropriate, but all spending reductions planned through 2013 should be spelled out in full to foster market confidence, and additional measures should be considered if needed. The introduction of an expenditure rule and the establishment of a fiscal council are welcome, but the government should avoid inconsistency of macroeconomic forecasts by making the Institute of Macroeconomic Analysis and Development (IMAD) the only source of the macroeconomic assumptions used for the budget law, as was the case prior to summer 2010. As the proposed pension reform falls well short of expected financing needs by 2060, a further more comprehensive reform is needed to reduce the generosity of the pension system and move it to actuarial neutrality.


Slovenia recorded one of the deepest declines in GDP in the OECD in 2009

 

1. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
2. Real GDP per capita in US dollars at constant prices and constant purchasing power parities.
Source: OECD (2010), OECD National Accounts Statistics and OECD Economic Outlook: Statistics and Projections (databases), December. 

Download underlying data from: http://dx.doi.org/10.1787/888932369011

More resources should be shifted to tertiary education and spending efficiency should be enhanced at below upper-secondary education levels. Slovenia is the only OECD country where spending per student at the tertiary level is less than that at lower levels of education. Further resources need to be directed to tertiary education where there is room for substantial improvement in outcomes, including higher completion rates and shorter study durations. This could be achieved by introducing universal tuition fees in tandem with loans with income-contingent repayment. Also, savings could be gained by enhancing spending efficiency in early childhood and basic education, which are plagued by high costs due to low pupil–teacher ratios, small class sizes and high numbers of non–teaching staff. Merging schools and extending catchment areas, while taking into account other socio-economic considerations, could bring significant efficiency gains.

Productivity could be boosted by measures encouraging FDI. Greater reliance on foreign direct investment would improve efficiency and the industrial structure of the economy. Slovenia’s international attractiveness could be enhanced by easing employment protection, reducing the level of the minimum wage relative to the median wage and gearing innovation policies towards a demand-driven framework. Public ownership should be made more efficient through better governance and higher exposure to competition. It could also be rationalised by accelerating privatisation and turning the state-owned investment funds into portfolio investors. This would promote FDI, deepen Slovenia’s capital market and improve corporate governance. The authorities must ensure that the corporate governance of the remaining state-owned enterprises conforms to international standards of best practice, in which the recently created central ownership agency has to play a prominent role.

How to obtain this publication

The complete edition of the Economic Survey of Slovenia is available from:

 

Additional information

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

The OECD Secretariat's report was prepared by by Jeremy Lawson, Mehmet Eris and Rafal Kierzenkowski under the supervision of Pierre Beynet. Research assistance was provided by Desne Erb. The Survey also benefited from external consultancy work.

www.oecd.org/eco/surveys/slovenia

 

 

 

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