Facilitate full-time labour force participation of both parents throughout the country. The reconciliation of full-time work and parental responsibilities is hindered by a lack of childcare infrastructure, in particular in remote areas, and adverse tax incentives.
Actions taken: The “Education Investment Law”, adopted in 2017, will provide another EUR 750 million for the expansion of full-day schooling until 2033.
Recommendations: Boost government investment in high-quality childcare facilities. Enhance the availability of full-day schools and care centres as envisaged. Consider introducing legal entitlements to these services. Reduce the implicit taxation of shifting from part-time to full-time employment to reduce barriers to female full-time work and replace the sole-earner tax deduction by targeted transfers to families in need.
Lower marginal tax rates on labour income. High effective marginal tax rates, especially at low income levels, undermine work incentives.
Actions taken: Payroll taxes have been cut progressively in 2016-2018. Employers’ contribution to the Family Burdens Equalisation Fund was reduced by 0.4 percentage point in 2017 and by another 0.2 percentage point in 2018.
Recommendations: Reduce the labour tax wedge further, notably by lowering employer and employee social security contributions. To ensure budget-neutrality, this could be financed by a broadening of the tax base and by increases in consumption, environmental and recurrent property taxes.
Reduce incentives to exit early from the labour force. The effective retirement age remains low, in particular for women, and subsidised avenues to early retirement still exist.
Actions taken: No new action taken. The statutory retirement age for women born after January 1964 will be raised successively to 65 year in six-month steps per year over 2024 to 2033.
Recommendations: Align the official retirement age for women to that for men. Eliminate all remaining subsidised avenues to early retirement. Tighten eligibility criteria for disability pensions for those born before 1964 and help partially disabled workers to better use their work capacity. Reflect changes in life expectancy more directly in the parameters of the pension system.
Reduce barriers to competition in professional services and retail trade. Restrictive regulations in many services hinder competition and productivity growth.
Actions taken: An amendment to the competition law in 2017 strengthened the National Competition Authority’s powers of inspection. A new law, passed in September 2017, facilitates the entry to legal and accounting professions by reducing the length of the examination process. A 2017 amendment to the trade law reduces the number of partially regulated professions. Since May 2018, the new digital business license allows for more flexible and faster activation of authorisations to do business.
Recommendations: Continue to ease entry to retail trade and liberal professions to allow for more competition, without reducing high quality standards and consumer protection.
Improve equity and outcomes in tertiary education. Increase tertiary graduation rates and make educational outcomes less dependent on socio-economic backgrounds to promote inclusive growth.
Actions taken: The 2018 amendment to the University Act introduced the possibility of holding back 0.5% of a university's budget if measures to improve social cohesion are considered insufficient. Further, the amendment will ensure additional funding for Universities of Applied Sciences to increase their capacities for an additional of 2 300 new students across all fields by 2024. Degree programmes with higher shares of STEM related subjects will receive higher funding allocations.
Recommendations: Allow universities to re-introduce general tuition fees in order to finance quality improvements in the provision of tertiary education. Accompany such fees by a comprehensive grant and income-contingent student loan system to avoid socio-economic segregation.
