Ease administrative and insolvency procedures for businesses. Overly burdensome and frequently changing regulation, coupled with lengthy and opaque insolvency procedures, are hampering business investment and productivity growth.
Actions taken: Some measures to simplify administrative procedures have been implemented, for example, electronic submission in civil courts for business matters. The competition authority intervened in several markets in 2017 to propose more competition friendly regulation.
Recommendations: Implement regulatory impact assessment to ensure regulations do not unnecessarily hamper market entry and competition. Increase transparency in public policy formulation. The competition authority should systematically review new legislation for barriers to competition. Insolvency procedures should be streamlined and effective reorganisation proceedings put in place. The time before formal closure should be reduced and market exit facilitated.
Improve outcomes and equity in education. A steady decline in PISA scores, continued low graduation rates from tertiary education, poor vocational training outcomes and high drop-out rates are leading to skills-mismatches and hampering employment and productivity growth.
Actions taken: A Digital Education Strategy for 2017-2020 has been adopted by the government to enhance digital literacy and usage, covering all levels of education from early school to adult learning.
Recommendations: Extend the period of compulsory secondary schooling to enhance general skills and promote equity in outcomes. Develop key performance indicators for vocational training institutes and embed apprenticeships better into the mainstream education. Stimulate the collaboration between higher education institutions in strategic areas. Integrate the use of ICT technology across most subject matters. Extend support to disadvantaged students in tertiary education.
Increase work incentives for the elderly. The labour market participation and employment rates for workers over 55 years of age remain below the EU average. Only 53.6% of the 55-64 age group are working, and incentives to remain in the labour market have been scarce in the past.
Actions taken: From 2019 social contribution taxes will no longer be charged for old-age pensioners who remain in the labour market, only the 15% personal income tax.
Recommendations: The statutory retirement age should be indexed to gains in life expectancy. Improve lifelong learning on the job through introducing individual training accounts. Allow for part-time work while drawing a partial pension for the over-55s. Better targeted job-search assistance and monitoring should be systematically implemented for older unemployed workers.
Reduce the tax-wedge on labour income. The average tax-wedge remains relatively high in international comparisons, especially for low-income workers.
Actions taken: Social security contributions were reduced for employers in 2017 and 2018, and will fall further in 2019, taking the total reduction to 9.5 percentage points since 2016. Families with two children will receive increased benefits in 2019.
Recommendations: The tax wedge on low wages could be further reduced by the introduction of an employment tax credit that declines as wages increase and an increase in the tax-free threshold amount. Shift the focus of taxation to less distortive taxes such as car-fuel use and property or land taxes.
1Increase female labour market participation. The participation rate for women after childbirth is very low by OECD standards, leaving out an important source of labour market supply and productivity growth.
Recommendations: Continue to expand the availability of childcare facilities for children below the age of three, and align opening hours with working hours. Create a voucher system from the parental leave benefits towards the purchase of childcare services. This can stimulate private sector provision of childcare. Improve incentives for working mothers to return to the labour market, such as part-time employment, and promote paternity leave.
