Economic Policy Reforms 2019

Slovak Republic

GDP per capita has been converging steadily towards the upper half of OECD countries, albeit at a slower pace since the crisis. The shortfall with respect to the best performing countries remains high, because of lagging productivity and low employment rates of older workers and young women.

Income distribution is relatively even compared to other advanced OECD countries. However, poverty is concentrated among marginalised Roma, who suffer from social and economic exclusion. Greenhouse gas emissions per capita remain well below the OECD average, but air pollution is high.

Some improvement has been achieved in the domain of public sector efficiency, thanks in particular to significantly better tax collection and the Value for Money initiative, which incorporates evidence-based analysis into policy making. Pre-school facilities continue to expand and free meals for children in their final year of nursery school were introduced.

Public sector efficiency remains weak and pursuing its reform should be a top priority. Particular attention should focus on reforms in education and health care. This should be accompanied by policies enhancing integration of women in the labour market and the social inclusion of Roma.

Growth performance, inequality and environment indicators: Slovak Republic

Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases; United Nations Framework Convention on Climate Change (UNFCCC) Database and International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases.

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Policy indicators: Slovak Republic

Source: Panel A: OECD, Family Database; Panel B: OECD, PISA Database.

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Beyond GDP per capita: Slovak Republic

Source: Panel A: OECD, Income Distribution Database, World Bank, World Development Indicators Database and China National Bureau of Statistics; Panel B: OECD, Environment Database.

Note: For the explanation of the sets of indicators above, please go to the metadata annex at the end of this chapter.

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Slovak Republic: Going for Growth 2019 priorities

Improve public sector efficiency. The Slovak Republic is underperforming in terms of public sector efficiency, which reduces the room of manoeuvre for both ensuring fiscal consolidation and financing growth-friendly measures.

• Actions taken: Tax collection has improved, especially for VAT. Additional action plan against tax evasion was adopted in 2017 with measures including more efficient auditing and online monitoring of transactions. Government spending on education, environment and labour market was also assessed thanks to the “Value-for-Money” initiative.

• Recommendations: Strengthen the Value for Money initiative, use the results to develop concrete proposals for efficiency improvements, and integrate them in medium-term fiscal planning. Continue to work with the ongoing Council of Europe project on judicial reform, and implement its suggestions, such as further court specialisation, more attention to ethics awareness among judges and more technical and legal support staff for them.

Improve funding, equity and effectiveness of the education system. The education system outcomes are weak in international comparison and are worsening.

• Actions taken: The government has committed to increase the salaries of teachers by 10% in January 2019 and 2020. The new legislation effective of November 2018 is introducing the Accreditation agency that is an independent public institution responsible for overseeing quality in tertiary education and is expected to follow ENQA (European Association for Quality Assurance in Higher Education) standards.

• Recommendations: Strengthen initial and continuing teacher training with a focus on methods to identify and address learning weaknesses. Provide more funding for disadvantaged schools, particularly for Roma teaching assistants and higher salaries for teachers teaching in disadvantaged schools. Introduce a graduate tracking system to improve the responsiveness of tertiary education to labour market needs.

Improve opportunities and outcomes for Roma population. The majority of Roma live in poverty and face social exclusion in almost every aspect of everyday life.

• Actions taken: Free meals for children in their final year of nursery school were introduced in 2019. New legislation that targets the misplacement of children in special schools has been approved in 2018.

• Recommendations: Develop statistics to monitor the effectiveness of support to the Roma. Raise pre-school attendance of the poor with conditional cash transfers. Encourage social diversity in classrooms and target more resources to disadvantaged schools. Increase the number of teaching assistants. Promote Roma access to health care by increasing support for trained Roma mediator programmes.

Reduce barriers to female labour market participation. Raising female labour market participation would foster economic growth and help counter the impact of population ageing.

• Actions taken: The government continues to expand provision of pre-school education and increased the funding for kindergartens, allowing more than 5 000 new kindergarten places to be created in 2018.

• Recommendations: Expansion of childcare facilities should be accompanied with the reduction of the length of parental leave by making the share of the parental allowance conditional on fathers taking part of the parental leave. The disincentives to work for second earners should be removed from the tax system.

1Improve the efficiency and outcomes of the Slovak health-care system. Slovak health outcomes remain poor compared with most other OECD countries.

• Recommendations: Phase in the diagnosis-related group-based hospital financing system. Further centralise hospital procurement, professionalise their management and decouple salaries from national average wage. Create regional one-stop shops with well-trained personnel to coordinate and simplify access to long-term care services.