The main findings and recommendations from the 2014 OECD Economic Survey of the Slovak Republic

1. www.oecd.org/eco/surveys/economic-survey-slovak-republic.htm
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2014 OECD ECONOMIC SURVEY
OF SLOVAK REPUBLIC
For a strong inclusive growth in Slovakia
Bratislava, 5 November 2014

2. Main Findings
1. The recovery of Slovak GDP is one of the strongest in the euro area.
2. Economic activity in Bratislava is among the highest in Europe.
3. Eastern and central regions are not attractive enough for business.
4. The unemployed do not search for a job in other regions.
5. The efficiency and effectiveness of the public sector is low.
6. Fiscal consolidation has been successful, but more is needed to maintain sound
fiscal balances

3. Key Recommendations
1. Improve transport and innovation infrastructures throughout the
country.
2. Strengthen regional mobility by developing the rental housing market
3. Step-up training and job search assistance programmes in the eastern
and central regions.
4. Strengthen administrative capacities and reduce high turnover in the
public sector
5. Create fiscal room for bad times by avoiding overspending in good times

4. Main economic growth and fiscal challenges

5. Economic growth is becoming more balanced
• Private consumption and
investment are picking up
but exports remain an
important driver of growth
• The unemployment rate has
started to fall but is still high,
especially long-term
unemployment
• Wage growth is catching up
with productivity which
sustains private consumption

6. • The unemployment rate is one of the highest of the OECD.
• Two third of unemployed are long term unemployed, the highest share in the
OECD countries.
• Joblessness especially hurts the most vulnerable groups, such as the low-
skilled, the youth, and the Roma.
Low employment is holding back growth

7. Innovation is low
• Deep integration in the
global value chain has
raised productivity gains
• But the domestic value
added of exports is small
• Climbing the value chain
will help to make the
most of globalisation

8. The fiscal deficit is falling but the debt-to-GDP
ratio is still raising
• Slovakia exited from the excessive deficit procedure in June 2014.
• The deficit declined by 5 pp between 2009 and 2013
• More needs to be done to reduce the debt-to-GDP ratio in a growth-friendly way

9. The efficiency of tax collection is weak
• Eliminating value added tax (VAT) evasion would raise VAT revenues by more
than one half.
• Efforts to fight major tax evasion (e.g. «tax cobra» scheme) should be
strengthened and extended.

10. Reforming the public sector

11. e-government tools are underdeveloped
• Develop electronic public
services to increase the
scope for single contact
points and lower red tape
• Strengthen electronic
contract management
tools to enhance the
transparency of public
procurement

12. High staff turnover undermines administrative
capacities
• Disconnect the career
of civil servants from
the political cycle
• Expand the use of
strategic human
resource management

13. Regulation is not business friendly enough
• Ease the regulation in professional services and the retail sector
• Develop and improve the quality of regulatory impact assessment

14. More could be made out of EU funds
• Strengthen administrative and analytical capacities to manage EU funds.
• Avoid another end-of-period surge in the absorption of EU funds

15. A more balanced country

16. Regional disparity is high and increasing
• Regional inequality is one
of the highest of OECD
countries
• Regional inequality has
strongly increased during
the past two decades
• Western regions are
booming and eastern and
central regions are not

17. Low regional labour mobility fuels
unemployment
• Job seekers in lagging regions do not move to the booming west
• As a result, two-thirds of unemployed live in eastern and central regions where
job opportunities are low

18. Housing policies support home ownership
rather than rental housing
• Promote mobility by expanding a rental housing market (90% of Slovaks own
their house)
• Phase out public support to home ownership and expand the rental housing
allowance

19. Spending on training programmes is almost
non-existent
• Step-up spending on active labour market policies.
• Develop training programmes to improve the employability of the low-skilled,
39% of them being unemployed
• Give specific attention to lagging regions

20. Educational opportunities are highly unequal
• Improve educational outcomes of students with low socio-economic
backgrounds by expanding and promoting early childhood education
• Give specific attention to Roma children

21. Transport infrastructures and innovation are
weak
• Improve east-west transport connections to increase the attractiveness of eastern
and central regions for business.
• Strengthen support for innovation and business R&D to improve the capacities of
firms to adopt new technologies and to innovate

22. All main messages from the Survey

23. Key recommendations for reforming the
public sector
For a more efficient and effective public administration
• Establish better human resource management, modernise public
administration and strengthen horizontal and vertical co-ordination and
collaboration across government.
• Ensure that public procurement achieves the best value for money and
continue with measures fighting corruption, inter alia by guaranteeing
better transparency.
For a more efficient and effective regulatory environment for doing
business
• Reduce regulation in professional services and retail trade, strengthen
regulatory impact assessment.
• Strengthen the efficiency and independence of the judicial system.

24. Key recommendations for reforming the
public sector
For a more efficient and effective regulatory environment for doing
business
• Reduce regulation in professional services and retail trade, strengthen
regulatory impact assessment.
• Strengthen the efficiency and independence of the judicial system.
For a better use of EU funds
• Streamline administrative procedures and strengthen capacities to manage
EU funds.
• Provide the poorer regions with a higher share of EU funds and a stronger
role in the design of programmes. Build capacity for more evidence-based
decision making.
For better local services delivery
• Encourage joint public service delivery for small municipalities and
strengthen the revenue raising power and spending responsibility of viable
local governments.

25. Key recommendations for spurring growth in
lagging regions
Strengthen mobility and employability to reduce unemployed and
inactive labor
• To develop the rental housing market, phase out support to home
ownership and expand means-tested rental housing allowances.
• Develop training as well as job-search support and phase out public works
programmes.
• Make sure minimum wages and legal extension are implemented without
damaging employment prospects, especially in lagging regions.
Reduce skills mismatch and better integrate Roma population
• Implement a dual vocational education and training system and give
specific attention to school-to-job transition in eastern regions.
• Develop the provision and quality of early childhood education and ensure
wide access to low socio-economic background children, especially Roma
children.

26. Key recommendations for spurring growth in
lagging regions
Boost the capacity to adopt new technology and reduce transport barriers
• Develop professional tertiary education and support for co-operation with
employers.
• Provide financial incentives for adopting new technology and innovation
spending.
• Improve national road and rail transport infrastructure and international
connections.

27. More Information…
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OECD Economic Surveys: United States 2014
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