COMMISSION STAFF WORKING DOCUMENT Country Report Slovakia 2018 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2018 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011
Date: 2018-03-07
Institutions: European Commission, Secretariat-General
Subjects: Slovakia, economic situation, education, investment, labour market, macroeconomics, public finance, social policy, structural adjustment, tax system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 7.3.2018 SWD(2018) 223 final  COMMISSION STAFF WORKING DOCUMENT Country Report Slovakia 2018 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2018 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011 {COM(2018) 120 final}   
 
 
CONTENTS 

Executive summary 

1.  Economic situation and outlook 

2.  Progress with country-specific recommendations 

3.  Reform priorities 

3.1.  Public finances and taxation 

3.2.  Financial sector 

3.3.  Labour market, education and social policies 

3.4.   Investment 

3.5.   Sectoral policies 

Annex A: Overview Table 

Annex B: MIP Scoreboard 

Annex C: Standard Tables 

References 

LIST OF TABLES 

Table 1.1: 

Key economic and financial indicators 

Table 2.1: 

Summary table on 2017 CSR assessment 

Table 3.3.1:  ALMP expenditure by type of actions (% of GDP, 2015) 

Table B.1: 

MIP Scoreboard (AMR 2018) 

Table C.1: 

Financial market indicators 

Table C.2: 

Headline Social Scoreboard Indicators 

Table C.3: 

Labour market and education indicators 

Table C.4: 

Social inclusion and health indicators 

Table C.5: 

Product market performance and policy indicators 

Table C.6: 

Green Growth 

LIST OF GRAPHS 

Graph 1.1: 

Real GDP and its components 

Graph 1.2:  GNI per person in purchasing power standards (PPS) as a share of EU-28 

1 

4 

11 

16 

16 

20 

22 

31 

38 

42 

47 

48 

54 

10 

13 

25 

47 

48 

49 

50 

51 

52 

53 

4 

5 

 
 
 
 
 
Graph 1.3: 

Investment 

Graph 1.4: 

Exports, REER and productivity 

Graph 1.5: 

Current account balance 

Graph 1.6: 

Unemployment and activity 

Graph 1.7: 

Labour shortages (% of respondents) 

Graph 1.8: 

Inflation (y-o-y in %) 

Graph 1.9: 

Loans to sectors (y-o-y in %) 

Graph 1.10:  Nominal house prices 

Graph 2.1:  Overall multiannual implementation of 2011-2017 CSRs to date 

Graph 3.1.1:  VAT compliance gap (2011-2015) 

Graph 3.2.1:  House prices and mortgage lending 

Graph 3.2.2:  Housing market overvaluation gap 

Graph 3.2.3:  Housing investment indicators 

Graph 3.3.1:  Unemployment duration (2016) 

Graph 3.3.2:  Employment rate by age and education level (2016) 

Graph 3.3.3:  Employment rate by gender and age (2016) 

Graph 3.3.4:  At-risk-of-poverty gap (2016) 

Graph 3.3.5:  PISA 2015 results by language spoken at home (in PISA score points) 

Graph 3.4.1:  Perceived judicial independence (2016-17) 

Graph 3.5.1:  RDI investment by sector 

LIST OF BOXES 

Box 2.1: Tangible results delivered through EU support to structural change in Slovakia 

Box 2.1: Policy Highlights: The 'Value for Money' Project 

Box 3.3.1: Monitoring performance in light of the European Pillar of Social Rights 

Box 3.4.1: Investment challenges and reforms in Slovakia 

5 

6 

7 

7 

8 

8 

9 

9 

11 

16 

20 

20 

21 

22 

24 

24 

27 

28 

36 

38 

14 
15 
23 
37 

 
 
 
 
 
EXECUTIVE SUMMARY 

to 

Slovakia's positive economic developments offer 
a  chance 
tackle  remaining  structural 
challenges  and  raise  its  growth  potential. (1) 
Addressing  long-standing  weaknesses  in  the  areas 
of  labour  market  inclusion,  education,  healthcare, 
public administration and corruption could prove a 
transformative 
in  utilising  Slovakia's 
productive  potential  and  public  funds  in  the  best 
possible  way.  Concerted  policy  efforts  may  also 
shield the economy from a potential slowdown and 
support 
the  economy, 
allowing it to move up the value chain.  

the  diversification  of 

step 

Slovakia's  economic  expansion  continues  at  a 
swift  pace.  According  to  the  latest  Commission 
forecast,  real  GDP  is  projected  to  have  increased 
by 3.4 % in 2017 due to solid household spending 
growth  amidst  a  strong  labour  market  recovery. 
Investment  activity  recovered  slightly  in  2017 
from  the  low  level  of  the  previous  year  but  failed 
to  make  a  sizeable  contribution  to  growth.  Real 
GDP growth is expected to reach 4 % in 2018 and 
4.2% in 2019. Accelerating private consumption is 
set  to  remain  the  strongest  driver  of  growth  for 
both  years,  buttressed  by  rising  employment  and 
robust wage growth. Both private and government 
fixed investment is likely to accelerate markedly in 
2018  and 2019.  External  demand  is also  expected 
to  act  as  an  increasingly  important  source  of 
economic  growth,  partly  owing  to  expanding 
production 
the 
manufacturing sector. 

facilities 

export 

and 

in 

and 

The  labour  market  witnessed  further  positive 
developments.  The  employment  rate  rose  to 
71.2 % 
the 
(third  quarter  of  2017) 
unemployment  rate  fell  to  8.1 %  in  2017.  Further 
improvements in the labour market are expected in 
the  medium 
long-term 
unemployment  and  limited  job  opportunities  for 
disadvantaged  groups,  low  internal  mobility  and 
the  western  region 
large  disparities  between 
around  Bratislava  and  the  east  of  the  country 
continue  to  hamper  economic  development.  The 
tightening of the labour market is accompanied by 

term.  However, 

(1)  This report assesses Slovakia’s economy in the light of the 
European Commission’s Annual Growth Survey published 
on 22 November 2017. In the survey, the Commission calls 
on  EU  Member  States  to  implement  reforms  to  make  the 
European  economy  more  productive, 
resilient  and 
inclusive.  In  doing  so,  Member  States  should  focus  their 
efforts  on  the  three  elements  of  the  virtuous  triangle  of 
economic policy - boosting investment, pursuing structural 
reforms and ensuring responsible fiscal policies. 

1 

shortages  of  skilled  labour  in  some  sectors  of  the 
economy.  Poor 
and 
inequalities  based  on  socioeconomic  background 
are major obstacles for inclusive growth.  

educational  outcomes 

in 

Developments 
the  wider  economy  are 
generally  favourable.  As  economic  growth  is 
expected  to  remain  well  above  the  EU  average, 
Slovakia's income convergence process is expected 
to  resume.  However,  some  regions  have  failed  to 
attract  major  investment,  which  has  exacerbated 
regional  disparities  in  many  economic  and  social 
areas.  Although  consumer  price  inflation  is  set  to 
increase,  sizeable  wage  increases  are  expected  to 
ensure  a  rise  in  real  wages  and  real  disposable 
household  incomes.  Growth  in  house  prices  has 
picked  up  in  the  context  of  low  interest  rates  and 
limited  housing  supply.  However,  there  are  no 
signs yet of the housing market being overvalued. 
Fiscal  consolidation  is  set  to  continue,  supported 
by  a  favourable  economic  environment.  In  2018 
the  government  deficit  is  projected  to  fall  to 
around -1 % of GDP and the debt-to-GDP ratio is 
projected to decline to below 50% of GDP. 

Slovakia has made some progress in addressing 
the  2017  country-specific  recommendations. 
Some  progress  has  been  made  in  a  number  of 
policy  areas,  including  on  improving  the  cost-
effectiveness  of  the  healthcare  system,  improving 
activation  measures  for  disadvantaged  groups, 
enhancing  employment  opportunities  for  women, 
and  adopting  and  implementing  a  comprehensive 
plan 
lower  administrative  and  regulatory 
barriers  for  businesses.  Only  limited  progress  has 
been  made  in  improving  the  quality  of  education, 
increasing the participation of Roma in education, 
improving  competition  and transparency  in  public 
procurement, and in improving the effectiveness of 
the justice system. No progress has been achieved 
in stepping up the fight against corruption. 

to 

Regarding  the  national  targets  under  the  Europe 
2020  strategy,  Slovakia  currently  meets,  or  is  on 
track  towards  meeting,  the  prospective  targets  for 
the  employment  rate,  greenhouse  gas  emissions, 
renewable  energy  use,  energy  efficiency  and 
reducing  the  number  of  people  at  risk  of  poverty 
and  social  exclusion.  While  a  sufficient  reduction 
in  the  early  school  leaving  rate  appears  to  be 
attainable  by  2020,  the  indicator  has  deteriorated 
recently  and  continued  action  is  needed  to  reach 
the targets. The distance to the targets for Research 

 
 
                                                           
Executive summary 

and  Development  (R&D)  intensity  and  tertiary 
education 
is 
progressively  narrowing 
latter  case, 
sustained effort is needed to attain the R&D target 
again.  

remains  significant,  but  while 
in 

the 

Slovakia  faces  challenges  with  regard  to  a 
number  of  indicators  of  the  Social  Scoreboard 
supporting the European Pillar of Social Rights. 
Whilst  the  high  economic  growth  has  translated 
into  a  significant  improvement  of  employment 
outcomes,  challenges  in  areas  such  as  childcare, 
active  labour  market  policies  and  social  transfers 
are apparent. Large gender disparities in the labour 
market  persist.  Access  to  inclusive  education  and 
social  housing  is  limited.  On  the  positive  side, 
income  inequality  remains  very  low  and  poverty 
rates are decreasing. 

Key structural issues analysed in this report, which 
to  particular  challenges  for  Slovakia's 
point 
economy, are the following: 

  Fiscal  revenues  are 

increasing  and  tax 
compliance  has  improved  but  a  large  VAT 
gap  persists.  In  light  of  persistent  issues 
further  anti-fraud  measures  are  planned  for 
2018.  While  fiscal  incentives  promoting  R&D 
were  increased,  property  taxation  remains  a 
weak 
revenue  source.  The  medium-term 
budgeting framework is weakened by a largely 
cash-based  state  budget  management  system. 
Public  spending  reviews  are  nevertheless 
proving  powerful  tools  for  raising  spending 
efficiency and effectiveness. 

  Long-term  sustainability  challenges  stem 
from  the  pension  and  healthcare  systems 
despite  reforms.  Automatic  increases  in  the 
pension age will mitigate the impact of adverse 
demographic  trends.  The  cost-effectiveness  of 
the healthcare system is improving, but from a 
low  level.  A  public  e-health  system  has  been 
introduced  after  long  delays  but  limitations  in 
terms  of  basic 
functionalities  and  user-
friendliness may hinder its use. A pilot project 
for  a  diagnosis-linked  funding  system  for 
healthcare  providers  was  launched  in  2017. 
to  rationalise  hospital  care 
While  action 
streamlined, 
continues,  plans 
integrated care centres have not advanced. 

create 

to 

  Structural 

labour  market  weaknesses 
persist. In light of consistently high long-term 
unemployment  and  increasing  skill  shortages, 
Slovakia  has  started  implementing  the  action 
plan  for  the  integration  of  the  long-term 
unemployed focusing on personalised services. 
However,  the  rate  of  participation  in  active 
labour  market  policies  is  still  low  and  their 
upskilling  component  remains  limited.  Low-
skilled  workers,  the  Roma  community  and 
young  people  continue  to  face  high  levels  of 
unemployment,  amplified  by  high  regional 
disparities.  The  gender  employment  gap 
remains  high,  with  women's  employment 
opportunities 
care 
conflicting 
responsibilities.  Efforts  are  being  made  to 
improve access to childcare through investment 
from EU funds, but quality and affordable care, 
in particular for children under the age of 3, are 
still  lacking.  Labour  market  improvements 
contributed  to  the  decrease  in  the  risk  of 
poverty or social exclusion but the intensity of 
poverty  is  relatively  high  and  not  addressed 
sufficiently  by  social 
inclusion  measures. 
Social  housing  remains  underdeveloped  and 
eligibility  criteria  for  receiving  unemployment 
benefits are strict.  

with 

Despite 

concern. 

level  of 

  Reforms  are  taking  place  in  the  education 
and  training  systems,  but  the  quality  and 
equity  of  educational  outcomes  remain  of 
significant 
some 
improvements,  low  pay  for  teachers  limits  the 
attractiveness  of 
the  profession.  Student 
performance in basic skills is weak and shows 
a  high 
low 
achievement  strongly  linked  to  socioeconomic 
background.  Regional  disparities  are  large, 
particularly  affecting  the  Roma  community. 
There  is  also  insufficient  inclusion  of  Roma 
children  into  mainstream  education  in  light  of 
their  over-representation  in  special  schools, 
with  no  recent  progress  visible.  Education 
continues  to  be  relatively  underfunded  at  all 
levels  and  adult  participation 
life-long 
learning activities is still very low. 

inequality,  with 

in 

  The  overall  outlook  for  public  and  private 
investment  is  favourable  but  barriers  to 
investment persist. Rising labour shortages in 
some of Slovakia's key sectors represent a large 
obstacle  to  raising  investment  and  production 

2 

 
 
Executive summary 

levels.  Corruption,  complex  administrative 
procedures,  fast-changing  regulations  and  the 
poor quality of regulatory bodies weigh on the 
the 
business  environment.  Concerns  over 
ineffectiveness  of  the  justice  system  also  hold 
back investment. 

to 
framework  and 

  Slovakia's  public  administration  shows  a 
mix  of  progress  and  continued  challenges. 
improve 
Steps  have  been 
the 
taken 
insolvency 
the  use  of 
regulatory  impact  assessments.  The  new  Civil 
Service Act is showing its first results thanks to 
the  modernisation  of  public  human  resource 
management.  However,  corruption  perceptions 
remain high and prosecutions for such offences 
have  fallen  further.  The  lack  of  accountability 
in  bodies  tasked  with  fighting  corruption  and 
only  moderately  effective  whistle-blower 
protection  hinder  the  fight  against  corruption. 
is  being 
Public  procurement 
modernised,  but  anti-competitive  practices 
remain a problem. Courts are managing to deal 
better  with  their  caseload, but concerns  persist 
over the independence of the judiciary. 

legislation 

  Boosting  innovation  and  resource  efficiency 
can  ease  the  transition  to  a  knowledge-
based,  greener  and  more  diversified 
economy. However, total R&D investment fell 
in  2016  and  business  R&D  intensity  remains 
very  low.  The  governing  framework  for  R&D 
policy  is  weak  and  measures  to  improve  the 
cooperation  between  businesses  and  academia 
are advancing only slowly. The lack of skilled 
workers 
information  and 
communications  technology  sector  is  being 
addressed  via  a  'digital  coalition'  initiative. 
Meanwhile, 
roll-out  of  e-government 
services  is  proceeding  slowly.  The  services 
sector  is  highly  regulated  and  the  framework 
does not appear to function effectively. Energy 
efficiency  is  low  and  the  use  of  landfills  is 
excessive. Recycling rates are very low and air 
quality remains relatively poor. 

the  sizeable 

the 

in 

3 

 
 
 
1. Economic situation and outlook 

1.  ECONOMIC SITUATION AND OUTLOOK 

and 

investment 

fixed 
increasingly  positive 
contributions  from  net  trade,  bringing  real  GDP 
growth to 4 % in 2018 and 4.2 % in 2019. Strong 
economic  growth  is  likely  to  feed  through  to  all 
segments  of  the  economy,  including  the  buoyant 
housing  market.  However,  a  shrinking  supply  of 
skilled  workers,  coupled  with  rising  demand  for 
labour,  is  likely  to  become  a  potential  bottleneck 
for the Slovak economy. 

Real  economic  convergence  stalled  in  recent 
years  despite  robust  growth.  Real  GDP  per 
person  based  on  purchasing  power  climbed  to 
77 %  of  the  EU  average  in  2014,  and  has  since 
remained  broadly  steady  at  this  level.  A  similar 
picture  emerges  when  looking  at  gross  national 
income (GNI). Slovakia’s relative GNI per person 
has  remained  broadly  stable  since  2013  at  around 
76 %  of  the  EU-28  average,  as  more  favourable 
developments  in  nominal  GNI  per  capita  growth 
were  offset  by  faster  price  level  convergence  in 
(Graph 1.2) (2).  However,  economic 
Slovakia 
growth in Slovakia is expected to strengthen in the 
coming  years  and  remain  well  above  the  EU 
average.  This  increases  the  chances  of  Slovakia’s 
income  convergence  resuming.  Equally,  potential 
growth  rates  are  estimated  to  remain  high  at 
around 3 % per year over the medium term. This is 
mainly  supported  by  total  factor  productivity 
growth,  capital  investment,  and  an  increasing 
number of employees. 

(2)  In economies such as Slovakia, which have high stocks of 
foreign investment and significant dividend outflows, GNI 
is  arguably  a  more  appropriate  measure  of  domestic 
income available for consumption and investment. 

Growth performance 

Economic  growth  in  Slovakia  has  remained 
in  recent  years,  showing  substantial 
solid 
improvements  in  the  labour  market  but  a 
somewhat  uneven  pattern  in  investment.  After 
picking  up  strongly  in  2015,  growth  in  real  GDP 
softened modestly to 3.3 % in 2016 on the back of 
a  sharp  downturn  in  total  investment  (Graph 1.1). 
This cyclical investment pattern was closely linked 
to the transition between the programming periods 
of  EU  funds.  At  the  same  time,  the  high  import 
intensity of fixed investment meant that declines in 
investment  held  back  import  growth  in  2016. 
Coupled  with  a  solid  rise  in  exports,  this  resulted 
in net trade contributing strongly to overall growth. 
Continued 
labour  market 
conditions  strengthened  private  spending,  with 
household  budgets  benefiting  from  faster  nominal 
wage  growth  and  subdued  dynamics  in  consumer 
prices throughout 2016. 

improvements 

in 

Graph 1.1: 

Real GDP and its components 

Source: European Commission 

Real GDP continued to grow at a robust pace of 
3.4 %  in  2017  and  it  is  expected  to  strengthen 
further,  led  by  private  consumption.  Growth  in 
household spending is projected to have increased 
to  3.6 %  in  2017,  boosted  by  rising  employment, 
solid increases in real wages, low credit costs and 
upbeat  consumer  sentiment.  These  factors  will 
make  private  consumption  a  major  contributor  to 
overall  growth  in  2017  and  beyond.  Economic 
growth is also expected to benefit from a revival in 

4 

-3-2-101234562013201420152016201720182019Percentage change and pointsInventories and errorsNet exportsInvestmentGovernment consumptionPrivate consumptionReal GDPforecast 
 
 
                                                           
Graph 1.2:  GNI per person in purchasing power standards 

(PPS) as a share of EU-28 

Source: European Commission 

Household consumption 

Private  consumption  is  expected  to  remain  the 
main  driver  of  growth  in  the  coming  years, 
backed  by  a  strong  labour  market  and  low 
credit  costs.  Continued  improvements  in  labour 
market conditions, such as further job creation and 
a lower risk of lay-offs are set to secure household 
incomes.  Given  the  progressive  tightening  of  the 
labour market, nominal wage growth is expected to 
gradually 
the  forecast  period. 
Although  reviving  consumer  inflation  will  lower 
real disposable income, real wages are projected to 
rise by some 3 % per year, which will significantly 
strengthen  household  budgets.  Historically  low 
interest  rates  and  a  favourable  economic  climate 
are  also  set  to  boost  private  spending,  which  is 
projected  to  maintain  robust  annual  growth  of 
more than 3 % over the forecast period. 

increase  over 

Investment 

Investment  is  likely  to  peak  in  2018  and 
maintain a solid pace thereafter, driven by both 
private  and  public  investment  spending.  Fixed 
investment  probably  increased  by  1 %  in  2017, 
after  contracting  sharply  at  the  beginning  of  the 
current  programming  period  of  EU  funds  in  2016 
(Graph 1.3). The pronounced investment swings of 
2015  and  2016  show  that  EU-funded  projects  are 
an important driving force for investment activities 
in  Slovakia,  while  projects  in  the  current  funding 

1. Economic situation and outlook 

period  are  in  the  early  stages  of  implementation. 
Booming  investment  in  the  automotive  industry 
and  an  expected  increase  in  public  investment 
spending,  including  major  infrastructure  projects 
such  as  the  Bratislava  ring  road,  invigorate  the 
investment  outlook.  The  completion  of  a  new  car 
factory  is  expected  to  result  in  annual  investment 
growth  peaking  at  around  6 %  in  2018.  At  the 
same  time,  possible  delays  in  large  infrastructure 
projects  due  to  litigation,  along  with  a  relatively 
slow  drawdown  of  EU  investment  funds,  could 
dampen the investment rebound in the near term. 

Graph 1.3: 

Investment 

Source: European Commission 

While  foreign  direct  investment  (FDI)  inflows 
remain  strong,  overall  investment  activity  is 
spread  unevenly  across  the  country.  Slovakia’s 
economy  has  enjoyed  steady  net  inflows  of  FDI, 
which  have  flowed  especially  into  the  automotive 
sector over the past 15 years. While typically such 
flows are somewhat volatile, gross inflows of FDI 
remained strong in 2016 and the first half of 2017 
at  above  5 %  of  GDP  on  an  annual  average. 
However,  rising  FDI  outflows  from  Slovakia  in 
recent  years  have  reduced  the  country’s  net  FDI 
stock to around 48 % of GDP in 2016. At the same 
time,  some  regions  have  failed  to  attract  major 
domestic  or  foreign  investment  in  recent  years, 
which  has  exacerbated  the  already  high  regional 
disparities  present  in  many  economic  and  social 
areas.  

Regional  economic  disparities  are  high.  Real 
GDP per person was more than three times higher 

5 

40%50%60%70%80%90%1998199920002001200220032004200520062007200820092010201120122013201420152016Czech RepublicHungaryPolandSlovakia60708090100110120130140Q1-08Q1-09Q1-10Q1-11Q1-12Q1-13Q1-14Q1-15Q1-16Q1-17Index (2008-Q1 = 100)Total investmentOther constructionMachinery 
 
 
1. Economic situation and outlook 

foreign demand, annual export growth is expected 
to gradually increase to around 7 % in 2019, in line 
with  the  gradual  start  of  production  in  new  and 
upgraded car factories (Graph 1.5). 

Graph 1.4: 

Exports, REER and productivity 

4QMA - four quarters moving average 
REER - real effective exchange rate 
Source: European Commission 

The  current  account  balance  is  expected  to 
remain  negative  in  2017,  reflecting  elevated 
imports  for  investment  and  a  deteriorating 
income  balance.  The  Slovak  current  account 
recorded  a  surplus  between  2012  and  2015  but  a 
shrinking  trade  surplus  caused  it  to  return  to 
negative  territory  in  2015,  as  investment-related 
imports surged. The current large investments into 
the automotive industry are likely to keep imports 
high  and  the  trade  balance  depressed  in  2017  and 
2018.  The 
income  balance  has 
deteriorated  since  2015,  mainly  on  the  back  of 
elevated  dividend  outflows  from  foreign  direct 
investment operations in Slovakia. 

primary 

that 

between 
is 

in  the  Bratislava  region  than in  the  eastern  region 
in  2015,  although  this  may  be  distorted  by  the 
large share of commuters and neglect the differing 
regions.  Transport 
levels 
price 
infrastructure 
inadequate  or  missing 
represents,  besides  weaker  human  capital,  one  of 
the  main  reasons  why  the  central  and  eastern 
regions are neglected by foreign investors (see also 
2017  Country  Report,  European  Commission 
2017a).  The  unemployment  rate  remained  high  in 
these parts of Slovakia, while businesses face acute 
labour shortages in the western region. 

Export performance 

Slovakia’s net trade is set to strengthen thanks 
to an increase in foreign demand and expanded 
production  capacities  in  the  automotive  sector. 
Export growth is expected to rise gradually in the 
coming  years,  following  a  moderate  slowdown  in 
2017.  New  car  production  facilities  are  about  to 
launch  production  over 
the  course  of  2018, 
boosting  Slovakia’s  production  and  export 
capacities.  This  implies  there  will  be  a  boost  to 
export  performance  with  robust  foreign  demand. 
Imports  are  likely  to  increase  markedly  over  the 
forecast  period  due 
to  buoyant  exports  and 
investment,  both  of  which  are  relatively  import-
to 
intensive.  In  2019,  exports  are  projected 
outperform  imports  even  more  strongly,  as  the 
latter  are  somewhat  restrained  by  the  softening  in 
investment growth. This would make net trade the 
second largest contributor to overall growth. At the 
same time, strong specialisation in the automotive 
sector  leaves  the  Slovak  economy  exposed  to  the 
risk of global economic fluctuations. 

The  boost  to  manufacturing  technology  and 
labour  productivity  is  expected  to  more  than 
offset  the  recent  rise  in  the  real  effective 
exchange  rate.  The  strengthening  of  the  euro  in 
2017,  coupled  with  the  recovery  in  inflation  and 
solid  wage  growth  in  Slovakia,  slightly  dampens 
the affordability of Slovak exports on international 
markets.  However,  strong  private  investment  and 
the related upgrade of manufacturing technologies, 
particularly  in  the  automotive  sector,  promote 
labour productivity, boost added value and support 
export  performance.  Slovakia’s  export  market 
shares rose by 5.1 % in 2016, still buttressed by the 
real effective exchange rate (REER) weakening in 
2015,  and  are  projected  to  have  moderately 
increased  also  in  2017.  Benefiting  from  strong 

6 

-4-2024681012Q1-12Q3-12Q1-13Q3-13Q1-14Q3-14Q1-15Q3-15Q1-16Q3-16Q1-17Q3-17Q1-18Q3-18Q1-19Q3-19% change (y-o-y)Exports (4QMA)REERProductivityforecast 
 
1. Economic situation and outlook 

Graph 1.5:  Current account balance 

forecast  period,  thereby  supporting  households’ 
real disposable income and private spending. 

Graph 1.6: 

Unemployment and activity 

Source: European Commission 

Rises  in  the  activity  rate  and  inflow  of  foreign 
workers  are  unlikely  to  fully  meet  the  growing 
demand  for  skilled  labour.  The  progressive 
tightening of the labour market is also reflected in 
greater  inflows  of  foreign  workers  from  EU  and 
non-EU countries. Although the overall proportion 
of foreign labour in total employment remains low, 
it  has  increased  significantly  in  some  regions, 
especially  in  areas  that  are  major  centres  of 
production.  This  phenomenon  is relatively  new  in 
Slovakia  and  suggests  that  supportive  policies  to 
accommodate  the  change  and  promote  social 
cohesion  are  needed.  Reported  labour  shortages 
have surged across sectors in 2017, dwarfing their 
the  financial  crisis  (Graph  1.7). 
rise  before 
Insufficient  supply  of  skilled  workers  is  seen  as 
one  of  the  most  pressing  issues  for  businesses  in 
Slovakia,  as  it  forms  a  major  barrier  to  further 
investment  and  economic  expansion.  At  the  same 
time,  still-elevated  long-term  unemployment,  as 
well  as  low  employment  rates  for  certain  groups, 
remain  both  a  social  challenge  and  an  untapped 
resource. 

Source: European Commission 

Labour market and social situation 

The  robust  economic  recovery  is bolstering the 
labour  market.  Employment  reached  a  record 
high  of  2.5  million  in  Q3-2017  and  is  set  to 
increase further. The unemployment rate has been 
declining  continually  since  2013.  It  dropped  to  a 
record  low  of  8.1 %  in  2017  (Graph 1.6)  and  is 
expected to fall further to below 7 % in 2019. Also 
the  activity  rate  is  set  to  increase  gradually  as 
employment  prospects  for  previously  inactive 
people  improve.  The  tightening  of  the  labour 
market  along  with  increasing  labour  shortages  in 
some sectors and regions is bound to exert upward 
pressure  on  nominal  wages,  particularly  in  an 
environment of reviving consumer prices. 

Nominal wage growth is projected to increase to 
around  5 %  but  remains  in  line  with  strong 
fundamentals.  In  2017,  nominal  wages  are 
to  have  risen  by  4.0 %,  outpacing 
forecast 
productivity  growth  and  causing  nominal  unit 
labour  costs  to  accelerate  from  growth  of  below 
1 %  in  2016  to  2.3 %  in  2017.  Overall,  in  2017 
there  is  no  big  gap  between  actual  nominal  wage 
growth and the growth rate that could be predicted 
fundamentals,  such  as 
based  on  economic 
developments 
in  prices,  unemployment  and 
productivity.  As  of  2018  the  minimum  wage  was 
increased to EUR 480. Real wage growth is set to 
maintain a solid pace of around 3 % throughout the 

7 

-14-12-10-8-6-4-20246899'00'01'02'03'04050607080910111213141516% of GDPCapital account (KA)Secondary income balancePrimary income balance  Trade balance - services  Trade balance - goodsTrade balanceCurrent account balance (CA)Net lending/borrowing (CA+KA)74.575.075.576.076.577.077.578910111213141516Q1-08Q4-08Q3-09Q2-10Q1-11Q4-11Q3-12Q2-13Q1-14Q4-14Q3-15Q2-16Q1-17Q4-17%% Unemployment (15-74 years, lhs)Activity (20-64 years, rhs) 
 
 
Graph 1.7: 

Labour shortages (% of respondents) 

Percentages show share of respondents citing labour 
shortage as a limiting factor on production; the composite 
indicator is a gross-value-added-weighted average of 
industry and services series. 
Source: European Commission 

in 

low 

inhabitants 

region  have  difficulties 

The 
labour  market  participation  of 
disadvantaged  groups  hampers  social  cohesion. 
The  Roma,  low-skilled  people,  young  people, 
persons  with  disabilities,  women  with  care 
in  Slovakia's 
responsibilities  and 
eastern 
finding 
employment.  The  inadequate  design  of  active 
labour market policies and insufficient provision of 
childcare  services,  reflected  in  the  low  share  of 
children under three in formal childcare, as well as 
low  movement  of  workers  within  the  country  and 
large  regional  economic  disparities  contribute  to 
this  problem.  On  the  positive  side,  improving 
labour market outcomes have led to the continually 
decreasing  at-risk-of-poverty  and  social  exclusion 
rate  (18.1 %  in  2016),  where  Slovakia  performs 
better than the EU average. 

Income  and  wealth  are  comparatively  evenly 
inequality  of  opportunity 
distributed  but 
remains  high.  For  Slovakia, 
the  S80/S20 
indicator,  which  measures  the  ratio  of  incomes  of 
the  richest  20 %  of  households  compared  to  the 
poorest, is among the lowest in the EU. This is due 
to 
the 
effectiveness of  the  tax  and  benefit  system.  Gross 
disposable  household  income  per  person  grew  at 
only  around  half  the  rate  of  GDP  per  person 
between  2010  and  2017, 
low 
inclusiveness  of  growth.  Wealth  inequality  is  also 

low  wage  dispersion, 

indicating  a 

rather 

than 

1. Economic situation and outlook 

among  the  lowest  in  the  EU,  partly  due  to  a  high 
rate of home ownership. Inequality of opportunity 
remains  high,  as  shown  by  the  high  poverty  risk 
faced  by  children  of  low-skilled  parents  (72  pps 
higher 
that  of  children  of  high-skilled 
parents). Educational outcomes are strongly linked 
to  socioeconomic  status  and  the  language  spoken 
at home.  

than 

Inflation 

Consumer  price  inflation  is  set  to  increase, 
backed  by  favourable  demand  conditions  and 
renewed rises in energy prices. After three years 
of  declining  consumer  prices,  headline  inflation 
firmly  entered  positive  territory  in  2017  at  1.4 %, 
with rising prices in food and services contributing 
most  to  the  rebound.  In  contrast,  energy  prices 
continued to reduce overall inflation — and in turn 
bolstered  household  budgets  —  for  the  fifth 
consecutive  year.  Overall,  consumer  inflation  is 
projected to increase to 2 % in 2019. Core inflation 
(excluding  energy  and  unprocessed  food)  rose 
significantly  to  1.8 %  in  2017  and  is  projected  to 
gradually  increase,  reflecting  vibrant  consumer 
spending and wage pressures. 

Graph 1.8: 

Inflation (y-o-y in %) 

Source: European Commission 

Credit growth 

Credit growth remained robust in the context of 
record-low  interest  rates  and  upbeat  economic 
sentiment.  Lending  to  non-financial  corporations 
rose in 2017 to around 8 % year-on-year from the 

8 

05101520253035Q1-05Q4-05Q3-06Q2-07Q1-08Q4-08Q3-09Q2-10Q1-11Q4-11Q3-12Q2-13Q1-14Q4-14Q3-15Q2-16Q1-17Q4-17IndustryServicesComposite-2%-1%0%1%2%3%Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17EnergyNon-energy ind. goodsProcessed foodServicesUnprocessed foodHICP 
 
 
1. Economic situation and outlook 

eastern  part  of  the  country,  where  long-term 
unemployment  is  still  a  challenging  economic 
issue. 

Graph 1.10:  Nominal house prices 

subdued  rates  of  around  1 %  observed  between 
2012  and  2016.  Meanwhile,  annual  growth  in 
mortgage lending appears to have peaked at close 
to 15 % year-on-year in early 2017. However, this 
is still growing swiftly in the context of a buoyant 
housing  market  (Graph 1.9).  Over  recent  years, 
financial leverage indicators show only a moderate 
rise  in  the  debt  of  non-financial  corporations, 
which stood at 54 % of GDP in 2016. By contrast, 
sustained  and  rapid  credit  growth  to  households 
has caused their debt to rise from 18 % of GDP in 
2007 to 38 % in 2016. The financial sector’s total 
liabilities increased only moderately in 2016, with 
the 
sector 
remaining well capitalised. 

foreign-owned 

banking 

largely 

Graph 1.9: 

Loans to sectors (y-o-y in %) 

Source: National Bank of Slovakia 

Public finances 

The government deficit has been declining since 
2015,  partly  due  to  the  favourable  economic 
backdrop.  The  deficit  fell  to  2.2 %  of  GDP  in 
2016 and is projected to have declined to 1.6 % in 
2017, supported mainly by strong VAT and labour 
tax  revenues  due  to  robust  private  consumption 
and  improved  labour  market  conditions.  The 
favourable  economic  environment  will  also 
support  the  revenue  consolidation  planned  for 
2018. Most of the expected revenue increases will 
be  used 
revenue 
shortfalls.  The  government  will  also  finance  an 
ad hoc  increase  of  pensions  for  those  who  retired 
before  the  2004  pension  reform  (see  Section  3.1) 
and  extra  spending  on  public  wages  and  social 
benefits.  

finance  policy-induced 

to 

The  budgetary  outlook  suggests  a  further 
improvement  in  the  medium  term.  Overall,  the 
government  plans  to  further  reduce  the  headline 
budget balance in 2018 and 2019. However, a part 
of the underlying consolidation effort comes at the 
expense  of  investment.  The  debt-to-GDP  ratio  is 
projected  to  decline  to  below  50 %  of  GDP  in 
the  principal  factor 
is 
2018.  Buoyant  GDP 
development.
underlying 

favourable 

this 

Source: ECB, European Commission 

Housing market 

Growth  in  property  prices  is  underpinned  by 
low  interest  rates,  a  favourable  outlook  for 
household incomes and limited housing supply. 
The  ability  of  households  to  borrow  has  been 
boosted  by  a  falling  risk  of  unemployment, 
accelerating  earnings  growth  and  record-low 
interest  rates.  Annual  growth  in  house  prices  rose 
to  7 %  in  2017  (Graph 1.10),  with  the  average 
house  price  reaching  90 %  of  its  2008  peak.  The 
strongest  recovery  was  in  the  Bratislava  region, 
where  property  prices  climbed  to  96 %  of  their 
pre-crisis  value,  reflecting  in  part  tight  planning 
restrictions that limit new construction. High rents 
in  more  prosperous  regions  also  restrain  internal 
labour  mobility,  especially  from  the  central  and 

9 

-5%-3%-1%1%3%5%7%9%11%13%15%Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Total loansNon-financial corporationsLoans to householdsLending for house purchase-20.0%-15.0%-10.0%-5.0%0.0%5.0%10.0%€1 100€1 150€1 200€1 250€1 300€1 350€1 400€1 450Q1-09Q3-09Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13Q1-14Q3-14Q1-15Q3-15Q1-16Q3-16Q1-17Q3-17Price level (€/m2, lhs)Price (y-o-y, rhs) 
 
 
Table 1.1: 

Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares   
(2) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU 
foreign-controlled branches. 
Source: Eurostat and ECB as of 30 Jan 2018, where available; European Commission for forecast figures (Winter forecast 2018 
for real GDP and HICP, Autumn forecast 2017 otherwise) 

10 

2004-072008-122013-1420152016201720182019Real GDP (y-o-y)7,81,92,13,93,33,44,04,2Potential growth (y-o-y)5,43,72,12,92,62,83,33,5Private consumption (y-o-y)6,11,00,32,22,7...Public consumption (y-o-y)3,32,03,75,41,6...Gross fixed capital formation (y-o-y)9,7-1,91,119,8-8,3...Exports of goods and services (y-o-y)17,74,05,36,46,2...Imports of goods and services (y-o-y) 16,41,65,28,43,7...Contribution to GDP growth:Domestic demand (y-o-y)6,60,41,06,4-0,2...Inventories (y-o-y)0,6-0,50,8-1,01,1...Net exports (y-o-y)0,61,90,3-1,52,4...Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0,40,60,30,30,50,60,70,8Capital accumulation (y-o-y)1,30,70,00,80,30,30,50,7Total factor productivity (y-o-y)3,82,41,81,71,81,92,02,1Output gap2,00,2-2,4-1,2-0,40,00,51,0Unemployment rate14,912,813,711,59,78,37,46,6GDP deflator (y-o-y)3,11,00,2-0,2-0,42,01,51,9Harmonised index of consumer prices (HICP, y-o-y)4,12,70,7-0,3-0,51,42,22,0Nominal compensation per employee (y-o-y)8,43,82,23,52,34,14,84,9Labour productivity (real, person employed, y-o-y)6,31,61,81,80,9...Unit labour costs (ULC, whole economy, y-o-y)2,02,20,41,61,42,02,22,0Real unit labour costs (y-o-y)-1,01,20,21,71,80,00,70,2Real effective exchange rate (ULC, y-o-y)6,22,30,1-0,40,81,00,70,0Real effective exchange rate (HICP, y-o-y)6,72,30,5-1,70,5-0,50,7.Savings rate of households (net saving as percentage of net disposable income)0,91,40,83,23,8...Private credit flow, consolidated (% of GDP)7,04,75,27,79,2...Private sector debt, consolidated (% of GDP)51,969,985,388,194,7...of which household debt, consolidated (% of GDP)13,124,731,134,838,0...of which non-financial corporate debt, consolidated (% of GDP)38,845,254,253,356,7...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)1,53,43,93,53,9...Corporations, net lending (+) or net borrowing (-) (% of GDP)-3,03,15,72,91,21,60,30,5Corporations, gross operating surplus (% of GDP)27,126,426,225,324,724,824,524,6Households, net lending (+) or net borrowing (-) (% of GDP)-1,5-0,5-0,50,91,10,81,21,6Deflated house price index (y-o-y).-3,60,65,57,0...Residential investment (% of GDP)2,72,62,52,32,4...Current account balance (% of GDP), balance of payments-7,2-3,71,5-1,8-1,50,20,41,3Trade balance (% of GDP), balance of payments-2,8-0,24,21,52,6...Terms of trade of goods and services (y-o-y)-0,7-1,2-0,2-0,2-0,4-0,10,10,1Capital account balance (% of GDP)0,21,31,23,52,0...Net international investment position (% of GDP)-47,3-62,1-62,9-64,6-62,4...Net marketable external debt (% of GDP) (1)0,3-10,1-11,8-14,1-15,0...Gross marketable external debt (% of GDP) (1)43,557,769,868,271,5...Export performance vs. advanced countries (% change over 5 years)83,916,96,36,14,4...Export market share, goods and services (y-o-y)7,7-2,11,6-2,65,6...Net FDI flows (% of GDP)-5,7-2,00,4-0,10,6...General government balance (% of GDP)-2,7-5,3-2,7-2,7-2,2-1,6-1,0-0,2Structural budget balance (% of GDP).-5,0-1,9-2,3-2,0-1,6-1,2-0,6General government gross debt (% of GDP)34,040,454,152,351,850,649,947,2Tax-to-GDP ratio (%)30,528,730,732,332,432,732,532,2Tax rate for a single person earning the average wage (%)22,022,322,823,123,2...Tax rate for a single person earning 50% of the average wage (%)14,214,715,814,515,0...forecast 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  PROGRESS WITH COUNTRY-SPECIFIC RECOMMENDATIONS 

the 

since 

recommendations 

implementation  of 

longer-term  perspective 

the 
Progress  with 
(CSR's) 
country-specific 
addressed to Slovakia in 2017 (3) has to be seen 
in  a 
the 
introduction of the European Semester in 2011. 
Looking  at  the  multi-annual  assessment  of  the 
implementation of the CSRs since these were first 
adopted,  54%  of  all  the  CSRs  addressed  to 
Slovakia have recorded at least 'some progress'. By 
contrast, 46% of the CSRs recorded 'limited' or 'no 
progress'  (see  Graph  2.1).  For  instance,  some 
progress has been achieved in the area of taxation 
and  tax  compliance,  in  reforming  the  pension 
system, increasing labour market participation and 
in reducing poverty. 

Graph 2.1:  Overall multiannual implementation of 2011-

2017 CSRs to date 

(1) The overall assessment of the country-specific 
recommendations related to fiscal policy excludes 
compliance with the Stability and Growth Pact. 
(2) 2011-2012: Different CSR assessment categories  
(3) The multiannual CSR assessment looks at the 
implementation until 2018 Country Report since the CSRs 
were first adopted. 
Source: European Commission 

Slovakia  ensured  a 
timely  and  durable 
correction  of  its  excessive  deficit.  In  December 
2009 the Council addressed a Recommendation to 
Slovakia  with  a  view  to  bringing  the  excessive 
deficit  situation  to  an  end  by  2013  at  the  latest. 
Having peaked at 8 % of GDP in 2009, the general 
government  deficit  in  Slovakia  was  been  brought 
down  to  2.7  %  of  GDP  in  2013,  resulting  in  an 
abrogation  of  Slovakia's 
excessive  deficit 
procedure.  The  underlying  deficit  reduction  was 
driven by fiscal consolidation on both the revenue 

(3)  For  the  assessment  of  other  reforms  implemented  in  the 

past, see in particular section 4.1, 4.2, 4.3 and 4.5, 

the  expenditure  side, 

and 
including  one-off 
measures.  After  stagnating  between  2013  and 
2015,  the  government  deficit  was  reduced  to  -
in  2017.  Slovakia's  progress 
1.6 %  of  GDP 
towards 
its  medium-term  budgetary  objective 
(MTO),  defined  as  a  structural  deficit  of  0.5%  of 
GDP,  has  been  somewhat  uneven  since  2013,  but 
in recent years the structural effort has been largely 
in  line  with  the  requirements  of  the  Stability  and 
Growth Pact (SGP).  

support 

Supported  by  an  improving  labour  market, 
labour  market  policies  have  become  somewhat 
more  focused  on  disadvantaged  groups.  Labour 
market  challenges  have  persisted  for  many  years, 
but the unemployment rate started to decline from 
2014 onwards and has now reached historic lows. 
Better-targeted 
long-term 
unemployed and other vulnerable groups has been 
on the government's agenda for a number of years. 
Improving  the  range  and  effectiveness  of  active 
labour market policies remains a challenge, but the 
policy  emphasis  has  shifted  towards  providing 
better-targeted  and 
individualised  support  for 
jobseekers, particularly the long-term unemployed. 
Very little progress has been made in tackling low 
Roma participation in the labour market.  

the 

for 

launched 

initiatives  have  been 

in 
Some 
education and childcare in recent years but will 
take  time  to  feed  through  into  better  results. 
Progress has made towards increasing the capacity 
of  and  access  to  early  childhood  education  and 
care,  particularly  for  the  over  threes.  For  children 
below  this  age  the  legislative  framework  on 
childcare  services  was  put  in  place  but  places 
remain  limited  and  can  be  expensive.  Some 
measures  have  been  taken  in  order  to  raise  the 
attractiveness of the teaching profession, including 
through  substantial  annual  pay  rises  in  2016  and 
2017.  The  planned  raising  of  entry  requirements 
for  teaching  and  better  training  are  likely  to  only 
become  visible  gradually.  A  reform  to  support 
socially  and  ethnically 
inclusive  education, 
including  of  Roma  pupils,  entered  into  force  in 
2016, but effectively implementing the reform will 
require further efforts and political commitment. 

The  speed  of  public  administration  reform  has 
been  uneven  but  reforms  are  beginning  to  pay 
off.  Slovakia's  inefficient  and  ineffective  public 
administration  and  justice  system  have  long  been 
the  business 
detracting  from 

the  quality  of 

11 

8%38%48%6%No ProgressLimited ProgressSome ProgressSubstantialProgress 
 
 
 
                                                           
and 

regulatory 

enterprises  and  large  public  assets  are  not  yet 
properly investigated and administrative resources 
in  the  special  prosecutions  service  are  being 
reduced. Some progress has been made in lowering 
administrative 
for 
businesses in light of the government's adoption of 
a package of measures to be implemented. Limited 
the 
progress  has  been  made 
effectiveness  of  the  justice  system,  as  case  length 
statistics  appear  favourable  when  taken  at  face 
value  but  contrast  with  continued  concerns  about 
judicial independence. 

improving 

barriers 

in 

environment  and  have  acted  as  an  investment 
barrier.  Government  policies  have,  however,  been 
able 
to  ameliorate  a  number  of  challenges, 
including  the  weak  human  resource  management 
and lacking analytical capacity in the civil service.  
There are clear signs of cumulative progress in the 
modernisation of public procurement, where a lack 
transparency  remain  key 
of  competition  and 
challenges  and  perceptions  of  corruption  remain 
high.  More  generally,  efforts  to  tackle  corruption 
in  the  public  sphere  have  been  limited  and  are 
hampered  by 
limitations  and  an 
apparent lack of political will. 

institutional 

the 

2017 

some  progress (4) 

in 
Slovakia  has  made 
addressing 
country-specific 
recommendations. Some progress has been made 
with  respect  to  the  fiscal-structural  part  of  CSR  1 
regarding  improving  the  cost-effectiveness  of  the 
healthcare  system.  While  several  commitments  of 
the "Value for Money" project have been fulfilled 
and  appear  to  have  generated  some  positive, 
tangible  changes  leading  to  savings,  several  key 
provisions  are  still  in  a  pilot  phase  and  may  face 
further  delays  and  implementation  challenges  in 
the short term.  

to 

Some progress has been made on CSR 2, including 
in improving activation measures for the long-term 
unemployed via a more individualised approach to 
activation.  Some  progress  has  also  been  made  in 
improving  early  childhood  education  and  care 
the  construction  of  facilities  and 
thanks 
strengthening  the  legislative  framework.  Limited 
progress has been made in improving the quality of 
education.  Progress  has  also  been  limited  in 
implementing  the  Roma  Action  Plan  and  the 
school  desegregation 
legislation 
legislation measures that was adopted in 2016. 

to  address 

Slovakia  has  made  limited  progress  in  addressing 
CSR 3,  notably  in  improving  competition  and 
transparency 
in  public  procurement.  While 
procedural  improvements  have  been  made  and 
healthcare  procurement  is  being  centralised,  best 
procurement practices are still not widely adopted. 
There has been no discernible progress in fighting 
corruption  as  corruption  cases  involving  state 

(4)  Information  on  the  level  of  progress  and  actions  taken  to 
address  the  policy  advice  in  each  respective  subpart  of  a 
CSR is presented in the Overview Table in the Annex. This 
overall  assessment  does  not  include  an  assessment  of 
compliance with the Stability and Growth Pact. 

12 

 
 
                                                           
Table 2.1: 

Summary table on 2017 CSR assessment 

* This overall assessment of CSR1 does not include an assessment of compliance with the Stability and Growth Pact 
Source: European Commission 

European  Structural  and  Investment  Funds  (ESI 
Funds) are pivotal in addressing key challenges to 
inclusive  growth  and  convergence  in  Slovakia, 
notably  by  investing  in  public  administration 
links  between  R&D  and 
reform, 
industry and strengthening the integrated approach 
to  healthcare.  ESI  Funds  also  help  reduce  youth 
unemployment  and  support  women's  participation 

improving 

in  the  labour  market  by  developing  childcare 
facilities.  They  strengthen 
link  between 
education  and  the  labour  market  and  increase  the 
inclusiveness  of  mainstream 
for 
marginalised Roma communities. 

education 

the 

13 

Slovakia Overall assessment of progress with 2017 CSRs:  Some progress CSR 1: Pursue its fiscal policy in line with the requirements of the preventive arm of the Stability and Growth Pact, which translates into a substantial fiscal effort for 2018. When taking policy action, consideration should be given to achieving a fiscal stance that contributes to both strengthening the ongoing recovery and ensuring the sustainability of Slovakia’s public finances. Improve the cost effectiveness of the healthcare system, including by implementing the value for money project.  Some progress*  Some progress in generating cost-savings in the healthcare sector. CSR 2: Improve activation measures for disadvantaged groups, including by implementing the action plan for the long-term unemployed and by providing individualised services and targeted training. Enhance employment opportunities for women, especially by extending affordable, quality childcare.  Improve the quality of education and increase the participation of Roma in inclusive mainstream education.  Some progress  Some progress has been made in improving activation measures for disadvantaged groups.  Some progress has also been made in improving the accessibility of childcare.  Limited progress has been made in improving the quality of education.  Limited progress has been made in increasing the participation of Roma in mainstream education. CSR 3: Improve competition and transparency in public procurement operations and step up the fight against corruption by stronger enforcement of existing legislation.  Adopt and implement a comprehensive plan to lower administrative and regulatory barriers for businesses.  Improve the effectiveness of the justice system, including a reduction in the length of civil and commercial cases. Limited progress  Limited progress has been made in improving competition and transparency in public procurement.  No progress has been made in the fight against corruption.  Some progress has been made in adopting and implementing a plan to address administrative and regulatory barriers for businesses.  Limited progress has been made towards improving the effectiveness of the justice system.   
 
 
 
 
 
2. Progress with country-specific recommendations 

Box 2.1: Tangible results delivered through EU support to structural change in Slovakia 

Slovakia  receives  significant  European  Structural  and  Investment  Funds  (ESI 
Funds) support of up to EUR 15 billion until 2020. This represents around 3 % of 
GDP  annually  over  the  period  2014-2018  and  60%  of  public  investment  (1).  By  31 
December  2017,  an  estimated  EUR  7.7  billion  (51 %  of  the  total)  was  allocated  to 
projects on the ground. This has paved the way for 45 000 people to gain employment, 
the capacity of kindergartens to be extended by an additional 4 780 places in 152 pre-
school facilities, the modernisation of more than ⅓ of hospitals of the core network, 
the  creation  of  77  pre-school  facilities,  and  for  various  forms  of  support  for  SMEs 
(innovation, starting-up, and consultancy/advisory services).  

ESI  Funds  help  address  structural  policy  challenges  and  implement  country-
specific recommendations. Actions financed cover, among others, support for public 
and  private  R&D;  strategic  and  sustainable  transport  infrastructure;  improving  the 
effectiveness  of  the  justice  system;  lowering  unemployment;  supporting  women's 
participation in the labour market by fostering childcare facilities and flexible working 
arrangements; making  education  inclusive  and  relevant to the  job  market;  promoting 
social  inclusion  of  marginalised  Roma  communities;  and  improving  analytical 
capacities  and  the  effectiveness  of  public  administration.  The  Youth  Employment 
Initiative has provided a package of support measures to lower youth unemployment. 
The  Prešov  region  volunteered  to  join  the  Catching-up  Regions  initiative  targeting 
structural challenges by using ESIF investments in the region.  

Various  reforms  were  undertaken  already  as  a  precondition  for  ESI  Funds 
support  (2).  The  Smart  Specialisation  Strategy  for  research  and  innovation  was 
developed to focus efforts on product specialisation with strong market potential. The 
National  Transport  Plan  has  allowed  the  timely  preparation  of  key  projects.  Public 
procurement reform is making public spending more efficient. A revised Civil Service 
Act was introduced to strengthen the civil service. New legislation has helped improve 
active  labour  market  policies  and  public  employment  services,  establish  a  dual 
vocational education system and formulate a national strategy for Roma inclusion.  

Slovakia  is  advancing  the  take  up  of  the  European  Fund  for  Strategic 
Investments  (EFSI).  As  of  December  2017,  the  overall  financing  volume  of 
operations approved under the EFSI amounted to EUR 475 million, which is expected 
to trigger total private and public investment of EUR 1.2 billion. European Investment 
Fund financing enabled by the EFSI amounts to EUR 25 million, which is expected to 
mobilise approximatively EUR 211 million in total investment. Close to 6 000 smaller 
companies or start-ups will benefit from  this support. Transport is by far the highest 
ranking sector in terms of volume approved. 

Funding under Horizon 2020, the Connecting Europe Facility and other directly 
managed  EU  funds  is  additional  to  the  ESI  Funds.  By  the  end  of  2017,  Slovakia 
has signed agreements for EUR 704 million for projects under the Connecting Europe 
Facility.  

https://cohesiondata.ec.europa.eu/countries/SK 

(1)  Public investment is defined as gross fixed capital formation + investment grants + national expenditure on agriculture 

and fisheries. 

(2)  Before  programmes  are  adopted,  Member  States  are  required  to  comply  with  a  number  of  so-called  ex-ante 

conditionalities, which aim at improving conditions for the majority of public investments areas. 

14 

 
 
 
 
 
 
 
2. Progress with country-specific recommendations 

Box 2.1: Policy Highlights: The 'Value for Money' Project 

In 2015 the groundwork was laid for a far-reaching government project entitled "The Best of All 
Possible  Worlds  –  Value  for  Money  in  Slovak  Public  Policies"  (Najlepší  z  možných  svetov  – 
Hodnota za peniaze v slovenskej verejnej politike). The result is a new comprehensive model for 
evaluating the efficiency and effectiveness of public spending.  

"Value for Money" is structured around three main principles: 

1. Public policy must be "the best possible option", duly justified and quantified on the basis of 
real-world economic and social data. 

2. Institutional reform should culminate in a new division of roles in various phases of the process. 

3.  Several  cost  analysis  methods  must  be  used.  In  addition  to  spending  reviews,  which  will  be 
both  domain-specific  (education,  healthcare,  etc.)  and  cross-cutting  (information  technologies), 
cost-benefit  analyses  will  be  carried  out  on  investment  projects  and  draft  regulations,  and 
benchmarking (against the best foreign practices) will be applied to operational expenses. 

A "Value for Money" unit was set up within the Ministry of Finance, tasked with coordinating the 
analytical work. The delivery of the measures is monitored and reported publicly by a designated 
implementation unit located with the vice-prime minister. The program was first implemented in 
three "problem" sectors that represent nearly 40% of government spending: healthcare, transport 
and information technology. Further series of thematic spending reviews followed in 2017, and 
first  recommendations  in  the  area  of  healthcare  are  beginning  to  show  a  positive  impact  on 
spending efficiency (see also chapter 3.1). 

The  Value  for  Money  project  was  supported  by  the  European  Commission,  the  OECD  and  the 
IMF, who have sent experts to provide joint technical assistance during the initial assessments.  

support  for  projects  to  improve  the  quality  and 
cost-effectiveness  of  health  care,  develop  a 
pipeline of bankable investment projects and to set 
tax  compliance, 
up  a  strategy  on  voluntary 
amongst others. 

can 

from 

request 

Member  States 
the 
Commission  technical  support  to  prepare, 
design,  and 
implement  growth-enhancing 
structural  reforms.  The  Structural  Reform 
Support  Service  (SRSS)  provides,  in  cooperation 
with  the  relevant  Commission  services,  tailor-
made technical support, which does not require co-
financing  and  is  provided  at  a  Member  State's 
request. The support addresses priorities identified 
in  the  context  of  the  EU  economic  governance 
process  (i.e.,  implementation  of  country-specific 
recommendations),  but  the  scope  of  the  SRSS 
support is wider as it can also cover reforms linked 
to  other  Commission  priorities,  or 
reforms 
undertaken at the initiative of Member States.  

Slovakia has requested technical support from the 
SRSS  to  help  implement  reforms  in  various  areas 
such  as:  growth  and  the  business  environment, 
healthcare,  public  financial  management  and 
taxation.  In  particular,  the  SRSS  continues  to 
provide  technical  support  to  the  Value  for  Money 
project.  It  has  also  started  to  provide  technical 

15 

 
 
 
3.  REFORM PRIORITIES 

3.1.  PUBLIC FINANCES AND TAXATION 

Taxation 

Slovakiaʼs  fiscal  deficit  is  falling  but  fiscal 
revenues  remain  low  in  relation  to  GDP.  The 
general government deficit fell from 2.7 % of GDP 
in  2015  to  a  projected  1.6 %  in  2017,  and 
government debt is projected to have been reduced 
by  1.7 pps  between  2015  and  2017.  The  tax 
revenue share in GDP remains well below the EU 
average. In 2016, the tax-to-GDP ratio in Slovakia 
stood at 32.2 % of GDP (EU average: 38.9 %). It is 
projected in the Commission 2017 autumn forecast 
to remain relatively stable and reach 32 % in 2019. 
Regarding  the  tax  structure,  revenues  from  labour 
taxes  remains high while  those  from  consumption 
and capital taxes are below the EU average. 

The overall tax burden on labour is broadly in 
line  with  the  EU  average.  Both  when  measured 
by  the  implicit  tax  rate  on  labour  and  the  tax 
wedge,  values  for  Slovakia  are  close  to  the  EU 
average across the income scale. For example, the 
tax  wedge (5)  for  a  single  low-income  earner  at 
67 %  of  the  average  wage  stood  at  34 %  in  2016, 
compared  to  the  EU  average  of  34.2 %.  The  tax 
wedge  for  second  earners  is  only  slightly  higher 
than the EU average for all income categories. The 
difference  in  the  tax  wedge  for  families  with  and 
without children is also close to the EU average. 

Revenue  from  recurrent  property  taxes  and 
environmental taxation are among the lowest in 
the EU. Both tax types are in principle considered 
less  detrimental  to  growth.  Total  revenue  from 
recurrent  taxes  on  immovable  property  stood  at 
0.4 % of GDP in 2015, considerably lower than the 
EU  average  of  1.7 %.  Real  estate  taxation  is  also 
not based on the value of the taxed property but on 
its  surface  area.  Revenues  from  environmental 
taxes,  at  1.8 %  of  GDP  in  2015,  are  also 
significantly below the EU average of 2.4 %. 

graph  3.1.1).  However,  at  29.4 %,  it  was  among 
the highest in the EU and still considerably higher 
than the EU average of 12.8 %. Various measures, 
including  the  applying  of  the  reverse  charge 
mechanism  (7)  in  the  construction  sector  and 
adjustments  to  the  control  statements,  appear  to 
have  helped  increase  the  efficiency  of  VAT 
collection.  The  Ministry  of  Finance  estimates  that 
the  efficiency  of  collection  continued  to  improve 
in 2016 (Ministry of Finance, 2018). (8) 

Graph 3.1.1:  VAT compliance gap (2011-2015) 

(1) EU average changes according to data availability. 
Years 2011-2013 are without HR, CY and 2014 without CY. 
Source: Centre for Social & Economic Research/CASE (2017) 

Further  anti-fraud  measures  are  planned  for 
2018.  In  April  2017,  the  government  approved 
a third Action plan to fight tax fraud for 2017-2018 
containing  21  measures,  some  of  which  are 
discussed  below.  In  addition,  stronger  obligations 
in the construction sector (9) will be introduced and 
a  tax  guarantee  required  upon  registration  will  be 
extended to natural persons. 

Audit 
activities 
cornerstones  of 

cross-checking 

and 
the  compliance 

are 
strategy. 

Tax  compliance  has  improved  somewhat  but 
remains a challenge. The value added tax (VAT) 
gap (6) continued its downward trend in 2015 (see 

(5)  The 

tax  wedge  shows 

the  difference  between 

the 

employer's labour costs and the employee's net earnings. 
(6)  The  VAT  gap  is  defined  as  the  difference  between  the 
amount  of  VAT  collected  and  the  VAT  total  tax  liability 
(the theoretical tax liability according to tax law). 

(7)  The  reverse  charge  mechanism  implies  that  the  obligation 
to  collect  and  pay  VAT  for  a  transaction  falls  on  the 
shoulders of the buyer instead of the seller. 

(8)  This is indicated by a further decline in the VAT gap  and 
an improvement in the VAT C-efficiency, which compares 
the  actual  VAT  collection  to  a  potential  VAT  collection 
applying a standard rate. 

(9)  The  construction  company  is  obliged  to  inform  the 
customer  about  the  involvement  of  the  tax  authorities  in 
obtaining a final building approval. 

16 

051015202530354020112012201320142015Czech RepublicSlovakiaHungaryPolandEU averageSlovakia 
 
                                                           
 
                                                           
3.1. Public finances and taxation 

Although VAT audits still form a major part of all 
tax  inspections,  the  proportion  declined  in  2016 
and  in  the  first  half  of  2017.  At  the  same  time, 
audits  of  income  taxes  have  risen  in  importance. 
A global tax audit protocol containing transactions 
of taxpayers that were found to be in breach of tax 
rules  is  likely  to  strengthen  the  overall  quality  of 
ʻanalytical 
audits.  The 
information  system  of  risksʼ,  which  allows  for 
taxpayers  at  risk  of  non-compliance 
to  be 
identified and assessed, can ensure audits are more 
targeted  and  auditing  resources  are  better  used. 
Such  a  tool  is  also  important  given  the  scrapping 
of the minimum corporate income tax as of 2018, 
which previously helped to limit tax evasion. (10) 

introduction  of  an 

issuing  advanced  tax  rulings  were  halved  and  the 
deadline for a taxpayer to make an appeal will be 
extended from 15 to 30 days. 

incentives  were 

Innovation 
introduced.  To 
support R&D expenditure, the ʻsuper-deductionʼ of 
R&D  expenditure  was  extended  from  25 %  to 
100 %  (12)  and  a  ʻpatent  boxʼ  regime  was 
introduced that allows income derived from certain 
intangible assets created in Slovakia to be partially 
tax-exempted.  Economic  evidence,  however, 
suggests  that  patent  boxes  may  be  used  as  tax 
competition  tools  and  are  an  inefficient  way  to 
encourage  R&D 
(European  Commission/JRC, 
2015). 

is  due 

to  be  published.  The 

compliance  monitoring  will 

be 
Tax 
strengthened.  The  criteria  underpinning 
tax 
compliance  index  that  assesses  taxpayersʼ  risk 
profiles 
tax 
administration  will  also  be  able  to  make  public 
every quarter a list of taxpayers, stating amounts of 
assessed corporate income tax or tax loss based on 
submitted 
tax 
administration  will  publish  every  quarter  a  list  of 
taxpayers  registered  for  VAT,  stating  the  amount 
of  recognized  VAT  and  requested  funds.  The 
setting  up  of  a  United  Analytical  Centre  has  not 
yet  been  finalised;  the  plan  is  to  ensure  a  more 
rapid exchange of information by bringing together 
analytical  and 
to 
support the fight against tax fraud. 

law  enforcement  capacities 

returns.  Furthermore, 

tax 

the 

tax 

compliance.  Call 

Improved  services  for  taxpayers  may  improve 
voluntary 
centres, 
introduced in 2014 to deal with tax queries, proved 
to be an important service for taxpayers. The limits 
on  using  ʻvirtual  cash  registersʼ  (11)  have  been 
removed  in  2017  and  their  use  is  increasing.  To 
deal  with  fraudulent  electronic  cash  registers  the 
authorities  plan  to  connect  these  to  the  tax 
administration’s online IT system. As of 2018, the 
electronic 
tax 
communication  between 
administration and legal entities and self-employed 
individuals  will  become  mandatory.  A  more 
advanced  strategy  for  voluntary  compliance  is 
planned for the first half of 2018. In 2018, fees for 

the 

(10)  The  percentage  of  companies  with  zero  corporate  income 
tax liability declined from 59 % in 2013 to 6 % in 2015. 
(11)  Virtual  cash  registers  are  virtual  accounting  spaces 
administered  by  the  Financial  Directorate  of  the  Slovak 
Republic,  and  can  be  used  by  companies  as  an  alternative 
to conventional electronic cash registers. 

Fiscal framework and spending review 

The  medium-term  budgeting  framework  could 
strengthened.  The  government 
be 
further 
a  detailed  multi-annual 
regularly  prepares 
budgetary  plan.  Parliament  takes  note  of  this 
document and approves the cash-based budget for 
the  following  year.  However,  this  could  hinder  a 
medium-term orientation of fiscal planning, in the 
context  of  EU  fiscal  rules  according  to  (accruals-
based)  ESA2010  standards.  Binding  expenditure 
ceilings  were  planned  in  the  constitutional  law  of 
the 
2011,  but  have  not  been  used,  making 
achievement  of  a balanced  budget  more  difficult. 
However,  Slovakia’s  Finance  Minister  has 
announced  the  launch  of  simulated  expenditure 
ceilings,  the  purpose  and  impact  of  which  remain 
to be assessed in future. 

Regular  spending  reviews  provide  relevant 
assessments  and  enrich  the  public  discussion. 
The  2017-2019  multiannual  budget  already 
contained  in  annexes  three  spending  reviews 
prepared  in  the  context  of  the  ‘Value  for  Money’ 
(VfM) project, covering the areas of healthcare, IT 
transport.(13)  The  2018-2020  multiannual 
and 
budget included an interim implementation report. 
This 
report  provided  an  advanced  progress 
assessment for the health spending review and also 
defined  the  most  concrete  and  measurable  targets 

(12)  The  super-deduction  may  be  used  by  a  taxpayer  who 
implements  an  R&D  project  in  respect  of  which  costs  are 
incurred.  Newly,  it  is  possible  to  deduct  100%  of  costs 
incurred  on  R&D  in  the  taxable  period  from  the  tax  base 
decreased  by  the  deduction  of  the  tax  loss  caused  during 
the implementation of the R&D project. 

(13)  For further details see Box on Policy Highlights. 

17 

 
                                                           
                                                           
3.1. Public finances and taxation 

contributing  is  expected  to  remain  broadly  stable. 
The effective retirement age in the country remains 
relatively  low  by  EU  standards.  However,  due  to 
relatively  low  life  expectancy  the  effective  time 
spent in retirement is not exceptionally long. 

fairness 

its  distributional 

The  latest  changes  to  the  pension  system  have 
for 
increased 
pensioners  and 
ensured  greater  pension 
adequacy  by  indexing  state  pensions  by  a 
minimum nominal sum. The government decided 
to  reduce  distributional  inequalities  in  pensions 
arisen after the 2004 pension reform. (16) In 2017, 
the  government  approved  an  ad hoc  pension 
indexation  of  2 %.  While  the  pension  indexation 
will  be  based  on  the  concept  of  ‘pensioner’s 
inflation’  as  of  2018,  for  the  period  2018-2021 
individual  pensions  will  have  to  increase  by  a 
minimum  amount  equal  to  2 %  of  an  average 
pension  of  the  same  type.  A  similar  ad-hoc 
increase of pension indexation to 2 % was adopted 
in  2017  already.  These  changes  will  increase  the 
deficit  of  the  system  during  the  coming  two 
decades. 

Healthcare 

People’s  health  is  improving  only  gradually. 
Life expectancy at birth is significantly lower than 
the EU average (17), largely due to higher mortality 
rates from cardiovascular diseases. Mortality rates 
from  coronary  artery  disease  and  strokes  are 
among  the  highest  in  the  EU,  although  there  has 
been  some  improvement  over  the  past  decade. 
Slovakia does not have a national cancer plan and 
cancer survival rates have not improved much over 
the past decade, partly due to low screening rates. 

The  availability  of  pharmaceuticals  has 
improved.  Legislative  changes  have  made 
companies  accountable  for  access  to  medicines, 
helping with the problem of exporting and trade in 
the  grey  economy.  As  of  January  2018,  147 
medicines  will  be  de-categorised  and  forced  to 
pass  a  Health  Technology  Assessment. 
If 
medicines do not meet the associated standards but 
can  nonetheless  demonstrate  their  added  value, 
they  fall  under  special  categories  which  will  be 

(16)  Prior  to  the  government’s  action  people  with  very  similar 
careers may have received different pensions depending on 
whether they retired shortly before or after the reform. 
(17)  For  men  it  was  almost  five  years  (73.1)  and  for  women 

more than three years (80.2) in 2015. 

in  this  area.  The  latest  multi-annual  budget  also 
includes  three  new  reviews,  covering  education, 
environment and labour market and social policies. 
While  the  reviews  provide  important  information 
on relevant spending areas, they have not yet been 
fully integrated in the budgetary process and hence 
have a limited impact on government priorities and 
spending  plans.  In  addition  to  the  reviews,  the 
VfM unit  at  the  Ministry of Finance has prepared 
several  analyses  of  large  infrastructure  and  IT 
projects,  which  may 
in  considerable 
efficiency gains if supported at the political level. 

result 

Sustainability of public finances 

in  a 

Risks  to  Slovak  public  finances  are  primarily 
longer-term  perspective. (14) 
visible 
Calculations of the European Commission suggest 
that  healthcare  and  pensions  outlays  are  projected 
to  remain  the  main  drivers  of  Slovak  long-term 
ageing costs (European Commission, 2018a). Both 
items  are  expected  to  increase  by  1.2  pp  of  GDP 
by  2070  compared  to  2016  (baseline  scenario) 
despite 
unfavourable 
demographic outlook than in previous projections. 
The long-term sustainability gap indicator (S2) for 
Slovakia suggests that Slovakia remains at medium 
risk  with  regard  to  the  long-term  sustainability  of 
its public finances.  (15) 

somewhat 

less 

a 

Pension system 

The  2012  pension  reform  will  mitigate  the 
impact  of  adverse  demographic  trends.  The 
latest projections confirmed that Slovak population 
is  set  to  start  declining  after  2030.  The  old-age 
dependency  ratio,  which  shows  the  relationship 
between people over 65 and those between 15 and 
64 years of age, is forecast to triple by 2060 from 
20.6 in 2016. However, its negative impact on the 
pension  system  will  be  limited  by  an  automatic 
pension increase that mirrors improvements in life 
expectancy. This will have a positive impact on the 
long-term sustainability gap indicator S2. The ratio 
between  the  time  spent  in  retirement  and  that  of 

(14)  For  more  see  European  Commission  (2018a),  ‘Debt 

Sustainability Monitor 2017’, forthcoming. 

(15)  S2 determines the upfront structural adjustment required in 
order  for  the  ratio  of  gross  public  debt  over  GDP  to 
stabilise  in  the  very  long  term.  The  S2  indicator  for 
Slovakia is estimated at 2.2 pps of GDP, with contributions 
for the healthcare and pensions components accounting for 
0.7 and 1.0 pp respectively. 

18 

 
                                                           
                                                           
3.1. Public finances and taxation 

if  the  National  Health-Care  Information  Centre 
(NHIC)  will  succeed 
in  providing  adequate 
technical  support  to  outpatient  doctors  before  the 
end of the lawʼs grace period (i.e. end of 2018). 

roll-out  of 

success.  The 

The  diagnosis-related  groups 
system  was 
implemented  as  a  pilot  project  in  2017  with 
the 
reasonable 
system (19), which allows for more transparency in 
care  supply,  pricing  and  funding,  will  continue  in 
2018. Budget neutrality will be gradually removed 
from  2019  onwards  when  the  system  will  start 
operating in full. The first adjusted base rates were 
published 
the 
project 
face  challenges  when 
implemented due to a lack of users’ preparation. 

in  September  2017.  However, 

likely 

to 

is 

Slovakia  has  a  general 
lack  of  General 
Practitioners  (GPs)  and  staffing  numbers  are 
increasing  only  gradually.  The  lack  of  effective 
primary  care  is  particularly  severe  in  rural  and 
deprived areas, especially those with a large Roma 
population.  Care  delivery  across  regions  varies, 
mainly due to the uneven geographical distribution 
of  health  professionals.  The  very  low  number  of 
new GPs raises concerns for the future GP supply 
given their current age composition. Moreover, the 
number of nurses is falling and is now one of the 
lowest in the EU. 

healthcare 

day-to-day 

The  ineffective  gatekeeping  role  of  GPs  points 
to  significant  opportunities  for  quality  and 
efficiency  gains.  Despite  EU  and  international 
recommendations,  the  role  of  GPs  has  been 
expanded  in  law  only  partially,  with  little  change 
in 
provision,  while 
specialists remain omnipresent. Because of the low 
number of GPs and their limited treatment powers, 
80%  of  GP  consultations  end  with  a  referral  to  a 
specialist. The ongoing development of a network 
of  primary-level  integrated  health  care  centres 
(IHCC)  to  transition  away  from  the  hospital-
centric  model  currently  in  place  does  not  seem  to 
tackle this inefficiency. A stronger role for primary 
care  and  GPs  could  raise  efficiency,  as  suggested 
by  Slovakia’s  high  rates  of  potentially  avoidable 
(ʻambulatory  care-sensitiveʼ)  hospital  admissions 
compared to the EU average. 

(19)  The DRG, or diagnosis-related group, is a payment system 
to 

for 
standardised cost formulas linked to illness types. 

in-patient  care  allocates 

funding  according 

monitored  and  for  which  spending  will  be 
managed over time.  

The cost-effectiveness of healthcare in Slovakia 
is  showing  some 
improvement.  The  VfM 
spending  review  showed  significant  scope  to 
increase  cost-effectiveness  in  several  healthcare 
areas.  Its  implementation  appears  to  have  led  to 
savings  and  positive  changes  in  hospital  and 
personnel management. The implementation report 
suggests 
of 
commitments  have  been  fulfilled  and  some 
EUR 60 million  was  saved  during  the  first  nine 
months of 2017 (Implementation Unit, 2017). 

considerable 

number 

that 

a 

hospital 

management 

Improved 
and 
procurement may limit growth of hospital debt. 
However,  hospitals’  arrears  reached  EUR 728 
million  at  the  end  of  2017.  The  government 
approved  another  hospital  debt 
relief  plan 
comprising  measures  totalling  EUR  585  million, 
which  was  finally  agreed  in November  2017.  The 
Ministry  of  Health  has  set  up  a  special  Office  for 
Management of Subsidiary Organisations (18). The 
central 
Office’s  main 
management  of  hospitals,  benchmarking,  central 
negotiation  of  deals  and,  if  needed,  changes  to 
hospitals’ range of services. 

include 

tasks 

the 

The  potential  to  rationalise  hospital  care 
remains significant. The number of hospital beds 
and  patients’  average  length  of  stay  have  fallen 
over the last two decades. Nonetheless, the overall 
use of hospital services remains high, with hospital 
discharge rates above the EU average and rising in 
recent  years,  and  the  bed  occupancy  rate  remains 
relatively  low  at  less  than  70%  (OECD  and 
European  Observatory  on  Health  Systems  and 
Policies, 2016). 

After long delays the public e-health system has 
been finally launched. Following a trial period in 
December  2017,  legal  provisions  to  ensure  the 
regular,  gradual  implementation  of  the  e-health 
system  have  come  into  force  on  January  1st  2018. 
Due  to  the  previous  lack  of  a  public  e-health 
solution, a privately developed e-health system has 
gained popularity in the meantime, and now covers 
a  third  of  the  Slovak  population.  It  remains  to  be 
seen  whether  overlaps  and/or  compatibility  issues 
between these two e-health systems will arise, and 

(18)  ʻÚrad pre riadenie podriadených organizáciíʼ 

19 

 
                                                           
                                                           
3.2.  FINANCIAL SECTOR 

Banking sector 

Slovakia's banking sector is relatively small and 
stable and benefits from the booming economy. 
The  Slovakian  banking  sector  is  concentrated 
within  the  hands  of  three  major  players  and  most 
of  the  Slovakia's  27  banks  are  controlled  by 
foreign  entities.  Relative  to  its  GDP,  the  Slovak 
banking  sector  is  one  of  the  smallest  in  the  EU. 
Slovakia's  banking  sector  is  amongst  Europe's 
most  profitable  and  also  has  one  of  the  lowest 
loan-to-deposit  ratios, 
it  from 
potential  shocks.  Capital  adequacy  ratios  are 
generally high and above the regulatory minimum. 
Consumer and mortgage loans have been growing 
fast,  driven  by  an  improving  labour  market, 
consumer 
accelerating  wage  growth,  high 
confidence levels and low interest rates. 

thus  shielding 

Housing market 

Slovakia’s  housing  market  is  emerging  from  a 
slump  that  followed  the  global  financial  and 
economic  crisis.  Residential  property  prices  rose 
sharply  during  the  economically  buoyant  phase 
preceding  the  crisis,  with  real  house  prices  rising 
by  72 %  between  Q1 2005 
and  Q2 2008 
(Graph 3.2.1).  

Graph 3.2.1:  House prices and mortgage lending 

Source: European Commission 

The  pronounced  recession  that  followed  in  2009 
took  a  toll  on  both  unemployment  and  household 
income  prospects,  and  was  accompanied  by  a 
significant  tightening  in  bank  lending  standards. 

Together  these  precipitated  a  property  market 
correction.  A  recovery  period  began  in  around 
2014,  during  the  course  of  which  house  price 
inflation  gradually  increased  to  a  rate  of  5.3 % 
year-on-year  in  real  terms  (6.6 %  in  nominal 
terms)  in  Q2 2017.  This  price  recovery  was 
associated with — and also fuelled by — increased 
mortgage  lending  flows,  which  peaked  at  over 
2.5 %  of  GDP  in  2016.  Signs  of  a  possible 
slowdown  in  mortgage  lending  are  evident  in 
2017, but remain to be corroborated by future data. 

Graph 3.2.2:  Housing market overvaluation gap 

Overvaluation gap estimated as an average of the 
price/income, price/rent and fundamental model valuation 
gaps. Long-term values are computed over 1995-2016. 
Source: European Commission 

Housing  market  developments  in  Slovakia  do 
not yet point to significant risks. In the context of 
the major price correction since 2008, house prices 
still appear to be slightly undervalued as suggested 
by two of the three benchmark indicators shown in 
Graph  3.2.2.  In  particular,  the  price-to-income 
ratio  and  a  model-based  valuation  suggest  that 
property  prices  are  still  slightly  undervalued,  and 
only  the  price-to-rent  ratio  currently  points  to  a 
small  overvaluation.  Slovakia’s  thin  and  illiquid 
private rental market may also drive the rise in the 
price-to-rent ratio. This effectively prevents rented 
private  accommodation  from  acting  as  a  housing 
substitute  that  could  bring  property  prices  back 
towards equilibrium levels.  

Housing investment still remains subdued, even 
though  new  building  permits  have  been  rising. 
Compared to the investment flurry that occurred in 

20 

607080901001101201300.00.51.01.52.02.53.005Q106Q107Q108Q109Q110Q111Q112Q113Q114Q115Q116Q117Q12010 Q1 = 100y-o-y change  (pps. of GDP)Loans for house purchase (% GDP, annual change)Real House Price Index (2010Q1=100), right axisNominal House Price Index (2010Q1=100), right axis-30-20-100102030200520062007200820092010201120122013201420152016Model-based valuations gapPrice to income vs. hist. avg.Price to rent vs. hist. avg. 
 
 
 
3.2. Financial sector 

residential 

lacklustre  housing 

the  early  2000s, 
investment  has 
decreased by around 1 % of GDP in the post-crisis 
period, with few signs of a significant recovery in 
the recent period (Graph 3.2.3). Given the strength 
of  economic  growth,  as  well  as  of  overall 
investment  and  house  price  inflation  in  recent 
years, 
investment  growth 
implies  potential  housing  supply  constraints; 
anecdotal  evidence  suggests  this  is  probably  true 
for the Bratislava region. However, the significant 
increase 
the  number  of  building  permits 
somewhat  weakens  the  notion  of  housing  supply 
being  constrained  and/or  inelastic.  The  time-lag 
between  the  issuing  of  housing  permits  and 
associated  construction  activity  instead  suggests 
that a pick-up in housing investment may occur in 
the medium term. 

in 

Graph 3.2.3:  Housing investment indicators 

Source: European Commission 

21 

0.00.51.01.52.02.53.03.54.0020406080100120140160180200010305070911131517*% of GDP2010=100Building Permits (2010=100)Residential Investment (% of GDP, right axis) 
 
3.3.  LABOUR MARKET, EDUCATION AND SOCIAL POLICIES 

Labour market 

(EU) 

Labour  market  conditions  have  improved  but 
structural  challenges  are  visible  in  several 
areas.  Stronger  economic  growth  has  led  to 
decreasing  unemployment,  increasing  wages  and 
disposable  household  income.  The  employment 
rate is swiftly approaching the EU average (71.2 % 
in  Q3-2017).  Following 
vs  72.3 % 
improvements  since  2013,  labour  market  slack 
indicators  are  now  all  below  the  EU  average 
(LMWD, 2017). The main challenges in the labour 
market are high long-term unemployment, coupled 
with high unemployment among vulnerable groups 
such  as  the  low-skilled  and  Roma,  as  well  as  a 
relatively low employment rate for women. These 
issues are amplified by regional disparities, caused 
partly by an underdeveloped rental housing market 
that limits labour mobility. 

in 

the 

found 

regions  with 

Falling  unemployment,  bolstered  by  faster  job 
creation, has led to increasing reports of labour 
shortages  in  some  sectors.  Vacancy  rates  have 
reached  a  historical  maximum,  with  the  highest 
rates 
lowest 
unemployment  (Value  for  Money  Unit,  2017). 
About  44 %  of  employers  reported  difficulties  in 
filling  jobs  in  2016  (Manpower  Talent  Survey 
2016). This trend is particularly prevalent in the IT 
and  manufacturing  sectors.  Some  employers  are 
reportedly  turning  to  foreign  workers  to  meet 
staffing  needs.  Work  permit  conditions 
for 
seasonal  work  were  eased  and  the  number  of 
foreign  workers  in  Slovakia  grew  by  40 %  year-
on-year  in  2017.  Nevertheless,  foreign  workers 
only account for 1.7 % of total employment.  

shortages. 

Notwithstanding 

A  multitude  of  factors  seem  to  contribute  to 
labour 
an 
acceleration  of  wage  growth,  in  2016  the  average 
compensation  of  employees  per  hour  worked  in 
Slovakia  (EUR  9.5)  was  well  below  the  EU 
average  (EUR  22.8).(20)  Higher  wages  abroad, 
in 
better  career  prospects  and  opportunities 
destination  countries  are 
factors 
the  main 
the  emigration  of  workers. 
contributing 
Emigration is most prevalent among young people 

to 

(20)  Expressed in purchasing power standards (PPS) the gap in 
compensation  of  employees  per  hour  worked  between 
Slovakia and EU average is reduced to EUR 8.5.  

with  tertiary  education  (IFP  2017a),  recent  data 
point to a decline in the number of workers abroad 
(150  000  in  Q2-2017  vs.  160  000  in  2016).(21) 
Skill shortages among the unemployed exacerbate 
the  lack  of  qualified  new  workers.  The  general 
level of skill mismatches has fallen since 2007 and 
there  is  a  low  overall  level  of  underqualification 
(European Commission, 2017b). 

Long-term  unemployment  (LTU)  is  falling, 
supported  by  government  policies.  Long-term 
unemployment  has  declined  to  a  rate  of  4.9 %  in 
Q3-2017,  but  remains  among  the  highest  in  the 
EU.  In  addition,  in  2016  the  share  of  very  long-
term  unemployment  (i.e.  more  than  two  years)  in 
total  unemployment  was  still  very  high,  at  44 % 
implemented  various 
(Graph  3.3.1).  Slovakia 
active  and  passive  measures  to  combat  LTU, 
including  an  ambitious  Action  Plan  (see  below), 
which  likely  contributed  to  the  overall  decline. 
However, the absorption of the large pool of long-
term unemployed still poses a challenge. 

Graph 3.3.1:  Unemployment duration (2016) 

Unemployment by duration is expressed as a percentage of 
total unemployment (15-74y) in 2016 
Source: European Commission 

(21)  Official  statistics  might  underestimate  figures,  as  they 
suggest  insignificant  net  migration  flows  (0.3%  of  total 
population  in  2004-2016).  Alternative  sources,  such  as 
health insurance data point to a decrease by 5% of the total 
population in the past 15 years as a result of out-migration.  

22 

0%10%20%30%40%50%60%70%80%90%100%ELSKPTBGITIEBEESHRSICYCZNLHUDEFRLVLTMTROLUATEEPLUKFIDKSE>24 months12-24 months6-12 months<6 months 
 
                                                           
 
                                                           
3.3. Labour market, education and social policies 

Box 3.3.1:Monitoring performance in light of the European Pillar of Social Rights 

The  European  Pillar  of  Social  Rights,  proclaimed  on  17  November  2017  by the European  Parliament,  the 
Council  and  the  European  Commission,  sets  out  20  principles  and  rights  to  benefit  citizens  in  the  EU.  In 
light of the legacy of the crisis and changes in our societies driven by population ageing, digitalisation and 
new ways of working, the Pillar serves as a compass for a renewed process of convergence towards better 
working and living conditions.  

of 

of 

the 

indicators 

Slovakia  faces  challenges  with  regard  to  a 
number 
Social 
Scoreboard (22) 
the  European 
supporting 
Pillar  of  Social  Rights.  The  number  of  children 
under the age of three enrolled in formal childcare 
is  very  low  (0.9 %).  This  contributes  to  a  high 
impact  of  motherhood  on  women's  participation 
in the labour market, reflected by a relatively high 
gender  employment  gap.  On  the  positive  side, 
income  inequality  and  poverty  remain  low  while 
both  employment  and  unemployment  rates  are 
improving at a fast pace. 

children 

Inclusive education, particularly with regard to 
integrating  Roma 
into  quality 
mainstream  education  from  an  early  age, 
remains  a  challenge.  Only  about  one-third  of 
Roma  children  aged  between  4  and  the  starting 
year  of  compulsory  education  participated  in 
childcare.  This  is  likely  caused  by  a  lack  of 
financial  resources  coupled  with  a  low  level  of 
information on application procedures and mistrust 
from  the  parents'  side.  Segregation  of  Roma 
children  in  schools  is  also  of  concern,  with 
Slovakia  being  among  the  countries  with  the 
highest  proportion  of  Roma  children  attending 
schools where all pupils are Roma. The legislative 
amendments made to the School Act in 2015 have 
a potential to increase the participation of Roma pupils in inclusive mainstream education, however, they are 
not being properly implemented and adequately supported by funding and additional measures. 

Slovakia  consistently  has  relatively  low  levels  of  income  inequality  (measured  by  the  income  quintile 
ratio). This is mainly due to its low degree of wage dispersion, rather than to the effectiveness of the tax and 
benefit  system.  Wealth  inequality  is  also  among  the  lowest  in  the  EU,  related  to  a  high  rate  of  home 
ownership, which results in a comparatively even distribution of housing assets. Likewise, the risk of poverty 
and social exclusion has remained well below the EU average and continues to decline further. 

22 The Social Scoreboard includes 14 headline indicators, of which 12 are currently used to compare Member States performance. 
The indicators "participants in active labour market policies per 100 persons wanting to work" and "compensation of employees 
per hour worked (in EUR)" are not used due to technical concerns by Member States. Possible alternatives will be discussed in the 
relevant Committees. Abbreviation: GDHI – gross disposable household income.  

23 

Early leavers from education and training (% of population aged 18-24)On averageGender employment gapTo watchIncome quintile ratio (S80/S20)Best performersAt risk of poverty or social exclusion (in %)Better than averageYouth NEET (% of total population aged 15-24)On averageEmployment rate (% population aged 20-64)Better than averageUnemployment rate (% population aged 15-74)Better than averageGDHI per capita growth On averageImpact of social transfers (other than pensions) on poverty reductionTo watchChildren aged less than 3 years in formal childcareCritical situationSelf-reported unmet need for medical care On averageIndividuals' level of digital skillsOn averageSocial protection and inclusionDynamic labour markets and fair working conditionsEqual opportunities and access to the labour marketSLOVAKIAMembersStatesareclassifiedaccordingtoastatisticalmethodologyagreedwiththeEMCOandSPCCommittees.ThemethodologylooksjointlyatlevelsandchangesoftheindicatorsincomparisonwiththerespectiveEUaveragesandclassifiesMemberStatesinsevencategories(from"bestperformers"to"criticalsituations").Forinstance,acountrycanbeflaggedas"betterthanaverage"iftheleveloftheindicatorisclosetoEUaverage,butitisimprovingfast.Formethodologicaldetails,please consult the draft Joint Employment Report 2018, COM (2017) 674 final.NEET:neitherinemploymentnorineducationortraining;GDHI:grossdisposablehousehold income. 
                                                           
3.3. Labour market, education and social policies 

unadjusted  gender  pay  gap  (19.6 %  in  2015).  The 
employment  gap  is  particularly  large  for  women 
under  40  years  (Graph  3.3.3),  which  is  likely 
explained  by  a  high  impact  of  motherhood  and 
care responsibilities on women's employment (see 
further below).  

Graph 3.3.3:  Employment rate by gender and age (2016) 

Employment  of  the  low-skilled  is  on  the  rise, 
but challenges remain. In 2016, 30 % of the low-
skilled  were  unemployed  for  more  than  a  year, 
compared  with  8 %  and  3 %  for  the  medium  and 
high skilled. The gap with the EU average is high 
(17.7  pps 
is 
particularly  high  (higher  than  45  pps)  for  some 
specific  age  groups  (Graph  3.3.2).  As  a  result  of 
the tightening labour market, the employment rate 
of  the  low-skilled  increased  substantially  (from 
31.6  in  2014  to  35.9 %  in  2016)  but  remains  the 
lowest in the EU. 

in  2016),  and 

the  difference 

Graph 3.3.2:  Employment rate by age and education level 

(2016) 

Source: European Commission 

The  situation  of  Roma  in  the  labour  market  is 
particularly  weak.  The  share  of  Roma  in  the 
population  is  estimated  at  8 %  of  the  total 
population,  living  predominantly  in  rural  areas 
(UNDP,  2014).  Almost  74  000  live  in  segregated 
settlements  often  with  very  dire  living  conditions. 
Unemployment among Roma reaches 48 %, while 
only  around  25 %  of  Roma  aged  20-64  are 
engaged in ‘paid work’ (FRA 2016).(23) Moreover, 
Roma  youth  are  at  a  much  greater  risk  of 
in  2016).  The  key 
becoming  NEETs  (65 % 
obstacles  for  their  participation  in  the  labour 
market are low skills attainment and barriers in the 
access  to  education,  housing,  and  healthcare  (see 
(IFP,  2014).  The  ethnic 
education  section) 
segmentation  of  the  labour  market  contributes  to 
an  adverse  social  situation,  reflected  by  higher 
poverty.  30 %  of  Roma  felt  discriminated  at  least 
once in the past 12 months in their daily life, and 
22 % when searching for work (FRA, 2016). 

Source: Eurostat 

Young people still represent a large share of the 
unemployed  (17.2 %  in  2016).  Additionally,  the 
share  of  young  people  neither  in  employment  nor 
in education and training (NEET) remains slightly 
above  the  EU  average  (12.3 %  vs  EU  11.5 %  in 
2016, age 15-24). The unemployment rate of low-
skilled youth continues to be very high (46.5 % vs 
EU 26.5 %; 2016). This is particularly alarming in 
light of an increasing early school leaving rate and 
shortages of qualified workers. In 2016, just under 
half of NEETs aged under 25 years were registered 
with  the  Youth  Guarantee  scheme.  Nearly  one  in 
five (18.2 %) of young people registered had been 
so for more than 12 months.  

The  employment  rate  of  women  (62.3 %) 
remained  well  below  that  of  men  (76.9 %)  in 
2016.  The  gender  employment  gap  is  persistently 
above  the  EU  average.  This  also  applies  to  the 

(23)  Indicators  used  the  2016  FRA  survey  closely  resemble 
those applied in standard European surveys (EU-SILC, EU 
LFS)  but  full  comparability  was  not  intended.  For  more 
details see FRA 2016. 

24 

0102030405060708090100SKlow-skilledmedium-skilledhigh-skilled% of population02040608010015-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-74% of populationMaleFemale 
 
 
                                                           
3.3. Labour market, education and social policies 

284 %  increase  in  personal  bankruptcies  was 
recorded compared to 2016. However, the waiting 
time for assistance at any of the twelve Legal Aid 
Centres  or  consulting  centres  is  very  long  (4 
months). 

Spending  on  active 
labour  market  polices 
(ALMPs) is still one of the lowest in the EU. In 
2016, spending on ALMPs was at 0.21 % of GDP, 
mostly  geared 
job  creation 
towards  direct 
measures. Training and education programs, on the 
other hand, receive significantly less (7.7 % of all 
expenditure  in  2015),  which  is  at  odds  with  the 
increasing 
shortages.  Moreover, 
participation  in  ALMPs  remains  low  (13.6 %).  A 
recent  study  found  that  the  design  of  ALMPs  is 
poor and its effectiveness low, with subsidised jobs 
and activation works prevailing over education and 
training  programmes  (Value  for  Money  Unit 
2017).  The  success  rate  of  activation  works  in 
placement  to  the  labour  market  is  low  (14.7 %), 
also due to the lack of a training component. 

labour 

Table 3.3.1:  ALMP expenditure by type of actions (% of 

GDP, 2015) 

Source: OECD 

of 

view 

skills 

shortages, 

In 
reskilling 
programmes  have  been  reinforced.  In  2017 
17,317 jobseekers attended requalification courses. 
However,  the  relevance  of  training  programmes 
for  the  labour  market  needs  has  been  flagged  as 
limited and participation in training depends on the 
initiative  of  the  jobseeker,  which  can  create  a 
barrier  for  the  low-skilled  (Machlica  et  al.  2017). 
Adult participation in learning is still significantly 
below EU average (2.9 % vs. 10.8 % in 2016). The 
introduce  a  National  Qualifications 
plans 
Framework  to  validate  non-formal  and  informal 
learning  underpinned  by  quality 
assurance 
procedures,  and  reflected  in  a  revised  National 
Life-long Learning Strategy, are a step in the right 
direction.  These  initiatives  are  key  in  increasing 
the flexibility of the overall education and training 

to 

Labour market policy 

Rights  and  obligations  of  jobseekers  registered 
at  the  public  employment  service  (PES)  have 
been  modified.  To  encourage  social  assistance 
beneficiaries  to  take  up  even  low-paid  jobs,  a 
higher  percentage  of  income  (50 %,  previously 
25 %) is now excluded from the calculation of the 
special  allowance  under  the  minimum  income 
scheme. This contributed to an increase of the total 
income  in  low-income  households  where  at  least 
one member found employment at the level of the 
minimum  wage  while  other  members  receive  the 
benefit.  The  increase  in  household  income  was 
most  visible  for  households  with  one  or  more 
children.  Following 
the 
a 
jobseekers  were 
conditionality  system,  many 
removed  from  PES  registers  (in  August  2017, 
11 % out of all withdrawn jobseekers).  

tightening 

in 

and 

being 

introduced 

The  implementation  of  the  European  Social 
Fund  (ESF)  supported  Action  Plan  for  the 
Integration  of  the  Long-Term  Unemployed  has 
started.  Individual  work  integration  agreements 
are 
individualised 
counselling  will  follow.  21.3 %  of  all  long-term 
unemployed  have  been  supported  thus  far,  of 
which  23.2 %  (as  of  August  2017)  have  been 
successfully  placed  in  the  labour  market.  The 
client-to-specialised counsellor ratio has decreased 
(1:723  in  2017  compared  to  1:1467  in  2016),  but 
overloaded  PES  capacities  remain  a  key  obstacle 
to  providing  individualised  services.  Given  the 
early  stage  of  the  implementation,  the  Action 
Plan's impact remains to be assessed, but progress 
is  regularly  reviewed  at  the  ESF  Monitoring 
Committee.  The  newly 
introduced  profiling 
mechanism  of  the  long-term  unemployed  remains 
rudimentary,  as  it  is  only  based  on  age  and  the 
duration of registration and therefore does allow an 
in-depth  assessment 
referral. 
Cooperation with private employment services and 
NGOs  is  lacking,  and  the  allocated  ESF  support 
has not yet been fully used. 

for  subsequent 

encourage 

this  may 

to  personal  bankruptcy  has  been 
Access 
facilitated; 
formal 
employment.  The  risk  of  earnings  becoming 
subject to seizure proceedings deters those in debt 
from  the  labour  market,  consequently  further 
long-term 
marginalising 
unemployed and Roma (IFP 2016). Following the 
revised  Act  on  Bankruptcy  and  Restructuring,  a 

homeless, 

the 

25 

ALMP actionsSKOECDPES and administration0.040.13Training0.010.13Employment incentives0.080.1Sheltered and supported employment and rehabilitation0.040.09Direct job creation0.020.07Start-up incentives0.010.01Out-of-work income maintenance and support0.210.74Early retirement0.130.04Total0.531.32 
 
 
 
3.3. Labour market, education and social policies 

allocation  for  commenting  on  reform  proposals, 
which may results in a limited scope to contribute 
to discussions. The low membership may also have 
a  negative  impact  on  their  capacity (24).  An  ESF-
supported project is in place to help improve social 
partners' capacity-building.  

Employment of women 

Slovakia is among the countries with the highest 
(discouraging)  impact  of  motherhood  and  care 
responsibilities  on  employment.  This  is  likely 
due  to  a  long  parental  leave,  rarely  taken  up  by 
men 
simultaneous 
compensation for both parents, coupled with a low 
take-up of flexible work arrangements and missing 
childcare facilities.  

(7%),  as 

is  no 

there 

Measures  have  been  put  in  place  to  improve 
access  to  childcare,  but  capacities  are  still 
insufficient. Only 0.9 % of children below 3 were 
enrolled  in  formal  childcare  in  2016,  one  of  the 
lowest rates in the EU. Childcare costs in Slovakia 
are also among the highest in the EU, which has a 
negative  impact  on  work  incentives  (25)  (Browne 
and  Neumann,  2017).  On  the  positive  side,  EU-
funded 
facilities, 
including for marginalised Roma communities, has 
been  slowly  taking  up.  As  of  January  2018,  the 
Social  Services  Act  has  expanded  access  to 
childcare to unemployed parents, on the condition 
that  their  child  does  not  take  the  place  of  a  child 
whose parents are employed or in education.  

construction  of 

childcare 

The  coverage  rate  is  higher  for  children  aged 
between  4  and  6  (78.4 %;  2016),  but  is  still 
below the EU average (94.8 %). Furthermore, the 
number  of  rejected  applications  for  kindergartens 
remains high, particularly in Bratislava (4,677 out 
of  12,486  in  total  in  2016).  Following  2017 
amendment  of  the  Act  on  Financing  of  Schools 
financial  support  will  be  extended  to  all  families 
receiving the benefit in material need with children 
above the age of 3 in kindergartens. 

The  implementation  of  deinstitutionalisation  is 
slow  but  additional  measures  are  planned. 
Long-term care in Slovakia is still largely provided 

(24)  Trade  union  density  was  estimated  at  11  %  in  2015 
(OECD),  as  compared  to  approximately  30  %  employer 
density rate in 2013 (ICTWSS Database 2015). 

(25)  The net cost for a single mother with two children and low 
earnings amounts to 24% of the disposable income in 2015. 

in  a 

lifelong 

system 
learning  perspective. 
Likewise,  the  lack  of  second-chance  education  is 
expected 
to  be  addressed  by  ESF-supported 
national projects. These initiatives will support the 
implementation  of 
the  Upskilling  Pathways 
Recommendation. 

Actions  for  Roma  inclusion  are  slowly  taking 
off,  but  results  remain  to  be  seen.  Outreach 
support  through  social  fieldwork  and  community 
centres has been launched and the Action Plans for 
the  National  Roma  Integration  Strategy  for  the 
years  2017-2020  have  been  adopted.  In  addition, 
following  the  adoption  of  the  law  on  social 
economy,  by  2020  around  3000  disadvantaged 
people  are  expected  to  find  employment  in  150 
new social enterprises.  

introduced,  and 

The  implementation  of  the  Youth  Guarantee 
has  aided  youth  employment.  Individualised 
training 
services  are  being 
programmes  under  the  so-called  'RE-PAS'  project 
were  extended 
to  young  people  under  29. 
However,  the  provision  of  offers  is  rarely  timely 
and  their  monitoring  and  assessment  is  weak.  In 
2016, 18.2 % of those registered had been waiting 
for an offer for more than 12 months. 

Additional  measures  are  being  introduced  to 
tackle  high  regional  disparities.  In  2016,  4,911 
people  benefited  from  a  commuting  allowance, 
while  816  received  labour  mobility  support  (770 
more  than  in  2015).  A  revision  of  the  Act  on 
Employment Services has led to an increase in the 
amount of the commuting allowances by loosening 
the requirements and introduced a flat-rate to cover 
moving  costs  up  to  EUR  4000.  The  number  of 
'least  developed'  has 
districts  designated  as 
increased from 12 to 16 and dedicated action plans 
are  being  implemented.  Training  centres  and 
regional  vocational  education  centres  are  planned 
to  provide  practically-oriented  training  for  the 
disadvantaged  unemployed,  and  the  education 
centres  will  address  the  specific  needs  of  SMEs 
and people interested in self-employment.  

Social dialogue 

The  involvement  of  social  partners  in  policies 
and reforms is relatively well developed. Despite 
the  general  satisfaction  with  the  consultation 
process,  some  concerns  are  raised  by  social 
partners  over  insufficient  information  and  time 

26 

 
                                                           
by  long-term  care  institutions  and  family  carers 
supported  through  the  caretaker  allowance  which 
will  gradually  increase  to  the  level  of  the  net 
minimum  wage  in  2020.  This  increase  may 
perpetuate  high  female  inactivity  rates  due  to 
caring  responsibilities.  Overall,  the  progress  in 
transition  from  the  institutional  to  community-
based  care  is  slow  and  partial,  and  support  for 
independent  living  is  still  insufficient  (United 
Nations,  2016).  Newly  introduced  measures,  such 
as  the  limitation  of  the  number  of  persons  in 
assisted  living  facilities  to  six  per  unit  and  the 
limitation  of  40  places  in  specialised  facilities  for 
seniors, go in the right direction.  

Social inclusion and poverty reduction 

The  poverty  rate  has  further  declined,  but  the 
intensity  of  poverty  is  still  relatively  high.  In 
2016,  the  number  of  people  at  risk  of  poverty  or 
social exclusion fell to 18.1 % (significantly below 
the  EU  average  of  23.5 %),  and  the  number  of 
people in severe material deprivation also dropped 
to  8.2 %  (still  slightly  above  the  EU  average  of 
7.5 %). Latest data (26) on poverty indicates that no 
significant  changes  are  expected  in  the  at-risk-of 
poverty  rate  for  income  reference  year  2016. 
However,  the  poverty  gap,  which  measures  the 
intensity  of  poverty  (i.e.  how  poor  the  poor  are), 
remains  relatively  high  at  26.1 %,  particularly  for 
children  (31.6 %)  (Graph  3.3.4).  The  poverty  rate 
for  Roma  is  alarmingly  high,  at  more  than  six 
times  the  rate  for  the  general  population  (FRA 
2016).  In  terms  of  in-work  risk  of  poverty,  the 
incidence  is  significantly  higher  among  part-time 
workers (27).  Homelessness 
low 
(according to the census, in 2011 there were about 
23,500  homeless  people  in  Slovakia,  i.e.  around 
0.4 %  of  the  total  population  (28)  and  a  national 
strategy  for  preventing  and  tackling  homelessness 
is being prepared.  

relatively 

is 

(26)  Eurostat  has  produced  experimental  flash  estimates  for 
income  reference  year  2016,  which  can  be  used  in 
preliminary analysis until the final EU-SILC data becomes 
available.  

(27)  In  2015  the  difference  in  the  incidence  of  income  poverty 
between full-time and part-time workers was more than 13 
percentage points. 

(28)  No national data has been collected since, but according to  
a  2016  survey,  in  Bratislava  0.5 %  of  all  inhabitants  were 
homeless.  

3.3. Labour market, education and social policies 

Graph 3.3.4:  At-risk-of-poverty gap (2016) 

Source: Eurostat 

Weaknesses  in  social  safety  nets  persist  despite 
some  positive  initiatives.  In  2016,  the  impact  of 
social  transfers  (excluding  pensions)  on  poverty 
reduction  has  fallen  to  31 %,  below  the  EU 
average  of  33 %,  and  reached  its  lowest  level 
during the last decade. The number of recipients of 
minimum  income  support  (benefit  in  material 
need)  has  fallen  to  83  000  by  August  2017 
(compared  to  99  000  in  December  2016).  The 
minimum  scheme  is  not  sensitive  to  the  number 
and  age  of  children  in  a  household.  It  lacks  a 
connection  to  the  national  subsistence  minimum 
and  there  is  no  obligation  of  annual  indexation. 
The provision of the benefit is conditional on each 
adult  member  of  a  household  to  carry  out  small 
community  work  for  32  hours  per  month.  The 
adequacy  of  the  minimum  income  scheme  is  still 
low,  around  50 %  of  the  poverty  threshold  (29) 
(European  Commission,  2017).  The  housing 
allowance is not accessible to those who are most 
in need because its receipt is conditional on proof 
affects  mostly 
of 
marginalised  Roma  who  live  in  undocumented 
dwellings  and  homeless  people.  On  the  positive 
side, an increase in benefits in material need (5 %) 
as  well  as  doubling  the  activation  allowance  to 
EUR  132.40  to  promote  employment  and  reduce 
poverty is planned for 2018.  

residence.  This 

legal 

(29)  According  to  the  benchmarking  exercise  in  the  area  of 
minimum  income  schemes  conducted  within  the  Social 
Protection  Committee,  see  the  draft  Joint  Employment 
Report 2018. 

27 

0510152025303540200520062007200820092010201120122013201420152016%Children (<18y)Working age (18-64)Elderly (65+)Total 
                                                           
 
                                                           
3.3. Labour market, education and social policies 

Conditions for receiving unemployment benefits 
are  strict,  and  net  replacements  rates  are 
among  the  lowest  in  the  EU.  Jobseekers  are 
required  to  be  insured  for  at  least  2  years  during 
the  reference  period  to  be  eligible.(30)  Legislative 
changes  as  of  January  2018  have  extended  the 
reference  period  from  3  to  4  years  and  the 
coverage period to 6 months unifying the rules for 
permanent  and  fixed-term  employees,  who  were 
previously 
to  4  months  of  support. 
Furthermore,  less  than  20 %  of  self-employed  are 
covered by unemployment benefits.(31) 

limited 

Furthermore, 

approximately 

is  underdeveloped, 

Social  housing 
and 
conditions  for  access  are  restrictive.  The  rental 
housing market is thin – only 10.7 % of inhabitants 
live in rental dwellings, far below the EU average 
of 30.7 %. Moreover, the number of finished flats 
owned by municipalities was at 2.2 % in 2015. The 
overcrowding  rate  has  increased  to  40.6 %  and 
remains  particularly  pronounced  among  poor 
(56.2 %  in  2016  vs.  an  EU  average  of  29.6 %  in 
2015). 
65,000 
residents  live  in  undocumented  dwellings  and 
makeshift  shanties  (Ministry  of  Interior,  2014). 
State  Housing  Development  Fund  loans  were 
provided  to  90  municipalities  in  2017,  aiming  to 
create  1,524  housing  units.  However, 
the 
requirement  of  proof  of  the  household’s  solvency 
hinders  access  for  the  most  deprived,  while  the 
accessibility  for  slightly  better  off  households  is 
restricted  by  an  income  threshold.  The  link  to 
accompanying  support  services  is  not  always 
available  and  monitoring  of  the  use  of  the  flats  is 
weak.  A  pilot  project  is  planned  for  transitional 
housing  with  social  assistance  for  marginalized 
Roma  communities,  but  a  more  systemic  support 
could allow stronger development. 

Education and skills 

In  Slovakia,  half  of  all  pupils  in  the  bottom 
social quartile are low achievers. The proportion 
of low achievers in the PISA 2015 (OECD, 2016a) 
survey is significantly higher than the EU average 

(30)  A  bad  performance  for  unemployment  benefits  in  SK  is 
confirmed  by  the  results  of  the  Benchmarking  exercise  in 
the  area  of  unemployment  benefits  and  active  labour 
market  policies  conducted  within  the  EMCO  Committee. 
See the draft Joint Employment Report 2018 for details. 
(31)  Self-employment  at  15 %  was  slightly  above  the  EU 
average  of  14 %  in  2016,  characterised  by  an  uneven 
distribution across different sectors. 

and 

upper 

between 

in  all  areas  tested  (31 %  in  science,  32 %  in 
reading  and  28 %  in  mathematics).  The  gap  in 
achievement 
lower 
socioeconomic quartiles is at more than 35 pps and 
9  pps  above  the  EU  average  of  26  pps.  Slovakia 
also  shows  a very  sizeable gender gap  in  reading, 
with boys lagging by 13.2 pps behind girls for low 
achievement  (European  Commission,  2016).  To 
address  declining  educational  outcomes, 
the 
national  education  strategy  ‘Learning  Slovakia’, 
developed  through  a  comprehensive  consultation 
process  by  experts  and  completed  in  September 
2017,  spells  out  a  vision  for  regional  and  higher 
education  reform.  Progress  on  the  reform  has 
however been limited, as the document still needs 
to  be  translated  into  the  official  government 
National  Education  Strategy  with  concrete  action 
plans announced only for 2018. 

Graph 3.3.5:  PISA 2015 results by language spoken at home 

(in PISA score points) 

Source: OECD PISA 

School  dropout  rates  are  marked  by  large 
regional  disparities.  The  rate  of  early  school 
leaving (ESL) is low at 7.4 %, well below the EU 
average  of  10.7%,  but  shows  sizeable  regional 
disparities. The highest and fastest-rising levels are 
in  eastern  Slovakia,  where  ESL  exceeds  12 %; 
compared  to  4 %  in  western  regions.  The  EU 
Fundamental  Rights Agency  (FRA)  estimates  that 
58 %  of  Roma  children  are  early  school  leavers. 
Finally, participation in early childhood education 
and care for children above 4 was 78.4 % in 2016, 
considerably  below  the  EU  average  of  94.8  %. 

28 

-200-1000100200300400500600ReadingMathematicsScienceSlovak language spoken at homeOther language spoken at homeGap 
                                                           
 
3.3. Labour market, education and social policies 

teacher 

training, 

enhancing 
professional 
development and working conditions; lowering the 
administrative  burden  and  increasing  funding  for 
study materials and classrooms.  

(at  39.4 %) 
(at 

Slovakia  has  fast-increasing  tertiary  education 
attainment  rates,  but  structural  weaknesses  in 
the higher education persist. In 2016, the tertiary 
attainment rate was 31.5 %, below the EU average 
of  39.1 %.  Women 
strongly 
outperformed 
24 %).  Weak 
men 
internationalisation is also an issue and the number 
of  in-coming  foreign  students  studying  at  Slovak 
universities 
small.  Existing  quality 
assurance  and  accreditation  mechanisms  are 
insufficient. Finally, Slovakia's tertiary sector lacks 
a professionally oriented bachelor programmes and 
does not meet the demands of the labour market. 

still 

is 

to  address 
Implementation  of  measures 
in  higher  education  has  been 
weaknesses 
delayed.  The  overall  strategy  is  to  introduce 
greater  flexibility  for  universities  in  response  to 
current  societal  needs,  while  strengthening  their 
responsibility for the quality of education. There is 
a  general  consensus  on  the  need  to  follow 
European  guidelines  on  accreditation  through  a 
fully  independent  quality  assurance  agency,  but 
there  is  no  agreement  among  stakeholders  on  the 
appropriate approach. Rationalisation of the higher 
education network and changing funding formulas 
to encourage more consolidation and specialisation 
is also being considered (Eurydice, 2017). 

information  on  the 

Comprehensive 
labour 
market  outcomes  of  vocational  education  and 
training  (VET)  to  increase  its  relevance  is 
lacking.  The  proportion  of  upper  secondary 
students in VET remained stable in 2015 at 69 %, 
well  above 
the  EU  average  of  47 %.  The 
employment rate of recent VET graduates, at 77 % 
in  2016,  was  slightly  higher  than  the  EU  average 
of  75 %.  To  improve  the  labour  market  relevance 
of  education,  the  performance-based  funding  has 
been  introduced.  Highly  relevant  programmes 
('white lists') benefit of a 10 % increase of funding 
per  student,  whereas,  funding  is  reduced  by  10 % 
for programmes preparing for skills not required in 
the labour market ('black lists'). Regional platforms 
have  been  created  for  stakeholders  to  discuss  the 
data used to update lists of programmes required or 
not  by  the  labour  market  and  to  inform  on  the 

Participation of Roma children, estimated at 34 %, 
is particularly low (FRA, 2016). 

Socioeconomic  and  educational  exclusion  of 
marginalised  Roma  communities 
is  a  key 
problem.  The  2016  FRA  survey  indicates  that 
62 %  of  Roma  children  attend  a  school  where  all 
or most other children are also Roma and that the 
proportion  of  Roma  pupils  attending  special 
education  establishments  is  among  the  highest  in 
the  region  (FRA  2016),  suggesting  discriminatory 
practices.  The  2015  PISA  survey  shows  a  very 
wide  gap  between  pupils  who  speak  Slovak  at 
home  and  those  who  do  not  —  including  Roma 
pupils  (Graph  3.3.5).  In  science,  this  gap  is 
equivalent  to  more  than  3  years  of  schooling 
(OECD, 2016a). The legislative amendments made 
to  the  School  Act  in  2015  have  a  potential  to 
increase  the  participation  of  Roma  pupils  in 
inclusive mainstream education. However, they are 
not  delivering  the  expected  results  due  to  the 
absence  of  an  integrated  approach.  There  is  no 
systematic  methodological  guidance  to  schools, 
which  would  include  concrete  measures  leading 
towards  inclusive  mainstream  education  and  a 
specification of funding available for that purpose. 
Systematic  monitoring  and  evaluation  of 
the 
effectiveness of measures is lacking. 

the 

Public  expenditure  on  education  has  been  low 
over 
last  decade.  Slovakia's  general 
government expenditure on education in 2015 was 
4.2 % of GDP, below the EU average of 4.9 % but 
the  gap  has  narrowed  in  recent  years.  Bearing  in 
mind  the  significant  rise  in  Slovak  GDP  in  recent 
years,  education  spending  levels  have  risen  by 
45%  in  real  terms  since  2005.  Compared  to  the 
EU's  best  performers  Slovakia  shows  a  limited 
efficiency  of  public  education  spending,  both  in 
terms  of  educational  outcomes  and  the  degree  to 
which  young  people  are 
the 
(European 
training 
and 
education 
Commission, 2017c). An additional EUR 500m in 
ESF  support  has  been  allocated  to  education,  but 
the implementation of measures is lagging. 

integrated 
system 

into 

are  being 

increased 
Teachers' 
salaries 
gradually,  but  the  profession 
is  still  not 
attractive. Salaries increased annually by 6% both 
in  2016  and  2017  and  the  government  plans  to 
make annual increases of 6 % until 2020. Incentive 
measures  being  implemented  in  accordance  with 
the  2017 National  reform  programme  include: 

29 

 
3.3. Labour market, education and social policies 

allocation  of  secondary  VET  entrants  by  self-
governing regions. 

little  access 

trainers  have 

The  overall  quality  and  responsiveness  of  the 
dual  VET  system  is  gradually  improving.  The 
enrolment  in  the  dual  VET  scheme  has  increased 
by 27 % for the school year 2017/2018. However, 
to 
teachers  and 
specialised  continuous  professional  development. 
To  further  improve  the  communication  on  the 
benefits of dual VET, a new information portal has 
been set up by the employers' council and contact 
points are being set up with ESF support to assist 
the  eight  self-governing  regions  in  targeting  all 
stakeholders  involved  in  dual  VET:  employers, 
schools,  learners  and  the  wide  public.  A  new  Act 
on VET seeks to tackle financial disincentives for 
schools to get involved in dual VET and to create 
conditions 
guidance. 
effective 
Regulation  of  study  places  in  VET  schools  better 
reflecting  labour  market  needs  and  cooperation of 
schools with employers is planned. The act is set to 
enter into force in September 2018. 

career 

for 

30 

 
3.4. INVESTMENT 

Business 
investment 

environment  and  barriers 

to 

The  quality  of  the  business  environment  is 
crucial  to  determining  investment  and  other 
economic  activities.  Excessive  and  uncertain 
business  regulation  and  a  low  quality  of  public 
administration  can  have  a  negative  impact  on 
economic  performance  by  discouraging  private 
investment 
sector  activities  and  hampering 
(European  Commission, 
2017d).  Slovakia’s 
business  environment  is  losing  ground  in  some 
cross-country  comparisons.  It  dropped  6  places  in 
the  World  Bank’s  ‘Doing  Business’  rankings  in 
two years, currently taking 39th place (out of 190 
economies) and ranking 18th among its EU peers. 
While  the  country  holds  first  place  globally  in 
‘trading  across  borders’  and  scores  very  well  in 
‘registering  property’  (7th),  protecting  minority 
investors  and  dealing  with  construction  permits 
(91st) remain key obstacles to investment.  

of 

firms 

identified 

obligations 

corruption 

administrative 

Slovak 
and 
inefficient  government  bureaucracy  as  the  top 
obstacles  to  doing  business  (World  Economic 
Forum,  2017).(32)  An  analysis  of  10  business-
related  laws,  conducted  by  Slovakia’s  National 
Union  of  Employers,  found  an  increase  in  the 
number 
for 
companies  from  1 514  in  2007  to  1 719  in  2016. 
Instability  in  the  legislative  environment  also 
harms  the  business  environment.  For  example, 
between  2007  and  2016  the  Trading  Act  was 
amended  54  times  and  the  law  on  income  tax  53 
times,  while  the  labour  code  was  amended  on 
average  between  2  and  3  times  per  year.  In  2015 
the Social Insurance Act was amended 9 times and 
the  Trade  Licensing  Act  12  times,  making  it 
particularly difficult for businesses to comply. 

National  surveys  suggest  worsening trends  in a 
variety  of  governance-related  areas.  The 
Business  Environment 
Index,  compiled  each 
quarter  by  the  Business  Alliance  of  Slovakia, 
declined  further  in  Q2 2017  to  its  weakest  value 
since  2001.  The  underlying  responses  from 
business  leaders  suggest  a  notable  worsening  in  a 
range of justice-related categories (equality before 
the  law,  law  enforceability,  functioning  of  the 
judiciary), scores for the political system and in the 

(32)  Followed  by  tax  rates,  tax  regulations,  restrictive  labour 
educated  workforce, 
inadequately 

regulations, 
inadequate supply of infrastructure, and policy instability. 

an 

level  of  corruption.  The  latest  index  scores  also 
confirmed  the  widely  reported  shortage  of  skilled 
labour,  as  this  category  witnessed  the  biggest 
quarterly  deterioration  since  the  survey  began  in 
2001. 

The government adopted a number of measures 
to improve the business environment and boost 
investment.  The  first  package,  agreed  in  June 
2017,  introduced  35  measures  with  9  priority 
measures  to  be  implemented  by  the  end  of  2017, 
with  the  remainder  to  be  carried  out  by  2019.  In 
2018,  the  second  package  of  measures  based  on 
the  inputs  from  entrepreneurs  will  be  unveiled. 
Among  the  priorities,  some  measures  aim  to 
streamline the process of getting a building permit. 
The  measures  were  selected  from  a  database  of 
400  proposals,  which  were  reduced  to  100  by  the 
Ministry of Economy and then negotiated with the 
relevant  ministries.  Another  set  of  measures  to 
improve  the  business  environment  is  also  soon 
expected  to  be  submitted  for  the  government´s 
approval. 

impact  assessments  (RIAs)  can 
Regulatory 
improve the business environment and their use 
has  been  extended  in  recent  years.  The  Centre 
for  Better  Regulation  established  at  the  Slovak 
Business  Agency  conducts  both  prior  and 
subsequent assessments of the regulatory impact of 
a  policy  measure  A  Commission  under 
the 
government office checks RIAs in two phases, and 
it can issue either a positive opinion, a positive one 
with  comments  or  a  negative  opinion  in  its  final 
assessment  (which  in  any  case  doesn't  have  the 
power  to  stop the  legislative process).  Since  2016 
the  RIA  procedure  includes  an  SME  test  that 
assesses  the  specific  impact  of  a  regulation  on 
SMEs. Only 12 % of the final versions of RIAs, as 
submitted  to  the  government,  were  deemed  to  be 
of poor quality in terms of complying with the RIA 
official guidelines. 

Business  organisations  recognise  that  RIA 
procedures  have 
improved.  Feedback  from 
business  associations  suggests  that  their  members 
value the official consultation at an early stage and 
with  prior  notice.  A  new  strategy  for  better 
regulation  -  RIA  2020  -  was  approved  by  the 
government  in  January  2018.  The  objective  is  to 
improve  public  awareness  of  better  regulation  as 
well as the quality of ex-ante impact assessments; 
systematic  ex-post  evaluations  of 
introduce 

31 

 
 
                                                           
3.4. Investment 

by  41 %,  mainly  due  to  the  launch  of  venture 
capital 
the  EU-financed 
JEREMIE initiative, which ended in 2016.(33)  

instruments  within 

Public administration 

by  EU 

funds.  However, 

inefficiencies.  The 

The  public  administration  is  still  burdened  by 
reform  of 
long-standing 
administration  has  been 
Slovakia’s  public 
supported 
its 
implementation has been lagging behind. The main 
bottlenecks  in  public  administration  include  a 
fairly rigid, silo-type working relationship between 
government  ministries,  a  low  degree  of  political 
neutrality  in  the  civil  service  and  non-transparent 
and 
procedures 
limited 
(European  Commission,  2017f).  The 
cooperation  between  ministries  hampers  strategic 
planning  and  risks  creating  inefficiencies  through 
the  duplication  of  work  and  disjointed  policy 
design.  Overall,  the  low  quality  and  efficiency  of 
Slovakia’s public institutions slow the adoption of 
required  structural  reforms  and  act  as  a  drag  on 
competitiveness  and  the  business  environment 
(National Bank of Slovakia, 2017). 

decentralised 

recruitment 

The  new  Civil  Service  Act  aims  to  address 
administrative  weaknesses  and  is  showing  the 
first signs of progress. The Act entered into force 
on  1  June  2017  and  seeks  to  reduce  political 
influence  in  public  administration  and  increase 
staff  transparency,  quality and  mobility.  Although 
it  remains  too  early  to  assess  the  law’s  actual 
impact,  some  steps  have been  taken  to  implement 
it.  Five  members  of 
the  new,  politically 
independent Civil Service Council were elected in 
October 2017 and are mandated to begin their term 
in January 2018. Overall, to evaluate the degree of 
progress,  careful  monitoring  to  ensure  the  Act  is 
correctly  implemented  and  an  assessment  of  the 
impact  of  both  the  Act  and  the  2015  human 
resource  management  strategy  would  be  required. 
With the support of EU funds, four new analytical 
units  have  been  created  in  four  government 
ministries.  

The  regional  public  reform  (ESO)  has  been 
progressing  slowly.  Its  ambition  is  to  make 

(33)  Joint  European  resources  for  micro  to  medium  enterprises 
the  European 
(JEREMIE) 
Commission  and  the  European  Investment  Group  to 
support 
to  finance  for  SMEs  and 
development of micro-credit. 

improved  access 

initiative  by 

is  a 

joint 

existing  regulations  and  alternative  approaches  to 
regulation  as  well  as  enable  greater  stakeholder 
engagement  in  better  regulation  activities,  namely 
engagement  of  the  members  of  parliament  and 
representatives  of  municipalities.  A  national 
project  under  the  Effective  Public  Administration 
operational 
the 
the  analytical  capacities  of 
strengthening  of 
government  ministries  in  RIA.  Finally,  a  national 
project  under 
Infrastructure 
operational programme has been planned with the 
aim  of  creating  a  digital  platform  for  better 
regulation processes. 

programme  will 

Integrated 

finance 

the 

The government also took steps to improve the 
deficient  insolvency  framework.  Slovakia  has 
one of the longest periods in the EU for resolving 
an  insolvency  and  is  one  of  the  costliest  EU 
countries in terms of percentage of the insolvency 
estate.  The  Slovak  Insolvency  Register,  listing 
that  have  been 
companies  and  entrepreneurs 
declared  bankrupt  or  are  currently  going  through 
the insolvency process, has been published online. 
A  new  legal  concept  of  a  ‘company  in  crisis’  — 
i.e.  at  risk  of  bankruptcy  —  was  introduced  into 
Slovak 
the  claims  made  by 
unsecured  creditors.  A  company  in  crisis  is  now 
required 
to  settle  claims  made  by  ordinary 
creditors  before  meeting  any  new  obligations  to 
shareholders  and  members  of  statutory  bodies.  
Furthermore,  the  self-employed  can  now  choose 
between  two  options  when  managing  insolvency: 
either  full  bankruptcy  followed  by  debt  acquittal 
based  on  a  court's  decision  or  a  repayment  plan 
mechanism allowing the debtor to retain part of his 
estate (European Commission, 2017e).  

to  secure 

law 

Access  to  finance  has  improved  but  alternative 
sources  of  financing  are  rarely  used  by  Slovak 
SMEs.  Access  to  finance  dropped  from  being  the 
main  concern  for  18 %  of  SMEs  in  Slovakia  in 
2013  to  5 %  in  2017  (against  7 %  at  EU  level). 
However,  13 %  of  bank  loan  applications  from 
SMEs  were  rejected  (compared  to  5 %  at  EU 
level).  According  to  a  2015  survey  on  the  use  of 
external forms of funding (i.e. funds obtained from 
outside  the  firm)  less  than  a  quarter  (24 %)  of 
Slovak  SMEs  used  alternative 
sources  of 
financing.  While  11 %  of  start-up  projects  in 
through  crowdfunding, 
Slovakia  are  financed 
venture capital financing only accounts for 2 % of 
funding and was used by 15 % of Slovak start-ups. 
However, venture capital investments in 2015 rose 

32 

 
                                                           
3.4. Investment 

around  52 %  of  government  capital  expenditure. 
The ESF invested EUR 1.5 billion.  

of 

the 

the 

implementation 

2014-2020 
The 
programming period is picking up pace after a 
slow start. Despite operational programmes being 
adopted early, delays were caused by poor project 
transition 
caseload  management  during 
between  programming  periods.  This  concerned  in 
particular  the  designation  of  management  and 
control  systems,  setting  up  of  new  territorial 
instruments, 
ex-ante 
conditionalities  and  drafting  of  implementation 
documents,  including  evaluation  and  selection 
criteria and guidelines for beneficiaries. However, 
most of these new elements are now in place, and 
it is expected that the selection and implementation 
of high quality projects will be accelerated and will 
deliver tangible results and policy change.  

fulfilment 

the 

of 

The  coordination  role  of  the  Office  of  the 
Deputy Prime Minister is growing but EU funds 
administration  capacity  and  efficiency  is  still 
limited.  Despite  the  entry  into  force  of  the  Civil 
Service Act (see preceding section), staff turnover 
remains high — in part linked to the political cycle 
— and limits continuity and institutional expertise 
in  implementing  organisations.  This  is  being 
addressed by strengthening the coordinating role of 
the  Office  of  the  Deputy  Prime  Minister,  which 
supervises  and  monitors  implementation  and  is 
designed  to  be  a  stabilising  factor  in  the  system. 
The  Office  also  initiated  an  amendment  of  the 
ESIF  Act  so  as  to  allow  closer  public  scrutiny  of 
how  EU  funds  are  managed  and  to  reduce 
bureaucracy.  Another  set  of  measures  to  improve 
transparency  and  fight  corruption  was  tabled  in 
September 2017 in a dedicated action plan, which 
includes  improved  grouping  and  the  electronic 
selection of evaluators. 

Implementation  of  the  current  programming 
period 
is  slowly  progressing.  The  project 
selection  rate  has  now  exceeded  half  of  the  total 
allocation for the current programming period and 
payments  to  beneficiaries  amount  to  11 %  of  the 
allocation. These figures are in in line with the EU 
average, both regarding the selection rates and the 
payments 
the  Commission. 
Slovakia nevertheless suffered from a loss of EUR 
26 million of funding for R&D in 2017 and there is 
a possibility of a loss of another part of the funding 

requested 

from 

The 

shops. 

one-stop 

the  quality, 

regional  administrations  function  more  efficiently 
and  ensure 
transparency  and 
accessibility of public administration for the public 
reform’s 
through 
implementation  has  not  yet  yielded  concrete 
results,  nor  have  analytical  evaluations  been 
carried  out.  The  reform  has  also  remained  a  low 
political  priority,  as  the  government  did  not 
include  the  issue  in  its  programme  of  meetings 
from  March  2016  to  September  2017  (European 
Commission, 2017f). 

the 

influence  on 

leadership  and 
Political 
functioning  of  regulatory  agencies  harms  their 
effectiveness.  A 
by  Transparency 
study 
International  (2017)  confirmed  there  was  strong 
political  influence  in  the  procedures  for  selecting 
chairs  and  vice-chairs  as  well  as  in  the  overall 
functioning  of  regulatory  institutions.  This  may 
impede 
the  achievement  of  a  high-quality 
regulatory environment guaranteed by independent 
and  accountable  regulators.  Half  of  all  the  chairs 
appointed 
influential 
authorities had a political past. The average tenure 
for  a  chair  reached  only  2.5  years  in  the  first  10 
years  of  a  regulatory  body’s  existence  and  a 
number of chairs appeared to have been dismissed 
for political reasons.  

the  eight  most 

lead 

to 

EU funds administration 

ESI Funds are pivotal in addressing key challenges 
to  inclusive  growth  and  convergence  in  Slovakia. 
Notable investment areas are public administration 
reform,  improving  links  between  research  and 
industry and strengthening the integrated approach 
to healthcare (see Box on EU support to structural 
change).  ESI  Funds  also  help  reduce  youth 
unemployment  and  support  women's  participation 
in  the  labour  market  by  developing  childcare 
facilities.  They  strengthen 
link  between 
education  and  the  labour  market  and  increase  the 
inclusiveness  of  mainstream 
for 
marginalised Roma communities. 

education 

the 

The  2007-2013  funding  period  has  closed. With 
the  closure  of  operational  programmes  of  the 
2007-2013  programming  period  nearly 
all 
associated  financial  resources  have  reached  the 
final  beneficiaries.  In  total,  European  Regional 
Development  Fund  and  Cohesion  Fund  support 
amounted  to  EUR  10  billion  between  2007  and 
2013,  equivalent  to  around  2 %  of  GDP  and 

33 

 
3.4. Investment 

allocation if appropriate measures are not taken to 
accelerate implementation.  

Entrepreneurship and SMEs 

Post-crisis labour productivity growth in Slovak 
SMEs  in  the  manufacturing  sector  fell  behind 
that  of  large  companies,  exacerbating  existing 
productivity  gaps.  In  2009-2014  the  average 
annual rate of productivity growth among SMEs in 
the manufacturing sector was 4.6 %, a much lower 
increase  than  in  large  firms,  whose  productivity 
rose by 14.1 % in the same period (OECD,2017a). 

Various measures aim to improve the ecosystem 
in which start-ups are founded. Slovakia enabled 
the  founding  of  a  new  type  of  company,  the 
‘simplified  joint  stock  company’,  or  ‘one-euro 
company’,  which  enables  entrepreneurs  to  form  a 
new company for just EUR 1 in capital. Although 
this form of company was introduced on 1 January 
2017,  interest  in  establishing  these  companies  has 
been  low  so  far.  Following  a  pilot  phase,  the 
National  Business  Centre  —  conceived  as  a  one-
stop-shop  support  for  SMEs  in  Bratislava  —  has 
been  operational 
since  August  2017.  The 
setting-up  of  a  network  of  regional  business 
centres across the country has also progressed. The 
network, headed by the National Business Centre, 
should  act  as  a  single  service  provider  for 
entrepreneurs,  providing  a  range  of  services  such 
as  business 
incubation,  business  mentoring, 
consultation and training. 

Fighting corruption 

Corruption remains one of the main barriers to 
doing  business  in  Slovakia.  According  to  the 
World  Economic  Forum  (2017),  corruption  is  the 
most problematic factor for doing business. Out of 
137 countries surveyed, Slovakia ranks 117th with 
a  score  of  2.5/7  on  the  diversion  of  public  funds, 
130th  on  favouritism  in  decision-making  (1.9/7) 
and 79th on irregular payments and bribes (3.7 /7), 
placing  it  among  the  worst  performers  in  the  EU. 
This  is  reflected  in  business  perceptions,  where  a 
79 %  of  managers  surveyed  in  2017  agreed  with 
the  statement  that  favouritism  and  corruption 
hamper  business  competition  in  Slovakia,  down 
in 
from  87 % 
2017)(European Commission, 2017g).  

in  2015  (EU  average:  68 % 

Prosecutions  for  corruption-related  offences 
have  fallen  considerably  from  a  level  that  was 
already  low  compared  to  the  perceived  high 
levels  of  corruption.  Criminal  statistics  show  a 
decreasing  number  of  bribery  investigations,  with 
the  number  of  indicted  cases  falling  from  163  in 
2015  to  109  in  2016.  The  capacity  of  the  Special 
Prosecutions  Service  seems  to  have  been  further 
reduced  in 2017  by  the  transfer of new powers  to 
the  unit  handling  corruption-related  crimes.  The 
previous  country  report  explained  the  pivotal  role 
of  the  public  prosecutor’s  office  in  imposing 
sanctions for corruption crimes, as only a minority 
of cases are decided by the courts. The prosecution 
of  high-profile  corruption  cases  remains  very  rare 
and  this  is reflected  in  public  perceptions.  A  very 
large number of business representatives surveyed 
disagree  with  the  statement  that  measures  against 
corruption  are  applied  impartially  and  without 
ulterior motives (up from 58 % in 2015 to 73 % in 
average:  48 %)(ibid).  74 %  of 
2017;  EU 
respondents in a further Eurobarometer survey felt 
that  high-level  corruption  cases  were  not  pursued 
sufficiently 
69 %)(European 
Commission, 2017h). 

average 

(EU 

The  lack  of  accountability  for  the  police  and 
public prosecutors has not been resolved. As the 
chief of police and the police inspection teams are 
appointed  by  and  directly  responsible  to  the 
interior  minister,  this  may  reduce  their  level  of 
functional  independence  and  hinder  investigations 
of sensitive or high-level corruption cases.  

and 

criminal 

reported 

activities 

The  2015  whistleblowing  legislation  still  has  to 
show 
its  effects  as  to  providing  adequate 
safeguards for reporting corruption. In Slovakia 
between  2015  and  2016  the  labour  inspectorate 
granted  protection  to  32  cases  of  whistleblowers 
(18 
14 
administrative  offences)(34).  According  to  a  2017 
Eurobarometer survey, among the possible reasons 
for  not  reporting  a  case  of  corruption  the  most 
commonly  mentioned  reasons  were  difficulties  in 
proving  (41 %),  the  lack  of  protection  for  those 
who report corruption (31 %) and a perception that 
reporting corruption is pointless as the perpetrators 
would  not  be 
(32 %)(European 
sanctioned 
Commission, 2017h). In June 2017 the government 
the  anti-
appointed  a  public  figurehead  for 
corruption strategy who will examine the need for 

(34)  Source: Nip.sk 

34 

 
                                                           
3.4. Investment 

Best  practices 
in  public  procurement  are 
beginning  to  be  applied.  The  Slovak  authorities 
are planning to provide training on using the most 
(ʻMEATʼ) 
economically  advantageous 
tender 
criteria,  already 
the  subject  of  a  series  of 
conferences in 2017, with a particular focus on the 
construction  and  health  sectors.  In  addition,  the 
Ministry  of  Health  has  carried  out  price 
benchmarking for health sector buyers, aggregated 
certain  purchases  of  hospital  equipment  and 
introduced quality award criteria. These efforts are 
not  yet  mirrored  in  the  use  of  MEAT  criteria  in 
other sectors: the share of procedures in which the 
lowest  price  was  the  only  criterion  has  remained 
stable in 2017 at 92 % (after increasing in the years 
prior;  this  is  more  than  twice  as  high  as  the  EEA 
average). Aggregated procurement also appears to 
remain underexploited as it is only used in 5 % of 
cases. 

in 

of 

all 

hinge 

advances 

on  more 

ESIF-funded 

improving  public 
Further 
procurement 
effective 
procedures.  The  Slovak  authorities  have  been 
carrying  out  multiple,  comprehensive  prior 
public 
verifications 
procurement projects, with a strengthened role for 
the  Public  Procurement  Office.  However,  this  is 
time-consuming  and  can  lead  to  bottlenecks  that 
jeopardise  the  absorption  of  EU  funds.  The 
introduction of checklists and training for officials 
could 
efficiency.  Adopting  more 
selective, risk-based controls would be one option 
to  balance  control  and  efficiency  considerations. 
Meanwhile,  the  first  conviction  by  a  specialised 
court  of  high-ranking  officials  for  irregularities  in 
public  procurement  is  encouraging.  However, 
there are still only limited signs of commitment to 
fighting  corruption,  which  remains  an  important 
barrier for business engaged in public procurement 
operations (see Box on Investment Challenges).  

increase 

Electronic  solutions  are  likely  to  improve  the 
efficiency  of  public  procurement.  In  preparing 
for  the  mandatory  transition  to  fully  electronic 
procedures  by  October  2018, 
the  Slovak 
authorities  have  been  testing  various  options  for 
extending  the  functionalities  of  the  state-owned 
electronic  platform.  While  the  introduction  of  the 
e-ID has shortened procedures that previously took 
one  week  to  one  hour,  this  is  only  available  to 
Slovak 
the 
authorities  also  announced  first  steps  towards 
in 
implementing 

‘once  only’  principle 

In  November  2017 

suppliers. 

the 

further 

strengthening 

a 
of  whistle-blower 
protection.  Meanwhile,  civil  society  initiatives, 
engage young people and civil servants in the fight 
against corruption through training and education, 
focussing both on prevention and whistle-blowing. 

Public Procurement 

but 

Slovakia's  public  procurement  legislation  is 
being  modernised, 
anti-competitive 
practices  remain  a  challenge.  Based  on  the 
opinion of company representatives who took part 
in  public  procurement  recently,  collusive  bidding, 
specifications tailor-made for particular companies 
and unclear selection or evaluation criteria are the 
most  widespread  anti-competitive  procurement 
practices in Slovakia. While these scores lie - with 
one  exception  -  somewhat  above  the  EU  average, 
they  show  an  improvement  compared  to  2015. 
More  than  half  of  the  business  representatives 
surveyed  perceive  corruption  to  be  widespread  in 
public 
national 
authorities  (58 %,  EU  average:  50 %).  However, 
perceptions  improved  regarding  procurement  at 
local or regional level (50 % in 2017 against 64 % 
in  2015,  EU  average:  54 %  in  2017,  58 %  in 
2015).   (35) Recent reforms may have contributed 
to  these  improvements.  There  has  been  a  marked 
decrease (from 18% in 2015 to just 5 % in 2017) in 
the  share  of  contracts  concluded  after  negotiation 
without  prior  publication.  The  percentage  of 
contracts awarded after a procedure with only one 
bid  has  also been  consistently  falling and  at 19 % 
in 2017 was well below the EEA average (34 %). 

procurement  managed 

by 

off-the-shelf’ 

Slovakia has taken important steps in creating a 
well-functioning  system  of public  procurement. 
Following  the  transposition  of  the  modernised 
public  procurement  and  concession  directives  in 
2016,  Slovakia  made  the  Electronic  Contracting 
System  no  longer  compulsory  for  ‘below-the-
procurements.  The 
threshold 
authorities  have  also  taken  further  steps  towards 
implementing  the  European  Single  Procurement 
Document  effectively,  and  the  Office  for  Public 
Procurement  produced  methodological  guidance 
on 
in  2017.  Nevertheless,  a 
satisfactory performance has not yet been achieved 
in  the  areas  of  internal  controls,  transparency, 
strategic 
digitisation,  professionalization  and 
public procurement. 

its  application 

(35)  European Commission (2017g) 

35 

 
                                                           
3.4. Investment 

to 

the 

three  vacant  posts  on  14 
candidates 
December  2017.  The  President  asked 
the 
Parliament  and  the  Government  to  take  steps  in 
order to improve the quality of candidates before a 
new  round  of  appointments  is  due  in  February 
2019 as already stipulated in the 2016 Government 
manifesto. The Government recently announced an 
initiative  to  strengthen  the  appointment  process, 
taking  into  account  the  recommendations  of  the 
Council of Europe's Venice Commission (2017). 

a 

of 

number 

information 

Slovakia  continues  with  action  to  improve  the 
efficiency and quality of its justice system. Since 
2016, 
and 
communications  technology  (ICT)  projects  have 
been  implemented  that  improve  the  quality  of  the 
justice  system.  The  new  Slovak  Civil  Procedural 
Law  is  starting  to  show  positive  effects  on  the 
streamlining  of  proceedings  and  giving  more 
responsibility  to  parties.  The  introduction  of  an 
electronic payment order is raising efficiency. The 
same  may  hold  true  for  the  act  on  consumer 
arbitration  and  the  amended  act  on  arbitration. 
alternative  dispute 
However, 
their  acceptance  by 
resolution  methods  and 
litigants  stands  in  need  of  strengthening.  In  2017, 
authorities  started  a  multi-annual  project  aimed  at 
improving  the  operations  of  the  judiciary,  but 
implementation will only begin in 2018. 

awareness  of 

Graph 3.4.1:  Perceived judicial independence (2016-17) 

Source: European Commission (EU Justice Scoreboard 2018, 
forthcoming) 

administrative processes. Public authorities will no 
longer be  authorised  to request  certain  certificates 
that are already available in public registers. 

Effectiveness of the justice system 

for 

justice  system 
but 

is  showing  signs  of 
The 
its 
challenges 
improvement, 
effectiveness  remain.  The  length  of  judicial 
proceedings  in  Slovakia  improved  markedly  in 
2016,  but  it  remains  to  be  seen  whether  this 
efficiency  gains  or  only 
reflects  genuine 
judicial  statistics 
methodological  changes  for 
(European  Commission,  2018b).  The 
long-
standing  negative 
length  of 
trend 
proceedings in litigious civil and commercial cases 
appears  to  have  ended,  as  administrative  justice 
continues  to  perform  well.  Clearance  rates  for 
civil,  commercial  and  administrative  cases  show 
that courts are coping with their caseload. This led 
to  a  decrease  in  pending  cases  in  all  categories, 
despite a rise in incoming cases in 2016. 

the 

for 

of 

the 

independence  of 

judiciary,  with 
to 

Concerns  over 
the 
judiciary  persist.  Slovakia  remains  the  lowest-
ranked EU Member State as regards the perceived 
independence 
no 
the 
improvement  compared 
the  previous  year 
(Graph  3.4.1).  Both  citizens’  and  investors’  trust 
and confidence in the judiciary may be harmed by 
judicial 
persistently 
independence, 
back 
investment. The security screening of judges based 
on  information  from  the  Slovak National Security 
Authority  still  raises  concerns  for  the  judiciary’s 
independence.  

of 
holding 

perceptions 

potentially 

low 

the 

resolved.  However, 

The 
pending 
judges  and  candidate 

The  Constitutional  Court  remains  a  locus  of 
constitutional 
controversy. 
complaints  by 
judges 
challenging  the  security  screening  have  still  not 
long-standing 
been 
constitutional conflict between the Parliament and 
the  President,  who  initially  refused  to  appoint 
candidates over concerns on their qualifications to 
three vacant posts for the Constitutional Court and 
which 
sound 
functioning  by  February  2019,  has  been  resolved. 
Following  a  decision  of  the  Constitutional  Court 
on  6  December  2017,  the  President  appointed 

could  have 

endangered 

its 

36 

01234567FINLUKIELUDKSEEEBEATDEFRPTCYCZMTLTESITROELSILVPLHUBGHRSKIndex score ( higher value = better perceptions)  
 
3.4. Investment 

Box 3.4.1: Investment challenges and reforms in Slovakia 

Section 1. Macroeconomic perspective  

Overall investment activity in Slovakia has been highly uneven since 2015, mainly caused by the transition 
between programming periods for EU structural funds. In 2015 – the final year in which drawdowns from the 
2007-2013 programming period were possible – total investment rose by 19.8%, boosted by a 63.7% rise in 
general government investment. Much of this surge reversed in 2016, however, as public investment activity 
almost  halved,  dragging  down  overall  investment  by  8.3%  to  leave  overall  investment  levels  at  21.3%  of 
GDP (EU: 19.8% of GDP). By contrast, private sector investment continued to rise throughout this period, 
buoyed by upbeat economic sentiment, easy credit conditions and diminishing slack in the economy. Based 
on the Commission 2017 autumn forecast, total investment is projected to have remained muted in 2017 but 
is  likely  to  strengthen  in  2018  and  2019  as  drawdowns  of  structural  funds  in  the  new  programming  period 
normalise, while private investment (including in car manufacturing plants) is likely to accelerate. 

Section 2. Assessment of barriers to investment and ongoing reforms  

While Slovakia shows clear success in some industrial sectors, notably the automotive industry, the overall 
business environment in the country is not overly conducive to investment. Some reforms have been adopted 
or are in the pipeline, in particular in the areas of education, public administration and the judicial system, but 
several barriers remain to be addressed. 

Main barriers to investment and priority actions underway 

1/  According  to  surveys  by  the  European  Commission  and  Manpower  Group,  labour  shortages  are  an 
increasingly serious obstacle to production and investment. With up to half of Slovak companies now citing 
recruitment  difficulties  as  a  binding  production  constraint,  the  ongoing  labour  market  recovery  is  likely  to 
exacerbate labour supply pressures. While the anticipated wage increases may raise participation levels, their 
main impact will be on current employees' incomes, not new job creation. Particularly industries such as car 
manufacturing and IT services are reporting acute shortages of appropriately qualified staff. Dual education 
programmes may alleviate this problem over time but are still in their infancy. 

2/ Challenges in the area of public administration are multi-faceted and together form a frequently changing, 
slow, inefficient business environment marked by high perceived levels of corruption. A frequently changing 
legislative environment makes it difficult and costly for companies to comply with legislation, and legislative 
and regulatory processes are often viewed as insufficiently business-friendly. A lack of evidence-based policy 
making  is  often  noted,  although  the  framework  for  regulatory  impact  assessments  is  gradually  being 
strengthened.  The  lack  of  eGovernment  services  complicates  business  interactions  with  authorities. 
Perceptions of corruption and favouritism are prevalent, especially in public procurement. 

3/ The justice system in Slovakia continues to face challenges regarding to its overall effectiveness. While 
efficiency has started to increase, the workload of the courts remains high. Efficiency aside, the quality of 
the justice system can be further improved, and persistently low levels of perceived judicial independence in 
Slovakia undermine the trust of citizens and business.  

37 

Regulatory/ administrative burdenCSRTaxationPublic administrationCSRAccess to financePublic procurement /PPPsCSRCooperation btw academia, research and businessJudicial systemCSRFinancing of R&D&IInsolvency frameworkBusiness services / Regulated professionsCompetition and regulatory frameworkRetailEPL & framework for labour contracts ConstructionWages & wage settingDigital Economy / TelecomEducation CSREnergyLegend:TransportNo barrier to investment identifiedCSRInvestment barriers that are also subject to a CSRSome progressNo progressSubstantial progressLimited progressFully addressedPublic administration/ Business environmentFinancial Sector / TaxationR&D&ISector specific regulationLabour market/ Education 
 
 
 
3.5. SECTORAL POLICIES 

Research, development and innovation 

Graph 3.5.1:  RDI investment by sector 

capacity 

innovate 

in  most  of 

Slovakia’s 
remains 
to 
moderate.  Although  the  country  shows  some 
notable areas of strength, such as sales of new-to-
market/new-to-firms  products  and  employment  in 
high-growth companies, it performs below the EU 
average 
indicators.  It  faces 
the 
numerous  challenges  to  improve  its  innovation 
performance,  which  include  the  low  efficiency  of 
the public Research, Development  and  Innovation 
(RDI)  system, 
further  support 
innovation  in  SMEs  and  incentivise  technology 
transfer,  and  the  urgent  need  to  foster  a  coherent 
research governance system.  

the  need 

to 

and 

increased 

significantly 

its 
Slovakia  has 
Research,  Development 
Innovation 
investment  over  the  past  decade,  growing  at 
more  than  10 %  per  year  between  2007  and 
2015.  However,  growth  in  RDI  investment  is 
mostly  due  to  the  use  of  the  ESIF  with  only  a 
modest contribution coming from businesses. Total 
RDI investment fell markedly from 1.2 % in 2015 
to  0.8 % 
in  2016  (Graph  3.5.1).  This  was 
accounted  for  by  a  fall  in  public  RDI  intensity 
from 0.84 % in 2015 to 0.39 % in 2016, which was 
largely driven by the start of the new EU funding 
cycle  and  the slow start-up  time  for  new projects, 
including  in  the  RDI  area.  Meanwhile,  business 
RDI  intensity  increased  slightly  from  0.33 %  in 
2015  to  0.40 %  in  2016,  but  remains  among  the 
lowest in the EU. 

Low levels of business RDI are partly explained 
by Slovakia's economic structure. While there is 
a  large  medium/high-tech  manufacturing  sector  in 
Slovakia,  the  dominant  multinational  companies 
have so far shown only limited interest in carrying 
out  RDI  activities.  The  proportion  of  researchers 
employed by business relative to total employment 
is  low  (1 %  in  2014  vs  an  EU  average  of  3.6 %). 
The  level  of  patenting  also  remains  very  low, 
especially 
(Patent 
Cooperation  Treaty  —  PCT)  patents.  Data  from 
the  2017  European  Innovation  Scoreboard  show 
that  the  percentage  of  SMEs  innovating  in-house 
was much lower in Slovakia (13.9 %) than that in 
the  EU  as  a  whole  (28.8 %)  in  2016.  However, 
new tax measures might help to alleviate financial 
obstacles to support investment (see Section 3.1). 

international 

regarding 

(1) Business RDI intensity: Business enterprise expenditure on 
R&D (BERD) as % of GDP. (2) Public R&D intensity: 
Government intramural expenditure on R&D (GOVERD) plus 
higher education.  
Source: European Commission 

A smart industry strategy was adopted in 2016 
to underpin trends of digitisation of industry, as 
robotics,  automation  and  ICT  are  among  the 
economic  and  promising areas  of  specialisation 
of the Slovak Republic. Also the concept of smart 
cities  was  developed 
innovative 
solutions  in  Slovak  companies  and  support  SMEs 
and  start-ups.  Traditional  support  schemes  for 
innovation continue to operate, such as innovation 
vouchers,  a 
for 
scheme  providing 
industrial clusters and for international cooperation 
for  companies  with  RDI  projects,  with  a  state 
budget of EUR 1 million. 

to  promote 

support 

Cooperation between businesses and the public 
RDI  sector  remains  difficult  but  a  number  of 
remedial  measures  have  been  taken.  (36)  The 
Law on Public Research Institutions will enter into 
in  2018  and  should  allow  for  better 
force 
cooperation  between  the  Slovak  Academy  of 
Science  and  businesses.  Calls  are  currently 
pending  under 
and 
Development  Agency  programmes  aimed  at 
supporting business RDI and cooperation between 
businesses  and  research  organisations  in  2016-
2019.  RDI  programmes,  which  mainly  focus  on 
improving  the  cooperation  between  the  business 

the  Slovak  Research 

(36)  For 

instance,  public-private  scientific  co-publications 
represented  only  1.5 %  of  all  publications  in  2014, 
compared to an EU average of 2.8 %. 

38 

Public R&D intensityBusiness R&D intensity0.10.20.30.40.50.60.70.80.920002001200220032004200520062007200820092010201120122013201420152016R&D intensity (R&D expenditure as % of GDP) 
 
 
                                                           
3.5. Sectoral policies 

and research sectors, have been reintroduced as of 
2018  with  a  total  budget  of  around  EUR  270 
million. 

increased 
implementing the overarching RDI strategy  

responsibility  for  coordinating  and 

in 

Support for R&D through EU funds faces some 
obstacles.  A  number  of  measures  to  mobilise 
knowledge  and  technology  transfer,  strengthen 
industries  and  support 
research  capacities 
strategic  long-term  research,  planned  in  the  EU-
financed  operational  programme,  are  significantly 
delayed.  This  is  partly  due  to  administrative 
inefficiencies and a non-transparent evaluation and 
selection process. Some progress has been made in 
implementing  the  smart  specialisation  strategy, 
mainly  on  the  establishment  of  sectoral  platforms 
bringing 
institutions,  business 
sector  and  academia  to  discuss  future  targeting  of 
R&D  investments.  However,  a  number  of  policy 
implemented. 
measures 
Implementing 
research 
infrastructure roadmap would help to map existing 
research  infrastructure  and  avoid  duplication  in 
financing or respective guidelines. 

to 
the  delayed  national 

together  public 

have 

yet 

be 

of 

the 

frequently 

inefficiency  and 

Returns on public R&D investment are low due 
to 
ineffectiveness  of 
Slovakia's  research  environment.  Although 
public R&D intensity is above the EU average, the 
scientific 
volume 
publications (37)  has  stagnated  at  pre-crisis  levels, 
placing  Slovakia  among 
lowest 
performers.  The  scientific  potential  is  limited  by 
the  fragmented  nature  of  the  system,  which 
comprises  34  higher  education  institutions,  of 
which  23  are  public,  and  the  Slovak  Academy  of 
Science. 

the  EU’s 

cited 

The  overall  governance  of  RDI  policy  is  weak 
and  reforms  are  regularly  postponed.  The 
planning  and 
implementing  of  RDI  policy 
continues  to  suffer  from  fragmentation  and  a  lack 
of  coordination,  with  responsibilities  split  —  and 
poorly  coordinated  —  among  several  ministries 
and 
Slovak 
Government Council for Science, Technology and 
Innovation,  placed  under  the  Office  of  Deputy 
Prime  Minister,  is  seen  as  the  key  body  for  RDI 
coordination. Its role has also been strengthened by 

agencies.  The 

implementing 

(37)  Scientific publications in the top 10 % most cited scientific 
publications  worldwide  as  a  percentage  of  total  scientific 
publications (2014): 5.3 % (EU average: 10.5 %); Slovakia 
ranks 22nd among EU Member States. 

Digital economy 

and 

Slovakia’s  overall  performance  in  connectivity 
remains below the EU average. Fixed broadband 
progress 
coverage 
significantly,  while  mobile  broadband,  4G  and 
‘next  generation  access’  broadband  network 
coverage  increased  by  4  and  11  pps  respectively 
compared to 2016. 

take-up 

did 

not 

(ICT) 

Slovakia lacks information and communication 
technology 
specialists  and  digital 
professionals.  The  ICT  sector  accounts  for  5.2 % 
of GDP and 2.4 % of total employment, making it 
one of the most productive sectors of the economy. 
However,  the  industry  currently  operates  with 
around  13 000  specialist  vacancies  and  has  an 
estimated  net  recruitment  need  of  at  least  2 000 
specialists  each  year  over  the  next  5  to  10  years 
(see  also  Section  3.3).  These  staffing  needs  may 
increase if digital trends advance and spread more 
quickly,  leading  to  a  major  expansion  of  the 
industry’s reach. 

The  Slovak  ‘digital  coalition’  aims  to  address 
the lack of digital skills and ICT specialists. The 
digital  coalition,  launched  in  September  2017, 
aims  to  improve  students’  digital  skills  and  boost 
the  digital  literacy  of  employees,  the  unemployed 
and  entrepreneurs.  The  main  challenge  will  be  to 
ensure good coordination and cooperation between 
the  different  partners  who  signed  the  associated 
memorandum,  which  contains  14  commitments 
and an action plan with 23 specific measures. The 
coalition’s  members  will  also  carry out an  impact 
assessment  focusing  on  Industry  4.0  and  global 
digitalisation.  A  number  of  measures  will  be 
implemented  through  the  IT  Academy  project, 
which receives  EU  funding of  EUR 21  million.  It 
should  establish  an  education  and  youth  training 
model  to  address  the  lack  of  digital  skills.  More 
than  300  elementary  schools,  200  secondary 
schools and five universities are due to participate 
in the project. 

Digital skills training for employees may reduce 
the  risks  of  losing  a  job  and  can  complement 
similar  existing  training  for  the  unemployed. 
Evaluation methods (e.g. similar to the ‘IT fitness’ 
association) 
testing  developed  by 

the 

IT 

39 

 
                                                           
3.5. Sectoral policies 

find that cross-border investment in manufacturing 
predominantly  generates 
low-skilled 
workers  and  makes  only  a  limited  contribution  to 
technological progress. 

jobs  for 

agents 

The Slovak services sector appears to be highly 
regulated.  There  is  a  relatively  high  level  of 
restrictions  in  the  services  sector  compared  to  the 
EU  weighted  average 
for  architects,  civil 
engineers, accountants, lawyers, patent agents, real 
estate 
its 
Communication  on  reform  recommendations  for 
regulation  in  professional  services,  the  European 
Commission  (2017i)  identified  possibilities  for 
improving  the  regulatory  environment  in  these 
sectors. However, Slovakia has so far reported no 
progress in tackling restrictions. 

tourist  guides. 

and 

In 

Energy 

low-carbon  sources  with 

The  Slovak  economy  is  energy-intensive  and 
highly dependent on energy imports. Slovakia’s 
import  dependency  lies  above  the  EU  average  for 
fossil  fuels  in  general  as  well  as  for  gas  and 
petroleum  individually.  The  electricity  mix  is 
dominated  by 
its 
minimum  level  of  demand  (i.e.  its  baseload) 
largely  met  by  nuclear  and  hydroelectric  power. 
Although  the  share  of  renewable  energy  has 
increased,  the  government  has  yet  to  develop  its 
vision  for  the  future  of  renewable  technologies. 
This 
is  complicated  by  electricity-generating 
installations above 10 kW being unable to connect 
to  the  distribution  network  (the  ‘stop-status’), 
partly  to  solve  issues  of  system  balancing  at  the 
transmission and distribution levels. This situation 
has existed since 2013 and adds to the uncertainty 
about  the  future  role  of  renewables,  deterring 
investment in the sector. 

targets.  While 

Slovakia’s  current  energy  policies  are  not  yet 
fully  aligned  with  the  energy  and  climate 
change 
the  electricity  price 
includes a levy to support production of electricity 
from  renewable  resources,  it  also  contains  a 
surcharge  that  supports  environmentally  harmful 
electricity  production 
lignite. 
Electricity  generation from  lignite is currently  not 
economically  viable  without  subsidies.  Moreover, 
the 
substantial  new 
Nováky plant will be needed after 2021 to ensure it 
operates 
in  compliance  with  new  emission 
standards that apply from 2021 onwards. 

from  domestic 

to  modernise 

investment 

identifying employees’ lack of digital skills would 
be  a  first  step  in  this  direction.  In  addition,  IT 
training  sessions  can  provide  jobseekers  with  a 
competitive  advantage  when  searching  for  a  new 
job. Establishing a competitive training market by 
allowing jobseekers to choose the training provider 
may boost the quality of the training. 

Businesses  still  do  not  fully  understand  nor 
embrace  the  digital  single market  (DSM).  Only 
big  corporations  take  advantage  of  the  DSM,  and 
SMEs face barriers to scaling up in the market. (38) 
A survey by the Slovak IT association shows that 
the  majority  of  businesses  have  heard  about  the 
DSM.  However,  less  than  50 %  had  a  more 
detailed  insight,  with  only  few  respondents  being 
aware of what DSM represents and promotes. 

in 

its 

The  roll-out  of  e-government  services 
is 
proceeding  very  slowly.  Slovakia  is  working 
towards  developing  an  e-government  system. 
However, 
is  significantly 
implementation 
delayed,  contributing  to  continued  administrative 
inefficiencies 
the  business  environment. 
Developing  e-services  can  help  fight  against 
corruption  and  promote  transparency,  while  the 
quality of the services can be improved to match a 
wider  range  of  requirements  (e.g.  usability  check 
against  people  with  disabilities).  The  Deputy 
Prime  Minister’s  Office  announced  the  ‘better 
services’ initiative, which may help to spearhead a 
renewed  push  towards  introducing  e-government 
services. 

Services sector 

A competitive services sector is key to boosting 
value  added  and  stimulating  innovation.  A 
variety of studies underline that a well-functioning 
services  sector  is  important  for  the  economy.  A 
study based on firm-level data from a country with 
a similar structure — the Czech Republic — finds 
a significant positive relationship between services 
sector  reform  and  manufacturing  industries  that 
rely  on  services  as  intermediate  inputs  (Arnold  et 
al.,  2011).  Münich  et  al.  (2014)  also  find  that 
cross-border  investment  in  the  services  sector  is 
relatively effective in stimulating innovation. They 

(38)  The  digital  single  market  is  the  European  Commission’s 
strategy  to  complete  a  single  market  in  e-commerce  and 
online  trade,  by  streamlining  national  regulations  and 
moving from 28 national markets to a single market. 

40 

 
                                                           
The  regulatory  framework  for  energy  still  has 
deficiencies.  Electricity  and  gas  prices 
for 
households, small businesses and customers under 
the  ‘supplier  of  last  resort’  regime  are  regulated, 
including  the  commodity  component,  although  it 
does  not  constitute  a  natural  monopoly  that  needs 
regulating.  All  household  consumers  and  SMEs 
are  considered  as  vulnerable  consumers  and 
therefore  are  supplied  electricity  and  gas  at 
hampers  market 
regulated 
development. 
better-targeted 
Alternatively, 
measures  for  protecting  vulnerable  customers  and 
less well-off households could be achieved through 
social  policy  means  rather  than  energy  policy 
measures. 

prices,  which 

low  and  poses 
is  still 
Energy  efficiency 
environmental  and  competitiveness  issues.  The 
energy intensity of the economy still ranks among 
the highest in the EU, partly due to the high share 
of  industry,  but  is  gradually  improving. (39)  In 
2015  both  primary  and  final  energy  consumption 
slightly  increased  compared  to  the  previous  year, 
thus  reversing  the  improvement  trend.  Slovakia 
has  already  met  its  Europe  2020  target  regarding 
primary  energy  consumption. (40)  However,  the 
2016  national  targets  regarding  energy  savings  in 
final  energy  consumption  and  energy  savings  in 
public buildings were undershot by 32 % and 56 % 
respectively. (41) 

Waste management and air quality 

The  use  of  landfills  is  excessive  and  recycling 
rates  are  very  low.  The  country  still  landfills 
around  66 %  (2016)  of  municipal  waste,  which  is 
one  of  the  highest  rates  in  the  EU-28.  The 
recycling rate (including composting) remains low 
(23.2%, 2016) in comparison to the EU-28 average 
(46.3%, 2016) and Slovakia is at risk of missing its 
2020 waste diversions targets. 

(39)  Energy  intensity  can  be  used  as  a  proxy  for  energy 
efficiency.  Energy  intensity  is  defined  as  the  amount  of 
energy  needed  to  produce  one  unit  of  GDP.  With  214.7 
the  Slovak 
kgoe/EUR 1 000 
economy was the 7th highest in the EU in 2015, and almost 
80 % higher than the EU average. 

intensity  of 

the  energy 

(40)  Primary  energy  consumption  was  15.4  Mtoe  in  2015, 
compared  to  the  Europe  2020  target  of  16.4  Mtoe.  Final 
energy  consumption  was  of  10.1  Mtoe  compared  to  the 
target of 9.0 Mtoe. 

(41)  European Commission (2017i) 

3.5. Sectoral policies 

Tax  and  fee-based  tools  to  improve  waste 
management  are  underutilised.  Although  a  new 
Waste Act from January 2016 aims to introduce a 
new waste management system, its implementation 
has  been  difficult  (Act  amended  in  March  and 
October 2017). A mandatory fee for consumers for 
single-use  plastic  bags  is  in  force  as  of  January 
2018.  Discussions  on  how  to  increase  Slovakia’s 
comparatively  low  landfill  fees  resumed  again  in 
2017  but  there  is  still  no  incineration  tax  and 
illegal  waste  dumping  remains  a  considerable 
long-standing 
problem 
former 
environmental  burdens,  such  as 
hazardous site of Vrakuňa. (42) 

addition 

the 

in 

to 

Air quality continues to give cause for concern.  
Concentrations of air pollutants continue to exceed 
EU  standards,  especially  for  particulate  matter 
(PM). (43)  There  are  still  delays  in  launching 
much-needed  action  to  address  domestic  heating 
and  road  transport.  Poor  air  quality  still  poses 
serious human health concerns. (44) Slovakia failed 
to  ensure  an  appropriate  number  and  type  of 
sampling  points  for  air  quality  monitoring  and  to 
provide sufficient valid data. (45) 

Slovakia's  forests  are  under  threat  due  to 
inadequate  forest  management  and  excessive 
logging. (46) Conflicts between nature conservation 
and  forest  management  persist.  Forest  logging  is 
rising  and  negatively  impacts  the  stability  of 
Slovakia’s  ecosystems. (47)  This  situation  has  led 
to public protests and the petition “We are forest” 
collected 
of 
signatures. (48)

exceptionally 

number 

high 

(42)  The  former  landfill  site  of  Vrakuňa  causes  high  risks  to 
waters  with  associated  health  problems.  The  estimated 
costs  for  cleaning  and  securing  Vrakuňa  are  around 
EUR 30 million, but no measures have been taken yet. 

(43)  European Environmental Agency (2017a) 
(44)  Premature  deaths 

in  2014:  5 160  from  particulates 
(PM 2.5),  100  from  nitrogen  dioxide  (NO2),  160  from 
ozone (O3); European Environment Agency (2017b) 

(46)  http://europa.eu/rapid/press-release_MEMO-17-

3494_en.htmhttp://europa.eu/rapid/press-release_MEMO-
17-3494_en.htm 

(47)  The Institute for Environmental Policy included forest 
management among the three biggest environmental 
challenges.https://www.minzp.sk/files/iep/01_2017_tri-
vyzvy_zivotneho_prostredia.pdf 
(47)  Slovak Environmental Agency: 

https://www.enviroportal.sk/indicator/detail?id=781  

(48)  https://www.mysmeles.sk/ 

41 

 
                                                           
                                                           
ANNEX A: OVERVIEW TABLE 

Commitments  

Summary assessment ( [1] )  

2017 Country-specific recommendations (CSRs)  

CSR 1:  

Slovakia has made some progress in addressing CSR 1  

Pursue a substantial fiscal effort in 2018 in 
line with the requirements of the preventive 
arm of the Stability and Growth Pact, taking 
into  account  the  need  to  strengthen  the 
ongoing 
the 
sustainability of Slovakia’s public finances.  

recovery  and 

to  ensure 

the  cost-effectiveness  of 

the 
Improve 
healthcare 
by 
implementing the value-for-money project.  

including 

system, 

This  overall  assessment  of  CSR  1  does  not  include  an 
assessment  of  compliance  with  the  Stability  and 
Growth Pact.  

Some  Progress  has  been  made  in  improving  the  cost-
effectiveness  of 
the  healthcare  system.  Several 
commitments  of  the  "Value-for-Money"  project  have 
been  fulfilled  and  appear  to  have  generated  some 
positive,  tangible  changes  leading  to  savings.  Several 
key  provisions  aimed  at  significantly  enhancing  the 
cost-effectiveness  of  the  system  (e.g.  introduction of  a 
DRG  payment  system,  strengthening  the  primary  care 
sector  and  promoting 
integration  of  healthcare 
providers) are still in their pilot phase and are likely to 
face  further  delays  and  implementation  challenges  in 
the near future.  

CSR 2:  

Slovakia has made some progress in addressing CSR 2  

measures 

activation 

for 
Improve 
disadvantaged 
by 
groups, 
implementing  the  action  plan  for  the  long-
and  by  providing 
term  unemployed 
individualised 
targeted 
training.  

including 

services 

and 

Enhance  employment  opportunities 
for 
women, especially by extending affordable, 
quality childcare.  

Individual  work 

Some  Progress; 
integration 
agreements  are  being  introduced  and  individualised 
counselling  will 
follow.  The  client-to-specialised 
counsellor  ratio  in  public  employment  services  has 
improved  but 
remains  high.  A  basic  profiling 
mechanism  for  the  long-term  unemployed  has  been 
introduced, but is only based on age and the duration of 
registration  and  therefore  does  not  allow  an  in-depth 
assessment 
In  addition, 
partnerships  with  NGOs  are  still  missing.  Some 
progress  has  been  achieved  towards  increasing  the 
provision  of  training  of  jobseekers  (e.g.  through  the 
RE-PAS project). 

for  subsequent 

referral. 

legislative 

framework 

Some  Progress;  The 
for 
childcare  was  extended,  but  capacities  remain  limited. 
Participation in pre-school education is stagnating, with 
differences  in  attendance  persisting  across  the  board. 
According to Eurostat, participation in early childhood 
education  and  care  (ECEC)  was  78.4  %  in  2016,  well 
below  the  EU  average  of  94.8  %  (a  16.4  pp. 

42 

 
 
Improve the quality of education.  

Increase 
inclusive mainstream education.  

the  participation  of  Roma 

in 

A. Overview Table 

difference). There are big regional disparities.  

a 

through 

Limited  Progress;  To  address  declining  educational 
outcomes,  the  national  education  strategy  ‘Learning 
Slovakia’,  developed 
comprehensive 
consultation  process  by  experts  and  completed  in 
September  2017,  spells  out  a  vision  for  regional  and 
higher  education  reform.  Progress  on  the  reform  has 
however been limited, as the document still needs to be 
translated 
the  official  government  National 
Education  Strategy,  with  concrete  action  plans 
announced only for 2018. 

into 

Limited  Progress;  The  country's  socioeconomic  and 
educational exclusion of its Roma communities is a key 
problem.  The  legislative  amendments  made  to  the 
School  Act  in  2015  have  a  potential  to  increase  the 
participation  of  Roma  pupils  in  inclusive  mainstream 
education.  However, 
the 
expected  results  due  to  the  absence  of  an  integrated 
approach.  There 
is  no  systematic  methodological 
guidance  to  schools,  which  would  include  concrete 
measures 
inclusive  mainstream 
education  and  a  specification  of  funding  available  for 
that  purpose.  Systematic  monitoring  and  evaluation  of 
the effectiveness of measures is lacking. 

they  are  not  delivering 

towards 

leading 

CSR 3:  

Slovakia  has  made  limited  progress  in  addressing 
CSR 3  

Improve  competition  and  transparency  in 
public procurement operations.  

in 

the 

has 

been  made 

Limited  Progress 
the 
implementation  of  a  number  of  efficiency  measures, 
including the European Single Procurement Document, 
e-ID  and 
'once  only'  principle.  The  Slovak 
authorities  have  undertaken  a  feasibility  study  of 
options  for  further  development  of  the  electronic 
platform for procurement and are on track to transition 
to  fully  electronic  procedures  by  October  2018,  as 
required  by  the  new  Public  Procurement  Directive. 
Implementation  of  MEAT  criteria  in  the  construction 
and health sectors is starting, as well as a price mapping 
exercise  and  aggregated  purchases  of  certain  hospital 
equipment.  

Step  up  the  fight  against  corruption  by 
stronger enforcement of existing legislation.  

No Progress; There has been no increase in conviction 
statistics,  and  corruption  cases  involving  PEPs  /  large 
public assets are not yet properly investigated. There is 
a decrease in the available human resources devoted to 
corruption  cases  at  prosecutorial  level,  namely  in  the 
special prosecutions service.  

43 

 
A. Overview Table 

Adopt and implement a comprehensive plan 
to 
lower  administrative  and  regulatory 
barriers for businesses.  

Some Progress; The Government adopted a package of 
measures  to  be  implemented  by  2019  to  improve  the 
business environment and boost investment  

Improve  the  effectiveness  of  the  justice 
system,  including  a  reduction  in  the  length 
of civil and commercial cases.  

Limited  Progress;  Limited  progress  has  been  made 
towards  improving  the  effectiveness  of  the  justice 
system.  

Europe 2020 (national targets and progress) 

Employment rate target: 72 %.  

R&D target set in the NRP: 1.2 % of GDP 
(where the private sector is to provide 2/3 of 
total expenditure) 

The  Slovak  labour  market  has  been  on  a  continuous 
path  of  recovery,  bolstered  by  rapid  job  creation.  The 
employment  rate  grew  to  69.8%  in  2016,  but  remains 
below  the  EU  average  and  the  national  target  to  be 
reached by 2020.  

0.79 % (2016) 

this 

target 

After  meeting 
in  2015  (1.2%),  RDI 
investment  dropped  significantly  in  2016  (0.8%). 
Sustained  effort  is  needed  to  attain  the  target  again. 
This was accounted for by a fall in public RDI intensity 
from 0.84% in 2015 to 0.39% in 2016, which was to a 
large extent driven by the start of the new EU funding 
cycle  and  the  slow  start-up  time  for  new  projects, 
including  in  the  RDI  area.  Meanwhile,  business  RDI 
intensity  increased  slightly  from  0.33%  in  2015  to 
0.40% in 2016, but remains one of the lowest in the EU. 

Greenhouse  gas  emissions,  national  target 
for non-ETS sectors: max. 13% increase by 
2020 compared to 2005 

2020 renewable energy target: 14%  

Emissions are expected to be 12 % lower in 2020 than 
in  2005,  according  to  national  projections  taking  into 
account existing measures. This means that Slovakia is 
expected  to  overachieve  its  target  by  25  percentage 
points.  

In 2016 emissions were 14 % lower than in 2005 (based 
on  preliminary  data),  again  overachieving 
the 
intermediate target for 2016 of a max. 9% rise.  

Slovakia  had  a  12.9%  share  of  renewable  energy  in 
gross  final  consumption  in  2015  (Eurostat).  This  was 
above the indicative goal for 2015/2016 of 10 % needed 
to stay on track towards its 2020 target.  

Energy 
consumption targets:  

efficiency, 

2020 

energy 

16.4  Mtoe  expressed  in  primary  energy 
consumption  (9.0  Mtoe  expressed  in  final 

Primary  and  final  energy  consumption  continued  to 
decrease  in  2014  for  both  types  of  consumption. 
Primary energy consumption stood at 15.3 compared to 
the (now slightly lowered) EU 2020 target of 16.4 Mtoe 
and  final  energy  consumption  stood  at  10.1  compared 

44 

 
  
A. Overview Table 

to the EU 2020 target of 9.0 Mtoe. Although Slovakia is 
on  track  to  meet  its  target  for  2020,  additional  efforts 
are  warranted  to  keep  primary  energy  consumption  in 
check.  

School  dropout  has  risen  and  there  are  large  regional 
disparities.  The  rate  of  early  school  leaving  (ESL)  is 
well below the EU average of 10.7%, at 7.4 % in 2016, 
but has  deteriorated from  5.3 %  in  2012.  Eurostat data 
show  a  sizeable  regional  variation.  The  highest  and 
fastest-rising levels are in eastern Slovakia, where ESL 
exceeds 12 %; compared to 4 % in western regions (see 
Figure  3  below).  FRA  estimates  that  58  %  of  Roma 
children  are  early  school  leavers.  The  rate  of  young 
people  aged  15-24  not  in  employment,  education  or 
training was 12.3 % in 2016, close to the EU average of 
11.5 %.  

The tertiary attainment rate rose by close to 8 pp. since 
2012  to  31.5  %  in  2016. While  below  the  EU  average 
of  39.1  %.  Women  (at  39.4  %)  strongly  outperformed 
men (at 24 %). Outgoing learning mobility remains low 
at  only  4.5  %  for  ISCED  5-8  levels  in  2015,  e.g. 
compared to 8.2 % in the Czech Republic.  

further 

The  number  of  people  at  risk  of  poverty  or  social 
exclusion  has 
is 
significantly  below  EU  average.  As  of  2016  there  has 
been  a  cumulative  decrease  of  161  000  persons  since 
2008 (Eurostat).  

to  18.1%,  and 

fallen 

energy consumption)  

Early school leaving (ESL) target: 6 %.  

Tertiary education target: 40 %.  

Reduce  to  a  rate  of  17.2%  the  number  of 
people living in poverty or social exclusion 
(compared  to  20.6%  in  2008;  reduction  of 
170 000 persons between 2008 and 2020) 

([1])  The  following  categories  are  used  to  assess  progress  in  implementing  the  country-specific 
recommendations:  

No  progress:  The  Member  State  has  not  credibly  announced  nor  adopted  any  measures  to  address  the 
CSR.  Below  a  number  of  non-exhaustive  typical  situations  that  could  be  covered  under  this,  to  be 
interpreted on a case by case basis taking into account country-specific conditions:  

no legal, administrative, or budgetary measures have been announced in the National Reform Programme 
or  in  other  official  communication  to  the  national  Parliament  /  relevant  parliamentary  committees,  the 
European  Commission,  or  announced  in  public  (e.g.  in  a  press  statement,  information  on  government's 
website);  

no non-legislative acts have been presented by the governing or legislator body; 

the Member State has taken initial steps in addressing the CSR, such as commissioning a study or setting 
up a study group to analyse possible measures that would need to be taken (unless the CSR explicitly asks 
for  orientations  or  exploratory  actions),  while  clearly-specified  measure(s)  to  address  the  CSR  has  not 
been proposed. 

45 

 
 
 
A. Overview Table 

Limited progress: The Member State has:  

announced certain measures but these only address the CSR to a limited extent; 

and/or 

presented  legislative  acts  in  the  governing  or  legislator  body  but  these  have  not  been  adopted  yet  and 
substantial non-legislative further work is needed before the CSR will be implemented; 

presented non-legislative acts, yet with no further follow-up in terms of implementation which is needed 
to address the CSR. 

Some progress: The Member State has adopted measures that partly address the CSR  

and/or  

the Member State has adopted measures that address the CSR, but a fair amount of work is still needed to 
fully  address  the  CSR  as  only  a  few  of  the  adopted  measures  have  been  implemented.  For  instance: 
adopted by national parliament; by ministerial decision; but no implementing decisions are in place.  

Substantial  progress:  The  Member  State  has  adopted  measures  that  go  a  long  way  in  addressing  the 
CSR and most of which have been implemented.  

Full  implementation:  The  Member  State  has  implemented  all  measures  needed  to  address  the  CSR 
appropriately.  

46 

 
ANNEX B:  MACROECONOMIC IMBALANCE PROCEDURE 

SCOREBOARD 

Table B.1:  MIP Scoreboard (AMR 2018) 

Flags:b:Break in series.          
1) This table provides data as published under the Alert Mechanism Report 2018, which reports data as of 24 Oct 2017. Please 
note that figures reported in this table may therefore differ from more recent data elsewhere in this document. 
 2) Unemployment rate: i = Eurostat back-calculation to include 2011 Population Census results. 
 3) Youth unemployment rate: i = Eurostat back-calculation to include 2011 Population Census results.  
4) Figures highlighted are those falling outside the threshold established in the European Commission's Alert Mechanism 
Report.          
Source: European Commission 2017, Statistical Annex to the Alert Mechanism Report 2018, SWD (2017) 661. 

47 

Thresholds201120122013201420152016Current account balance, % of GDP 3 year average-4%/6%-4.4 -2.9 -0.7 1.3 0.4 -0.7 Net international investment position% of GDP-35%-64.4 -61.4 -62.3 -63.6 -64.6 -62.4 Real effective exchange rate - 42 trading partners, HICP deflator3 year % change±5% (EA) ±11% (Non-EA)3.4 -3.2 2.1 1.2 -1.1 -1.6 Export market share - % of world exports5 year % change-6%-2.6 -9.9 -3.7 2.3 4.5 7.3 Nominal unit labour cost index (2010=100)3 year % change9% (EA) 12% (Non-EA)6.1 0.8 2.2 1.8 2.4 3.5 House price index (2015=100), deflated 1 year % change6%-5.2 -6.0 -0.4 1.5 5.5 7.0 Private sector credit flow, consolidated% of GDP14%3.0 3.4 5.2 5.1 7.7 9.2 Private sector debt, consolidated% of GDP133%70.2 77.9 82.9 87.8 88.1 94.7 General government gross debt% of GDP60%43.7 52.2 54.7 53.5 52.3 51.8 Unemployment rate3 year average10%13.4i14.1i14.0i13.8 13.0 11.5 Total financial sector liabilities, non-consolidated1 year % change16.5%0.3 0.7 1.7 8.7 10.8 8.5 Activity rate - % of total population aged 15-643 year change in pp-0.2 pp-0.1b1.0 1.2 1.6b1.5 2.0 Long-term unemployment rate - % of active population aged 15-743 year change in pp0.5 pp2.6b2.9 0.8 0.1 -1.8 -4.2 Youth unemployment rate - % of active population aged 15-243 year change in pp2 pp14.4i6.4 -0.2 -4.0 -7.5 -11.5 External imbalances and competitivenessInternal imbalancesEmployment indicators 
 
 
 
 
ANNEX C: STANDARD TABLES 

Table C.1: 

Financial market indicators 

1) Latest data Q3 2017. Includes not only banks but all monetary financial institutions excluding central banks. 
2) Latest data Q2 2017. 
3) As per ECB definition of gross non-performing debt instruments 
4) Quarterly values are not annualised 
* Measured in basis points. 
Sources: 
European Commission (long-term interest rates); World Bank (gross external debt); Eurostat (private debt); ECB (all other 
indicators). 

Sources: Sources: 
European Commission (long-term interest rates); World Bank (gross external debt); Eurostat (private debt); ECB (all other 
indicators). 

48 

201220132014201520162017Total assets of the banking sector (% of GDP)(1)82.182.384.487.690.189.8Share of assets of the five largest banks (% of total assets)70.770.370.772.372.7-Foreign ownership of banking system (% of total assets)(2)88.488.184.385.183.683.9Financial soundness indicators:2)              - non-performing loans (% of total loans)(3)3.83.84.13.53.93.6              - capital adequacy ratio (%)15.917.517.317.718.018.6              - return on equity (%)(4)9.010.09.29.79.95.3Bank loans to the private sector (year-on-year % change)(1)3.86.47.410.410.011.7Lending for house purchase (year-on-year % change)(1)11.111.913.613.814.413.6Loan to deposit ratio(1)87.287.991.291.595.199.5Central Bank liquidity as % of liabilities--1.11.21.31.7Private debt (% of GDP)77.982.987.888.194.7-Gross external debt (% of GDP)(2) - public24.232.937.933.632.831.3    - private28.232.130.631.233.034.1Long-term interest rate spread versus Bund (basis points)*305.8161.890.838.945.362.0Credit default swap spreads for sovereign securities (5-year)*191.583.753.344.939.238.8 
 
 
 
 
 
 
  
C. Standard Tables 

Table C.2: 

Headline Social Scoreboard Indicators 

† The Social Scoreboard includes 14 headline indicators, of which 12 are currently used to compare Member States 
performance. The indicators "participants in active labour market policies per 100 persons wanting to work" and 
"compensation of employees per hour worked (in EUR)" are not used due to technical concerns by Member States. Possible 
alternatives will be discussed in the relevant Committees. 
(1) People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) and/or suffering from 
severe material deprivation (SMD) and/or living in households with zero or very low work intensity (LWI).       
(2) Unemployed persons are all those who were not employed but had actively sought work and were ready to begin 
working immediately or within two weeks.       
(3) Gross disposable household income is defined in unadjusted terms, according to the draft Joint Employment Report 2018.       
(4) Reduction in percentage of the risk of poverty rate, due to social transfers (calculated comparing at-risk-of poverty rates 
before social transfers with those after transfers; pensions are not considered as social transfers in the calculation).       
(5) Average of first three quarters of 2017 for the employment rate and gender employment gap. 
Source: Eurostat    

49 

201220132014201520162017 5Equal opportunities and access to the labour marketEarly leavers from education and training (% of population aged 18-24)5.36.46.76.97.4:Gender employment gap (pps)15.514.414.614.714.212.7Income inequality, measured as quintile share ratio (S80/S20)3.73.63.93.53.6:At-risk-of-poverty or social exclusion rate1 (AROPE)20.519.818.418.418.1:Young people neither in employment nor in education and training (% of population aged 15-24)13.813.712.813.712.3:Dynamic labour markets and fair working conditions†Employment rate (20-64 years)65.165.065.967.769.871.0Unemployment rate2 (15-74 years)14.014.213.211.59.78.1Gross disposable income of households in real terms per capita3 (Index 2008=100) ::101.8106.0109.2:Public support / Social protection and inclusionImpact of social transfers (excluding pensions) on poverty reduction434.036.335.735.331.0:Children aged less than 3 years in formal childcare5.04.06.51.10.5:Self-reported unmet need for medical care2.21.92.12.12.3:Individuals who have basic or above basic overall digital skills (% of population aged 16-74):::53.055.059.0 
 
 
 
 
C. Standard Tables 

Table C.3: 

Labour market and education indicators 

* Non-scoreboard indicator       
(1) Long-term unemployed are people who have been unemployed for at least 12 months.       
(2) Difference between the average gross hourly earnings of male paid employees and of female paid employees as a 
percentage of average gross hourly earnings of male paid employees. It is defined as "unadjusted", as it does not correct for 
the distribution of individual characteristics (and thus gives an overall picture of gender inequalities in terms of pay). All 
employees working in firms with ten or more employees, without restrictions for age and hours worked, are included.       
(3) PISA (OECD) results for low achievement in mathematics for 15 year-olds.       
(4) Impact of socio-economic and cultural status on PISA (OECD) scores. Values for 2012 and 2015 refer respectively to 
mathematics and science. 
(5) Average of first three quarters of 2017, unless for the youth unemployment rate (annual figure). 
Source: Eurostat, OECD 

50 

Labour market indicators201220132014201520162017 5Activity rate (15-64)69.469.970.370.971.9:Employment in current job by durationFrom 0 to 11 months8.18.09.611.712.0:From 12 to 23 months7.77.17.38.28.6:From 24 to 59 months18.717.917.816.316.9:60 months or over65.566.965.363.862.5:Employment growth* (% change from previous year)0.1-0.81.42.02.42.2Employment rate of women(% of female population aged 20-64)57.357.858.660.362.764.6Employment rate of men (% of male population aged 20-64)72.872.273.275.076.977.3Employment rate of older workers* (% of population aged 55-64)43.144.044.847.049.052.6Part-time employment* (% of total employment, aged 15-64)4.04.55.15.85.85.8Fixed-term employment* (% of employees with a fixed term contract, aged 15-64)6.76.88.810.59.99.4Transition rate from temporary to permanent employment(3-year average)40.941.239.435.7::Long-term unemployment rate1 (% of labour force)9.410.09.37.65.85.1Youth unemployment rate (% active population aged 15-24)34.033.729.726.522.218.6Gender gap in part-time employment2.72.93.14.03.84.0Gender pay gap2 (in undadjusted form)20.818.819.719.6::Education and training indicators201220132014201520162017Adult participation in learning(% of people aged 25-64 participating in education and  training)3.23.13.13.12.9:Underachievement in education327.5::27.7::Tertiary educational attainment (% of population aged 30-34 having successfully completed tertiary education)23.726.926.928.431.5:Variation in performance explained by students' socio-economic status424.6::16.0:: 
 
 
 
 
C. Standard Tables 

Table C.4: 

Social inclusion and health indicators 

*  Non-scoreboard indicator 
(1) At-risk-of-poverty rate (AROP): proportion of people with an equivalised disposable income below 60 % of the national 
equivalised median income.  
(2) Proportion of people who experience at least four of the following forms of deprivation: not being able to afford to i) pay 
their rent or utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have a washing 
machine, viii) have a colour TV, or ix) have a telephone. 
(3) Percentage of total population living in overcrowded dwellings and exhibiting housing deprivation. 
(4) People living in households with very low work intensity: proportion of people aged 0-59 living in households where the 
adults (excluding dependent children) worked less than 20 % of their total work-time potential in the previous 12 months. 
(5) Ratio of the median individual gross pensions of people aged 65-74 relative to the median individual gross earnings of 
people aged 50-59. 
(6) Fixed broadband take up (33%), mobile broadband take up (22%), speed (33%) and affordability (11%), from the Digital 
Scoreboard. 
Source: Eurostat, OECD 

51 

201220132014201520162017Expenditure on social protection benefits* (% of GDP)Sickness/healthcare5.35.55.65.5::Disability1.61.61.61.6::Old age and survivors7.77.98.28.1::Family/children1.71.71.71.6::Unemployment0.70.60.50.5::Housing0.00.00.00.0::Social exclusion n.e.c.0.40.40.40.3::Total17.517.818.017.7::of which: means-tested benefits0.90.90.90.8::General government expenditure by function (% of GDP, COFOG)Social protection15.015.315.115.115.1:Health6.86.87.07.17.4:Education4.14.04.14.23.8:Out-of-pocket expenditure on healthcare (% of total health expenditure)23.223.318.018.4::Children at risk of poverty or social exclusion (% of people aged 0-17)*26.625.523.624.924.4:At-risk-of-poverty  rate1 (% of total population)13.212.812.612.312.7:In-work at-risk-of-poverty rate (% of persons employed)6.25.75.76.06.5:Severe material deprivation rate2  (% of total population)10.510.29.99.08.2:Severe housing deprivation rate3, by tenure statusOwner, with mortgage or loan2.93.91.63.2::Tenant, rent at market price12.39.19.47.66.7:Proportion of people living in low work intensity households4 (% of people aged 0-59)7.27.67.17.16.5:Poverty thresholds, expressed in national currency at constant prices*37103478346535303553:Healthy life years (at the age of 65)Females3.13.73.63.8::Males3.54.24.34.1::Aggregate replacement ratio for pensions5 (at the age of 65)0.60.60.60.60.6:Connectivity dimension of the Digital Economy and Society Inedex (DESI)6::38.544.948.954.1GINI coefficient before taxes and transfers*41.941.343.239.840.5:GINI coefficient after taxes and transfers*25.324.226.123.724.3: 
 
 
 
 
 
C. Standard Tables 

Table C.5: 

Product market performance and policy indicators 

(1) The methodologies, including the assumptions, for this indicator are shown in detail here: 
http://www.doingbusiness.org/methodology.        
(2) Average of the answer to question Q7B_a. "[Bank loan]: If you applied and tried to negotiate for this type of financing 
over the past six months, what was the outcome?". Answers were codified as follows: zero if received everything, one if 
received most of it, two if only received a limited part of it, three if refused or rejected and treated as missing values if the 
application is still pending or don't know.       
(3) Percentage population aged 15-64 having completed tertiary education.       
(4) Percentage population aged 20-24 having attained at least upper secondary education.       
(5) Index: 0 = not regulated; 6 = most regulated. The methodologies of the OECD product market regulation indicators are 
shown in detail here: http://www.oecd.org/competition/reform/indicatorsofproductmarketregulationhomepage.htm       
(6) Aggregate OECD indicators of regulation in energy, transport and communications (ETCR).       

Source: European Commission; World Bank — Doing Business (for enforcing contracts and time to start a business); OECD (for 
the product market regulation 
indicators); SAFE (for outcome of SMEs' applications for bank loans). 

52 

Performance Indicators2010201120122013201420152016Labour productivity (real, per person employed, year-on-year % change)Labour productivity in Industry17.861.201.420.6511.005.375.98Labour productivity in Construction-4.9310.409.84-7.813.073.45-3.32Labour productivity in Market Services2.27-1.201.411.132.711.55-1.91Unit labour costs (ULC) (whole economy, year-on-year % change)ULC in Industry-14.763.264.513.41-7.34-1.82-2.01ULC in Construction9.36-6.64-8.0810.80-3.591.714.93ULC in Market Services1.095.94-0.071.260.703.364.57Business Environment2010201120122013201420152016Time needed to enforce contracts(1) (days)565.0565.0545.0545.0705.0705.0705.0Time needed to start a business(1) (days)17.517.513.518.511.511.511.5Outcome of applications by SMEs for bank loans(2)na0.92na1.070.830.650.61Research and innovation2010201120122013201420152016R&D intensity0.620.660.800.820.881.180.79General government expenditure on education as % of GDP4.204.104.104.004.104.20naPersons with tertiary education and/or employed in science and technology as % of total employment39383737373738Population having completed tertiary education(3)15161718181920Young people with upper secondary level education(4)93939391919190Trade balance of high technology products as % of GDP-3.17-4.93-5.55-5.32-5.07-5.92naProduct and service markets and competition200320082013OECD product market regulation (PMR)(5), overall2.181.621.29OECD PMR5, retail1.141.041.75OECD PMR5, professional servicesnana2.90OECD PMR5, network industries(6)3.332.281.88 
 
 
 
 
 
C. Standard Tables 

Table C.6:  Green Growth 

All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2010 prices) 
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR) 
          Carbon intensity: greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR) 
          Resource intensity: domestic material consumption (in kg) divided by GDP (in EUR) 
          Waste intensity: waste (in kg) divided by GDP (in EUR) 
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP   
Weighting of energy in HICP: the proportion of 'energy' items in the consumption basket used for the construction of the HICP 
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual % 
change) 
Real unit energy cost: real energy costs as % of total value added for the economy 
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in 2010 EUR)  
Real unit energy costs for manufacturing industry excluding refining : real costs as % of value added for  manufacturing 
sectors 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP 
Electricity and gas prices for medium-sized industrial users: consumption band 500–20 00MWh and 10 000–100 000 GJ; figures 
excl. VAT. 
Recycling rate of municipal waste: ratio of recycled and composted municipal waste to total municipal waste 
Public R&D for energy or for the environment: government spending on R&D for these categories as % of GDP 
Proportion of GHG emissions covered by EU emissions trading system (ETS) (excluding aviation): based on GHG emissions 
(excl land use, land use change and forestry) as reported by Member States to the European Environment Agency. 
Transport energy intensity: final energy consumption of transport activity (kgoe) divided by transport industry gross value 
added (in 2010 EUR) 
Transport carbon intensity: GHG emissions in transport activity divided by gross value added of the transport sector 
Energy import dependency: net energy imports divided by gross inland energy consumption incl. consumption of 
international bunker fuels 
Aggregated supplier concentration index:  covers oil, gas and coal. Smaller values indicate larger diversification and hence 
lower risk. 
Diversification of the energy mix: Herfindahl index covering natural gas, total petrol products, nuclear heat, renewable 
energies and solid fuels 
* European Commission and European Environment Agency 
Source: European Commission and European Environment Agency (Share of GHG emissions covered by ETS); European 
Commission (Environmental taxes over labour taxes and GDP); Eurostat (all other indicators) 

53 

Green growth performance201120122013201420152016MacroeconomicEnergy intensity kgoe / €0.250.240.240.220.210.21Carbon intensity kg / €0.650.610.600.550.54-Resource intensity (reciprocal of resource productivity)kg / €1.070.910.860.920.900.85Waste intensity kg / €-0.12-0.12--Energy balance of trade % GDP-6.4-5.9-5.9-4.3-3.5-2.7Weighting of energy in HICP%15.4018.9116.4816.1815.5414.87Difference between energy price change and inflation %4.71.8-1.9-2.0-2.0-2.4Real unit of energy cost% of value added30.930.228.925.5--Ratio of environmental taxes to labour taxesratio0.120.110.110.110.11-Environmental taxes% GDP1.81.71.71.81.81.8Sectoral Industry energy intensity kgoe / € 0.250.260.260.240.220.20Real unit energy cost for manufacturing industry excl. refining% of value added26.225.423.622.8--Share of energy-intensive industries in the economy% GDP14.1714.3813.4015.1116.8918.95Electricity prices for medium-sized industrial users€ / kWh0.130.130.130.120.110.11Gas prices for medium-sized industrial users€ / kWh0.040.040.040.040.030.03Public R&D for energy % GDP0.010.000.000.010.010.01Public R&D for environmental protection% GDP0.010.010.010.010.010.01Municipal waste recycling rate%10.313.310.810.314.923.0Share of GHG emissions covered by ETS*%51.150.750.951.551.251.9Transport energy intensitykgoe / €0.710.620.630.460.400.53Transport carbon intensitykg / €1.891.811.811.341.23-Security of energy supplyEnergy import dependency%64.360.259.260.958.759.0Aggregated supplier concentration indexHHI71.966.168.970.468.5-Diversification of energy mixHHI0.220.220.220.210.200.20 
 
 
 
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