COMMISSION STAFF WORKING DOCUMENT Country Report Slovakia 2020 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2020 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: 2020-02-26
Institutions: European Commission, Secretariat-General
Subjects: Slovakia, economic situation, green economy, investment, labour market, macroeconomics, public finance, social policy, structural adjustment, tax system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.2.2020  SWD(2020) 524 final  COMMISSION STAFF WORKING DOCUMENT Country Report Slovakia 2020 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2020 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(2020) 150 final}  
 
 
CONTENTS 

Executive summary 

1. 

2. 

3. 

Economic situation and outlook 

Progress with country-specific recommendations 

Reform priorities 

Financial sector 

Public finances and taxation 

3.1. 
3.2. 
3.3.  Labour market, education and social policies 
3.4.  Competitiveness, reforms and investment 
3.5.  Environmental sustainability 

A.  Overview table 

B.  Commission debt sustainability analysis and fiscal risks 

C. 

Standard tables 

D. 

E. 

Investment guidance on Just Transition Fund 2021-2027 for Slovakia 

Progress towards the Sustainable Development Goals (SDGs) 

References 

LIST OF TABLES 

1.1. 
2.1. 
C.1. 
C.2. 
C.3. 
C.4. 
C.6. 

Key economic indicators Slovakia 

Summary table on 2019 CSR assessment 

Financial market indicators 

Headline Social Scoreboard indicators 

Labour market and education indicators 

Social inclusion and health indicators 

Green growth 

LIST OF GRAPHS 

1.1. 
1.2. 
1.3. 
1.4. 
1.5. 

Real GDP growth and its components 

GNI per person in purchasing power standards 

Evolution of labour productivity and gaps (GVA per hour worked in PPS) 

Decomposition of rate of change of ULC 

Evolution of labour productivity by region 

1 

3 

7 

18 

22 

22 
27 
32 
42 
53 

57 

65 

66 

72 

74 

79 

17 
19 
66 
66 
67 
68 
70 

7 
7 
8 
8 
9 

 
 
 
10 
10 
11 
11 
12 
13 
13 
18 
22 
26 
29 
30 
32 
33 
34 
38 
42 
42 
43 
43 

15 

20 
39 

Consumer inflation 

Regional disparities 

Unit Labour Costs by sector 

Beveridge curve, 2000-2018 

Employment by sector, year-on-year changes 

Decomposition of Net International Investment Position 

Evolution of the House Price Index and MFI loans for house purchase 

Overall multiannual implementation of 2011-2019 country-specific recommendations (CSR) to date 

1.6. 
1.7. 
1.8. 
1.9. 
1.10. 
1.11. 
1.12. 
2.1. 
3.1.1.  Changes in tax structure in Slovakia and the EU-28 between 2007 and 2017 (in pps) 
3.1.2.  Hospital admissions for ambulatory care-sensitive conditions, age-standardised rate per 100.000 population 
3.2.1.  Housing construction and decrease in number of dwellings 
3.2.2.  Household debt as % of GDP 
3.3.1.  Unemployment rates by district (September 2019) 
3.3.2.  Gender employment gap by age group, 2018 
3.3.3.  AROPE levels by age group 
3.3.4.  Early school leavers, aged 18-24 (%) 
3.4.1.  Labour productivity in manufacturing vs. market services 
3.4.2.  Evolution of gross fixed capital formation 
3.4.3. 
3.4.4.  RCI 2019 indicators: Comparison of the EU average, Bratislava region and Eastern Slovakia 

Foreign direct investment inflows and repatriation of profits 

LIST OF BOXES 

1.1. 
2.1. 

Automotive sector 

EU funds and programmes contribute to addressing structural challenges and to fostering growth and 

competitiveness in Slovakia 

3.3.1.  Monitoring performance in light of the European Pillar of Social Rights 

2 

 
 
 
 
 
 
EXECUTIVE SUMMARY 

the 

and 

climate 

Slovakia’s  growth  opportunities  lie  in  a  more 
sustainable  and  higher  value  added  economy. 
Slovakia  has  seen  significant  economic  growth  in 
recent  decades  and  has  been  catching  up  with  the 
EU  average,  thanks  to  important  reforms  and 
structural  changes  that  have  taken  place.  As 
convergence  with  the  EU  weakens,  population 
digital 
change 
ageing, 
transformation  pose  long-term  challenges  to  the 
country’s  economy  and  to  fiscal  sustainability. 
Maintaining  productivity  growth,  the  backbone  of 
Slovakia’s  economic  convergence,  will 
thus 
require  sustained  structural  reforms  and  targeted 
investment  into  infrastructure  and  research  and 
innovation. 
and 
inclusiveness of the education and training system, 
reducing  regional  disparities  and  improving  the 
quality  of  public  institutions  can  help  Slovakia  to 
safeguard  its  competitiveness,  move  up  the  value 
chain  and  become  more  sustainable.  A  smart  and 
transport  and  energy  system  can 
low-carbon 
contribute to greening the economy. (1) 

Improving 

quality 

the 

to 

The  strong  economic  expansion of  recent years 
slower  growth.  After 
is  giving  way 
experiencing  4.0%  growth  in  2018,  Slovakia’s 
economy  is  estimated  to  have  grown  at  2.3%  in 
2019  and  is  expected  to  grow  at  a  similar  rate  in 
2020  and  2021.  Amid  record-low  unemployment 
and  rising  wages,  household  incomes  and  private 
consumption will continue to grow. Trade is likely 
to  recover  after  its  less  dynamic  performance  of 
2019,  which  was  due  to  weaker  demand  and 
changes  to  production  in  the  automotive  industry, 
which is a key part of Slovakia’s economy. 

Slovakia’s progress in catching up with the EU 
average has slowed down. After a period of swift 
convergence after the country joined the EU, GDP 
per  person  in  purchasing  power  standards  has 
stood  between  72%  and  77%  of  the  EU  average 
since  2010.  Slovakia’s  progress  in  catching  up  is 
now  lagging  behind  that  of  regional  peers  in 
Central  and  Eastern  Europe.  This  is  partly  linked 
to  the  persisting  labour  productivity  gap  vis-à-vis 

(1)  This  report  assesses  Slovakia’s  economy  in  light  of  the 
European  Commission’s  Annual  Sustainable  Growth 
Strategy,  published  on  17  December  2019.  In 
this 
document, the Commission sets out a new strategy on how 
to  address  not  only  short-term  economic  challenges  but 
also  the  economy’s  longer-term  challenges.  This  new 
economic agenda of competitive sustainability rests on four 
dimensions:  environmental  sustainability,  productivity 
gains, fairness and macroeconomic stability. 

3 

the  EU  average.  Slovakia’s  suboptimal  use  of 
available  EU  funds  may  also  have  contributed.  In 
addition,  there  is  still  a  significant  developmental 
gap  between  Slovakia’s  capital  and  its  other 
regions.  Improving  key  infrastructure  and  public 
services  and  strengthening  urban-rural  linkages 
can help narrow this gap. Slovakia’s strategies and 
reforms are relatively clear and effective on paper, 
but their implementation often remains poor. 

The  labour  market  continues  to  improve  and 
wages  are  rising  fast.  Employment  growth  has 
brought  the  unemployment  rate  to  a  record  low. 
The  shortage  of  workers  has  fuelled  large  salary 
increases and labour costs are now growing faster 
than  productivity.  Although  wage  growth  has 
helped  improve  living  standards,  in  some  sectors 
this  can  negatively  affect  competitiveness  if  it  is 
not  supported  by  investment,  innovation  and  the 
development of better skills that match the labour 
market’s future needs. The positive general trends 
hide  significant  gender  employment  and  pay  gaps 
as  well  as 
regional  disparities,  particularly 
affecting  the  marginalised  Roma  communities. 
Long-term unemployment is generally decreasing, 
but  it  remains  high  for  young  people  and  in 
Slovakia’s eastern regions. 

Households  are  increasingly  indebted,  which 
constitutes a potential risk to financial stability. 
Household debt reached a record high of 42.8% of 
GDP in Q2-2019, due to rising property prices and 
the  resulting  higher  mortgages.  House  prices  are 
expected to continue to grow faster than disposable 
income, reducing affordability. Despite an increase 
in construction activity, supply constraints, in part 
due  to  lengthy  permit  processes,  continue  to  fuel 
price growth. Further measures to increase housing 
supply  and  develop  the  rental  market  and  public 
housing  may  reduce  further  house  price  inflation. 
Better  public  transport  connections  could  reduce 
the demand for housing in the bigger cities. 

Investment  is  needed  in  many  policy  areas. 
Modernising  the  hospital  network  can  further 
improve  health  outcomes.  Expanding  broadband 
coverage  and  speed  will  allow  for  equal  and 
improved access to the internet. Renovating energy 
inefficient  buildings 
expanding  public 
transport  options  can  put  the  economy  on  a  path 
that  is  more  environmentally  sustainable.  More 
generally, fostering good governance and a quality 

and 

 
                                                           
business  environment  are  also  crucial  for  a  more 
supportive investment climate. 

Slovakia  has  made 
addressing 
the 
recommendations. 

limited (2)  progress 
2019 

in 
country-specific 

There  has  been  some  progress  in  the  following 
areas: 

 

improving  the  effectiveness  of  the  justice 
system; 

  using  quality-related  and  lifecycle  cost  criteria 

in public procurement; 

There  has  been  limited  progress  in  the  following 
areas: 

  safeguarding the long-term fiscal sustainability 

of the healthcare and pension systems 

 

improving  the  quality  and  inclusiveness  of 
education; 

  enhancing  access  to  affordable  and  quality 

childcare and long-term care; 

  promoting  the  integration  of  disadvantaged 

groups, in particular Roma people; 

 

focusing investment-related economic policy; 

  detecting and prosecuting corruption. 

supporting 

The  Social  Scoreboard 
the 
European  Pillar  of  Social  Rights  highlights 
some  challenges 
in  Slovakia.  The  gender 
employment gap is high and continues to increase, 
reflecting  that  women  in  childbearing  age  have 
lower  activity  rates.  Slovakia  is  trying  to  address 
this  issue  by  adjusting  parental  leave  benefits. 
While  close  to  average,  the  rate  of  early  leavers 
from  education  and  training  has  significantly 
increased in recent years, and it is very high among 
Roma  population.  The  inclusiveness  of  education 
remains  a  challenge 
in  particular  for  Roma 
children,  and  children  with  special  educational 

(2)  Information  on  the  level  of  progress  and  actions  taken  to 
address  the  policy  advice  in  each  respective  subpart  of  a 
country-specific  recommendation 
the 
overview table in the Annex. 

is  presented 

in 

Executive summary 

needs. On the positive side, income inequality and 
the proportion of people at risk of poverty or social 
exclusion remain low. 

the 

track 

targets 

necessitate 

target  would 

towards  meeting, 

Regarding  progress  towards  its  national  targets 
under  the  Europe  2020  strategy,  based  on  data 
available  thus  far,  Slovakia  currently  meets,  or  is 
for 
on 
employment  rate,  greenhouse  gas  emissions  and 
reducing  the  number  of  people  at  risk  of  poverty 
and  social  exclusion.  Reaching  the  renewable 
energy 
swift 
improvements.  As  regards  the  energy  efficiency 
targets,  while  the  primary  energy  consumption 
target is within reach, Slovakia is likely to miss its 
final  energy  consumption 
target.  The  R&D 
intensity  and  tertiary  education  targets  do  not 
appear  to  have  been  met,  but  Slovakia  is  getting 
ever closer to meeting the latter. Although the rate 
of early leavers from education and training is still 
within  the  target  range,  it  is  on  the  rise,  which 
shows  Slovakia’s  performance 
this  area 
continues to deteriorate. 

in 

Slovakia  has  made  progress  towards  achieving 
the Sustainable Development Goals (SDGs), but 
some  challenges  remain.  It  performs  better  than 
the EU average on a number of SDGs in the social 
domain,  including  reducing  poverty  (SDG1)  and 
inequalities 
(SDG10).  There  has  also  been 
progress  on  good  health  and  well-being  (SDG3) 
and  quality  education  (SDG4),  although  Slovakia 
is still lagging behind the EU average on indicators 
in  these  areas.  However,  environmental  pressures 
and  a  changing  climate  weigh  on  Slovakia’s 
sustainable  development, 
low-emissions 
energy  consumption  and  resource  productivity 
have  developed  less  favourably.  Slovakia  is  still 
facing  challenges  related  to  reinforced  climate 
action  (SDG13),  affordable  and  clean  energy 
(SDG7)  and  more  responsible  consumption  and 
production (SDG12). (3) 

and 

(3)  Within the scope of its legal basis, the European Semester 
can help drive national economic and employment policies 
towards the achievement of the United Nations Sustainable 
Development  Goals  (SDGs)  by  monitoring  progress  and 
ensuring  closer  coordination  of  national  efforts.  The 
present  report contains  reinforced  analysis  and  monitoring 
on  the  SDGs.  A  new  annex  (ANNEX  E)  presents  a 
statistical  assessment  of  trends  in  relation  to  SDGs  in 
Slovakia during the past five years, based on Eurostat’s EU 
SDG indicator set. 

4 

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

by 

has 

been 

boosted 

  Amid  risks,  public  finances  are  improving 
only  slowly  as  expenditure  grows  fast. 
Revenue 
solid 
employment growth and improved collection of 
value-added  tax,  even  though  the  value-added 
tax  gap  remains  high.  Property,  consumption 
and  environmental  taxes  still  play  a  limited 
role.  Digital  services  are  set  to  improve  the 
efficiency  of  tax  administration,  and  spending 
review  assessments  are  gradually  improving 
resource allocation. 

  Population  ageing,  recent  pension  reforms 
and  the  healthcare  system  pose  long-term 
sustainability  risks  to  public  finances.  The 
population  is  projected  to  age  rapidly  due  to 
increases  in  life  expectancy  and  low  fertility 
rates.  Recent  reforms  capping  the  retirement 
age and raising minimum pensions translate in 
higher  medium 
public 
to 
expenditure.  Excessive  reliance  on  hospital 
care  hinders 
a 
comprehensive  reform  for  modernising  the 
hospital  network  has  been  put  on  hold. 
However, several measures have also improved 
the efficiency of the health care system. 

efficiency,  but 

long-term 

system 

  Overall,  the  banking  sector  remains  sound 
and  well  capitalised,  but  rising  housing 
prices  and  household  debt  pose  challenges. 
Banks  continue  to  be  profitable,  but  lower 
interest rates have reduced their profit margins, 
and  the  recent  doubling  of  the  bank  levy  will 
further  weigh  on  their  profitability.  House 
prices  continue  to  grow,  translating  into  a  low 
but 
decreasing 
affordability,  as  well  as  rising  household  debt. 
Macro-prudential measures have contributed to 
reduce debt growth. Other measures in various 
areas  can  help  balance  housing  supply  and 
demand,  lower  household  indebtedness  and 
reduce financial risks.  

overvaluation, 

rising 

  The 

the 

effectiveness 

of 
framework  needs 

anti-money 
to  be 
laundering 
to 
improved.  Despite 
strengthen  the  prevention,  investigation  and 
the 
prosecution 

ambitious  plans 

of  money 

laundering, 

Executive summary 

effectiveness  of 

understanding  of  risk  exposure  remains  low. 
Limited  human  resources  and  training  hamper 
the 
supervision.  Steps 
undertaken  under  the  government  action  plan 
have  not  yet  provided  the  tools  necessary  to 
effectively 
identify  and  prosecute  money 
laundering offences and to confiscate assets. 

  Slovakia  has  a  strong  labour  market,  but 
structural challenges and disparities persist. 
Slovakia’s  employment  rate  reached  a  record 
high of 73.3%. The number of women who are 
in  work  or  looking  for  a  job  is  gradually 
increasing, but there are still significant gender 
gaps  in  both  employment  and  wages.  Long-
term unemployment is dropping, but it remains 
high in particular in eastern regions, also due to 
lack  of  integrated  employment  and  social 
services  for  the  vulnerable  groups  that  are  the 
farthest  away  from  the  labour  market.  The 
proportion of people at risk of poverty or social 
exclusion is low, but some groups and regions 
are particularly vulnerable.  

  The persisting cycle of poverty is difficult to 
break  and  people’s  access  to  social  and 
essential  services  is  uneven.  A  large  part  of 
the Roma population lives in poverty or in poor 
housing  conditions  and  their  access  to  social 
and  essential  services  is  hampered  by  missing 
infrastructure.  Child  poverty, 
in  particular 
among  Roma  communities,  is  a  major  reason 
for children being placed in the state foster care 
system. Formal long-term care continues to be 
dominated  by  residential  facilities,  and  the 
process  of deinstitutionalising  care for persons 
with disabilities is proceeding slowly. There is 
a lack of financial resources and of a clear and 
integrated  approach  addressing  the  increasing 
demand  for  healthcare  and  social  services  in 
long-term care. Access to quality healthcare, in 
particular primary care, remains relatively poor 
and uneven. 

  The low quality of Slovakia’s education and 
training system and the inequalities within it 
prevent  the  country  from  fulfilling 
its 
economic  potential.  Students’  performance  in 
low  and  pronounced 
basic  skills  remains 
with 
persist, 
educational 
socioeconomic  status  having  a  significant 
impact  on  educational  and  employment 

inequalities 

5 

 
 
Executive summary 

and 

take-up 

remains 

in  coordinating  policy  making, 
particular 
ensuring  high 
regulations, 
drafting 
performance  of 
the  civil  service,  human 
resource management and service delivery. The 
digitisation  of  public  services  is  progressing 
but 
low.  Despite  some 
progress,  the  justice  system  continues  to  face 
its  overall 
specific  challenges 
integrity.  Moreover,  the  prosecution  of  high-
level  corruption  cases  has  become  a  pressing 
challenge and efforts to improve the corruption 
prevention framework and to carry out planned 
reforms appear to be insufficient. 

regarding 

on 

  Environmental  pressures  and  challenges 
weigh 
sustainable 
Slovakia’s 
development.  The  climate  transition  requires 
scaled  up  efforts  and  targeted  investment, 
which  implies  significant  economic  and  social 
choices.  Currently  planned  investment  and 
funding  for  mitigation  and  adaptation  may  not 
be  sufficient,  with  private  finance  and  capital 
markets particularly underdeveloped. Investing 
into  making  buildings  more  energy  efficient 
enabling 
a  priority.  A  more 
remains 
environment could help increase the proportion 
of  renewable  energy  sources  in  the  energy 
supply.  Air  pollution  caused  by  solid  fuel 
rising  emissions  caused  by 
burning  and 
transport  pose  a  serious  health  concern. 
Moreover,  Slovakia  needs 
to  a 
changing  climate  by  addressing  and  planning 
for  increased  risks.  Moving  to  a  more  circular 
economy  would  also  help  make  the  use  of 
natural 
sustainable.  The 
Commission’s  proposal  for  a  Just  Transition 
Mechanism  under 
the  next  multi-annual 
financial  framework  for  2021-2027  includes  a 
Just Transition Fund, a dedicated just transition 
scheme  under  InvestEU,  and  a  new  public 
sector 
the  European 
facility  with 
Investment  Bank.  It  is  designed  to  ensure  that 
the  transition  towards  EU  climate  neutrality  is 
fair  by  helping  Slovakia’s  most  affected 
regions  to  address  the  social  and  economic 
consequences. Key priorities for support under 
the  Just  Transition  Fund  are  identified  in 
Annex D, building on the analysis of transition 
challenges outlined in this report. 

resources  more 

to  adapt 

loan 

the  country.  This 

outcomes. Investment in education and training 
remains 
insufficient,  affecting  educational 
outcomes across all levels, including vocational 
training  and  lifelong  learning.  Despite  further 
pay  rises  for  teachers,  the  teaching  profession 
remains  unattractive  and  there  are  teacher 
shortages.  The low inclusiveness of education 
contributes  to  the  poverty  cycle  seen  in  some 
parts  of 
is  especially 
challenging in relation to the Roma minority, in 
particular due to the persisting lack of systemic 
measures  to  improve  the  inclusion  of  Roma 
children.  The  obligatory  pre-school  entry  age 
will  be  lowered  as  of  2021,  which  means  that 
early childhood education and care will have to 
become  more  accessible,  high-quality  and 
inclusive.  As  the  quality  of  higher  education 
remains  low,  reform  measures  in  the  quality 
assurance system have been launched. 

  The  digital  transformation  could  provide 
opportunities if the regulatory framework is 
made fit-for-purpose and R&D is improved. 
Future  technological  changes  are  likely  to 
impact  Slovakia’s  economy  more  than  the 
economies of other countries. Yet, both public 
and  private  R&D  investment  remain  low.  The 
low  quality  of  public  research  and  limited 
cooperation  with  businesses,  partly  explained 
by 
to  a  fragmented 
governance  system,  constrain  the  development 
and sharing of knowledge and skills. 

inefficiencies  related 

  The  business  environment  is  slowly  losing 
ground  both  in  international  rankings  and 
in  the  perception  of  local  entrepreneurs.  In 
addition  to  specific  shortcomings  such  as 
lengthy  processes  to  get  construction  permits 
and resolve insolvency, the high frequency and 
low  predictability  of  changes  in  the  regulatory 
framework  hamper  investment.  On  a  more 
positive  note,  contracting  authorities  are 
becoming more interested in the use of quality 
in  public 
criteria  and 
procurement, 
substantial  practical 
improvements are yet to be seen. 

life  cycle  costing 
though 

  The overall effectiveness of Slovakia’s public 
institutions and administration remains low. 
reform  efforts,  Slovakia’s  public 
Despite 
administration  underperforms  relative  to  other 
in 
EU  countries.  There  are  shortcomings 

6 

 
 
 
1.  ECONOMIC SITUATION AND OUTLOOK 

uptick  in  2018.  Based  on  purchasing  power 
standards, GDP per person has stood between 72% 
and 77% of the EU average since 2010, similar to 
gross national income per person (Graph 1.2). Real 
GDP per person outpaced the EU average by more 
than  13.2 percentage  points cumulatively  between 
2010 and 2018, considerably less than the 50.1 pps 
in  2000-2010.  However,  Slovakia’s  relatively  fast 
economic  growth,  coupled  with  moderating 
inflation, may revive convergence. 

Graph 1.2:  GNI per person in purchasing power standards 

Growth performance 

The  strong  economic  expansion  seen  in  recent 
years  is  giving  way  to  slower  growth.  Slovakia 
has  witnessed 
impressive  economic  growth 
following the 2009 economic crisis. More recently, 
after  expanding  by  4.0%  in  2018,  economic 
growth measured by real GDP is estimated to have 
slowed  down  markedly  to  2.3%  in  2019  (Graph 
1.1).  This  was  mostly  due  to  lower  net  exports,  a 
result of both lower foreign demand and temporary 
domestic  factors,  such  as  changes  and  delays  in 
production in the large, export-focused automotive 
sector. Yet, domestic demand has been robust, and 
record-low  unemployment  and  strong  wage 
increases  have  supported  private  consumption. 
Investment activity is estimated to have weakened 
in 2019 after strong growth in previous years. 

Graph 1.1: 

Real GDP growth and its components 

Source: AMECO 

Potential growth 

Economic growth is now below potential. Recent 
investment activity has stimulated potential growth 
in  parallel  with  actual  GDP.  However,  slower 
domestic  and  foreign  demand  have  pushed  the 
cyclical growth component into negative territory. 
Overall,  economic  growth  stems  from  structural 
growth. As a result, the high wage growth seen so 
far  is  likely  to  decelerate.  In  the  medium  term, 
economic  growth  is  expected  to  return  to  its 
potential. 

Potential  growth  is  projected  to  sustain  a  solid 
pace  close  to  3%  over  the  next  few  years.  It  is 
mostly  driven  by  total  factor  productivity  growth 
and  capital  accumulation.  Further  deepening  the 
capital stock and investing in intangible capital and 
high  value-added  technologies  can  help  diversify 
the  economy,  strengthen  its  resilience  and  sustain 
or  even  improve  potential  growth.  In  contrast, 

Source: Eurostat, European Commission 2020 Winter Forecast 

winter 

forecast, 

The  economy  is  projected  to  grow  at  2.2%  in 
2020  and  2.6%  in  2021  as  exports  recover  and 
domestic  demand  eases.  According 
the 
to 
private 
Commission’s 
consumption growth is likely to ease slightly as the 
rate  of  job  creation  is  slowing  and  real  wage 
growth  decelerates.  Both  exports  and  the  trade 
balance are expected to slowly recover in 2020-21. 
New  production  capacities  and  a  competitive 
export  sector  set  Slovakia  on  course  to  regaining 
market share.  

Convergence  towards  the  EU  average  has 
slowed  down  in  the  past  decade,  despite  an 

7 

-10%-5%0%5%10%03040506070809101112131415161718192021y-o-y %Net exportsConsumptionInvestment (GFCF)InventoriesReal GDP growthforecast404550556065707580859000010203040506070809101112131415161718Czech RepublicHungaryPolandSlovakiaPortugal 
      
        
in 

labour  is  likely  to  drag  on potential  growth  in  the 
long  term:  the  demographic  outlook  implies  a 
projected  12%  decline 
the  working-age 
population by 2050, among the least favourable in 
the  EU.  Moreover,  there  is  a  trend  towards  fewer 
hours  worked  per  person.  Currently, 
these 
developments  are  still 
largely  offset  by  an 
increasing employment rate, which reached 73.3% 
in 
year-on-year). 
Transformational  changes  such  as  automation  and 
the green transition, as well as Slovakia’s ability to 
respond 
long-term 
them,  will  determine 
potential growth. 

Q3-2019 

(1.2 

pps 

to 

Productivity 

Graph 1.3: 

Evolution of labour productivity and gaps 
(GVA per hour worked in PPS) 

Source: Eurostat 

Total 

efforts. 

sustained 

Maintaining productivity growth, the backbone 
of  Slovakia’s  swift  economic  convergence,  will 
require 
factor 
productivity  grew  by  an  annual  average  rate  of 
2.1% in Slovakia in 1996-2018, compared to 0.7% 
in the EU. Labour productivity growth (Graph 1.3) 
has been similarly impressive, and the productivity 
gap  with 
the  EU  average  has  narrowed 
substantially  since  2000,  though  less  so  since 
2009.  Economic  growth  has  been  based  on 
industrial  specialisation  –  achieved  with  the  help 
of foreign direct investment – and attractive labour 
costs.  Manufacturing  accounted  for  20%  of  GDP 
in 2018, compared to 14.6% in the EU. With some 
of  these  industries,  such  as  the  automotive  sector, 
facing deep structural change at a global scale, and 
domestic  unit  labour  costs  increasing,  further 

1. Economic situation and outlook 

convergence  will  hinge  on  Slovakia’s  ability  to 
further raise competitiveness and productivity – for 
stock, 
example,  by  deepening 
improving 
addressing  skills  mismatches  and 
education (see Section 3.3). 

the  capital 

Unit labour costs are increasing as wage growth 
outpaces  labour  productivity  growth.  Nominal 
unit labour costs increased by 4.5% in 2017, 3.5% 
in  2018,  and  an  estimated  5.2%  in  2019  (Graph 
1.4).  Labour  compensation  growth  drives  these 
increases  and  is  projected  to  have  reached  its 
highest value since the financial crisis, at 7.7% in 
2019.  While  high  wage  increases  in  the  public 
sector contributed strongly, the tight labour market 
and  labour  shortages  in  experienced  in  several 
sectors are at the heart of the developments. Wage 
growth  can  be  expected  to  decelerate  along  with 
overall  economic  growth,  so  pressures  could  ease 
in the coming years. 

Graph 1.4:  Decomposition of rate of change of ULC 

Source: AMECO 

Productivity is catching up with the EU average 
in all of Slovakia’s regions, but the gap between 
the  capital  and  other  parts  of  the  country 
remains significant. In 2017, the real gross value 
added  per  worker  in  Bratislava  amounted  to 
€50,500,  compared  to  the  national  average  of 
€35,400. All of Slovakia’s regions show a similar 
growth  trend,  but  Bratislava’s  performance  is 
always  significantly  above  the  national  average. 
This  is  because  Bratislava  has  better  overall 
infrastructure,  higher  labour  market  efficiency,  a 
better  ability  to  attract  more  skilled  workers  and 

8 

0%10%20%30%40%50%60%70%9010011012013014015016017018019000010203040506070809101112131415161718Gap2000=100SlovakiaGermanyCzechiaHungaryPolandEUSlovakia vs EU (rhs)-10-8-6-4-2024681004050607080910111213141516171819*20*21*Rate of change y-o-y (%)Inflation (GDP deflator growth)Real Compensation per EmployeeProductivity Contribution (negative sign)Nominal unit labour costULC in Slovakia 
   
      
firms  with  higher  value-added,  and  a  more 
competitive innovation ecosystem (Graph 1.5).  

Graph 1.5: 

Evolution of labour productivity by region 

Source: Eurostat, European Commission calculations 

Household consumption 

Solid  growth 
in  household  real  disposable 
income  supports  robust  private  consumption. 
After years of strong employment growth, the rate 
of job creation slowed down in 2019 and is likely 
to  moderate  further  in  2020-2021.  Although  the 
positive  effect  that  job  creation  has  on  household 
disposable income is expected to fade, strong wage 
growth  should  continue  to  prop  up  earnings  and 
incomes.  Overall,  household  consumption 
is 
projected  to  grow  well  above  2%  in  real  terms, 
which  leaves  the  household  saving  rate  stable  at 
close to 10%. 

Investment 

Investment growth is expected to continue, with 
public  investment  gaining  importance.  Total 
investment has returned to and surpassed pre-crisis 
levels  since  2015.  Investment  growth  is  estimated 
to have weakened in 2019, due to a more subdued 
economic  outlook  and  following  sizeable  private 
investment  in  2018  due  to  the  construction  of  a 
new car factory. Investment is expected to grow at 
similar 
the  coming  years.  Public 
to  assume  a  more 
investment 
prominent role in the medium term thanks to some 
major  public  investment  projects  and  due  to  the 
approaching  end  of  the  programming  period  for 
EU funding. 

is  projected 

rates 

in 

1. Economic situation and outlook 

Trade performance and competitiveness 

largest 

Foreign  trade  is  likely  to  recover  after  its  less 
dynamic  performance  of  2019.  Slovakia 
is 
sensitive  to  the  trade  environment  as  it  is  a  small 
and very open economy: In 2018, its exports were 
worth  93.6%  of  GDP  (EU:  46.2%)  and  imports 
worth  92.9%  of  GDP  (EU:  42.7%).  Exports  were 
affected by the impact of slowing foreign demand 
from  key  EU  trading  partners  in  2019,  most 
notably  Germany,  Slovakia’s 
trading 
partner  accounting  for  22%  of  exports  in  2018. 
(see 
Temporary  domestic  production 
below) exacerbated the slowdown. As these factors 
fade,  exports  are  likely  to  gradually  pick  up.  As 
imports  were  less  affected  by  the  slowdown,  the 
trade  balance  is  projected  to  have  dipped  into 
negative  territory  in  2019,  but  should  move  back 
into  surplus  by  2021.  The  positive  effect  of  new 
investment  on  Slovakia’s  export  capacities  and 
trade  performance  is  expected  to  be  seen  over 
2020-2021.  This  should  result  in  export  market 
share gains after an expected dip and slight loss in 
2019.  Global  trade  uncertainty  could  dampen  this 
outlook, however. 

factors 

The  automotive 
industry  drives  Slovakia’s 
export  performance.  The  sector  accounts  for 
around one quarter of total exports and almost one 
third  when  car  accessories  are  included.  In  2018, 
the automotive sector accounted for more than two 
thirds  of  export  growth.  In  2019,  the  sector  was 
much less dynamic, dragging down export growth. 
In  Q2-2019,  exports  decreased  more  sharply  than 
foreign  demand.  Temporary  domestic  factors  can 
explain  this  drop,  but  are  expected  to  wear  off. 
They include: a) changes made in production lines 
to  respond  to  changing  consumer  preferences  and 
to  comply  with  new  emission  standards;  and  b)  a 
longer  time  than  expected  for  some  production 
capacities to become operational. The car industry 
in general is at a critical juncture, and the transition 
to  alternative  propulsion  vehicles  can  impact 
Slovakia’s  future  production  and  exports  (Box 
1.1). It is important that Slovakia prepares for this 
challenge. 

Exporting  sectors  have  maintained  their  price 
competitiveness 
relatively  well  despite  a 
worsening real effective exchange rate. The unit 
labour  cost-based  real  effective  exchange  rate 
weakened  mainly  due  to  rising  labour  costs,  with 
average nominal wages increasing in the context of 

9 

15253545556575000102030405060708091011121314151617thousands of EUR per  employed personsCapital regionOther NUTS2 regionsEU28National average 
          
1. Economic situation and outlook 

is 

therefore 

non-defaultable 

-15.6%  of  GDP 

largely  unproblematic. 
position 
Excluding 
net 
instruments, 
external  liabilities  are  estimated  to  have  stood  at 
in  2019,  a  modest 
only 
deterioration  over  the  past  decade.  Overall,  the 
projected  high  nominal  GDP  growth  is  likely  to 
allow  for  a  modest  improvement  of  the  external 
position in coming years. 

Graph 1.7:  Decomposition of Net International Investment 

Position 

Source: Eurostat 

The  current  account  balance  is  expected  to 
remain in deficit. In 2019, it is estimated to have 
stood at –2.4% and at -0.6% if cyclically adjusted, 
only  slightly  below  the  -0.2%  explained  by 
fundamentals.  This  is  the  result  of  dividend 
outflows stemming from the large stock of foreign 
direct  investment.  Sluggish  exports  in  2019  are 
expected to worsen the negative contribution of the 
income balance to the current account, though only 
temporarily.  An  improving  trade  balance  –  also 
due 
is 
to  expanding  production  facilities  – 
expected to mitigate the current account deficit in 
the medium term. 

Labour market and social situation  

pps 

(0.8 

year-on-year) 

Employment  growth  continued,  driven  by 
services  and  construction.  In  Q3-2019, 
the 
employment  rate  of  people  aged  20-64  reached 
73.3% 
the 
unemployment  rate  dropped  by  0.4  pps  year-on-
year to 5.7% in Q4-2019. The largest year-on-year 
in 
increases 
recorded 
information 
construction 
(5.1%)  and  professional  and  technical  services 
(2.5%,  see  Graph  1.8). According  to  the  Slovak 

in  employment  were 
(5.3%), 

technology 

and 

record-low  unemployment  and  elevated  inflation. 
Labour  costs  are  set  to  grow  further,  but  the 
expected economic slowdown is likely to moderate 
their growth in the medium term. A similar picture 
emerges  for  the  consumer  price  index-based  real 
effective  exchange  rate.  However,  exports  have 
been less affected as productivity gains in export-
largely  offset  rising 
oriented 
compensation (Graph  1.6).  Effectively,  Slovakia’s 
export  performance  has  thus  been  relatively  well 
insulated from the average rise in unit labour costs, 
which  has  been  most  pronounced  in  market 
services. Low productivity gains explain the rise of 
unit labour costs despite moderate wage growth in 
that sector (see below). 

industries  have 

Graph 1.6: 

Unit Labour Costs by sector 

Source: Eurostat, European Commission calculations 

External position 

inward 

inflows  of 

Steady 
foreign  direct 
investment have built up a sizeable negative net 
international 
investment  position.  The  net 
(inward)  stock  of  foreign  direct  investment  as  a 
share  of  GDP  is  estimated  to  have  remained 
broadly  stable  at  -51.1%  in  2019  (Graph  1.7).  It 
thus  forms  the  lion’s  share  of  the  country’s 
international 
negative 
relatively 
investment  position  estimated  to  have  slightly 
improved  to  -65.7%  in  2019(4).  As  foreign  direct 
investment  is  a  safer  and  more  stable  form  of 
instrument  because 
investment 
is  non-
investment 
the  net 
defaultable, 

international 

large 

net 

it 

(4)  Nevertheless, it remains below the prudential benchmark of 
-50% and the fundamentals-based benchmark of -7% 

10 

80901001101201301401501600304050607080910111213141516171819'2003=100IndustryConstructionMarket servicesTradableNon tradableTotal economy-100-80-60-40-200204004050607080910111213141516171819*% of GDPReserve assetsNet portfolio investment, equity and investment fund shares/unitsNet portfolio investment, debt securitiesOther investment (net)Net direct investmentNet financial derivatives and employee stock optionsNet Int'l investment position (NIIP)NENDI (NIIP excluding non-defaultable instruments) 
      
                                                           
      
1. Economic situation and outlook 

Statistical Office, after five years of steady growth, 
employment  in  the  automotive  industry  seems  to 
have plateaued. Strong labour demand was met by 
an increasing activity rate (among people aged 20-
64 by 0.4 pps year-on-year). 

Graph 1.8: 

Employment by sector, year-on-year changes 

Graph 1.9: 

Beveridge curve, 2000-2018 

Source: Eurostat 

As  unemployment  dropped,  labour  shortages 
remain  pronounced,  though  the  figures  are 
stabilising.  Vacancies  registered  at  labour  offices 
in  December  2019,  highly 
reached  92,300 
concentrated in the western part of the country. In 
contrast, 
in  several  districts  of  South-East 
Slovakia, the number of vacancies was lower than 
the  number  of  jobseekers  (IFP,  2019).  The  labour 
shortage  indicator,  shown  by  the  Beveridge  curve 
(Graph 1.9), peaked in 2018, but fell by 10 pps in 
Q3-2019.    

A  tight  labour  market  has  fuelled  large  salary 
increases.  Driven  by  labour  shortages,  nominal 
compensation  of  employees  increased  by  5.3%  in 
2018  and  are  expected  to  have  further  grown  by 
6.8%  in  2019.  Public  sector  wages  grew  (6.6%) 
faster than private sector wages (5.1%) in 2018. In 
the private sector, wage growth was mostly driven 
by construction (7.7%) and industry (7.4%), while 
milder growth was recorded in services, notably in 
market  services  (3.5%).  Overall,  the  impact  of 
recent  wage 
is 
expected remain limited (see productivity above). 

increases  on  competitiveness 

(1) Annual data based on the average of the four quarters 
Source: Eurostat, LFS and European Commission, EU Business 
and Consumer Surveys. Data seasonally adjusted. 

In  spite  of  overall  positive  labour  market 
outcomes,  some  groups  face  disadvantages  and 
east-west  disparities  remain  marked.  The 
unemployment of low-skilled people is among the 
highest in the EU, at 29.8 % in 2018 (13.3 % in the 
EU).  The  situation  is  particularly  serious  for  low-
skilled  youth  (43.5 %  v  21.1 %  in  the  EU).  Large 
regional  disparities  persist,  with  Eastern  regions 
presenting  a  comparatively  worse  situation  across 
all  labour  market  and  social  indicators.  The 
situation  is  especially  critical  for  marginalised 
Roma communities (see Section 3.3). 

Poverty  rates  remain  low  but  social  exclusion 
remains a serious challenge in some regions. In 
2018,  the  ‘at-risk-of  poverty  or  social  exclusion’ 
rate remained stable at 16.3%, significantly below 
the  EU  average  of  21.9%.  However,  close  to 
in  marginalised 
200,000  Roma  people 
to  basic 
communities  often  without  access 
infrastructure and public services. 

live 

Income  and  wealth  are  comparatively  evenly 
inequality  of  opportunities 
distributed  but 
remains high. For Slovakia, the S80/S20 indicator 
that  measures  the  ratio  of  the  incomes  of  the 
richest 20% of households compared to the poorest 
20%, is among the lowest in the EU (3.0 compared 
to  the  EU  average  of  5.2  in  2018).  This  is  due  to 
low wage dispersion, rather than the redistributive 
effect  of  the  tax  and  benefit  system.  Gross 

11 

-150-100-5005010000Q201Q101Q402Q303Q204Q104Q405Q306Q207Q107Q408Q309Q210Q110Q411Q312Q213Q113Q414Q315Q216Q116Q417Q318Q219Q1thsAgricultureIndustryConstructionTradable servicesMpm-tradable servicesPublic sectorTotal0001020304050607080910111213141516171805101520253035400510152025labour shortage indicator (%)unemployment rate (% of labour force) 
  
 
      
1. Economic situation and outlook 

Graph 1.10:  Regional disparities 

(1) Shaded areas: GDP per person in PPS as % of national 
average; figures in %: cumulative growth relative to national 
average 2007-2016. 
Source: Eurostat, European Commission calculations 

some 

show 

Economic  and  social  indicators  depict  sizeable 
regional  disparities,  even  if  labour  market 
convergence. 
developments 
Territorial  disparities  in  terms  of  labour  market 
and  social  inclusion  indicators  remain  significant, 
with  Eastern  and  South-Eastern  Slovakia  lagging 
behind.  With  the  exception  of  the  capital  region, 
population growth was below the EU average in all 
of Slovakia’s regions in the 2010-2016 period. The 
capital  region  also  outperforms  the  remaining 
regions  in  a  wider  range  of  economic  indicators, 
such as investment levels, labour productivity and 
in  2013-2018,  all  regions 
salaries.  However, 
experienced  stronger  wage  growth 
the 
Bratislava  region,  albeit  from  a  lower  starting 
point. Although regional dispersion in employment 
rates  remains  substantial,  regions  with  high 
unemployment  rates  are  benefiting  most  from  the 
recent strong growth in employment.  

than 

disposable  household  income  per  person  grew  at 
only  around  half  the  rate  of  GDP  per  person 
between  2010  and  2018,  indicating  that  increases 
in  income  have  reached  households  only  to  some 
extent,  i.e.  a  low  inclusiveness  of  growth.  Wealth 
inequality  is  also  among  the  lowest  in  the  EU, 
partly  due  to  a  high  rate  of  home  ownership. 
However, inequality of opportunities remains high, 
as  shown  by  the  strong  impact  of  socio-economic 
background on education outcomes, for example. 

Regional disparities 

are 

remain 

disparities 

disparities 

Regional 
significant. 
Infrastructure  gaps  and  weak  urban-rural  linkages 
mark  pronounced  economic  differences  between 
regions  (Section  3.4.2).  In  2017,  GDP  per  person 
(in  purchasing  power  standards)  ranged  between 
179%  in  the  capital  region  and  54%  of  the  EU 
average in the less developed region of Východné 
less 
Slovensko.  Regional 
pronounced  when  comparing  net  disposable 
income,  which  ranged  from  87%  in  Východné 
Slovensko  to  153%  in  the  Bratislava  region  in 
2017. This reflects low registration rates of internal 
migration  and  the  importance  of  commuters  and 
government  transfers,  and  it  is  arguably  a  more 
relevant  measure  of  disparities.  Moreover, 
purchasing  power  standards  are  set  at  national 
level,  whereas  differences  in  the  cost  of  living 
across regions may further reduce this gap. At the 
same  time,  a  more  granular  analysis  could  reveal 
further 
intra-regional  disparities,  e.g.  between 
regional capitals and more urban areas. 

Despite  overall  convergence  towards  the  EU 
average  income,  convergence  within  Slovakia 
itself  has  been  weak. Thanks  to strong  economic 
growth,  Slovakia’s  convergence  with  the  EU 
average  since the  country joined  the  EU has  been 
impressive,  with  all  eight  NUTS  3  regions  – 
similar  in  size  in  terms  of  population  –    growing 
faster  than  the  EU  average.  The  capital  region  of 
Bratislava  has grown  about  as  fast  as  the  national 
average  between  2007-2016,  by  roughly  31%. 
Prešov,  the  country’s  poorest  region,  experienced 
the  strongest  growth,  outperforming  the  national 
average  by  13.9%.  Overall,  however,  regional 
income dispersion is still at a similar level in 2017 
as it was in 2007 (see Graph 1.10). 

Inflation 

Consumer  prices  increased  by  2.8%  in  2019 
and are expected to ease slightly. Services, food 
and  energy  all  contribute  substantially  to  overall 
inflation. The services sector is forecast to remain 
a  key  driver  of  price  dynamics  as  swift  wage 
growth is set to continue to spill over into services 
prices.  Inflationary  pressures  stemming  from 
energy  and  food  prices  are  expected  to  moderate. 
In contrast, non-industrial energy goods are likely 
to  contribute  less  to  overall  price  increases. 
Overall,  consumer  price  growth  is  expected  to 
settle at 2.5% in 2020 and 2.2% in 2021. 

12 

 
 
1. Economic situation and outlook 

Graph 1.11:  Consumer inflation 

Graph 1.12:  Evolution of the House Price Index and MFI 

loans for house purchase 

Source: Eurostat 

Credit growth 

Household  debt  continues  to  grow  and  could 
pose  a  systemic  risk  in  the  future.  It  reached  a 
record-high  42.8%  of  GDP  in  the  first  half  of 
2019,  above  the  fundamental  benchmark  of  28%, 
but  still  below  the  prudential  benchmark  of  55% 
(5)  (Section  3.2).  After  substantial  expansion 
throughout 2016 and 2017, in part driven by rising 
housing prices, its growth has slowed significantly 
in  the  first  half  of  2019.  However,  it  remains  one 
of  the  highest  in  the  EU.  The  deceleration  was 
mainly due to a tightening of the  macroprudential 
measures, a gradual saturation of the credit market 
and  a  stabilisation  of  the  average  interest  rate, 
which nevertheless remains low. 

Housing market 

House  prices  continue  to  grow.    Real  house 
prices  have  been  growing  steadily  on  the  back  of 
supply  constraints  and  strong  demand, 
thus 
reducing  affordability,  although  they  are  still 
below the pre-crisis peak. Construction activity has 
increased  markedly,  but  is  unlikely  to  fully  meet 
demand  in  the  near  future.  Meanwhile,  the  rental 
market  is  too  small,  limiting  the  mobility  of 
especially temporary workers and students.  

(5)  The  prudential  benchmark  is  an  estimate  of  the  value  of 
debt above which there is a higher likelihood of a banking 
crisis.  The  fundamental  benchmark  refers  to  the  value  of 
debt that should be observed over the medium-to-long term 
on the basis of a country’s fundamental characteristics.  

Source: Eurostat, ECB and European Commission 
calculations 

Public finances 

The  consolidation  effort  is  expected  to  have 
been weak in 2019. The deficit is expected to have 
declined  from  1.1%  of  GDP  in  2018  to  0.9%  in 
2019. The strong labour market boosted revenues, 
especially  social  security  contributions.  Value 
added  tax  collection  grew  faster  than  household 
improved  collection. 
consumption,  suggesting 
including 
However, 
compensation  of  employees,  social 
transfers, 
subsidies and other current transfers, grew at a fast 
pace.  Public  investment  also  increased  due  to  a 
higher  drawdown  of  EU  funds.  Consequently,  the 
structural balance improved only marginally. 

expenditure, 

current 

Public  finances  face  further  risks.  In  2020,  the 
government deficit is projected to increase to 1.2% 
of GDP. Direct taxes are set to grow more slowly 
due to increased tax allowances, a reduced income 
tax  rate  for  self-employed  and  small  enterprises, 
higher deductions for R&D and faster depreciation 
of  electric  vehicles.  The  delayed  implementation 
poses  a  risk  to  indirect  tax  revenues  from  online 
electronic  cash-registers  and  fuel  additives,  and  a 
reduced  VAT  rate  for  certain  foodstuffs  will 
negatively 
for 
expenditure in 2020 include continued public wage 
growth,  more  social  benefits  and  the  drawdown 
rate of EU funds and related investment. The debt-

revenue.  Risks 

impact 

tax 

13 

-2%-1%0%1%2%3%Dec 13Apr 14Aug 14Dec 14Apr 15Aug 15Dec 15Apr 16Aug 16Dec 16Apr 17Aug 17Dec 17Apr 18Aug 18Dec 18Apr 19Aug 19Dec 19EnergyNon-energy ind. goodsProcessed foodServicesUnprocessed foodHICP0204060801001201400510152025303507Q108Q109Q110Q111Q112Q113Q114Q115Q116Q117Q118Q119Q12015=100Rate of change y-o-y (%)MFI loans for house purchase (y-o-y growth rate)Real House Price Index (2015=100), right axisNominal House Price Index (2015=100), right axis 
      
                                                           
    
1. Economic situation and outlook 

to-GDP ratio is expected to decline to close to 47% 
and below in 2020-21. 

Sustainable Development Goals 

(SDG1), 

including  poverty 

Slovakia  has  made  progress  towards  achieving 
the Sustainable Development Goals (SDGs), but 
challenges remain. Over the past five years, there 
has  been  progress  for  almost  all  SDGs.  Slovakia 
performs better than EU average in various social 
SDGs, 
reduced 
inequalities  (SDG10)  and  zero  hunger  (SDG2). 
While still lagging behind EU average, progress is 
also  visible 
in,  good  health  and  well-being 
(SDG3),  and  quality  education  (SDG4),  though 
challenges 
(see  Section  3.3).  Yet, 
environmental  pressures  and  a  changing  climate 
weigh on Slovakia’s sustainable development, and 
low-emission  energy  consumption  and  resource 
productivity  have  developed  less  favourably,  with 
the latter below EU average. Challenges therefore 
remain for reinforced climate action (SDG13) and 
improving the status of ecosystems, in decelerating 
land  degradation  and  in  preserving  biodiversity 
(SDG15), for affordable and clean energy (SDG7), 
responsible  consumption  and 
for  more 
and 
production (SDG12). 

remain 

14 

 
 
1. Economic situation and outlook 

(Continued on the next page) 

15 

Box 1.1: Automotive sectorThe automotive sector is the largest industry in Slovakia, accounting for a significant proportion of total employment. It accounted for 14.3% of total output in 2018, an increase of 5.4 percentage points compared to 2010, while taking up 8.5% of total employment (1) (PEI, 2019). Its structure is characterised by a few large foreign-owned, export-oriented car manufacturers with high productivity and focused on assembling, such as Volkswagen, Jaguar LandRover, Kia Motors and Groupe PSA. These are complemented with a substantial number of both large and small firms that supply car parts to the big car companies and export to Germany and neighbouring countries in the CEE automotive cluster. The sector accounted for 26.9% of all exports in 2018, compared to 7.5% in the EU, making it particularly vulnerable to external shocks. However, this challenge is similar to the one faced by other countries from the regional automotive cluster, such as Czech Republic and Hungary. The automotive production sector is also highly concentrated in the western part of the country, which contributes to regional disparities.  Helping domestic firms move up the value chain will be key to increase the value added of the sector, particularly by improving coordination with research institutions, R&D governance and transport infrastructure. Slovakia’s automotive sector accounted for only 5.2% of total gross value added in 2018, quite low compared to its contribution to overall output. This is mainly due to the size and openness of the economy and the sector’s specialisation in low value-added activities, as well as a high import intensity and a low innovation capacity in domestic firms. Although foreign-owned automotive companies account for most R&D spending and innovation in the sector, these investments are mainly directed at improving production processes without high domestic technological diffusion, thus limiting the capacity of the sector to upscale to knowledge-intensive services (Pavlínek, P., 2014; Szcurek, M. and Tomaszewski, M., 2017; Drahokoupil, J. and Fabo, B., 2019). In 2019, the government introduced ‘super tax deductions’ deductions of eligible R&D costs, from 100% to 150% by the end of 2019 and to 200% in 2020, as well as the principle of “one year-one change in business laws” as limit to encourage a stable business environment (IMF, 2019a). Still, regulatory burden may hold back investment. Enhancing coordination between research institutions and automotive companies and improving R&D governance could support domestic firms. Upgrading the transport system – e.g. the quality of infrastructure and more efficient customs clearances and timeliness of shipments – will also help attract investment, especially in more remote areas (IMF, 2019a).  Addressing skilled labour shortages both in secondary and tertiary education can help the automotive sector to move up the value chain. According to the OECD, labour shortages are particularly pronounced in the STEM (2) and IT fields, and 58% of original equipment manufacturers flag this as a major risk factor for prospective growth of the sector (PWC, 2019). Companies also hire foreign workers or run training programmes to compensate for lack of domestic labour supply, incurring significant costs especially for smaller firms along the supply chain. Still, OECD data suggests that less than 20% of low skilled employees in Slovakia receive firm-based training, compared to around 40% in Czechia, for example. Furthermore, there is no government strategy for social inclusion and integration of migrant workers, leaving this burden to municipalities. Given the tight labour market, efforts have been made to ease labour shortages through a nationally funded programme for reskilling unemployed people for the automotive sector. Measures to promote dual vocational education are set to reduce skill mismatches, but their                                                            (1) Considering both direct and indirect employment. (2) STEM refers to the disciplines of Science, Technology, Engineering and Mathematics.  
 
 
 
   
 
1. Economic situation and outlook 

Box (continued) 

16 

implementation has been slow so far. Improving the quality of tertiary education, aligning higher education with technical skill needs, and providing career guidance in schools would also be beneficial. One example of this is the ‘professional bachelor’s programme’ between Volkswagen and the Slovak University of Technology. Promoting conditions for regional labour mobility, including by developing the rental market through investing in public housing and better transport connections for commuting, could also help boost job matching.   Efforts to strengthen electric vehicle (EV) production are being put forward, but the rise of e-mobility poses a challenge to the automotive industry. In order to manage the transformation away from internal combustion engines to EVs, countries will have to improve their R&I ecosystem and invest in infrastructure, as well as develop the right skill sets. Sales of EVs are projected to account for 60% of total vehicle sales by 2030. This will significantly transform the industry, as it is estimated that almost 60% of the content of an EV originates from outside the traditional value chain (UBS, 2017). E-mobility will likely also reduce the number of manufacturing jobs needed due to EVs’ lower mechanical complexity, making the case for targeted training and retraining even more pressing (Frediksson, G et al, 2018). Currently, Kia, Groupe PSA and Volkswagen are producing EVs, while Jaguar LandRover is considering including EVs to its portfolio. In 2019, the government passed the ‘Plan for Development of Electromobility’ to support the transition to EV, including R&D provisions for EV’s battery research. Projections show that EVs will account for 11% of total car production by 2025 (T&E, 2019). This transition can contribute to progress on climate action (SDG13), cleaner energy (SDG7), and innovation and infrastructure (SDG9).  Slovakia lags behind other EU countries in creating a battery value chain. Batteries make up for 30-48% of the total cost of an EV, making them an essential part of the future of the automotive value chain. Currently, both Slovakia and the EU rely on imports from China for batteries and raw materials. The ‘Slovak Battery Alliance’ was formed in October 2018 to help create a competitive battery ecosystem and to attract stakeholders. Nevertheless, EV battery pack production in Slovakia is projected to reach around 100 MWh per year by 2021, which is low compared to neighboring countries (25 GWh in Hungary; 52 GWh in Poland (3)), and markedly lower than the expected EV battery demand in the EU, which is estimated to reach 400 GWh by 2025(4).                                                             (3) Based on the Commission’s internal estimates. (4) According to InnoEnergy forecasts.  
 
 
   
 
 
1. Economic situation and outlook 

Table 1.1: 

Key economic indicators  Slovakia 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU 
foreign-controlled branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
(3) The tax-to-GDP indicator includes imputed social contributions and hence differs from the tax-to-GDP indicator used in the 
section on taxation. 
(4) Defined as the income tax on gross wage earnings plus the employee's social security contributions less universal cash 
benefits, expressed as a percentage of gross wage earnings. 
Source:  Source: Eurostat and ECB as of 4-2-2020, where available; European Commission for forecast figures (Winter forecast 
2020 for real GDP and HICP, Autumn forecast 2019 otherwise) 

17 

2004-072008-122013-1620172018201920202021Real GDP (y-o-y)7.82.02.63.04.02.32.22.6Potential growth (y-o-y)5.73.72.12.22.62.62.82.9Private consumption (y-o-y)6.51.21.84.33.9...Public consumption (y-o-y)2.11.83.31.00.2...Gross fixed capital formation (y-o-y)9.9-1.63.53.93.7...Exports of goods and services (y-o-y)17.74.15.33.55.4...Imports of goods and services (y-o-y) 16.51.65.93.95.0...Contribution to GDP growth:Domestic demand (y-o-y)6.40.62.33.43.0...Inventories (y-o-y)0.6-0.60.4-0.20.5...Net exports (y-o-y)0.72.0-0.2-0.20.5...Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.30.70.10.00.20.20.30.3Capital accumulation (y-o-y)1.10.91.01.01.11.01.01.0Total factor productivity (y-o-y)4.32.11.11.21.31.41.51.6Output gap1.5-0.5-1.90.31.71.81.61.5Unemployment rate14.912.812.28.16.55.85.75.6GDP deflator (y-o-y)3.11.0-0.11.22.02.42.32.2Harmonised index of consumer prices (HICP, y-o-y)4.12.70.11.42.52.82.52.2Nominal compensation per employee (y-o-y)8.43.82.65.45.67.15.44.9Labour productivity (real, person employed, y-o-y)6.31.71.30.82.0...Unit labour costs (ULC, whole economy, y-o-y)1.92.01.34.53.55.23.02.4Real unit labour costs (y-o-y)-1.11.01.43.31.42.70.60.2Real effective exchange rate (ULC, y-o-y)6.12.20.43.71.92.00.50.4Real effective exchange rate (HICP, y-o-y)6.72.3-0.2-0.12.00.70.40.2Net savings rate of households (net saving as percentage of net disposable income)0.61.62.02.52.6...Private credit flow, consolidated (% of GDP)7.04.36.19.62.0...Private sector debt, consolidated (% of GDP)51.967.880.994.590.9...of which household debt, consolidated (% of GDP)13.124.733.741.142.3...of which non-financial corporate debt, consolidated (% of GDP)38.843.147.253.348.6...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)1.53.43.83.32.7...Corporations, net lending (+) or net borrowing (-) (% of GDP)-2.63.64.0-2.4-1.0-2.7-2.9-1.9Corporations, gross operating surplus (% of GDP)30.930.630.927.727.927.427.428.3Households, net lending (+) or net borrowing (-) (% of GDP)-0.10.70.70.80.71.51.61.1Deflated house price index (y-o-y).-3.64.74.44.9...Residential investment (% of GDP)3.03.02.93.23.4...Current account balance (% of GDP), balance of payments-7.2-3.7-0.5-1.9-2.6-3.4-3.7-3.3Trade balance (% of GDP), balance of payments-2.8-0.22.91.80.8...Terms of trade of goods and services (y-o-y)-0.7-1.2-0.3-0.6-0.6-0.4-0.2-0.2Capital account balance (% of GDP)0.21.31.80.11.4...Net international investment position (% of GDP)-47.2-61.7-64.1-68.3-68.1...NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)0.3-10.0-13.1-15.2-16.5...IIP liabilities excluding non-defaultable instruments (% of GDP) (1)43.457.469.688.193.5...Export performance vs. advanced countries (% change over 5 years)83.916.35.52.31.1...Export market share, goods and services (y-o-y)7.7-2.21.6-1.33.1-0.10.60.9Net FDI flows (% of GDP)-5.7-2.00.0-2.8-0.9...General government balance (% of GDP)-2.7-5.4-2.8-1.0-1.1-0.9-1.2-1.3Structural budget balance (% of GDP)..-2.1-1.1-1.7-1.6-1.8-1.8General government gross debt (% of GDP)34.640.253.051.349.448.147.346.9Tax-to-GDP ratio (%) (3)30.528.932.334.334.334.534.534.0Tax rate for a single person earning the average wage (%) (4)22.022.323.023.623.9...Tax rate for a single person earning 50% of the average wage (%) (4)14.214.715.316.117.1...forecast 
 
 
 
 
2.  PROGRESS WITH COUNTRY-SPECIFIC RECOMMENDATIONS 

of 

all 

50% 

Since  the  start  of  the  European  Semester  in 
2011, 
country-specific 
recommendations  addressed  to  Slovakia  have 
recorded at  least ‘some  progress’. 50% of  these 
CSRs recorded 'limited' or 'no progress' (see Graph 
2.1).  For 
instance,  some  progress  has  been 
achieved in reforming the health care system, and 
in  improving  the  quality  and  efficiency  of  the 
justice system. 

Graph 2.1:  Overall multiannual implementation of 2011-

2019 country-specific recommendations (CSR) 
to date 

* The overall assessment of the country-specific 
recommendations related to fiscal policy excludes 
compliance with the Stability and Growth Pact. 
** 2011 annual assessment: Different CSR assessment 
categories. 
** The multiannual CSR assessment looks at the 
implementation until 2020 Country Report since the CSRs 
were first adopted. 
Source: European Commission 

the 

reform 

in  healthcare 

remain.  While 

Despite  progress 
reforms, 
concerns  over  the  sustainability  of  public 
finances 
for 
modernising the hospital network has been put on 
hold in late December, the health authorities have 
carried  out  another  spending  review  and  some 
improvements  have  gradually  been  implemented. 
Yearly  cost  savings  of  about  €130  million  were 
achieved over the course of 2019. However, long-
term fiscal sustainability was compromised due to: 
(i)  a  pension  reform  removing  the  automatic 
adjustment  of  the  statutory  retirement  age  to  life 
expectancy  and  capping  the  retirement  age  at 
maximum  64,  and  (ii)  the  National  Council 
increasing  minimum  pensions  to  33%  of  the 

average  wage  of  2  years  ago,  abolishing  the 
previous  link  to  the  subsistence  minimum.  Fiscal 
consolidation has been driven by buoyant revenue 
growth  supported  by  swift  and  tax-rich  economic 
growth, but was also facilitated by policy efforts to 
improve  tax  collection  and  reduce  tax  fraud. 
Further  consolidation  has  been  limited  due  to 
adjustments on the expenditure side.  

for  Roma 

Measures  aimed  at  improving  the  quality  and 
inclusiveness  of  education  have  yielded  limited 
progress,  and  further  systemic  efforts  are 
needed.  More  kindergarten  facilities  are  being 
made available, but enrolment rates remain low, in 
particular 
children.  Educational 
outcomes  at  secondary  level  continue  to be  weak, 
and  strongly  affected  by  students'  socio-economic 
background. Slovakia is implementing the 2018-27 
reform programme in education. The key measures 
adopted  or  announced  in  2019  included  the 
lowering of the pre-school age to 5 as of 2021, the 
new law on pedagogical staff, setting up the center 
for  inclusive  education,  and  a  new  accreditation 
agency,  and  new  legislation  aimed  at  improving 
the  higher  education  quality.  The  implementation 
and impact of these new measures will need to be 
monitored.  Despite  recent  pay  rises,  teachers’ 
salaries  remain  low,  both  compared  with  other 
tertiary-educated  workers  and  by  international 
standards. 

Investment-related  economic  policy  improved 
in  some  areas  such  as  energy  efficiency,  and 
public  procurement  practices  are  being 
reformed. Various measures facilitate investment, 
such  as  higher  amounts  eligible  for  the  R&D  tax 
deduction.  Investments  in  renovating  multi-family 
apartment  buildings  are  producing  good  results. 
The government formally agreed with operators to 
connect  uncovered  areas  to  broadband.  However, 
governance and the regulatory climate continue to 
weigh on investment, and the poor management of 
the  implementation  of  EU  funds  for  R&D  in 
Slovakia  restrained  R&D  investment.  Moreover, 
the interest of contracting authorities in increasing 
the use of quality criteria and life-cycle costing is 
rising. The Public Procurement Office and Central 
Coordination  Authority  continue  to  work  towards 
providing  methodology  and  training,  even  though 
results  are  yet 
learning  and 
implementation take time. 

to  emerge,  as 

18 

No Progress6%Limited Progress44%Some Progress48%Substantial Progress2%Full Implementation0% 
    
2. Progress with country-specific recommendations 

Table 2.1: 

Summary table on 2019 CSR assessment 

* This overall assessment of CSR1 does not include an assessment of compliance with the Stability and Growth Pact 
Source: European Commission 
For CSR 3 The regulatory framework underpinning the programming of the 2021-2027 EU cohesion policy funds has not yet 
been adopted by the co-legislators, pending inter alia an agreement on the multiannual financial framework (MFF). 

The quality and efficiency of the justice system 
improved,  but  efforts  to  detect  and 
have 
prosecute  corruption  are  still 
insufficient. 
Increased  reform  activities  are  having  a  positive 
impact  on  the  quality  of  the  justice  system,  e.g. 
with  improving  online  accessibility  of  judgments. 
been 
As 

efficiency, 

regards 

there 

have 

improvements regarding the length of proceedings 
and  the  clearance  rate  for  litigious  civil  and 
commercial  cases  and  administrative  justice  is 
performing well.  As regards strengthening judicial 
independence,  including  judicial  appointments, 
one  positive  development  is  that  on  10  October 
2019,  the  president  appointed  the  remaining  six 

19 

SlovakiaOverall assessment of progress with the 2019 CSRs: Limited progressCSR 1: Limited progress*Achievethemedium-termbudgetaryobjectivein2020.       The compliance assessment with the Stability and Growth Pact will be included in Spring when final data for 2019 will be availableSafeguardthelong-termsustainabilityofpublicfinances,notablythatofthehealthcareandpension systems.        Limited progress has been made in safeguarding the sustainability of public finance, notably as relates to the healthcare systemCSR 2: Limited progressImprovethequalityandinclusivenessofeducation at all levels and foster skills.        Slovakia has made limited progress in improving the quality and inclusiveness of education.Enhance access to affordable and quality childcare and long-term care.        Limited progress has been made in enhancing access to affordable and quality childcare and long-term care.Promoteintegrationofdisadvantagedgroups,inparticular Roma.        Limited progress has been made in promoting the integration of disadvantaged groups.CSR 3: Limited progressFocusinvestment-relatedeconomicpolicyonhealthcare,        Limited progress has been made in focusing investment-related economic policy on healthcare.Research and innovation;        Limited progress has been made in focusing investment-related economic policy on research and innovation.Transport, notably on its sustainability        Limited progress has been made in focusing investment-related economic policy on transport, notably on its sustainability.Digital infrastructure        Limited progress has been made in focusing investment-related economic policy on digital infrastructure.Energy efficiency        Some progress has been made in focusing investment-related economic policy on energy efficiency.Competitivenessofsmallandmedium-sizedenterprises        Limited progress has been made in focusing investment-related economic policy on the competitiveness of small and medium-sized enterprises.Andsocialhousing,takingintoaccountregionaldisparities        Limited progress has been made in focusing investment-related economic policy on social housing, taking into account regional disparities.Increasetheuseofquality-relatedandlifecyclecost criteria in public procurement operations        Some progress has been made in increasing the use of quality-related and lifecycle cost criteria.CSR 4: Some progressContinuetoimprovetheeffectivenessofthejusticesystem,focusingonstrengtheningitsindependence,includingonjudicialappointments.        Slovakia has made some progress in improving the effectiveness of the justice system, in particular as regards the quality and efficiency.Increaseeffortstodetectandprosecutecorruption,inparticularinlarge-scalecorruption cases.        Limited progress has been made to increase efforts to detect and prosecute corruption. 
 
    
 
2. Progress with country-specific recommendations 

been provided to Slovakia for 26 support projects. 
Several  projects  have  been delivered  in  2019.  For 
example,  the  Commission  helped  Slovakia  to 
prepare  an  action  plan  for  Upper  Nitra  region’s 
transition  from  coal,  which  was  adopted  by  the 
government  on  3  July  2019.  It  also  helped 
Slovakia  design  a  strategy  and  a  detailed 
tax 
implementation  plan 
compliance.  Furthermore,  the  Commission  helped 
Slovakia  develop  an  IT  architecture  strategy  and 
transition plan for the Ministry of Justice. In 2019, 
work 
of 
the 
recommendations for the judicial sector, improving 
good  governance  at  the  local  level  and  on  the 
design of a labour mobility scheme. 

to  foster  voluntary 

implementation 

started 

on 

judges  to  the  Constitutional  Court,  successfully 
bringing  to  a  positive  end  an  impasse  that  had 
existed  since  February  2019.  The  Constitutional 
Court is now composed of 13 judges as envisaged 
by the Constitution and is finally fully operational 
again.  However,  longstanding  concerns  over  the 
overall  integrity  of  Slovakia’s  judicial  system 
continued to mount in the second half of 2019 due 
to  increasing  evidence  of  close  links  between 
white-collar  criminals  and  the  political  level  and 
individual  judges  and  prosecutors,  including  a 
former General Prosecutor. The low perception of 
to  be 
judicial 
Slovakia’s  most  serious  challenge,  and 
the 
country’s  performance  in  this  area  remains  at  the 
bottom of EU Member States. Moreover, progress 
in  fighting  corruption  remains  limited.  Criminal 
statistics  show 
fluctuations  but  no  explicit 
improvement.  Improved  efforts  to  sanction  legal 
persons are reported. 

thus  continues 

independence 

country-specific 

recommendation, 

relevant  advances 

Slovakia has made some progress in addressing 
the  2019  country-specific  recommendations. (6) 
Limited progress has been made with respect to the 
fiscal-structural  part  of  the  first  country-specific 
recommendation,  with 
in 
improving  the  cost-effectiveness  of  the  healthcare 
system.  Limited  progress  is  also  visible  in  the 
as 
second 
various  measures  and  programmes  supported  by 
the  European  Social  Fund  are  being  introduced. 
Only limited progress has been made in addressing 
third  recommendation  as  some  measures 
the 
helped  focus  investment-related  economic  policy. 
Some  progress  has  been  made  on  the  authorities 
paying more attention to the use of quality criteria 
and life cycle costing in public procurement. Only 
limited  progress  has  been  made  in  combating 
corruption. Some progress has been made towards 
improving the quality and efficiency of the justice 
system.  

Upon  request  from  a  Member  State,  the 
Commission  can  provide  tailor-made  expertise 
via the Structural Reform Support Programme 
implement  growth-
to  help  design  and 
enhancing reforms. Since 2016, such support has 

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

is  presented 

in 

20 

 
                                                           
2. Progress with country-specific recommendations 

21 

Box 2.1: EU funds and programmes to address structural challenges and to foster growth and competitiveness in SlovakiaSlovakia is one of the countries benefiting most from EU support. The financial allocation from EU Cohesion policy funds (1) for Slovakia amounts to €17.23 billion in the current Multiannual Financial Framework, equivalent to around 2.8% of the GDP annually. By the end of 2019, some €14.62 billion (around 85% of the total amount planned) was allocated to specific projects, while €5.23 billion were reported as spent by the selected projects (2) showing a very limited level of implementation below the EU average stemming from poor performance of the implementation structure in Slovakia. While bringing about a more harmonious development through reducing economic, social and territorial disparities, EU Cohesion policy funding is also addressing structural challenges in Slovakia. The Cohesion Policy programmes for Slovakia have allocated €2.84 billion for smart growth, €6.74 billion for sustainable growth and sustainable transport and €3.44 billion for inclusive growth. In 2019 following a performance review (3) €468 million have been made available within performing priorities for Slovakia. EU Cohesion policy funding is contributing to major transformations of the Slovak economy by promoting growth and employment via investments, among others, in research, technological development and innovation, competitiveness of enterprises, sustainable transport, employment and labour mobility. By 2019, investments driven by the European Regional Development Fund and the Cohesion Fund have already led to building or modernisation of 123 km of roads, both at regional level and in connection with the TEN-T network, support was already provided for 3,219 enterprises including 1,581 start-ups. Funds also contributed to the reduction of greenhouse gas emissions by over 54,000 tons of CO2. The ESF supported the reform of the dual Vocational Education and Training (VET) system, closing the skills gap between technical VET and the (mainly automotive) industry. New enrolments of apprentices quadrupled from 422 in school year 2015/2016 to 1,615 in school year 2018/2019. Since poor access to healthcare is an important barrier for the marginalised Roma communities, the ESF financed "Healthy Communities" to address this gap by financing over 250 health assistants who share information and advice about healthcare. Agricultural and fisheries funds and other EU programmes also contribute to addressing the investment needs. The European Agricultural Fund for Rural Development (EARDF) makes available in total €2.1 billion, and the European Maritime and Fisheries Fund (EMFF) in total €17 million (including the national co-financing for both). Slovakia benefits also from other EU programmes, such as the Connecting Europe Facility, which allocated EU funding of €713 million to specific projects on strategic transport networks, and Horizon 2020, which allocated EU funding of €99 million (including 70 SMEs with about €20 million). EU funding contributes to mobilisation of important private investment. European Structural and Investment funds (ESIF) (4) supported programmes alone mobilise additional capital by committing about €898 million in the form of loans, guarantees and equity (5), 6% of all decided allocations of ESIF. The EU supports investment in Slovakia also via the European Fund for Strategic Investments (EFSI). EU funds already invest substantial amounts on actions in line with the Sustainable Development Goals (SDGs). In Slovakia, ESIF funds support 13 out of the 17 SDGs and up to 91% of the expenditure is contributing to those.                                                            (1) European Regional Development Fund, Cohesion Fund, European Social Fund, Youth Employment Initiative, including national co-financing. (2) https://cohesiondata.ec.europa.eu/countries/SK  (3) Under the performance review (Art 22 of the Regulation (EU) No 1303/2013), 5-7% of overall resources allocated are released to performing priority axes of the operational programmes, which includes national co-financing. (4) European Regional Development Fund, Cohesion Fund, European Social Fund, European Agricultural Fund for Rural Development Fund and European Maritime and Fisheries Fund. (5) Reporting on financial instruments based on Article 46 Regulation 1303/2013, cut-off date 31/12/2018.  
 
 
 
  
 
 
3.  REFORM PRIORITIES 

3.1.  PUBLIC FINANCES AND TAXATION 

3.1.1.  TAXATION 

Both  Slovakia's  structural  deficit  and  fiscal 
revenues  are  slowly  decreasing  in  relation  to 
GDP.  The  general  government  deficit  fell  from 
2.5%  of  GDP  in  2016  to  1.1%  in  2018,  and 
government  debt  has  been  reduced  by  2.6 pps  to 
49.4% of GDP over the same period. In 2018, the 
tax revenues-to-GDP ratio stood at 34.1% of GDP, 
below  the  EU  average  of  39.2%.  This  ratio  is 
projected  to  remain  relatively  stable  in  2019  and 
2020 (Commission 2019 autumn forecast). 

Revenue  from  labour  taxes  continues  to  be  the 
biggest  source  of  tax  revenues.  It  accounted  for 
53.4%  of  tax  revenues  in  2018  (EU:  49.9%). (7) 
This  is  mainly  due  to  a  significantly  higher 
proportion of social  contributions  in  total  taxation 
(43.3%) than in the EU (31.1%). Also, the share of 
consumption  taxes  in  total  tax  revenues  is  above 
the  EU  average,  though  their  share  of  GDP  was 
almost  the  same.  In  contrast,  the  proportion  of 
revenues  from  capital  taxes  in  total  taxation  is 
notably  below  the  EU  average  (13.4%  v  21.6%). 
Between  2008  and  2018,  the  proportion  of  labour 
taxes in total taxes increased by 5.8 pps, while the 
proportion of capital taxes remained stable and the 
proportion  of  consumption  taxes  fell  by  5.2  pps 
(Graph 3.1.1). 

Property,  consumption  and  environmental 
taxes  play  a  limited  role.  They  account  for  a 
lower share of GDP in Slovakia than overall in the 
EU  (14.2%  v  16.1%  in  2018).  The  relatively  low 
implicit  tax  rate (8)  suggests  a  potential  scope  to 
shift  from  taxes  on  labour  to  property  and 
environmental 
less 
distortionary to economic growth. Inequality issues 
and  redistribution  effects  of  such  reforms  would 
need to be taken into account in that context. (9) 

taxes,  which  are  deemed 

(7)  Labour  taxes  consist  of  personal  income  taxes  and  social 

security contributions. 

(8)  The implicit tax rate on consumption represents the ratio of 
revenue  from  consumption  taxes  to  households´  total 
consumption expenditure (i.e. the consumption tax base). 
(9)  Employees  and  employers  would  benefit  from  a  tax  shift 
labour,  such  as  pensioners,  would  not. 
away  from 
Increasing consumption taxes on energy may be regressive 
if  not  combined  with  measures  favouring  vulnerable  parts 
of the population. 

Bringing the tax base of recurrent property tax 
in line with market values can increase revenue 
without increasing tax rates. Failure to regularly 
update the tax base erodes it over time, while also 
fuelling  property  prices  and  creating  potentially 
inequitable effects. 

Graph 3.1.1:  Changes in tax structure in Slovakia and the 

EU between 2008 and 2018 (in pps) 

Source: 2019 Taxation trend reports, European Commission 

Environmental  taxes  as  a  whole  stood  at  2.5% 
of  GDP  in  2018.  The  implicit  tax  rate  on  energy 
stood at 164.3 (10), among the lowest in the EU in 
2017.  While  energy  taxation  was  above  the  EU 
average  (2.2%  of  GDP;  EU  1.9%),  there  is  still 
space  to  increase  taxation  in  transport  (0.3%  in 
2018; EU 0.5%) and pollution resources (0.03% in 
2018;  EU  0.08%).  Importantly,  differentiating  tax 
rates according to the carbon content of the energy 
source  and  indexing  the  rates  to  inflation  could 
also  encourage  a  more  environmentally  conscious 
behaviour  in  consumers.  Excise  duty  rates  on 
diesel  are  significantly 
those  on 
unleaded  petrol,  despite  diesel  having  a  higher 
carbon  and  energy  content  than  unleaded  petrol. 
The  tax  system  also  favours  the  private  use  of 
company  cars,  which  counteracts  the  incentives 
provided by energy and vehicle taxation to reduce 

lower 

than 

(10)  The  indicator  is  defined  as  the  ratio  between  energy  tax 
revenues and final energy consumption in a calendar year. 
Energy tax revenue is measured in euro (deflated) and the 
energy consumption as tonnes of oil equivalent. 

22 

-6.0-4.0-2.00.02.04.06.0Taxes on labourTaxes on capitalTaxes on consumptionSKEU 
                                                           
 
    
                                                           
3.1. Public finances and taxation 

necessarily constitute a more effective policy than 
targeted  expenditure  measures,  such  as  incentives 
to  boost  investment  or  targeted  benefits  for  low-
tax 
income  households.  However, 
expenditures  are 
to  provide  financial 
incentives  to  take  up  jobs,  to  remain  in  work,  to 
increase  work  effort  and  to  invest  in  training 
(Barrios, S. et al, 2015). 

in-work 

likely 

collection 

of  VAT  has 

The 
improved 
significantly  but  the  VAT  gap  remains  very 
high. The VAT gap (17) is more than twice the EU 
average (23.0% v 10.9% in 2017, Centre for Social 
and  Economic  Research,  2018).  The  rise  in  VAT 
compliance  suggests  that  policy  measures  put  in 
place  in  recent  years  have  started  to  take  effect. 
For  instance,  one  measure  able  to  increase  VAT 
collection  and 
the 
mandatory  use  of  electronic  cash  registers  for  all 
taxable  persons,  with  an  online  connection  to  the 
financial administration (‘eKasa’) from 2020. This 
measure  was  supposed  to  already  be  in  place  in 
2019  (Ministry  of  Finance,  2019a),  but  it  was 
postponed  due 
lack  of  available  cash 
registers. (18) The implementation of nano-markers 
could  potentially  decrease  the  tax  gap  in  the 
excises on mineral oils, which remains high. (19) 

to  combat 

tax  fraud 

to  a 

is 

Recent  use  of  digital  services  is  addressing  the 
need  to  increase  the  efficiency  of  the  tax 
administration.  Call  centre  services,  a  chatbot 
available to clients (‘Taxana’), and pre-filled forms 
for  tax  records  to  be  submitted  via  the  ‘eDane’ 
application  are  gradually  being  offered 
to 
taxpayers.  Administrative  and  court  fees  can  be 
paid through the new payment system (‘eKolok’), 
both  in  Slovakia  and  from  abroad.  A  new  policy 
on 
approved 
streamlining  business  start-up  processes.  A  draft 
amendment to the Income Tax Act was adopted to 
it  easier  for  small  and  medium-sized 
make 
tax  obligations 
companies 
(Ministry of Finance, 2019a). 

to  comply  with 

in  February 

focuses 

2019 

(17)  The indicator expresses the revenue loss due to VAT con-
compliance,  but  it  also  includes  VAT  lost  due  to,  e.g. 
insolvencies,  bankruptcies,  administrative  errors  and  legal 
tax optimisation. 

(18)  A  virtual  cash  register  is  also  offered  for  free  to 
entrepreneurs  with  a  few  cash  transactions  for  whom  the 
purchase of a cash register is too costly. 

(19)  Estimated at between 13.7% and 16.8% in 2017  - Daňový 

report SR 2018 (Ministry of Finance, 2018) 

fuel  consumption.  A  reform  of  environmental 
taxation is under discussion in 2020 (11). 

Reducing the tax wedge on labour can improve 
social  inclusion  through  employment.  (12)  The 
tax  burden  on  low-income  earners  is  at  36.5%, 
significantly  above  the  weighted  EU  average  of 
32.5%.  This  suggests  that  labour  taxation  may 
have an impact on employment of people from the 
most  vulnerable  groups.  At  36.4%  in  2018,  the 
employment  rate  of  low-skilled workers  is among 
the  lowest  in  the  EU. Labour  taxation  is designed 
in  a  way  that can  discourage  second  earners  from 
taking  up  work. (13)  Moreover,  the  features  of 
family-based  taxation  can  also  lead  to  an  unequal 
tax 
a 
household. (14)  A 
low  difference 
between  the  tax  wedge  at  50%  and  167%  of 
average  wage  also  suggests  that  tax  progressivity 
is below the EU average. 

individuals  within 

treatment 

relatively 

of 

The ratio of tax expenditure to GDP is expected 
to increase from 1.4% in 2018 to 1.7% in 2021. 
This  increase  compared  to  2018  is  mainly  due  to 
the  introduction  of  holiday  vouchers,  non-cash 
accommodation  income  and  a  reduced  VAT  rate 
for accommodation. The main impact in 2020 will 
come from: the introduction of a reduced VAT rate 
for  selected  foodstuffs;  reduced  tax  rates  for 
entrepreneurs  with  turnover  up  to  € 100,000 (15); 
tax exemptions on benefits-in-kind for employees; 
increases  in  extra  deductions  of  the  eligible  R&D 
costs from 100% to 150% by the end of 2019 and 
to 200% in 2020, and; free tax deductions on assets 
during the depreciation period for micro taxpayers 
(starting  in  2021) (16).  Tax  expenditures  may  not 

(11)  A  joint  analytical  project  between  the  Ministry  of 
Environment and Ministry of Finance is proposed to model 
such a reform, but no substantial reform is planned for the 
year 2020. 

(12)  The  tax  wedge  is  the  difference  between  the  employer’s 
labour  costs  and  the  employee’s  net  take-home  pay, 
including benefits from government welfare programmes. 
(13)  They have a 9% higher average tax rate than a single earner 

(each at the 67% percentile of the average wage). 

(14)  Since  the  primary  earner  benefits  from  the  family-based 
features, including the lower tax brackets, the non-working 
partner or secondary earner is subject to a higher effective 
tax rate when they increase their income. 

(15)  The  corporate  income  tax  will  be  reduced  to  15%  for 
companies  whose  revenue  is  less  than  € 100,000  per year. 
This measure will enter into force in 2020. 

(16)  This  new  taxation  category  was  introduced  with  an 
amendment  to  the  last  Income  Tax  Act.  It  applies  to  any 
natural  or  legal  person  with  a  turnover  of  up  to  € 49,790. 
(Ministry of Finance, 2019a, p. 29-30). 

23 

 
                                                           
                                                           
3.1. Public finances and taxation 

Audit  activities  and  cross-checking  are  still  a 
challenge  for  tax  compliance.  While  the  Joint 
Analytical  Centre  is  currently  being  tested  as  an 
analytical tool for a risk assessment in the field of 
customs and the tax reliability index score is being 
tested  for  a  differentiated  approach 
towards 
taxpayers. A specialised tax office will offer tailor-
made  services  to  top-ranked  business  taxpayers. 
Measurable positive consequences can be expected 
from these measures. 

3.1.2.  FISCAL FRAMEWORK 

Spending review assessments are only gradually 
being  integrated  in  the  budgetary  process.  (20) 
In 2019, final reports on agriculture, on healthcare 
and an interim report on marginalised groups were 
published. The final report on the second review of 
health  expenditure  was  discussed  as  part  of  the 
general  government  budget 
for  2020-2022. 
Although  initially  envisaged  as  of  2020,  it  now 
looks 
insurance  budget 
expenditure  will  be  organised  in  a  more  detailed 
programme  structure  with  measurable  indicators 
for  selected  areas  of  the  health  system  only  from 
2021.  Carrying  out  spending  reviews  that  link  to 
the budgeting process remains a challenge. 

like  public  health 

expenditure 

ceilings  would 
Multiannual 
support  better  budget  planning  and  execution 
and  improve  fiscal  discipline  in  the  medium 
term.  Binding  expenditure  ceilings,  including  on 
tax  expenditure,  would  make  it  possible  for  fiscal 
policy 
to  work  counter-cyclically  and  would 
protect investments during an economic downturn. 
The  Constitutional  Act  on  Budget  Responsibility, 
adopted  in  2011,  covers  the  setting  of  general 
government expenditure ceilings. The government 
approved a 2020 spending cap roughly at the level 
of  the  approved  budget.  This  is  the  first  time  an 
expenditure ceiling was introduced. 

The  forecast  committees  and  the  Slovak  fiscal 
council  strengthened  the  fiscal  framework  but 
some  challenges  remain.  More  than  ten  years  of 
committees  operation  improved  the  plausibility  of 
budget 
some 
shortcomings  remain,  e.g.  incomplete  coverage  of 
tax  categories  with  ESA2010  (21),  access  to 

Nevertheless, 

assumptions. 

(20)  Slovakia  has  started  spending  reviews  in  2016  with  the 
support of the EU Structural Reform Support Programme. 
(21)  The European System of National and Regional Accounts 

data 

statistical 
and 
comprehensiveness (e.g. there is no assessment of 
non-tax revenues). 

the  CBR 

for 

(22) 

3.1.3.  DEBT SUSTAINABILITY ANALYSIS AND 

FISCAL RISKS 

poses 

ageing 

long-term 
Population 
sustainability risks to public finances. The fiscal 
sustainability gap indicator S2 points to a medium 
long-term  risk  (European  Commission  2020a), 
while  the  S1  indicator  shows  low  medium-term 
cumulative 
risk 
improvement  of  3.8 pps  of  GDP  in  the  structural 
primary balance would be required to stabilise the 
debt-to-GDP  ratio  over  the  long  term.  Pensions 
and healthcare are the main drivers of ageing costs, 
with a joint contribution of 2 pps of GDP. 

projections.  A 

debt 

in 

The  old-age  dependency  ratio  is  projected  to 
triple by 2060 due to increases in life expectancy 
and low fertility rates. While in 2016 there were 
only about two inactive people above 65 for every 
10  employed  people,  population  projections 
suggest  that  by  2060  there  will  be  around  six 
inactive people for every 10 employed, one of the 
highest ratios in the EU. Several trends contribute 
to  this.  Life  expectancy  at  birth  is  projected  to 
increase  further  from  73.7  to  82.6  years  for  men 
and  from  80.7  to  87.8  years  for  women  by  2060, 
thus  increasing  the  proportion  of  those  aged  65+ 
and  80+  in  the  population.  The  fertility  rate  will 
remain  below  the  natural  replacement  rate  of  2.1, 
projected to rise from 1.40 children per woman in 
2016  to  1.79  in  2060.  The  overall  population  is 
thus  projected  to  decline  to  5.1  million  in  2060, 
from 5.45 million in 2019 and the proportion of the 
working age population is projected to decrease by 
16.1 pps  by  2060  (European  Commission,  2018a, 
Eurostat 2019a). 

Pensions 

Recent  reforms  cap  the  retirement  age  and 
raise  minimum  pensions.  The  2019  legislation 
removed the automatic adjustment of the statutory 
retirement  age  to  life  expectancy  and  capped  the 
retirement  age  at  64,  while  also  granting  women 
the possibility to retire half a year earlier for each 
child  raised,  up  to  a  maximum  of  three  children. 
As a consequence, the statutory retirement age will 

(22)  Council for Budget Responsibility 

24 

 
                                                           
                                                           
3.1. Public finances and taxation 

continue  to  increase,  albeit at a  slower pace,  until 
around  2030  when  reaching  64,  and  will  stabilise 
then. Official estimates of the impact of the reform 
are  not  available  yet.  Furthermore,  in  October 
2019, Parliament set the minimum pension at 33% 
of the average wage of the two preceding years for 
those  having  paid  into  the  system  for  at  least  30 
qualified years, weakening the previous link to the 
subsistence  minimum.  This  change  was  adopted 
without expert discussion. 

sustainability. 

The  reforms  increase  the  risks  to  long-term 
Preliminary 
fiscal 
Commission/Aging  Working  Group  estimates 
point to an expenditure increase of 5.2 pps of GDP 
over the long-term (from 8.6% in 2016 to 13.8% in 
2070, instead of 9.8% in 2070 in the 2018 Ageing 
Report). Counterbalancing measures have not been 
put forward yet. The capping of the retirement age 
and  the  increasing  of  minimum  pensions  may 
affect  the  risk-of-poverty-or-social-exclusion  for 
the elderly (currently among the lowest in the EU) 
and the aggregate replacement ratio (currently 62% 
and above the EU average (European Commission, 
2018b) (23).  

Health care 

reliance  of  the  Slovak  health  system  on  hospital 
care,  which  hinders  efficiency.  The  VfM  project 
found  scope  for  potential  additional  savings  of  at 
least  € 0.5  billion  per  year  (i.e.  10%  of  health 
expenditure), and identified measures which could 
reduce wasteful spending by € 148 million already 
in 2020 (Ministry of Finance, 2019b). 

A  comprehensive  reform  for  modernising  the 
hospital network has been put on hold. In 2018, 
the  Slovak  health  authorities  developed  a  reform 
proposal  that  aims  to  rationalise  the  supply  of 
hospital  care  services  by  concentrating  acute  care 
capacity  territorially  and  functionally.  The  reform 
was supposed to set up a network of hospitals to be 
located  across  the  country  according  to  the  scope 
and complexity of care services provided (Ministry 
of  Health,  2018). 
accompanied  by  a 
If 
commensurate  expansion  of  primary,  emergency 
and long-term care services, such a reform has the 
potential  to  improve  quality  of  care  and  increase 
the  efficiency  of  the  Slovak  health  system.  At 
present,  it  is  uncertain  when  the  reform  will  be 
adopted,  given  that  the  government  withdrew  the 
legislative  proposal  from  Parliament,  after  it  was 
delayed and was unlikely to be finalised under the 
current Parliament configuration. 

have 

contributed 

Several  measures 
to 
improving  the  efficiency  of  the  health  care 
system.  In  the  context  of  the  multi-year  spending 
review  linked  to  the  implementation  of  the  Value 
for Money (VfM) project, Slovak authorities have 
implemented  several  measures  to  optimise  the 
pricing  and  procurement  of  pharmaceuticals  and 
medical  goods,  as  well  as  to  curb  their  excessive 
consumption. By mid-2019, about € 116 million of 
cost  savings  were  achieved.  In  the  area  of 
diagnostics  and  laboratory  tests,  the  rollout  of  an 
electronic  control  system  can  reap  immediate 
savings of € 10 million. 

Excessive  reliance  on  hospital  care  hinders  the 
efficiency of the health system. Despite continued 
efforts  to  move  towards  a  leaner  hospital  sector, 
the number of acute care beds (5.8 v 5.0 per 1,000 
people  in  the  EU)  and  hospital  discharge  rates 
(195.7 v 179.3 per 1,000 people in the EU in 2017) 
in hospitals remain high. Together with one of the 
lowest  bed  occupancy  rates  in  the  EU  (67.8%  v 
77%  in  the  EU  in  2017),  this  shows  an  excessive 

(23)  The aggregate replacement ratio indicates the pension level 
as a proportion of earnings in the decade before retirement. 

with 

non-compliance), 

State-owned  hospitals  continue  to  accumulate 
debt  despite  recurring  government  bailouts. 
Recurrent  debt  accumulation  by  state-owned 
hospitals  is  a  longstanding  issue  in  the  Slovak 
health sector. The last round of the three-step debt 
settlement programme initiated by the government 
at the end of 2017 was launched in October 2019. 
Although  the  programme  required  recipients  to 
comply  with  a  recovery  plan  (with  sanctions 
debt 
associated 
accumulation  by  the  13  state-owned  faculty  and 
university  hospitals  continued  over  this  period. 
While  this  can  be  partially  explained  by  a  sub-
optimal use of resources, a scenario analysis by the 
Health  Ministry  estimates  that,  even  after  having 
implemented  all  measures  envisaged  by  the  VfM 
project, 
insurance 
from 
companies  would  still  fail  to  cover  hospital  costs 
by around € 70 million of hospital costs (Ministry 
of  Finance,  2019b).  This  pattern  signals  the 
inadequacy  of  government  regulatory  tools  in 
relation  to  the  contracting  practices  of  health 
insurance companies, and of the hospital  payment 
mechanism,  which  provides  weak  incentives  to 
pursue cost-effectiveness. The gradual introduction 

payments 

health 

25 

 
                                                           
3.1. Public finances and taxation 

of  a  hospital  payment  system  for  hospitals  based 
on diagnosis-related groups (DRGs), which should 
become  fully  operational  by  2022,  is  expected  to 
increase  the  transparency  of  hospital  spending, 
incentivise  cost-management  and  better  align 
hospital  resource  allocation  with 
their  actual 
service costs (European Commission, 2019a). 

which,  at  1%  of  current  expenditure  on  health  in 
2017, was one of the lowest in the EU (3%). 

Graph 3.1.2:  Hospital admissions for ambulatory care-

sensitive conditions, age-standardised rate 
per 100.000 population 

the 

indicate 

Despite government action, current weaknesses 
in  primary  care  limit  Slovakia’s  potential  to 
improve  health  care  quality  and  efficiency. 
Against  the  backdrop  of  a  rising  prevalence  of 
chronic diseases among the Slovak population and 
a  higher  rate  of  outpatient  consultations  than  the 
EU  average,  high  rates  of  hospital  admissions  for 
ambulatory  care-sensitive  conditions  (see  Graph 
in  primary  and 
inefficiencies 
3.1.2) 
outpatient  specialist  care.  These  can  be  partially 
explained  by 
low  number  and  uneven 
geographic  distribution  of  general  practitioners 
set  of  GP 
(GPs).  Moreover, 
competencies, coupled with a payment mechanism 
that  offers  weak  incentives  to  provide  definitive 
care  and  other  technical  limitations  leave  GPs 
unable to act as effective gatekeepers to specialists 
(World  Bank,  2018).  In  response,  authorities 
devised  a  modest  set  of  measures  in  recent  years, 
to expand GPs’ prescription authority and to offer 
incentives  to  GPs  who  fill  a  vacancy  in  remote 
areas.  As  regards  infrastructure,  integrated  care 
centres  are  being  developed  in  underserved  areas 
with  support  from  EU  funds  to  modernise  the 
provision of primary care. 

the  narrow 

Significant  preventable  mortality  rates  reflect 
the  high  prevalence  of  risk  factors  and  low 
spending  on  prevention.  The  high  prevalence  of 
risk  factors  such  as  smoking  and  poor  nutritional 
habits  among  the  population  is  a  major  public 
health  concern.  The  negative  impact  of  these  risk 
factors  on  population  health 
in 
Slovakia’s above-average number of deaths due to 
preventable  causes (24)  (2.44  v  1.61  per  1,000 
people  in  the  EU).  This  shows  that  there  is 
significant  room  for  public health  interventions  to 
contribute  to  reducing  premature  deaths.  Current 
deficits in health promotion and disease prevention 
are  partly  attributable  to  the  low  level  of  health 
spending  allocated  to  prevention  in  Slovakia, 

is  reflected 

(24)  Preventable mortality is defined as death that can be mainly 
avoided through public health and primary prevention. 

Source: Eurostat, 2017 

ratio 

is  significantly 

expected  health  workforce 
Current  and 
shortages are significant, especially for GPs and 
nurses.  Assuming  no  policy  changes,  Slovakia  is 
projected to endure a shortfall of more than 3,000 
doctors  (20%  of  active  doctors)  and  9,900  nurses 
(33%  of  active  nurses)  by  2030  (Ministry  of 
Health, 2018b). Although the number of practising 
doctors  in  2017  is  comparable  to  the  EU  average 
(3.4 v 3.6 per 1,000 people in the EU), the GP-to-
lower.  This, 
specialist 
combined with an increasingly high average age of 
practising  GPs  (57  years  in  2016,  Ministry  of 
Finance,  2019b)  and  a  low  number  of  medical 
graduates that specialise in general practice (9% v 
17%  in  the  EU,  World  Bank,  2018),  heightens 
concerns for the future supply of GPs. In addition 
to  this,  the  number  of  nurses  in  Slovakia  is 
significantly lower than the EU average (5.7 v 8.5 
per 1,000 people, OECD/European Observatory on 
Health  Systems  and  Policies,  2019).  In  light  of 
these risks, the government has stepped up efforts 
to  tackle  health  workforce  shortages  and  improve 
retention. On top of salary increases for non-doctor 
personnel,  the  government  increased  the  capacity 
of  universities  to  train  medical  students,  extended 
the  GP  residency  programme  set  up  in  2013  and 
set  up  a  scholarship 
for  nursing  students 
conditional upon accepting to practise in Slovakia 
for five years (Ministry of Finance, 2019b). 

26 

-100100300500700900EUSlovakiaAsthma and COPDDiabetesCongestive Heart Failure 
                                                           
    
3.2.  FINANCIAL SECTOR 

Banking sector 

Overall,  Slovakia’s  banking  sector  remains 
sound and well capitalised. Foreign owned banks 
account for more than 90% of market share. Total 
banking  sector  capitalisation  fell  slightly  in  2018 
but  overall  has  remained  stable  in  recent  years. 
This  is  thanks to  profit retention, which  stabilised 
the  total  capital  ratio  at  18.2%  in  June  2019, 
equalling  the  euro  area  average.  The  common 
equity  Tier  1  (CET1)  decreased  slightly  in  2018 
but  recovered  in  2019  and  stood  at  16.0%  in  the 
first half of 2019, i.e. above the euro area average. 
The  counter-cyclical  buffer,  introduced  in  2015 
and raised several times since, will be increased to 
2%  as  of  1  August  2020.  Like  in  many  Member 
capital 
States,  Basel 
requirements. 

3  might 

increase 

the 

tightened 

Macroprudential measures have contributed to 
attenuate  mortgage  growth.  The  central  bank 
also introduced borrower-based limits in 2014 and 
has 
them 
since 
repeatedly (25). Consequently, 
loan-to-value 
ratio  at  origination  has  fallen  significantly  and 
indebtedness has decelerated. Most mortgagees opt 
for rather longer fixed interest rate periods to limit 
their  vulnerability  in  case  of  rising  interest  rates. 
These  macroprudential  measures  have  decelerated 
aggregated  mortgage  attribution  (see  Section  on 
housing  below).  Further  gains  in  effectiveness  of 
tackling overheating and the attractiveness of debt-
financing  house  purchases  could  come  from 
increasing property taxation (see Section 3.1). 

Banks  continue  to  be  profitable,  but  lower 
interest  rates  reduced  their  profit  margins. 
Return  on  equity  (ROE)  has  been  rather  stable  at 
around  10%  until  the  end  of  2018,  but  has  since 
fallen  to  8.5%  due  to  lower  interest  rates  and,  in 
turn,  lower  intermediation  margins.  Even  though 
net  interest  income  remains  the  main  source  of 
profit, banks have maintained their profit ratios by 

(25)  After the 2018 tightening, the limits read as follows:  
1.  Only 20% of loans may exceed a 80% loan to value ratio.  
2.  The  debt  service 

that  a 
income 
household’s  sum  of  all  loan  repayments  cannot  exceed 
80%  of  disposable  income  minus  the  national  subsistence 
allowance.  

limit  stipulates 

to 

3.  The  Debt  to  Income  ceiling  was  set  at  8  time’s  annual 
income. It is being phased in since 2018. 5% of new loans 
may transgress that threshold. 

4.  Maturity limits are 30 years for mortgages and 8 years for 

consumer loans.  

5.  Every instalment must contain capital repayments. 

widening  lending  activity  (mostly  via  housing 
loans). This translated into an increase of the loan-
to-deposit  ratio  from  around  90%  at  the  end  of 
2016  to  101.5%  in  the  first  half  of  2019,  still 
significantly  lower  than  the  euro  area  average. 
Mortgage  competition  increased:  in  December 
2018,  61%  of  new  mortgages  had  been 
intermediated  via  mortgage  brokers,  compressing 
the  lending  margin.  Despite  this  compression, 
intermediation  income  has  somewhat  held  up 
thanks  to  volume  effects.  Private  sector  loan 
growth  decelerated  from  10.6%  in  June  2018  to 
7.1%  in  July  2019.  In  a  system  where  banks 
depend  pre-dominantly  on  intermediation  income, 
smaller banks with weaker asset quality have seen 
their  profitability  fall  disproportionally,  whereas 
the systemic banks’ profitability has held up rather 
well.  

The  recent  doubling  of  the  bank  levy  will 
further weigh on profitability. As the tax was set 
to be abolished by 2020, banks set long-term loan 
interest  rates  on  different  assumptions.  The 
doubling of the tax does not have a time limit. As 
the  tax  is  levied  independent  of  profits,  it  might 
result  in  decreased  macro-financial  stability,  as  it 
will push more banks into the loss-making zone. It 
might also strengthen pro-cyclicality, as the levy’s 
base is independent from the inherent riskiness of 
bank assets (European Central Bank, 2019). 

The non-performing loans (NPL) ratio remains 
below  average.  It  has  decreased  significantly  in 
recent  years,  from  around  5%  in  2016  to  3.1%  in 
June  2019,  below  the  euro  area  average  of  3.6%. 
Similarly, the coverage ratio has increased steadily 
in  the  last  three  years,  standing  at  69.4%  in  June 
2019.  However,  the  macroeconomic  slowdown 
and  current  financial  conditions  could  pose  risks. 
Albeit  less  strong,  the  spiral  between  property 
prices  and  mortgage  loans,  fuelled  by  current 
lending conditions and the need of banks to widen 
their client portfolio, could contribute negatively to 
the medium term outlook. 

Sensitivity analysis for an extended low interest 
environment  points  to  potential  sharp  declines 
in  banking  sector  profits  by  2021.  Analysis 
carried out by the central bank indicates that, under 
the baseline – i.e. with interest rates staying at their 
2018  level  – profits would fall  from  €594 million 
at  the  end  of  2018  (corresponding  to  a  return  on 
equity  of  9.3%)  to  €485  million  by  the  end  of 

27 

 
                                                           
3.2. Financial sector 

risk  assessment,  in  early  2019  the  government 
drew  up  an  action  plan 
to  combat  money 
laundering and terrorist financing. The timeline for 
delivering on the action plan is ambitious and aims 
to get the anti-money laundering framework fit by 
June 2020. Progress has been limited and efforts to 
strengthen  the  sanctioning  system  have  been 
rejected by Parliament twice. To date, the financial 
intelligence unit has received no additional staff to 
deal  with  supervisory  tasks.  No  new  training  has 
been  provided  to  help  investigators  better  target 
the  activities  of  international  organised  crime. 
the  5th  anti-money 
Delayed 
laundering  directive  also  deprives  competent 
authorities of key tools such as the central register 
of bank accounts.  

transposition  of 

Housing 

House  prices  continue  to  grow.  In  real  terms, 
house  prices  grew  by  8.6%  year-on-year  in  the 
third  quarter  of  2019,  the  second  highest  growth 
rate  since  the  crisis.  House  prices  are  set  to  grow 
by 5.7% in real terms in 2019, slightly faster than 
in  2018  (+5.0%)  and  2017  (+4.4%).  This  growth 
has  been  present  in  most  regions  and  types  of 
dwellings,  placing  price  levels  around  pre-crisis 
peaks. Growth rates have been rather homogenous 
across  the  different  regions,  except  in  Košice, 
where prices have decreased year-on-year by 3.3% 
on  average  since  2018.  Bratislava  has  a  much 
higher  price  level  compared  to  the  rest  of  the 
country  at  €2,148  /  m2  in  2018,  i.e.  €1,100  /  m2 
above the national average.  

Slovakia  has  a  low  but  increasing  and  positive 
valuation  gap.  According  to  internal  calculations 
made  by  the  Commission,  the  Slovak  housing 
market  was  overvalued  by  4.8%  in  2018,  which 
represents  an  increase  of  3.8  percentage  points 
compared  to  2017.  Despite  the  increase,  the 
valuation gap is still around the long-run average, 
and  the  increase  mainly  stems  from  the  price-to-
rent  ratio,  which  increased  by  7.8 percentage 
points in 2018. This entails that house prices have 
increased  at  a  faster  rate  than  rents,  although  this 
indicator  should  be  treated  with  caution  as  the 
rental  market  is  small  and  mostly  limited  to  the 
Bratislava  region.  Meanwhile,  estimates  from  the 
central  bank  point  to  an  overvaluation  of  around 
12.5% in the second half of 2019 (NBS, 2019). 

2021, or an average decline of 18% for the banking 
system  as  a  whole.  A  second  scenario  examines 
what  would  happen  if  interest  rates  for  housing 
loans fell gradually from 1.6% to 1.0%. Under this 
scenario, profits would decrease by 32% by 2021. 
The  most  severe  scenario  adds  a  worsening  of 
asset  quality  with  an  increase  in  the  NPL  ratio 
from 3.2% to 5.2%. In this case, there would be a 
differentiated  impact  with  profits  of  large  banks 
receding  by  18%,  while  smaller  banks  making  a 
slight loss. 

Anti-money laundering 

Limited  understanding  of  money  laundering 
risks  and  insufficient  supervision  results  in 
underreporting  by  professionals  involved  in 
company formation. Despite the extensive use of 
companies  in  laundering  schemes,  professionals 
involved  in  company  formation  report  very  few 
suspicious transactions(26): in 2018, they submitted 
only four out of the 2,509 reports received by the 
financial  intelligence  unit  (Ministry  of  Interior, 
2019a).  While  effective  supervision  of 
these 
professionals  might  improve  reporting,  only  five 
staff  members  are  allocated  to  this  task,  with 
limited training. 

laundering  cases.  Despite 

Failure to detect crime early and an inadequate 
framework  constrain  prosecutors  of 
legal 
money 
the  high 
conviction  rates,  until  recently  money  laundering 
cases were linked to minor crimes. Ongoing cases 
are  more  prominent,  but  require  significant  effort 
to  carry  out  swift 
financial  and  criminal 
investigations,  as  limited  understanding  of  new 
trends in activities by international organised crime 
(mostly  economic  crime)  hampers  early  detection 
and targeted investigations(27). The lack of a strong 
framework  for  sanctions  and  confiscation  also 
limits 
recover 
proceeds from money laundering. 

law  enforcement  capacity 

to 

The  government  announced  its  intention  to 
strengthen 
its  preventive  and  sanctioning 
system,  but  so  far,  progress  has  been  limited. 
Based on the weaknesses identified in the national 

(26)  They  function  as  gatekeepers  and  have  more  timely  and 
complete  access  to  information,  which  could  prove  more 
effective than what is flagged by banks. 

(27)  These  weaknesses  are  identified  in  the  country’s  2019-
laundering:  
on 

2022  Action 
https://rokovania.gov.sk/RVL/Material/23812/1 

anti-money 

Plan 

28 

 
                                                           
3.2. Financial sector 

building  permits  issued  fell  during  2019,  after  a 
moderate increase  between 2017  and 2018.  In  the 
second  quarter  of  2019,  some  4,335  building 
permits  were  issued,  which  is  substantially  lower 
compared  to  pre-crisis  peaks  (7,143  in  Q3-2018). 
Slovakia continues to rank highest in the OECD in 
terms  of  the  number  of  days  it  takes  to  acquire  a 
building  permit:  300  days  on  average,  i.e.  almost 
twice  the  EU  average  (174.6  days)  (World  Bank, 
2019).  This  limits  the  ability  of  supply  to  quickly 
adapt  to  shifts  in  demand.  The  building  permit 
process is expected to become more efficient with 
the  implementation  of  the  three  packages  of 
measures 
the  administrative  and 
regulatory  burden  (see  Section  3.4.4),  but  the 
impact will take time to unfold. 

reduce 

to 

legal  framework 

An underdeveloped rental market fuels demand 
in  the  real  estate  sector  and  hampers  labour 
mobility. About 90.1% of people in Slovakia live 
in an owned house, more than 24 percentage points 
higher than the EU average (Eurostat data). This is 
the  combined  result  of:  a)  a  lack  of  public  rental 
housing;  b)  a 
that  favours 
ownership over renting; and c) the large sell-off of 
apartments into private ownership after the fall of 
the  communist  regime.  Such  a  thin  rental  market 
reduces  the  mobility  of  students  and  temporary 
workers. For instance, 84.2% of people between 18 
and 29 years old live with their parents, compared 
to  68.2%  in  the  EU  (Eurostat  data).  Moreover,  as 
homeowners are more attached to their homes and 
regions due to high transaction costs, the high rate 
of  homeownership  can  also  make  job  matching 
across  regions  more  inefficient,  and  lead  to larger 
regional  disparities  in  unemployment  in  the  event 
of adverse economic shocks (see Section 3.3). The 
lack of alternative housing options has also shifted 
demand to the real-estate sector, putting an upward 
pressure on prices. 

to 

Investing  in  public  housing  and  adjusting  the 
legal  framework  could  help  develop  the  rental 
market.  According 
the  Slovak  Statistical 
Office,  the  number  of  public  housing  dwellings 
built  has  been  decreasing  steadily,  from  1,545 
completed  dwellings  in  2012  to  just  195  in  2018. 
Investing  in  public  housing  could  ease  supply 
shortages  and  help  serve  temporary  workers,  as 
well  as  those  with  lower  incomes  insofar  as  it 
provides  housing  at  a  lower  cost  than  on  a  pure 
market 
administrative 
Simplifying 
procedures for municipalities and regions to obtain 

basis. 

The sustained price increase has had an impact 
on affordability, even in a context of decreasing 
interest  rates.  Year-on-year  growth  in  deflated 
house  prices  has  outpaced  real  wage  growth  by 
five  percentage  points  on  average  since  2014, 
worsening  affordability  despite 
low  financing 
costs.  On  average,  it  takes  8.1  years  to  buy  a 
100m2  apartment  at  the  current  income  level, 
which  is  low  compared  to  the  EU  average. 
Affordability  problems  are  most  acute  in  the 
Bratislava  region,  where  it  takes  39%  more  years 
of income to buy a house considering the regional 
income level compared to the country average (28). 

Despite  an  increase  in  construction,  supply 
constraints  continue  to  fuel  price  growth.  In 
2018,  the  number  of  completed  dwellings  grew 
markedly  by  10.6%  year-on-year,  reaching  more 
than  22,000  dwellings,  the  highest  level  since  the 
crisis.  The  number  of  started  dwellings  has 
outpaced  that  of  completed  dwellings  since  2015, 
thus  increasing  the  number  of  dwellings  under 
construction.  Yet,  a  substantial  proportion  of 
dwellings  under  construction  have  already  been 
sold, suggesting that construction levels might still 
not be enough to match the strong demand (NBS, 
2019b). 

Graph 3.2.1:  Housing construction and decrease in number 

of dwellings 

Source: Slovak Statistical Office 

The  lengthy  construction  permit  process  slows 
down  supply  side  responses.  The  number  of 

(28)  Derived from regional wage level and apartment price per 

m2 across regions. 

29 

20,00030,00040,00050,00060,00070,00080,0002,0002,5003,0003,5004,0004,5005,0005,50012Q413Q213Q414Q214Q415Q215Q416Q216Q417Q217Q418Q218Q419Q2Dwellings under construction (rhs)Dwellings started (past 4 quarters moving average)Dwuellings completed (past 4 quarters moving average) 
    
                                                           
3.2. Financial sector 

the  credit  market  –  as 

loan value at origination and the risk of defaults in 
the  event  of  a  deterioration  in  economic  activity 
(NBS,  2019).  Beyond  these  measures,  a  more 
stable average interest rate, coupled with a gradual 
saturation  of 
loan 
penetration  increased  markedly  and  housing loans 
are  concentrated  in  younger  age  cohorts  –  have 
contributed  the  growth  moderation  in  housing 
loans,  too.  In  addition,  consumer  credit  growth 
decreased to 1.2% in 2019 (vs. 13.4% in 2018), as 
a result of quick loan repayment. 

Graph 3.2.2:  Household debt as % of GDP 

to 

relate 

income 

these  challenges 

dedicated  funding  may  also  help.  Measures  taken 
to  address 
the 
procurement of boarding houses for employees and 
to 
tax  exemptions  of  non-monetary 
partially  compensate  the  employer  for  the  cost  of 
accommodation. Effective as of January 2020, loan 
conditions  to  procure  rental  apartments  were 
local 
for  both  businesses 
improved 
governments,  including  by  raising  the  thresholds 
for  credits  and  costs.  A  better  public  transport 
infrastructure  (see  Section  3.4.2)  that  can  support 
suburban commuting could reduce the demand and 
price  pressures  in  the  main  cities  and  reduce 
private indebtedness, by effectively increasing land 
supply.  Both  landlord  and  tenant  rights  could  be 
strengthened  by  protecting  landlords’  property 
rights  while  ensuring  stability  and  predictability 
for tenants (European Commission, 2015). 

and 

Private indebtedness  

Household  credit  continues  to  grow,  but  at  a 
more  moderate  pace.  Household  credit  has  been 
increasing  steadily  since  Slovakia’s  accession  to 
the  EU  in  2004,  particularly  compared  to  peer 
countries (see Graph 3.2.2.). In the third quarter of 
2019,  household  debt  reached  its  highest  level  on 
record  at  43.4%  of  GDP,  still  below 
the 
Commission’s  prudential  benchmark  of  55%  but 
above  the  fundamental-based  one  (28%).  This 
growth  has  been  the  result  of  a  low  interest  rate 
environment,  strong  labour  market  performance 
and rising incomes, which encouraged households 
to  take  on  credit.  Low  credit  margins  in  the 
banking  sector  also  created  incentives  to  increase 
banks’  lending  activity.  However,  growth  has 
slowed  in  2019,  with  year-on-year  growth  of 
household debt-to-GDP growing at an average rate 
of 2.7%, much lower than the long-term average of 
11.3%. 

Macroprudential  rules  have  contributed  to  the 
in  household  debt.  The 
slower  growth 
deceleration  of  household  debt 
is  mainly 
attributable to a moderation in the growth of loans 
for  house  purchase,  which  saw  its  growth  drop  to 
10%  in  2019,  compared  to  12%  in  2018.  The 
macroprudential  measures  put  forward  by  the 
central  bank  contributed  to  this  deceleration, 
particularly  by  raising  the  bar  for  lending  to  the 
riskiest  borrowers  through  the  debt  service  to 
income  ceiling  (NBS,  2019b).  The  loan-to-value 
ratio limits also helped mitigate the increase in the 

Source: Eurostat 

Although  growth 
in  household  debt  has 
decelerated,  a  number  of  risks  to  financial 
stability  remain.  Firstly,  a  low  interest  rate 
environment continues to contribute to the elevated 
demand  for  loans.  Rising  property  prices,  which 
have surged in the second half of 2019, will likely 
continue  to  increase  the  value  of  loans  taken  by 
households. This should be particularly monitored, 
since households that take loans with high debt-to-
income (DTI) and loan-to-value (LTV) ratios also 
feature  other 
risky  characteristics,  such  as 
relatively low income and longer maturities (NBS, 
2019b).  Moreover,  a  non-negligible  proportion  of 
loans with simultaneously high DTI and LTV ratio 
limits also points to underlying risks in the market. 
The  rising  average  age  of  borrowers  at  the  loan 
maturity date could also represent a challenge, as it 
reduces the scope for extending the loan term as a 
means  of  reducing  the  instalments  of  a  distressed 
borrower. All these factors, coupled with a low net 
financial  assets  to  GDP  ratio,  could  lead  to 

30 

051015202530354045020304050607080910111213141516171819*Household debt as % of GDPSlovakiaCzech RepublicHungaryPoland 
    
3.2. Financial sector 

financial instability if there are negative economic 
shocks.  The  NBS  thus  reduced  the  limit  on  the 
debt-service-to-income  ratio  from  80%  to  60%  in 
January 2020. 

31 

 
3.3.  LABOUR MARKET, EDUCATION AND SOCIAL POLICIES 

Labour market performance 

Disadvantaged persons on the labour market 

Labour  market  performance  continued  to 
improve  amid  continuous  employment  growth. 
Employment  levels  increased  further  by  about 
30,000  people  between  Q3-2018  and  Q3-2019, 
corresponding to  an average growth of 2.3%. The 
employment rate (for people aged 20-64) peaked at 
73.3%, which is 0.8 pps more than one year before 
and  above  the  Europe  2020  target  of  72%.  This 
improvement  in  the  employment  rate  can  be 
partially  explained  by  the  continuous  decline  in 
working age population, which started in 2012 and 
amounted  to  4.1%  in  the  past  six  years.  In  Q3-
2019,  unemployment  levels  stood  at  157,000, 
which is around 40% of the levels reached in 2013 
at the start of the recovery, and the unemployment 
rate fell further to 5.7% (0.4 pp less than one year 
before).  

Graph 3.3.1:  Unemployment rates by district (September 

2019) 

Source: Slovak Central Office of Labour, Social Affairs and 
Family 

The  positive  trends  hide  significant  regional 
disparities. In 2018, the gap between employment 
rates in the best and worst performing regions was 
more  than  10  pps.  Bratislava  performed  best 
(79.9%),  followed  by  Western  Slovakia  (73.9%), 
Central  Slovakia  (71.9%)  and  Eastern  Slovakia 
(68.1%).  Similarly,  the  unemployment  rate  in 
Bratislava (2.9%) was more than 7 pps below that 
in  Eastern  Slovakia  (10.1%).  Note  that,  in  some 
districts, the unemployment rate reaches 20% (see 
Graph  3.3.1).  These  disparities  are 
in  part 
explained  by  the  location  of  top  automotive 
producers  which  –  including  the  supply  chain  – 
account for an estimated 8.5% of total employment 
(Box 1.1). 

In  2018,  the  share  of  young  people  neither  in 
employment  nor  in  education  and  training 
(NEET) continued to approach the EU average. 
In  the  age  group  15-29,  the  share  of  NEETs  was 
14.6% compared to the EU average of 12.9%. The 
Youth  Guarantee  could  help  these  groups,  but  its 
delivery  is  largely project-based  and  implemented 
labour  market 
through 
policies 
systemic 
coordination  with  social  policy  measures.  For 
instance, jobseekers classified as uncooperative by 
the  public  employment  system  are  subject  to 
deregistration,  which  hampers  further  follow-up 
and complicates the outreach towards NEETs. 

therefore  without 

traditional  active 

the 
system, 

Long-term  unemployment  is  dropping,  but  it 
remains high in particular for young people and 
in  Eastern  regions. As  a proportion of  the  active 
population,  the  number  of  long-term  unemployed 
decreased  by  0.9  pps  year-on-year  to  3 %  in  Q3-
2019,  which  is  still  above  the  EU  average  of 
2.5 %.  Long-term  unemployment 
remains  a 
challenge  for  young  people:  this  rate  is  still  well 
above  the  EU  average  (6.6%  compared  to  3.3%), 
accentuating  regional  disparities  (2.1%  in  West 
Slovakia as opposed to 10% in East Slovakia). The 
incidence  of  unemployment  and 
long-term 
unemployment  continues  to  be  particularly  high 
among the Roma population. 

a 

to 

the 

tool 

Social  entrepreneurship  is  gaining  importance 
long-term 
combat 
as 
unemployment  of  marginalised  groups.  The 
number of social enterprises (29) and their staffing 
have  increased  progressively,  with  38  registered 
enterprises compared to 7 in 2018. Out of these 38 
social  enterprises,  32  employ  a  total  of  452 
marginalised  Roma  (Ministry  of  Interior,  2019b). 
However,  the  EU  funds  earmarked  for  support  to 
social enterprises remain largely unused. 

Spending  on  active  labour  market  policies  is 
low  and,  despite  progress,  service  provision  to 
vulnerable  groups  has  room  for  improvement. 
Spending  (LMP  categories  2-7)  amounted  to 
0.185% of GDP in 2017, which is less than half of 
the  EU  average.  At 
time,  with 
unemployment  dropping  and  increased  European 

the  same 

(29)  Social  enterprises  combine  entrepreneurial  activity  with  a 
social  purpose,  i.e.  in  order  to  have  social  impact,  rather 
than maximise profit for owners or shareholders. 

32 

 
 
                                                           
3.3. Labour market, education and social policies 

facilities, 

(18.3  to  27.9  pps,  see  Graph  3.3.2).  The  labour 
market  participation  of  younger  women  continues 
to  be  low,  constrained  by  the  take-up  of  family 
obligations  (encouraged  by  long  paid  maternity 
leaves (30)), 
in 
lack  of  childcare 
particular  for  children  under  3  years  of  age,  and 
low  uptake  of 
flexible  work  arrangements. 
Participation in early childhood education and care 
is  one  of  lowest  in  the  EU  and  the  provision  of 
childcare 
is 
unsatisfactory across the whole country. At 38.1% 
in 2018, the proportion of women who are inactive 
due to caring responsibilities is significantly higher 
than the EU average (31.8%). Similarly, as in most 
Eastern  European  countries,  the  proportion  of 
women working part-time remains below 10%. 

for  children  under  3 

facilities 

Sectoral  segregation  contributes  to  the  high 
gender pay gap. At 19.8% in 2018, the unadjusted 
gender  pay  gap  is  higher  than  the  EU  average 
(16%)  and  has  increased  over  the  last  year. 
Women  are  overrepresented  in  the  public  sector 
(72%), including in relatively low paying jobs such 
as education, healthcare, social services and public 
the  private  sector,  women 
administration.  In 
occupy  only  42%  of  positions.  Last  year's  salary 
increases,  introduced  in  sectors  predominantly 
occupied  by  women,  are  helping  to  close  the 
gender pay gap. The gender pension gap is below 
10% and among the lowest in the EU.  

Social dialogue 

Collective  bargaining  has  a  sound  institutional 
structure.  However,  an  increasing  number  of 
issues  are  being  addressed  with 
legislation, 
bypassing  social  partners.  Both  unions  and 
employers  increasingly  pursue  their  objectives 
through  mechanisms  other 
collective 
bargaining,  such  as  political  lobbying,  public 
protests  and  media  campaigns,  as 
legislative 
amendments  are  seen  to  prove  to  be  a  more 
effective  means  to  the  desired  end  (Müller,  T.  et 
al., 2019). The capacity of social partners is largely 

than 

(30)  The  maternity benefit can also be claimed  by fathers. The 
number  of  fathers  claiming  it  is  rapidly  growing,  albeit 
from very low levels – from 292 men in 2014 to more than 
10,000  in  2018.  As  of  2020,  parental  allowance  increased 
from € 220.7 to € 270 for a parent and to € 370 for a parent 
whose  maternity  benefit  was  paid  prior  to  entitlement  to 
parental  allowance..  The  JRC  (2019)  estimates  that  the 
increase  will  result  in  an  increase  of  the  mean  equalised 
disposable  income  for  all  deciles,  with  a  minor  positive 
effect on the at-risk-of-poverty level and poverty gap, and a 
stronger effect for single parent families. 

the 

remains 

staff  was 

counselling 

caseload  per 

is  weak  and 

labour  market 

Social Fund support to staff at public employment 
services, 
reduced 
significantly  (from  550-620  applicants  in  2014  to 
220  applicants  in  2018).  However,  the  use  of 
individualised 
limited. 
Cooperation  between  public  employment  services 
and  social  services  for  the  groups  furthest  away 
the 
from 
involvement  of  non-governmental  providers  and 
external  institutions  (e.g.  sheltered  employment 
providers,  centres  for  homeless  persons  and  drug-
addicts) remains poorly developed (Kešelová et al., 
2018).  Employment  incentives  are  still  Slovakia’s 
dominant  active  labour  market  policy  tool.  Re-
training courses are offered to eligible job-seekers 
under  the  REPAS+  and  KOMPAS+  programmes, 
but  the  offer  of  training  tailored  to  low-skilled 
people  is  limited,  with  a  lack  of  systemic  support 
for  second  chance  education  (Kešelová  et  al., 
2018).  This  is  an  issue  because  of  the  high 
unemployment  rate  among  low-skilled  people, 
who  are  enrolled  in  activation  works  with  no 
upskilling  component 
(Ministry  of  Finance, 
2019c). 

Graph 3.3.2:  Gender employment gap by age group, 2018 

Source: Eurostat 

The  labour  market  situation  of  women  is 
gradually  improving,  but  the  employment  and 
wage  gender  gaps  remain  significant.  Although 
the overall gender employment gap is close to the 
EU  average,  this  figures  masks  significant  age-
related  differences:  the  gap  is  rather  small  in  the 
over-40  age  group  (1  to  7.8  pps  depending  on 
cohort),  but  substantial  in  the  20-39  age  group 

33 

02040608010015-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-74MaleFemale% of population 
          
                                                           
3.3. Labour market, education and social policies 

(compared 

in  rough  conditions (31),  more  than  when  the 
previous  data  were  collected  in  2013.  Among 
230,000 of marginalized Roma, 84.7% live below 
the poverty threshold (corresponding to EUR 3.80 
per  day)  and  56%  are  subject  to  severe  material 
deprivation 
for  overall 
to  7% 
population 
in  Slovakia;  Ministry  of  Interior 
2020). (32)  While  microfinance  schemes  for  own 
construction through  financial  instruments  show 
some very good practices, these have not reached a 
large  enough  scale.  Land  ownership  is  often 
fragmented  or  unknown,  impeding  construction 
works and necessary building approval processes. 

services 

Slovakia 
lacks  a  vision  on  the  future  of 
marginalized  settlements.  Individual  policies  in 
education,  labour  market  policies,  health  care, 
housing  and  financial  inclusion  lack  effective 
coordination  (OECD  2019).  Access  to  social  and 
is  hampered  by  missing 
essential 
lack 
infrastructure.  The  communities  often 
drinking  water  infrastructure,  access  to  electricity 
and heating systems, road infrastructure and paved 
roads.  Despite 
funds, 
municipalities’ take-up of investment opportunities 
to address these issues remains limited. According 
to  the  new  Atlas  report,  there  are  no  childcare 
places  available  in  183  municipalities  with  Roma 
population.  Also,  only  163  municipalities  run  a 
community  centre,  and 
in  153  community 
activities  are  organised  by  church  organisations; 
both  of 
these  help  expand  secondary  social 
networks  in  marginalised  communities  (Ministry 
of  Interior,  2019b;  Hrustič,  T  and  Podolinská,  T., 
2010). (33)  

available  EU 

the 

is  persistent 

Poverty 
in  particular  groups 
indicating  low  social  mobility.  Some  80.4%  of 
children of parents with a low education level are 
at  risk  of  poverty  or  social  exclusion,  which  is 
significantly higher than the EU average of 51.3% 
socially 
(2018). 
disadvantaged  families  face  significant  barriers  in 
education 
(see  below).  The  probability  of 
disadvantages being passed on through generations 

children 

from 

turn, 

In 

(31)  Out  of  these,  34,700  live  in  shacks,  4,900  in  containers, 
500 in caravans, 5,200 in wooden non-approved buildings 
and 1,200 in ‘other’ forms of living.    

(32)  According 

to  The  European  Union  Agency 

for 
Fundamental  Rights  (FRA)  in  2016  87%  of  the  Roma 
population  lived  below  the  income  poverty  threshold 
(FRA, 2018). 

dependent on EU financial support, leaving social 
partners  vulnerable  to  potential  disruptions  in  this 
stream of financing. 

Poverty and social exclusion 

The  proportion  of  people  at  risk  of  poverty  or 
social  exclusion  is  comparatively  low,  but  it  is 
not decreasing and some groups and regions are 
in  a  particularly  vulnerable  position.  Despite 
robust  economic  growth,  the  risk  of  poverty  or 
social  exclusion  remained  at  16.3%  in  2018 
(compared  to  a  21.9%  EU  average).  Regional 
disparities are substantial: the proportion of people 
at  risk  of  poverty  or  social  exclusion  ranges  from 
7.9%  in  Bratislava  to  21.7%  in  East  Slovakia. 
Certain  groups  are  in  a  particularly  vulnerable 
position, 
socially 
disadvantaged 
single-parent 
families,  Roma, 
families  (45.7%),  and  persons  with  disabilities 
(Ministry  of  Finance,  2019c).  Every  fourth  child 
(aged  0-17;  23.8%)  faces  a  risk-of-poverty  or 
social  exclusion  (AROPE).  The  AROPE  rate  for 
families with three or more children was 37.7% in 
2017 vs. 29.2% in the EU.  

including 

children 

from 

Graph 3.3.3:  AROPE levels by age group 

Source: Eurostat 

A large proportion of the Roma population lives 
in  poverty  and/or  in  poor  housing  conditions. 
The  updated  Atlas  of  Roma  communities 
published  in  2019  estimates  that  416,000  Roma 
people  live  in  1043  concentrated  communities 
(Ministry of Interior, 2019b). Of these, 46,500 live 

(33)  2018  Annual  Implementation  Report  of  OP  Human 

Resources, Priority Access 6 

34 

05101520253035400506070809101112131415161718% of populationChildren (<18y)Working age (18-64)Elderly (65+) 
         
                                                           
3.3. Labour market, education and social policies 

on  active  stakeholders  applying  for  EU  funded 
projects.  Even  there,  the  administration  of  cash-
flow  is often delayed,  resulting  in  interruptions  in 
the provision of services. Moreover, providers are 
often  concerned  about  long-term  sustainability  of 
financial support in case EU funding is phased out 
(Škobla,  D.  et  al.,  2018).  Despite  newly  launched 
ESF-funded  projects,  professions  related  to  social 
work  remain  financially  unattractive  (European 
Commission, 2019b).  

Since  2009,  all  social  service  providers  are 
to  regulatory  quality  assessment. 
subject 
However,  such  assessment  has  been  limited  and 
existing  research  has  so  far  shown  a  subsequent 
increase  in  quality  (Repková,  K.,  2019).  An  EU-
funded  project,  “Quality  of  social  services”, 
launched 
the 
in  June  2019  contributes 
methodological support and guidance to public and 
non-public  providers  of  social  services  as  well  as 
quality evaluators. 

to 

lacking.  Responsibility 

Financial  resources  and  a  systematic  vision  of 
how  to  meet  the  increasing  demand  for  long-
for 
term  care  are 
delivering  long-term  care  is  shared  between  the 
Ministry of Labour, Social Affairs and Family, the 
Ministry  of  Health, 
regional  governments, 
municipalities and non-public providers, without a 
and  no 
clear  division  of 
coordination 
and 
healthcare  systems.  Public  expenditure  on  long-
term  care  reached  0.9%  as  a  share  of  GDP,  way 
below the EU average of 1.6%. Consequently, also 
the number of long-term care workers is among the 
lowest in the EU (OECD 2019e). 

responsibilities 
social 

between 

security 

Long-term  care  heavily  relies  on  informal  care 
by family members. Up to 71% of people with a 
family  member  who  requires 
long-term  care 
organised this on their own, which keeps a sizeable 
part  of  the  population  outside  the  labour  market. 
Only the persons diagnosed with severe disabilities 
(estimated at 20% of those in need of LTC) receive 
financial support (34) (Ministry of Finance, 2019b). 
Since  July  2019,  the  nursing  benefit  to  care  for  a 
family  member 
the  net 
minimum  wage.  However,  respite  services  for 
Slovakia’s  53,000  informal  carers  (78%  of  whom 
are women) of persons with severe disabilities are 
practically  non-existent  (Filipová  2018),  with 

to  match 

increased 

(34)  Based on a survey by the Patients’ Rights Association  

is  very  high  for  the  Roma  population,  especially 
for  Roma  people  living  in  segregated  settlements 
(OECD,  2019).  For  Roma  children  living  in 
concentrated  residential  areas,  the  probability  of 
becoming  unemployed  or  earning  less  than  the 
minimum  wage  in  irregular  work  is  almost  70%. 
This  is  much  higher  than  that  of  the  general 
population (25%) and even higher than the poorest 
(45%;  OECD,  2019). 
non-Roma  population 
Moreover,  Slovakia 
lacks  a  systematic  early 
support for children in poverty and children with a 
disability (Ministry of Finance, 2019c). Only 8.2% 
out  of  estimated  14,000  children  with  a  disability 
(0-7  years  old)  have  access  to  early  support 
services (APPVI, 2019). 

Child  poverty,  in  particular  among  Roma 
communities, is the main circumstance in which 
the  state  provides  foster  care.  The  Slovak  legal 
system  does  not  allow  for  the  placement  of 
children  into  institutional  foster  care  on  the 
grounds  of  poverty  or  deprivation,  but  research 
suggests  that  poor  housing  conditions  are  one  of 
the  most  frequent  reasons  for  putting  Roma 
children  into  institutional  custody  (Kríglerová, 
E.G. et al., 2015). In 2018, 13,863 children lived in 
substitute care, of whom 37% in institutional care, 
with the average length of stay being slightly over 
four years. 

Access to social services  

localities 

and  no 

The  division  of  responsibilities 
for  social 
services  between  municipalities  and  regions  is 
often  unclear.  This  leads  to  uneven  access  to 
social  services  across  the  country.  Municipalities 
are  obliged  to  adopt  community  plans  for  the 
development of social services, and these are often 
formalistic.  There  is  a  lack  of  cooperation  among 
neighbouring 
systematic 
aggregated mapping and forecasting of services is 
carried  out  at  national  and  regional  level.  In 
addition,  the  financial  support  to  social  services 
under  the  European  Social  Fund  is  currently 
fragmented  between  the  Implementation  Agency 
of  the  Ministry  of  Labour  and  the  Office  of  the 
Roma  Plenipotentiary  under 
the  Ministry  of 
Interior,  duplicating  administrative  structures. 
Although EU funded services related to field social 
work,  crisis  intervention,  community  centres  and 
healthcare  assistance  are  generally  well  perceived 
(Ministry  of  Finance,  2019c),  they  are  limited  in 
coverage  and  lack  coordination,  often  depending 

35 

 
                                                           
3.3. Labour market, education and social policies 

European Regional Development Fund, but delays 
and  lack  of  ESF-ERDF  coordination  renders  the 
work of some facilities redundant and discourages 
others  from  joining.  The  lack  of  coordination  of 
EU  operational  programmes  continues  to  be  a 
bottleneck (European Commission, 2019c). 

A  national  strategy  for  preventing  and  ending 
homelessness  is  still  pending,  despite  growing 
evidence  of  policy  action  being  necessary. 
Research  demonstrates  the  economic  plausibility 
of addressing homelessness through public budgets 
(Institute  for  Environmental  Policy,  2019),  and 
provides  strategic  guidance  on  prevention  and 
ending  homelessness  (Institute  for  Labour  and 
Family  Research,  2018).  The  proportion  of  flats 
owned  by  municipalities  is  low  (only  2.6%  in 
2016) and, in any case the system of social housing 
is in principle not accessible to homeless persons. 
Access of  the most deprived persons  is limited  as 
many municipalities that rent out flats examine the 
potential  tenant’s  ability  to  pay  rent  or  set  a 
minimum income level. Many also require proof of 
permanent residence and/or an absence of debts in 
order for a person to be eligible. 

Education and skills 

Students’  performance 
in  basic  skills  has 
low  and  pronounced  educational 
remained 
inequalities  persist.  Despite  some  improvement, 
notably in mathematics since 2015, pupils’ overall 
performance  was  in  2018  still  significantly  worse 
than  in  2009  (OECD,  2019b).  The  proportion  of 
low  achievers  is  significantly  above  the  EU 
average of 22% in all areas tested (31% in reading, 
29%  in  science,  and  25%  in  mathematics).  The 
proportion  of  top-performers  in  reading  is  also 
particularly  low  at  4.6%  (EU:  8.9%),  which 
indicates  that  the  education  system  does  not 
support  the  high  skills  needs  either.  In  2018, 
Slovakia  adopted  a  ten-year  national  programme 
for  education  and  upbringing 
(Ministry  of 
Education,  2018a).  Its  efficient  implementation  is 
crucial to improve the quality and inclusiveness of 
the education system. Further  policy measures and 
resources may be needed following the evaluation 
of  the  implementation  of  the  first  action  plan 
(2018-19) and the analysis of the recommendation 
on  strengthening  young  people's  skills  of  the 
OECD Skills Strategy for Slovakia (OECD, 2020).  

impacts on their families e.g. as regards the labour 
market  participation,  as  well  as  society  (Ministry 
of Finance, 2019b). 

Formal 
to  be 
long-term  care  continues 
dominated  by  residential  facilities  and  lacks 
sufficient home care and community-based care 
services.  In  2017,  there  were  47,125  places  in 
social  services  facilities,  with  approximately  40% 
serving  pensioners  and  the  other  60%  serving 
people with various types of disabilities or special 
needs  (AOPP,  2018).  However,  this  type  of  care 
remains  under-resourced,  with  up  to  20%  of 
applicants  waiting  for  a  placement  for  more  than 
one  year.  Nursing  services,  which  are 
the 
competence  of  municipalities,  are  currently 
dependent  on  EU  funds  and  deployed  in  an 
unsustainable and unsystematic way, depending on 
successful  project  applications.  Therefore,  the 
percentage of elderly people (65+) who use home 
care  services  remains  relatively  low  (6.9%  v 
10.6%  in  the  EU),  while  the  number  of  people  in 
need  of  personal  care  and/or  household  help  is 
high (38.7% vs. 26.3% in the EU).  

Population ageing will likely exacerbate some of 
the  above  challenges,  in  particular  access  to 
long-term  care  for  the  elderly.  The  old-age 
dependency  ratio  is  projected  to  triple  by  2060 
(Section  3.1).  Banská  Bystrica  region,  one  of  the 
fastest  ageing  regions  in  Slovakia,  has  identified 
the lack of integrated care system for elderly as an 
investment priority under the Catching-Up regions 
initiative.  Pilot  testing  of  such  a  model,  in 
cooperation  with  the  European  Commission  and 
the World Bank, is planned for 2020. 

The process of deinstitutionalisation of care for 
persons  with  disabilities  is  proceeding  slowly. 
There has been significant progress in terms of the 
number  of  large  capacity  social  service  facilities 
involved  in  this  transformation  process,  which 
involves  setting  up  dedicated  teams  and  plans.  In 
the  first  phase  of  the  EU-funded  project  launched 
in  this  area  in  August  2019,  25  facilities  got 
involved  and  another  71  are  expected  to  be 
included  before  the  project  ends  in  October 
2023 (35).  The  transformation  plans  are  a  pre-
the 
condition 

financing 

receiving 

from 

for 

(35)  Overall, there are 213 high-capacity institutions (with more 
than  40  places)  institutions  with  a  cumulative  capacity  of 
15,000 places. 

36 

 
                                                           
3.3. Labour market, education and social policies 

staff 

will  earn  only  68%  of  the  average  salary  of  other 
full-time 
tertiary 
full-wage  employees  with 
education  (Ministry  of  Finance,  2019c).  This  is 
significantly  below  the  2017  EU  averages  from 
85%  at  primary  level  up  to  95%  at  upper 
secondary  level  (OECD,  2019c).  The  situation  is 
particularly  alarming  in  Bratislava  region  where 
pedagogical  staff  working  in  primary  schools 
earned  in  2018  only  61%  of  average  regional 
salary  for  full-wage  employees  with 
tertiary 
education.  Lack  of  statistical  data  per  group  of 
pedagogical 
and  per  various  wage 
components  renders  any  analyses  for  eventual 
revision  of  remuneration  system  of  pedagogical 
staff  difficult  (Supreme  Control  Authority,  2019). 
Initial  teacher  education  often  lacks  quality  and 
relevance  (Santiago,  P.  et  al.,  2016;  OECD, 
is  still  under 
2019d),  and 
its  modernisation 
2019c). 
discussion 
Continuing 
development 
professional 
opportunities  are  limited  (OECD,  2019c)  and 
related allocated resources are unclear (Ministry of 
Finance, 2019d). These long-term trends are likely 
to have contributed to insufficient teaching quality, 
exacerbated  the  impact  of  the  ageing  teacher 
population,  and  to  discouraging  a  significant 
proportion  of  young  graduates  of  initial  teacher 
education  programmes  from  going  into  teaching 
2019c).  However, 
(European  Commission, 
education and training still rank among the sectors 
with  the  highest  additional  labour  needs  forecast 
until 2024 (Ministry of Labour, Social Affairs and 
Family, 2019). 

of  Finance, 

(Ministry 

in 

involved 

Children  from  disadvantaged  homes  are  not 
systematically 
in  early  childhood 
education  and  care  programmes.  In  2017-2018 
only  43%  of  children  aged  3-5  from  families 
receiving  the  ‘benefit  in  material  need’ (38),  and 
31.7%  of  children 
that  age  group  from 
marginalised Roma communities, were enrolled in 
early  childhood  education  and  care  (Hellebrandt, 
T.  et  al.,  2019).  The  overall  participation  rate  of 
children aged 4 and above is at 78.2%, the lowest 
in  the  EU  (95.4%).  In  June  2019,  Parliament 
approved  compulsory  pre-school  attendance  for  5 
year-olds  starting 
in  January  2021  (National 
Council,  2019).  This  will  likely  have  a  positive 

(38)  Payable  to  households  who  are  not  able  to  secure  basic 
living conditions and cannot increase their income through 
their own efforts (i.e. by work, statutory entitlements) 

Socioeconomic  status  has  a  significant  impact 
on  educational  outcomes.  Schools  do  not 
sufficiently  level  out  inequalities  among  students, 
hampering  social  mobility.  Low-  and  high-
performing  students  as  well  as  advantaged  and 
disadvantaged students, respectively, are clustered 
in separate schools to a significantly higher extent 
than in other EU countries (OECD, 2019b), which 
points  to  the  persistent  fragmentation  of  the 
education  system.  To  illustrate,  in  reading,  15 
backgrounds 
year-olds 
outperformed 
disadvantaged 
backgrounds by 106 points (EU: 95 points), which 
corresponds to more than three years of schooling. 
This gap has remained stable since 2015 but is 20 
points  wider  than  in  2009.  In  addition,  there  is  a 
lack of systemic measures to prevent and eliminate 
segregation  of  Roma  children 
in  Roma-only 
classes and in Roma-only schools. 

advantaged 

those 

from 

from 

Investment  in  education  and  training  remains 
insufficient,  affecting  educational  outcomes.  In 
2017,  general  government 
expenditure  on 
education  as  a  share  of  GDP  was  well  under  the 
EU  average:  3.8%  vs.  4.6% (UEO  2017) (36). 
Spending  on  education  measured  against  the  total 
public  budget  amounted  to  9.4%  compared  to  the 
EU average of 10.2% in 2017. In addition, school 
principals  of  disadvantaged  schools  reported  staff 
shortages more often than principals of advantaged 
schools, and, in general, school principals reported 
more  material  shortage  than  the  OECD  average 
(OECD,  2019b).  The  use  of  EU  funds  to  support 
developments  in  education  is  sub-optimal,  and  a 
systematic  evaluation  of  projects  to  guide  further 
policy  action  and  funding  are  needed.  Investment 
in teacher training is also weak. The evaluation of 
the first action plan (2018-2019) of the 2018-2027 
national  reform  programme  for  education  and 
upbringing (Ministry of Education, 2018a) and the 
development of the second are pending.  

The  attractiveness  of  the  teaching  profession 
remains  limited  due  to  low  salaries  and  low 
prestige (37)  (Perignáthová  M.,  2019).  Average 
teachers’  salaries  still  lag  behind  those  of  other 
professions 
following  planned 
increases  in  2020,  teachers  in  public  institutions 

in  Slovakia: 

(36)  Joint  collection  of  education  data  by  UNESCO,  the 
Institute for Statistics (UIS), the OECD and Eurostat. 
(37)  The  proportion  of  Slovak  teachers  who  think  that  the 
teaching profession is valued in society is one of the lowest 
in the EU — 4.5% v 17.7% at EU level (OECD, 2019c). 

37 

 
                                                           
                                                           
3.3. Labour market, education and social policies 

marginalised  Roma  communities  had  dropped  out 
before the final year of lower secondary education 
(Hellebrandt,  T.  et  al.,  2019).  Furthermore,  only 
51.7%  of  16  year-olds  from  both  groups  were  in 
formal  education  compared  to  80.3%  for  the  full 
population of this age group. The current measures 
aimed  at  improving  attendance  and pupils’  school 
performance  have  been  insufficient  in  preventing 
early 
training 
(European  Commission,  2019d).  Among  people 
from  disadvantaged  groups,  there  is  a  correlation 
between  high  rates  of  leaving  education  and 
training early and low enrolments in kindergartens. 
This  shows  the  need  to  improve  access  to  early 
childhood education and care for these groups as a 
pre-requisite for improved educational attainment. 

from  education  and 

leaving 

an 

approved 

Low  inclusiveness  of  education  remains  a  big 
challenge.  The  proportion  of  pupils  with  special 
educational needs is among the highest in Europe, 
at  almost  20%  of  primary  school  pupils.  Some 
5.9%  of  these  pupils  (EU:  1.6%)  are  educated  in 
special  classes  or  special  schools.  In  several 
districts  in  Eastern  Slovakia,  the  proportion  of 
primary  school  pupils  in  special  schools  for 
children  with  mental  disabilities  exceeds  10% 
(MESA10, 2019). This trend affects especially the 
Roma  population:  22.6%  of  Roma  children  are  in 
special  primary  schools  (Slovak  National  Centre 
for  Human  Rights,  2018).  In  January  2019,  the 
government 
updated  Roma 
integration  action  plan,  valid  until  2020,  with  an 
allocation  of  €55.7  million  to  raise  the  Roma 
population’s  education 
the  national 
average (Eurydice,  2019).  The  inclusion  projects 
supported also with EU funds focus on awareness 
raising activities for schools and creating inclusive 
and 
teams.  Their 
evaluation,  as  well  as  sustainable  measures 
embedded in a comprehensive strategy will need to 
be ensured. A systemic approach is also needed in 
addressing  disproportionate  placement  of  Roma 
children  in  special  schools  or  special  classes  for 
children  with  mental  or  other  disabilities.  A 
strategy  for  inclusive  education  with  concrete 
desegregation measures is still lacking, which also 
contributes 
of 
disadvantaged students (OECD, 2019d). 

the  worsening 

implementation 

effective 

results 

level 

to 

to 

The  employability  of  graduates  of  vocational 
education and training (VET) has increased. In 
2017,  total  enrolment  in  upper  secondary  VET 
remained stable at 68.9% which is well above the 

impact on disadvantaged children if a high quality 
and inclusive environment is ensured. 

and 

facilities 

in  the  provision  of  early  childhood 
Gaps 
education 
persist, 
care 
aggravating  regional  and  social  disparities.  In 
2018-2019,  some  12,502  child  admission  requests 
could not be met,  mostly in the Bratislava region. 
Furthermore,  kindergartens  are  less  accessible  in 
municipalities  with  a  higher  proportion  of  Roma 
population  (Hellebrandt,  T.  et  al.  2019).  Despite 
EU investment in the building of facilities in 2014-
2020, it is estimated that between 1 828 and 3 172 
places could be needed to ensure full enrolment of 
5  year-olds  (Varsik,  S.,  2019).  Also,  current 
capacity  of  facilities  for  children  under  3  (207 
is 
establishments  with 
insufficient to fully cater for the population of 175 
000 children. Independent analysis shows that lack 
of  capacity  affects  in  particular  admissions  of  2 
and  3  years-old  (MESA,  2019).  However,  a 
comprehensive mapping and long-term forecast of 
needs  are  still  pending  to  fully  determine  the 
lacking capacities for all age groups. 

some  3500  places) 

Graph 3.3.4:  Early school leavers, aged 18-24 (%) 

Source: OECD Economic Surveys 

The  rate  of  early  leavers  from  education  and 
is  high  among 
training  has  risen  and 
disadvantaged  groups.  The  proportion  of  early 
leavers  from  education  and  training  has  increased 
to 8.6% in 2018 (4.7% in 2010) and reaches 13.9% 
in  Eastern  Slovakia.  In  2017-2018,  32.6%  of  16 
year-olds  from  families  receiving  the  ‘benefit  in 
material  need’  and  37.2%  of  16-year-olds  from 

38 

010203040506070Roma MenRoma WomenGeneralpopulationEurope 2020target 
      
3.3. Labour market, education and social policies 

as 

such 

from 

result 

factors 

Amid  persisting  concerns,  reform  efforts  are 
aiming  to  improve  the  quality  of  tertiary 
education.  Weaknesses  of  the  higher  education 
the 
system 
fragmentation,  high  outflow  of  secondary  school 
graduates,  limited  teaching  quality,  and  a  lack  of 
internationalisation  and  job  market  orientation 
(European Commission, 2019b). Higher education 
institutions  rank  low  internationally,  and  recently 
their position has further worsened (Times Higher 
Education, 2020). In 2017, 13% of Slovak students 
graduated  abroad 
(EU  average:  3.6%).  The 
independent  Slovak  Accreditation  Agency  for 
higher  education  is  now  operational,  a  first  step 
towards  improving  quality.  Additionally,  new 
legislation adopted in 2019 on the system of study 
the 
branches  of 
framework  for  awarding  professor  degrees,  are 
relevant  for  the  forthcoming  reform  of  higher 
education.  Amendment  of  the  act  on  higher 
education provides a platform for rationalising the 
network  of  higher  education  institutions.  The 
national qualifications framework was updated and 
can help the education and training system become 
more flexible once qualification standards become 
officially  recognised  and  labour  market-driven.  A 
comprehensive  national  system  for  validation  of 
non-formally and informally acquired skills (39) is 
not yet in place.  

the  Slovak  Republic,  and 

of 

data 

skills 

relevance 

labour 
Despite  developments,  data  on  the 
limited. 
is 
market 
and  macroeconomic 
Unemployment 
forecasting  of  labour  market  demand  are  not 
sufficiently  disseminated  and  used  to  regulate 
graduate  supply  against  labour  market  needs.  The 
gradual  refinement  of  processes  and  improved 
information  on  graduates’  prospects  can  help 
career counsellors and individual learners to make 
more informed choices on their field of study and 
profession (‘professiometers’, ‘study-grams’ and a 
new portal). However, detailed reliable data on the 
transition  from  school  to  work  are  still  not 
available. Individualised data based on information 
from  the  Social  Insurance  Agency  database  are 
still  only  under  discussion.  There  were  no 
administrative data on graduates' placement on the 
labour market. 

(39)  Non-formal  learning  relates  to  learning  which  takes  place 
through  planned  activities;  informal  learning  describes 
learning  resulting  from  daily  activities  related  to  work, 
family or leisure and is not organised or structured. 

(12% 

EU  average  of  47.8%  (UEO  data  2017).  Students 
enrolled in VET had some exposure to work-based 
learning 
in  2017).  Most  educational 
programmes  provide  for  practical  aspects  in  the 
curriculum.  The  level  of  employability  of  recent 
VET  graduates  in  2018  saw  a  notable  increase  to 
84.7%  (81.6%  in  2017),  well  above  the  EU 
average  of  79.5%  (Labour  Force  Survey  2018). 
Thanks to removing entry barriers, Dual Education 
became more attractive for schools and employers. 
Despite  rising  interest,  the  participation  in  dual 
education  remains  challenging  for  micro,  small 
and medium-sized enterprises. The least developed 
regions  of  Prešov  and  Banská  Bystrica  foster 
linkages  between  companies  and  VET  schools  by 
participating  in  the  Catching-up  regions  Initiative 
with the support of European Commission. 

Emerging 

The  development  of  professionally-oriented 
bachelor  studies  and  the  introduction  of  dual 
VET  into  tertiary  education  are  progressing 
slowly.  European  Social  Fund  projects  aimed  at 
developing 
bachelor 
professionally-oriented 
studies  were  under  assessment  at  the  time  of 
professionally-oriented 
reporting. 
bachelor studies are backed by legislation and dual 
VET  at  tertiary  level  is  backed  by  the  2018-2027 
national  programme  for 
the  development  of 
education.  However,  there  is  currently  only  one 
professional  bachelor  programme  in  place,  in  the 
automotive 
of 
universities  of  applied  science,  which  was 
advocated  by  some  experts,  is  not  envisaged 
(European Commission, 2017). On the other hand, 
Slovakia 
the 
introduction  of  separate  governance  and  funding 
arrangements 
oriented 
institutions (OECD 2020). 

recommended 

professionally 

sector.  The 

establishment 

to  consider 

for 

is 

Tertiary  attainment  is  steadily  growing  but 
disparities  exist.  In  2018,  the  national  tertiary 
attainment  rate  was  37.7%  (EU:  40.7%).  The  gap 
to the EU has been narrowing over time, from 11.7 
pps  in  2010  to  only  3.0  pps  in  2018.  However, 
high 
the 
regional  disparities  exist  between 
Bratislava region (59.9%) and other regions, where 
the  attainment  rate  ranges  between  33.4%  and 
35.2%. The gender gap in favour of women is 13.5 
pps  (EU  average:  10  pps).  Furthermore,  the 
proportion  of  graduates  in  science,  technology, 
engineering  and  mathematics,  at  21.2%,  remains 
below the EU average of 25.8% (UEO data). 

39 

 
                                                           
3.3. Labour market, education and social policies 

Most  adults  have  at  least  an  upper-secondary 
qualification, but lifelong learning rates are low. 
In  2018,  only  8.3%  of  adults  did  not  have  upper-
secondary  qualification  (EU:  21.9%).  However, 
adult  learning  rates  are  low:  Only  4.0%  of  adults 
aged  25-64  participated  in  a  lifelong  learning 
programme  in  2018  (EU:  11.1%,  LFS  data  for 
2018).  An  important  factor  is  the  lack  of  both 
labour market intelligence and interest from adults 
(OECD Skills Strategy Slovak Republic). 

spreadsheet  editors.  Although 

Digital  skills  are  improving  but  businesses  still 
lack  qualified  experts  in  key  industrial  sectors. 
Although  according  to  the  Digital  Economy  and 
Society  Index,  59%  of  adults  have  at  least  basic 
digital  skills,  the  latest  IT  fitness  test  indicates 
gaps  in  digital  competences  among  young  people 
in  particular  in  the  use  of  office  software  such  as 
text  or 
the 
proportion  of  graduates  with  a  degree  in  ICT  is 
growing  (DESI,  2019),  60%  of  companies  that 
recruited  or  tried  to  recruit  ICT  specialists  report 
problems  in  filling  these  vacancies  (Eurostat, 
2017a). There is also a significant brain drain, with 
almost  10%  of  Slovak  university  graduates 
relocating to foreign countries not including those 
who  graduated  abroad.  The  new  Strategy  for 
Digital  Transformation  of  Slovakia  2030  aims  to 
reform  the  education  system  to  improve  the 
employability  of  graduates,  introduce  lifelong 
learning  programmes  and  ensure  that  people  gain 
relevant digital skills at school.  

40 

 
3.3. Labour market, education and social policies 

41 

Box 3.3.1: Monitoring performance in light of the European Pillar of Social RightsThe European Pillar of Social Rights is a compass for a renewed process of upward convergence towards better working and living conditions in the European Union. It sets out twenty essential principles and rights in the areas of equal opportunities and access to the labour market; fair working conditions; and social protection and inclusion.  The Social Scoreboard supporting the European Pillar of Social Rights points to some challenges in Slovakia. The gender employment gap remains high and is increasing, pointing to low labour market participation of women of childbearing age. This situation is related to the high proportion of women who are inactive because of caring responsibilities and the limited availability of childcare facilities across the country. Indeed, the participation of children aged 0 to 3 in formal childcare remains among the lowest in the EU. Recent efforts to increase the number of available places, while welcome, have not significantly changed the overall picture. As far as education is concerned, early school leaving has significantly worsened in recent years, although it is close to EU average. The inclusiveness of education remains a challenge in particular for Roma children (as explained in detail in the main text).   On the positive side, income inequality and the proportion of people at risk of poverty or social exclusion remain low. However, the overall figures hide significant disparities across regions, and the situation is challenging for people living in marginalised Roma communities who suffer from multiple forms of disadvantage (as concerns integration in the labour market and access to services). The level of income for the average worker remains well below the EU average, although fast wage and household disposable income growth in recent years suggests that convergence is taking place. Some recent measures aim to improve women’s participation in the labour market via a more balanced approach to parental leave. Due to the increasing base for calculating the paternity leave benefit, and information campaigns run over the last several years, the number of fathers taking paternity leave (28 weeks at 75% of previous salary and capped at 1458.50 €/month in 2019) has grown from close to 0% in 2014 to almost 20% in 2018. This development has allowed an increasing number of mothers to come back to the labour market, contributing to an increase of about 5 pps in the employment rate of women aged 25-29 and 30-34 over this period (though the gender gap with men remains sizeable). Social Scoreboard for SLOVAKIA SOCIAL SCOREBOARD SDGs Equal opportunities and access to the labour market  Early leavers from  education and training  (% of population aged 18-24)      Youth NEET  (% of population aged 15-24) Gender employment gap Income quintile ratio (S80/S20) At risk of poverty or social exclusion (in %) Dynamic labour markets and fair working conditions   Employment rate  (% of population aged 20-64)  Unemployment rate  (% active population aged 15-74) Long-term unemployment rate  (% active population aged 15-74) GDHI per capita growth  Net earnings of a full-time single worker earning AW Social protection and inclusion  Impact of social transfers (other than pensions) on poverty reduction    Children aged less than 3 years in formal childcare Self-reported unmet need for medical care Individuals' level of digital skills Critical situation To watch Weak but improving Good but to monitor On average Better than average Best performers Members States are classified on the Social Scoreboard according to a statistical methodology agreed with the EMCO and SPC Committees. It looks jointly at levels and changes of the indicators in comparison with the respective EU averages and classifies Member States in seven categories. For methodological details, please consult the proposal for a Joint Employment Report 2020, COM(2019) 653 final; NEET: neither in employment nor in education and training; GDHI: gross disposable household income. Update of January 2020. Classification of Individuals’ level of digital skills based on 2017 data.   
 
 
 
  
 
 
3.4. COMPETITIVENESS, REFORMS AND INVESTMENT 

markedly  in  the  early  2000s  and  is  below  the 
average  of  other  Central  and  Eastern  European 
countries. EU funds directed at gross fixed capital 
formation  represented  about  one  quarter  of  total 
public  investment  in  2018.  Nevertheless,  the 
absorption rate is currently among the lowest in the 
EU and a longstanding challenge, leading to one of 
the highest volatilities in public investment among 
all  EU  countries  (average  2012-2017,  European 
Commission (41), IMF, 2019b).  

Graph 3.4.2:  Evolution of gross fixed capital formation 

3.4.1.  PRODUCTIVITY AND INVESTMENT 

keeps 

competitiveness, 

The  productivity  divide  between  services  and 
widening.  While 
manufacturing 
productivity in manufacturing grew fourfold since 
2000, in services it only grew by about 20%. High 
productivity  growth  in  manufacturing  has  helped 
cushion  the  impact  of  rising  labour  costs  on 
external 
as  manufacturing 
provides the bulk of tradable goods, while services 
entail  many  non-tradable  activities  (Section  1). 
Foreign  direct  investment  (FDI)  channelled  into 
highly  productive,  export-oriented  foreign  firms 
contributed to this, while technological diffusion to 
domestic firms has been limited. The productivity 
gap  between  leader  and  laggard  firms  therefore 
remains wide, with the top 10% of firms 18 times 
more productive than the bottom 10%. Following a 
Council  Recommendation(40),  Slovakia  recently 
set  up  a  Productivity  Board  to  monitor,  analyse 
and  evaluate  productivity  and  competitiveness, 
with a first report due in March 2020. 

Graph 3.4.1:  Labour productivity in manufacturing vs. 

market services 

Source: AMECO, Eurostat 

in 

to  be  reversed 

Foreign  direct  investment  (FDI)  flows  have 
diminished,  while  the  repatriation  of  profits 
worsens  the  current  account.  FDI  accounted  for 
0.4%  of  GDP  in  2018,  much  lower  than  previous 
levels and the peak of 10.2% in 2006. This trend is 
unlikely 
the  near  future. 
Following the maturing of FDI, profit repatriation 
is  more  sizeable  and  contributes  to  the  negative 
current  account  balance.  In  2016,  about  3.6%  of 
GDP flowed out of the country as dividends. This 
is  less  than  in  Czechia,  but  higher  than  in  Poland 
and  Hungary.  Despite  the  declining  trend  in  FDI, 
the  Slovak  Investment  and  Trade  Development 
Agency  (SARIO)  reports  that  new  investment 
projects  tend  to  move  into  higher  valued  added 
sectors  and  activities  (11  of  26  projects  in  2017, 
totalling  €319  million),  targeting  less  developed 
regions  (12  of  26).  Moreover,  some  investments 
have  been  upgraded  over  time,  extending  from 

Source: Eurostat, European Commission calculations 

Public  investment  is  volatile  and  dependent  on 
EU  funding.  It  accounted  for  17.6%  of  total 
investment  in  2018,  though  it  is  significantly 
higher in regions with lower income notably due to 
a  greater  use  of  EU  funds.  This  is  just  enough  to 
sustain the stock of public capital, which decreased 

(40)  Council  Recommendation  of  20  September  2016  on  the 
establishment  of  National  Productivity  Boards,  OJ  C  349, 
24.9.2016, p. 1–4. 

(41)  European  Structural  and  Investment  Funds  Open  Data 
Portal: https://cohesiondata.ec.europa.eu/countries/SK# 

42 

100150200250300350400000102030405060708091011121314151617182000=100SK whole economyCZ whole economySK manufacturingCZ manufacturingSK market servicesCZ market services050010001500200025000%5%10%15%20%25%30%0506070809101112131415161718Mill €% GDPEU funds used for GFCF (mill €)(rhs)GFCF total economyGFCF general government 
       
                                                           
       
                                                           
  
3.4. Competitiveness, reforms and investment 

manufacturing  to  include  shared  service-  and 
technology centres. 

Graph 3.4.3:  Foreign direct investment inflows and 

repatriation of profits 

local  economy, 

education  and  social  and  health  care  services 
(Bleha,  B.  et  al.,  2017),  and  the  transition  to  a 
greener 
including  sustainable 
public  transport  and  waste  management.  The 
Bratislava  region  performs  better  than  the  other 
regions  on  all  R&I-related  aspects,  including 
innovation  performance  and  tertiary  education. 
This  might  have  an  adverse  effect  on  R&I 
development in non-capital regions, making efforts 
to attract talent to these regions more difficult. 

Graph 3.4.4:  RCI 2019 indicators: Comparison of the EU 

average, Bratislava region and Eastern 
Slovakia 

Source: Slovak National Bank 

3.4.2.  REGIONAL DISPARITIES 

Economic and social disparities between regions 
in  the  East  and  in  the  West  are  significant. 
Despite  a  positive  upward  trend  registered  by  all 
four  NUTS 2  regions  when  comparing  2016  and 
2019  values  of  regional  competitiveness (42),  the 
gap  between  Bratislava  and  Slovakia’s  other 
regions remains significant. A similar divide exists 
for  levels  of  R&D  expenditure,  the  proportion  of 
tertiary  education,  and 
the  population  with 
employment 
high-tech 
manufacturing (European  Commission,  2019e). 
Filling  key  infrastructure  gaps  and  strengthening 
urban-rural  linkages  with  the  regional  capitals  in 
an integrated, inclusive way can help address these 
disparities. 

in  medium- 

and 

The  capital region performs  above  EU  average 
regarding  higher  education,  labour  market 
efficiency  and  innovation.  The  Bratislava  region 
is  Slovakia’s  most  competitive  region  (Graph 
3.4.4).  It  has  the  lowest  long-term  unemployment 
rates,  but  also  receives  the  highest  numbers  of 
inter-regional migration (Hudakova, J., 2018). This 
terms  of 
will  pose  additional  challenges 
affordable  social  housing,  access  to  pre-primary 

in 

(42)  The 2019 European Regional Competitiveness Index 

Source: European Commission 2019 Regional 
Competitiveness Index 

Despite  efforts,  significant  disparities  remain 
within  the  regions  of  Central  and  Eastern 
Slovakia.  With 
the  European  Commission’s 
support,  Slovakia  has  developed  a  number  of 
tailor-made  measures  –  such  as  a  strategy  for  the 
coal mining transition in Horná Nitra (Section 3.5) 
or  the  ‘catching-up  regions’  Initiative  in  the  two 
least  developed  regions  of  Prešov  and  Banská 
Bystrica.  Despite  these  targeted  actions,  Slovakia 
has  made  limited  progress  in  reducing  structural 
disparities, addressing administrative capacity gaps 
and  spilling  over  good  practices  to  other  regions. 
As  a  result,  certain  remote  areas,  for  example 
municipalities 
and 
municipalities  inhabited  by  marginalised  Roma 
communities,  still  lack  basic  water  and  sewage 
infrastructure, essential  public services  and  labour 
opportunities. 

the  Snina  district, 

in 

43 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%-2.0%0.0%2.0%4.0%6.0%8.0%10.0%12.0%040506070809101112131415161718Inward FDI Flows as % GDPRepatriated profits  as % GDP (rhs)RCI 2019InstitutionsMacroeconomicStabilityInfrastructureHealthBasic EducationHigherEducation…Labour MarketEfficiencyMarket SizeTechnologicalReadinessBusinessSophisticationInnovationBasic Sub-indexEfficiency Sub-indexInnovation Sub-indexEU AverageSK01: Bratislavský krajSK04: Východné Slovensko 
      
                                                           
       
3.4. Competitiveness, reforms and investment 

is  slow,  hampering  R&D 
spending.  The 
cancellation  of  various  calls  and  administrative 
inefficiencies  resulted  in  de-commitments (43)  in 
2017  and  2018,  to  be  remedied  by  new  calls  to 
mobilise  top  researchers  and  support  strategic 
research. Due to  lengthy evaluation,  selection and 
administrative  procedures,  the  OP  R&I  will  not 
have achieved its minimum spending targets again 
in  2019.  The  merger  with 
the  operational 
programme  Integrated  Infrastructure  ensured  that 
there  was  no  de-commitment  in  2019.  Substantial 
improvements in the efficiency of the management 
and control system should follow to avoid another 
loss  of  EU  funds  earmarked  for  research  and 
innovation.  

investment 

fragmented  governance  system  renders 
A 
public  R&D 
inefficient.  Policy 
development  and  implementation  suffer  from  a 
lack  of  coordination  between  ministries  and 
lack  of  a 
implementing  agencies,  and 
comprehensive, long-term research and innovation 
strategy.  Major  reforms  have  been  regularly 
postponed. No substantial policies were adopted to 
decrease  the  fragmentation  of  the  public  research 
system  and  the  reform  of  the  Slovak  Academy  of 
Sciences was stopped in its final stage. As a result, 
the whole R&I ecosystem is not performing well. 

the 

The  low  quality  of  public  research  constrains 
skills  development,  and  knowledge  production 
and diffusion. There is a vicious circle created by 
the low quality of the system (44) and the ability to 
attract students and researchers. Initiatives such as 
the  ACCORD  project  to  invest  €111  million  into 
Bratislava-based universities Comenius University 
and  Slovak  University  of  Technology  could  help 
break  this  circle  and  improve  R&I  capacity  and 
infrastructure,  as  well  as  attracting  students  and 
researchers.  Targeted  measures  to  attract  foreign 
talent can also increase the benefits of investing in 
infrastructure. The low quality of the science base 

(43)  If a sum committed to a programme has not been claimed 
by  the  end  of  the  third  year  following  the  programme’s 
adoption, any unpaid  money  ceases  to be available to  that 
programme, i.e. it is ‘de-committed’. 

(44)  For instance, the proportion of Slovak publications that are 
highly-cited  (scientific  publications  within  the  top  10% 
most cited scientific publications worldwide as percentage 
of  a  country’s  total  scientific  publications)  remains  very 
low. 

of 

capacity 

investment 

administrative 

Lack 
and 
coordination  at  national  and  local  levels  limit 
the  possibility  of 
to  reduce 
disparities.  EU  funding  that  could  support  the 
transformation  of  less  developed  areas  to  more 
diversified,  knowledge-based  local  economies  is 
not  fully  utilised  due  to  slow  absorption  of 
targets.  A  bottom-up 
funding,  below  agreed 
approach  for  project  proposals  and  a  leaner 
implementation  structure  supporting  quality  local 
projects are lacking.  

Transport infrastructure 

The  Trans-European  Transport  Network 
(TEN-T)  core  road  and  railway  infrastructure 
requires  further  modernisation.  This  concerns 
outstanding  road  sections  of  the  D1  and  D3 
motorways,  as  well  as  the  D4  Bratislava  bypass 
located  on  the  comprehensive  TEN-T.  In  the 
railway  sector,  the  modernisation  of  the  Žilina  – 
Košice  railway  line  remains  a  priority  on  the 
Rhine-Danube  corridor,  in  addition  to  the  Kúty  – 
Bratislava  railway  line  on  the  Orient/East-Med 
corridor.  Completing  the  network  could  connect 
the  less  developed  regions  of  Prešov,  Banská 
Bystrica  and Košice,  to growth  centres  and  create 
local  business  opportunities.  Improving  transport 
infrastructure  also  plays  a  role  in  the  transition 
process of certain regions, such as the Horná Nitra 
coal region.  

3.4.3.  INNOVATION AND DIGITAL 
TRANSFORMATION 

Innovation 

R&D  investment  has  increased  in  the  last 
decade  but  depends  on  European  Structural 
and  Investment  Funds  (ESIF).  About  39%  of 
R&D investment relies on foreign funding sources, 
89%  of  which  are  EU  funds.  Both  figures  are 
among  the  highest  in  the  EU.  Overall  R&D 
investment  has  risen  from  0.45%  of  GDP  since 
2007 to peak at 1.16% in 2015 and dropped again 
to 0.84% in 2018. These developments are mainly 
explained  by  fluctuations  in  public  R&D  funding 
due to the transition between EU funding periods. 
This  illustrates  Slovakia’s  over-reliance  on  ESIF 
funding 
the 
about 
sustainability and adequacy of R&D funding.  

questions 

raises 

and 

The  use  of  funds  under  the  operational 
programme Research and Innovation (OP R&I) 

44 

 
                                                           
3.4. Competitiveness, reforms and investment 

to  define  new  growth  paths  (the  areas  of  smart 
specialisation  where  R&I  could  bring  economic 
transformation),  to  identify  measures  to  increase 
R&I performance and to strengthen the governance 
system. 

Digital economy, automation and connectivity 

Future  technological  disruptions  are  likely  to 
impact Slovakia’s economy more than they will 
other countries. Estimates differ, but most studies 
suggest  that  Slovakia  will  be  among  the  most 
affected.  Depending  on  the  methodology  used,  it 
has been suggested that between 40% and 64% of 
total current jobs in the country may change, or in 
some  cases  disappear,  due  to  automation  (Szabo, 
S.,  forthcoming).  This  figure  is  higher  in  the 
automotive industry, the backbone of the country’s 
manufacturing,  in  particular  for  jobs  such  as 
production  workers  and  machine  operators  (box 
1.1). Slovakia can benefit from the involvement in 
all  relevant  European  initiatives  that  aim  to 
strengthen  the  Digital  Single  Market  and  foster 
cooperation  in  strategic  fields  such  as  High 
performance  computing,  Artificial 
intelligence 
(AI) or Cybersecurity. 

Automation  is  already  a  significant  feature  of 
Slovak  industry,  due  to  the  high  share  of 
manufacturing and the automotive sector. With 
165 
industrial  robots  per  10,000  employees, 
Slovakia  is  among  Europe’s  and  the  world’s 
leaders  in  terms  of  robotic  intensity.  Robotisation 
of the car industry is the main driver, with around 
6,600  robots  per  10,000  employees 
the 
automotive  sector,  compared  to  around  9,500  in 
Germany or 4,000 in Czechia. Robotic automation 
has  also  been  growing  rapidly  in  logistics  and  in 
the service robots sector. 

in 

are  moving 

increasing  number  of  manufacturing 
An 
towards  digital 
companies 
transformation. The most common objectives are 
to  increase  performance  and  to  make  internal 
processes  more  efficient.  However,  only  18%  of 
companies  report  a  high  or  very  high  level  of 
digital 
(European 
Commission, 2019f). Slovakia does not yet have a 
digital  innovation  hub  and  there  is  a  shortage  of 
employees with digital skills (see Section 3.3). 

intensity (46) 

(EU:  26%) 

also  hinders  science-business  cooperation (45)  and 
private R&D investment.  

from 

investment 

Business  expenditure  on  R&D  is  too  low  to 
substantially  boost 
innovation,  particularly 
among  small  and  medium  enterprises  (SMEs). 
Even though it has increased since 2009 to 0.45% 
in  2018,  Slovakia’s  business  R&D 
of  GDP 
intensity  remains  one  of  the  lowest  in  the  EU. 
Despite  the  importance  of  the  medium-high-tech 
manufacturing  sector  dominated  by  multinational 
firms,  Slovakia  has  not  been  able  to  attract 
these 
substantial  R&D 
companies.  Domestic  technological  development 
is  low,  as  shown  by  patenting  activity,  which  is 
among the lowest in the EU. In addition, at 0.14% 
of  GDP  in  2018,  SMEs’  business  expenditure  on 
R&D is at less than half the EU average of 0.3%. 
Various  measures  are  underway  to  improve  the 
SME  research  ecosystem,  mostly  financed  by  the 
Investment  Funds. 
European  Structural  and 
However,  SMEs’  ability 
these 
to  draw  on 
resources is hindered by cumbersome and lengthy 
administrative  processes.  In  2018,  260  firms 
benefited  from  the  R&D  tax  deduction  (Section 
3.1),  saving  around  €72  million  in  income  taxes 
(compared  to  163  companies  and  €8  million  in 
2017; Slovak Credit Bureau, 2019). The increasing 
numbers  and  amounts  as  well  as  the  involvement 
of  micro  and  small  enterprises  in  the  scheme 
surpassed initial expectations. 

the 

First, 

specialisation. 

Skills  mismatches  and  regional  disparities 
hamper  Slovakia’s  capacity  to  benefits  from 
smart 
smart 
specialisation  strategy  does  not  fully  reflect 
differences  between  Slovak  regions  in  terms  of 
specialisation,  economic  performance  or  research 
and innovation potential. Second, the current skill-
set and weakly developed policies for future skills 
hinder the technological transition of the economy. 
However,  a  revision  of  the  strategy  has  recently 
started,  with  technical  support  from  the  EU 
Structural Reform Support Programme; the results 
should  feed 
the  programming  of  R&D 
investment for the post-2020 period. An important 
aspect  of  revising  the  strategy  will  be  the  setting 
up  of  an  effective  and  continuous  dialogue  with 
entrepreneurs  (entrepreneurial  discovery  process) 

into 

(45)  Links  between  science  and  business  remain  limited,  with 
public-private  scientific  co-publications  only  accounting 
for 2% of the total number of Slovak publications.   

(46)  The Digital Intensity score is based on how many out of 12 
technologies  a  company  uses.  Companies  that  use  at  least 
seven of the listed digital technologies receive a high score. 

45 

 
                                                           
                                                           
3.4. Competitiveness, reforms and investment 

auctions have not yet taken place. This leaves little 
time  to  the  authorities  to  meet  the  deadline  and 
award  the  frequencies  for  5G  before  the  end  of 
June 2020 deadline. 

3.4.4.  INSTITUTIONAL QUALITY AND BUSINESS 

ENVIRONMENT 

Business environment and entrepreneurship 

Slovakia’s  business  competitiveness  is  slowly 
losing ground. It fell by one position compared to 
2018  in  the  Global  Competitiveness  Report (42nd 
of  141)  (World  Economic  Forum,  2019)  and  by 
three  places  in  the  Doing  Business  report  (45th  of 
190, World Bank, 2019). Compared to its regional 
peers,  Slovakia  performed  worse  than  Poland 
(40th)  and  the  Czechia  (41st),  but  better  than 
Hungary  (52nd).  On  the  Business  Environment 
Index,  it  dropped by  2.2%  year-on-year (Business 
Alliance  of  Slovakia,  2019).  The  quality  of 
Slovakia’s public institutions gives rise to concern, 
as  high  regulatory  burden,  low  law  enforcement, 
persistent  concerns  about  the  independence  of  the 
justice  system  and  police,  and  frequent  legislative 
changes  and  policy  uncertainty  all  hamper 
competitiveness. The complicated tax and customs 
system  burdens entrepreneurs.  Specific  challenges 
relate to starting a business (see below on support 
to  entrepreneurship)  and  to  a  lengthy  construction 
permit  process 
(see  Section  3.2).  Political 
influence  reduces  the  ability  of  some  regulatory 
institutions 
sound  business 
safeguard  a 
environment. 

to 

to 

entrepreneurship 
2019g). 

Support  for  entrepreneurship  is  below  the  EU 
average.  Just  47%  of  the  population  aged  18-64 
consider  entrepreneurship  a  desirable  career 
choice, among the lowest rates in the EU. This can 
be  explained  by  insufficient  preparedness  for  and 
attention 
(European 
Underdeveloped 
Commission, 
entrepreneurship education at both basic and post-
secondary 
low  media  attention 
contribute to this. According to a Slovak Business 
Agency  survey,  over  50%  of  surveyed  students 
indicate a lack of entrepreneurial skills training at 
their  school.  Although  the  agency’s  acceleration 
programme  now  offers  professional  counselling, 
training courses and activities to develop business 
on 
potential, 
entrepreneurship skills in the school curriculum is 
still lacking. 

levels  and 

greater 

direct 

focus 

a 

Automation  can  be  an  opportunity  if  the 
regulatory  framework  and  education  system 
support  digital 
transformation.  Developing 
people’s digital and related skills will be crucial to 
adjusting  to  technological  change  and,  in  turn 
changes 
in  production,  service  delivery  and 
consumption  (see  Section  3.3).  The  role  of 
research  and  innovation  must  also  increase  if 
Slovakia  is  to  be  well  equipped  to  adapt  to  these 
changes  and  move  up  the  value  chain.  Slovakia 
scores  particularly  low  on  Industry  4.0  patent 
applications, with only four applications submitted 
between  1990  and  2016,  compared  to  33  in 
Czechia,  41  in  Hungary  and  86  in  Poland  (data 
from  the  European  Patent  Office  for  2017). 
Moreover,  businesses  and  business  associations 
feel that they lack support from public institutions 
on  addressing  the  digital  transformation  (47).  The 
new  Strategy  for  Digital  Transformation  of 
Slovakia  2030  and  the  related  Action  Plan  2019-
the 
2020  aim 
transformation 
innovation, 
strengthening  cybersecurity,  supporting  the  job 
market,  improving  digital  skills  and  building  a 
strong  institutional  ecosystem.  The  effort  could 
benefit  from  a  broader  involvement  of  initiatives 
such  as  the  Digital  Coalition  or  the  new  National 
Research  Centre 
intelligence 
(Slovak.AI) as a platform for connecting everyone 
active and interested in AI. 

the  country  fit  for 
stimulating 

to  make 
by 

artificial 

on 

to 

the 

Connectivity is improving, but progress is slow. 
Despite  progress,  Slovakia’s  performance  in  this 
area  has  slipped  in  comparison  to  other  EU 
countries.  Insufficient 
fixed  basic  broadband 
coverage  remains  a  big  challenge  to  ensure  equal 
access 
internet.  The  2011  national 
broadband  strategy  is  still  in  place,  but  the 
government plans an update to the strategy in early 
2020  to  include  the  EU  broadband  targets  for 
2025.. 4G coverage is also below the EU average. 
However,  Slovakia  shows  good  progress  on 
increasing  fast  broad  coverage  both  in  urban  and 
rural areas (Next Generation Access) with 86% of 
households  covered.  It  has  also  been  significantly 
improving  ultrafast  broadband  coverage  (80%  of 
households).  Telecom 
the 
government  aim  to  bring  30  Mbit/s  internet  to 
every  municipality  by  the  end  of  2020.  5G 

operators 

and 

(47)https://ec.europa.eu/information_society/newsroom/image/d

ocument/2019-32/country_report_-_slovakia_-
_final_2019_0D31C79C-EC95-A759-
9A4EFF789FEB2FB2_61219.pdf     

46 

 
                                                           
3.4. Competitiveness, reforms and investment 

venture stages and is concentrated in Bratislava. In 
2016,  venture  capital  investment  reached  0.014% 
of GDP in Slovakia, compared to roughly 0.1% in 
Sweden and 0.22% in the UK.  

and 

instruments  and 

the  European  Fund 

The  EU  supports  investment  in  Slovakia  also 
via 
for  Strategic 
Investments  (EFSI).  By  December  2019,  total 
approved  financing  under  the  EFSI  amounted  to 
€555  million,  intended  to  trigger  €1.45  billion  in 
additional investment. The current experience with 
the  EU  financial 
the  EFSI 
budgetary  guarantee  demonstrated  a  need  for 
simplification, 
better 
streamlining 
coordination  of  the  EU’s  investment  support 
instruments during the next 2021-27 programming 
period.  By  the  end  of  2020,  EFSI  and  other  EU 
financial  instruments  will  come  under  the  roof  of 
the  new  InvestEU  programme  that  promotes  a 
more  coherent  approach  to  financing  EU  policy 
objectives  and  increases  the  choice  of  policy 
implementation options and implementing partners 
to  tackle  country  specific  market  failures  and 
investment  gaps.  In  addition,  under  InvestEU, 
Member States can set-up a national compartment 
by allocating up to 5% of their structural funds to 
underpin 
instruments 
supporting  the  financing  of  investments  with  a 
higher level of local specificities. InvestEU will be 
policy-driven  and  focus  on  four  main  areas: 
Sustainable  Infrastructure,  Research,  Innovation, 
and  Digitisation,  Small  Businesses,  and  Social 
Investment and Skills. 

additional 

guarantee 

Single market 

regarding 

Slovakia performs above the EU average in the 
transposition  of  single  market  legislation.  Only 
two  single  market  directives  are  outstanding. 
Slovakia  is  among  countries  with  the  lowest 
average transposition delay for overdue directives, 
few 
2.7  months.  However,  Slovakia 
notifications 
the  Single  Market 
Transparency Directive in 2018 (51): 15 out of 713 
draft  technical  regulations  were  notified  to  the 
Commission,  i.e.  1.67%  of  the  total.  The  reasons 
level  of 
for 
notifications 
the 
that 
Commission  and  stakeholders  did  not  have  a 
chance to react and prevent barriers to trade, which 
can  affect  economic  growth  and  the  overall 

this  remain  unclear.  The 

potentially 

implies 

sent 

low 

(51)  Directive (EU) 2015/1535, SMTD 

innovation-driven  high 

However, 
growth 
companies  are  performing  relatively  well.  In 
2016, 19%  of employees  in companies  with  more 
than  10  employees  worked  for  innovation-driven 
high  growth  companies,  well  above  the  EU 
average. Overall, in 2017, 13% of companies with 
more 
than  10  employees  were  high  growth 
companies.  The  highest  proportions  are  seen  in 
knowledge-intensive  services,  medium-and  low-
tech  manufacturing,  and  the  transportation  and 
storage 
al., 
forthcoming).  

(Flachenecker et 

industries 

insolvency 

Improving firm exit policies and the insolvency 
framework  could  foster  resource  reallocation 
and  productivity  growth.  The  proportion  of 
zombie  firms (48)  has  increased,  in  part  due  to  an 
underperforming 
framework. 
Insolvency  procedures  can  last  up  to  four  years  – 
the longest in the EU – and can take up to 18% of 
the  debtor’s  estate  –  one  of  the  highest in  the  EU 
(World  Bank,  2019).  In  addition,  early  warning 
tools have not been used so far and there has been 
no attempt to legislate in this area. The use of the 
restructuring procedure is very low. Finally, fear of 
failure  holds  38%  of  surveyed  stakeholders  back 
from starting a business, 5 pps more than last year. 
Nevertheless, 
remains 
dynamism 
the  churn 
relatively  robust,  as  measured  by 
rate (49), at 24.8%, very high compared to Visegrad 
countries.  Even 
entrepreneurial 
activity (50)  among  women  is  at  9%,  one  of  the 
highest in the EU. 

early-stage 

business 

Access  to  finance  is  at  the  EU  average,  but 
alternative  finance  remains  underdeveloped. 
Access  to  public  financial  support  deteriorated 
according  to  19%  of  the  surveyed  stakeholders  - 
8 pps more than in 2017. The rate of rejected loans 
also  climbed,  from  8%  in  2016  to  13%  in  2018. 
However,  the  cost  of  borrowing  for  small  loans 
relative  to  large  loans  has  dropped  from  45%  in 
2013  to  28%  in  2018.  Although  venture  capital 
investment  has  increased  substantially  between 
2014  and  2016,  it  is  relatively  low  across  all 

(48)  Zombie  firms  are  defined  as  firms  with  at  least  3 
consecutive years of negative operating profits and that are 
not growing. 

(49)  Measuring  the  number  of  enterprises  entering  and  exiting 

the market. 

(50)  Total 

early-stage  Entrepreneurial  Activity  means 
entrepreneurial  activity  that  is  centred  on  the  period 
preceding and immediately after a company’s actual start. 

47 

 
                                                           
                                                           
3.4. Competitiveness, reforms and investment 

functioning  of  the  single  market  as  a  tool  for 
competitiveness.  

include 
commitment of EU funds. 

the  underutilisation  and  even  de-

and 

real 

agents 

Professional  services  continue  to  be  heavily 
regulated,  hampering  competition.  The  level  of 
restrictiveness of regulation is higher than the EU 
average for lawyers, civil engineers and architects 
(European  Commission,  2016).  This  particularly 
relates to licences and permits, for which the level 
of  restriction  is  more  than  double  the  OECD 
average  (Vitale,  C.  et  al.,  2019).  Disproportionate 
restrictions  also  remain  for  patent  agents,  tourist 
(European 
estate 
guides 
Commission, 2016). Some regulatory requirements 
imposed  on  professional  services,  such  as 
form  and 
limitations 
to  shareholding, 
these 
multidisciplinary  activities  can  hamper 
services  markets.  This 
to 
lawyers. Such requirements may  limit companies’ 
access  to  capital,  reduce  economies  of  scale  and 
scope  and  restrict  competition.  Redesigning  the 
rules  to  stimulate  innovation  and  competition 
while  safeguarding  quality  requirements  could 
therefore  be  economically  beneficial,  in  particular 
as  better  performance  of  business  services  also 
supports  Slovakia’s  manufacturing  sector,  an 
important part of the country’s economy. 

relates  especially 

legal 

Regulatory  changes  in  the  retail  sector  have 
caused concern. Although a retail-specific tax was 
withdrawn  following  a  Commission  decision,  the 
adoption of the Inappropriate Conditions Act could 
increase  the  costs  of  operations  and  restrict 
advertising  of  products  originating  outside 
Slovakia.  This  could  negatively  affect 
the 
economic  sustainability  of  some  of  the  retailers 
active  in  the  country,  as  well  as  market  access  of 
foreign  firms,  to  the  detriment  of  consumers  in 
terms of pricing and choice.  

Public administration  

Despite  reform  efforts,  Slovakia’s  public 
administration underperforms relative to other 
EU  countries.  There  are  shortcomings  in:  policy 
planning,  development  and  coordination;  civil 
service  and  human  resource  management  (see 
below  for  both);  accountability  including  control 
of  corruption;  and  service  delivery.  Public 
financial  management 
include 
procurement,  although  a  series  of  spending 
reviews  and  measures  to  improve  tax  compliance 
are  helping  (see  Section  3.1).  Consequences 

challenges 

Despite some efforts, the government’s strategic 
planning  capacity  and  coordination  across 
levels of government are limited. Initiatives such 
as  the  Slovakia  2030  Vision  and  Sustainable 
Development  Strategy  aim  to  improve  strategic 
coherence  between  ministries,  but  overall 
cooperation could be further improved. In addition, 
a  lack  of  capacity  and  of  effective  coordination 
between  all  administrative  levels  hinders  the  full 
impact  of  reforms  and  investment  geared  towards 
narrowing  regional  disparities  (Section  3.4.2). 
Overall,  although  strategies,  policies  and  reforms 
tend  to  be  well  developed  and  comprehensive, 
their  implementation  is  often  comparatively  weak 
(OECD 2020). 

There  is  still  room  for  improvement  regarding 
the  regulatory  process.  The  policy  making 
system  is  formally  based  on  consultations  and 
evidence, but in reality, political decisions tend to 
be based on the political priorities of the parties in 
government.  Whereas  legislative  initiatives  by 
ministries have clear written rules and undergo an 
impact  assessment,  the  increasing  use  of  swift 
parliamentary  procedures  hamper  evidence-based 
policy  making,  for  example  by  not  allowing  for  a 
proper  impact  assessment  and  consultation  with 
stakeholders. This often results in additional costs 
for companies. It also leads to frequent changes to 
the  regulatory  framework  related  to  the  business 
environment.  According  to  the  Better  Regulation 
Centre, 10 laws with a high impact on most SMEs 
were amended 32 times in 2018. 

in  the  civil 
Human  resource  management 
service continues to present challenges. The new 
Civil  Service  Law  from  2017  brings  a  number  of 
positive  changes, but  these  do not apply to  public 
service  employees. (52)  In  the  civil  service,  senior 
management  fails  to  sufficiently  motivate  staff 
amid  politicisation,  a  lack  of  career  development 
opportunities,  and  a  problematic  remuneration 
system  (Nemec,  J.,  2018).  The  Assessment, 
Testing  and  Methodological  Centre  provides 
training  and  mentorship  programmes  to  improve 
employee  competencies,  but 
limited 
resources  and  is  so  far  limited  to  Bratislava.  The 

it  has 

(52)  Government  employees  are  subject 

to 

two  different 

statutes. 

48 

 
                                                           
3.4. Competitiveness, reforms and investment 

too  costly  or  do  not  reflect  future  technological 
developments. 

Public procurement 

procurement 

The steps taken to simplify public procurement 
and  in  particular  verification  procedures  are 
insufficient.  The  complexity  and  length  of  the 
procedures 
public 
remains 
potential 
beneficiaries  to  draw  EU  funds.  Efforts  to  amend 
the  Slovak  Public  Procurement  Act  to  streamline 
control  procedures  of  EU  funded  projects  were 
halted.  

verification 
factor 

blocking 

for 

a 

steps 

Further 
to  professionalise  public 
procurement  have  been  taken.  The  government 
approved  the  legislative  intent  to  regulate  the 
profession of certified public procurement officers. 
The  Public  Procurement 
Institute  provides 
consultancy  services  to  contracting  authorities  to 
unify  the  interpretation  of  the  public  procurement 
law. To help with legal interpretation and training 
activities  at  local  level,  the  Public  Procurement 
Office  is  opening  eight  regional  offices  by  2020. 
of 
Cooperation 
Municipalities, 
the 
Regions  Club  to  centralise  purchasing  activities, 
training  and 
is  under 
the  Public 
In  September  2019, 
discussion. 
Procurement  Office  published  a  handbook  on 
recurrent errors identified in its control activity and 
a conflict of interest guideline is being prepared by 
the Public Procurement Office.53  

with 
the  Union  of  Cities  and 

Association 

specialised 

support 

the 

Efforts  to  include  environmental  sustainability 
in procurement are being made. The framework 
for  development  and  implementation  of  green 
public procurement in the Slovak Republic focuses 
on  developing  methodologies, 
training  and 
template  documents  for  integrating  environmental 
into  public  procurement.  The  Public 
criteria 
Procurement  Office  has  been  working  with  the 
OECD on three projects focusing on increasing the 
efficiency  of  public  procurement,  responsible 
procurement  and  flexible  procurement  practices 
for  IT  solutions.  It  has  also  issued  guidelines  for 
procuring  electric  cars  and  carrying  out  a 
preliminary  market  consultation.  As  of  January 
2020, 6% of public procurement resources must be 
dedicated  to  social  aspects.  However,  there  is  no 

53 Data to be provided when available.   

linked 

to  performance  and 

compressed  salary  structure  is  to  some  degree 
offset  by  allowances,  but  overall  appears  to  be 
insufficiently 
its 
appraisal,  and  provides  limited  incentives  for 
career  progress  (Office  of  the  Civil  Service 
Council, 2019). Despite increases, salaries are not 
competitive  with  the  private  sector.  Implementing 
the  planned  reform  of  the  remuneration  system  to 
remedy  these  shortcomings  could  help  address 
their  negative  ramifications.  The  implementation 
of the ethical codex for civil servants which came 
into force in 2020 could also have some impact.  

Political  influence  reduces  the  ability  of  some 
regulatory  institutions  to  safeguard  a  sound 
business environment. This concerns in particular 
procedures  for  selecting  chairs  and  vice-chairs  as 
well  as  the  overall  functioning  of  regulatory 
institutions. 
accountable 
regulators  could  ensure  a  more  efficient  resource 
allocation and a more competitive economy. More 
generally,  a  lack  of  trust  in  institutions  is  among 
the  main  weaknesses  of  the  business  environment 
(Transparency International Slovakia, 2017). 

Independent 

and 

The provision of e-government services is slowly 
improving,  but  their  take-up  by  the  public 
remains limited, as do awareness levels. 52% of 
Slovaks  who  need  to  submit  forms  to  public 
authorities  do  it  over  the  internet  (EU  average 
67%).  Transparency  and  focus  on 
the  user 
experience of digital public services are improving 
the  Strategy  for  Digital  Transformation 
and 
foresees  additional  positive  measures.  However, 
the  number  of  people  with  active  email 
identification  is  still  too  low,  increasing  the 
services’ cost per capita (Supreme Audit Office of 
the  Slovak  Republic,  2019).  According  to  the 
Supreme  Audit  Office,  the  use  of  national  and 
European  funds  for  investments  in  digital  public 
services  did  not  lead  to  an  increased  take-up  by 
citizens.  To  boost  the  number  of  users,  a  mobile 
eID  and  an  API  gateway  will  be  introduced  in 
2020.  The  government 
rolling  out  anti-
bureaucratic  measures  to  implement  the  ‘once-
only’  principle  and  make  submission  of  some 
obsolete.  However, 
documents 
municipalities 
difficulties  when 
enforcing  it  (Supreme  Audit  Office  of  the  Slovak 
Republic, 2019). Stakeholders and NGOs (grouped 
in  Slovensko.digital)  point  out  that  digitisation 
projects 
lack 
thorough  analysis,  are  not  properly  prepared,  are 

in  public  administration  often 

paper 
encounter 

in 

is 

49 

 
                                                           
3.4. Competitiveness, reforms and investment 

specific  policy  to  support  the  public  procurement 
of innovative solutions. 

in 

and 

better 

quality 

devices 

is  extending 

mammographic 

its 
The  Ministry  of  Health 
ambitious  centralised  purchasing  activities  to 
state-owned  hospitals.  Central 
joint 
procurement, 
specifications, 
preliminary  market  consultation  and  analysis  of 
individual  hospital  needs  have  already  resulted  in 
savings of €67 million (Institute of Health Policies, 
2018).  The  central  procurement  of  CT  scanners 
stimulated 
and 
the 
competition,  and  demolition  works 
unfinished 
integrated 
Rázsochy 
recyclability  aspects.  A  dynamic  purchasing 
system  for  medical  drugs  combined  with  an 
electronic  catalogue  will  considerably  reduce 
administrative  burden  related  to  the  procurement 
of standard products, such as drugs and pharmacy 
goods. Furthermore,  the  Institute of  Health Policy 
started several cooperation projects with the Czech 
Ministry  of  Health  and  hospitals  to  benchmark 
new  types  of  devices  that  will  be  integrated  into 
central  procurement  projects.  A  new  electronic 
system  for  the  approval  of  individual  hospital 
purchases  has  been  put  in  place  to  streamline  the 
authorisation process. 

hospital 

The  Public  Procurement  Office  is  setting  up  e-
procurement.  The  new  e-procurement  platform, 
SVO,  will  connect  all  e-procurement,  contract 
register  and  e-invoicing  modules  in  order  to 
accurate 
and 
optimise 
analytical data. The national working group on IT 
procurement  adopted  the  first  part  of  the  strategy 
on IT procurement, aiming in particular to prevent 
vendor lock-in and terminate unbalanced contracts 
from the past. 

processes 

generate 

Justice 

including 

Specific  concerns  regarding  the  independence 
and integrity of the justice system remain. New 
revelations point to a number of cases of high-level 
corruption, 
the  exercise  of  undue 
influence  by  individual  members  of  the  executive 
and  the  political  level  over  the  judiciary  and 
individual  cases  of  abuse  of  office  by  judges  and 
prosecutors.  This  has  also  sparked  public  protests 
and  reinforced  calls  on  the  authorities  to  step  up 
efforts  to  reduce  corruption  in  the  justice  system. 
This  has  also  triggered  a  number  of  disciplinary 
proceedings as well as criminal investigations and 

of 

the 

low 

perception 

a  number  of  judges  and  prosecutors  has  been 
suspended  or  chose  to  resign  from  office.  In  this 
context, 
judicial 
independence  deteriorated  according  to  the  2020 
EU  Justice  Scoreboard  (European  Commission, 
forthcoming)  and  remains  a  concern  for  citizens, 
businesses  and  investors.  Determination  to  tackle 
these  concerns  can  also  help  to  improve  the 
general  business  environment  and  help  keep 
business competitiveness stable (IMF, 2019a).  

In terms of efficiency, the Slovak justice system 
largely  manages  to  deal  with  its  workload.  In 
particular, courts continue to perform efficiently in 
terms of length of proceedings in litigious civil and 
commercial  cases  in  first  instance  (157  days 
compared to 171 days in 2017) and clearance rate 
(130.6% in 2018), also benefitting from a reduced 
inflow of new cases. However, the performance of 
courts  in  administrative  cases  has  dropped  as  the 
clearance rate (54) fell (96.1% compared to 118.1% 
in  2017),  the  disposition  time  further  increased 
(401  days  compared  to  317  days  in  2017)  and 
overall  productivity  decreased  (4,886  resolved 
cases  in  2018  compared  to  5,950  in  2017). 
Moreover, authorities have indicated that there are 
still  some  challenges  concerning  older  cases,  i.e. 
those pending for more than two years.  

Efforts to improve the efficiency and quality of 
the  justice  system  have  picked  up  over  the  last 
12  months.  Following 
the  publication  of  a 
comprehensive  functional  review  of  the  Slovak 
justice  system  by  the  European  Commission  for 
the Efficiency of Justice of the Council of Europe 
(CEPEJ, 2017), an increasing number of the more 
than  60  targeted  recommendations  have  been 
translated into specific policy actions and are being 
implemented.  This 
the 
includes 
introduction  of  so-called  flying/hosting  judges  to 
address 
in 
individual  courts,  legislative  measures  to  de-
register  old,  inactive  enforcement  cases  that  had 
been a drain on resources and an ambitious project 
on case weighting, as well as efforts to upgrade the 
available  IT  tools  and  analytical  capacity.  In 
addition,  authorities  have  made  progress  in  the 
absorption  of  earmarked  ESIF  funding  under  the 
Public 
operational 

temporary  workload 

in  particular 

programme 

challenges 

'Effective 

(54)  The  clearance  rate  is  the  ratio  of  the  number  of  resolved 
cases  over  the  number  of  incoming  cases.  It  measures 
whether  a  court  is  able  to  keep  up  with  its  incoming 
caseload. 

50 

 
                                                           
3.4. Competitiveness, reforms and investment 

for 

external  channels 
reporting  misconduct 
(OECD,  2017).  In  addition,  the  procedure  to 
prevent  retaliation  is  excessively  complex.  The 
new legislation aims at addressing these concerns, 
but in practice, the application of the law can only 
be assessed once the authority has started its work. 

Rules  on  lobbying,  gifts,  incompatibilities  and 
contacts  with  third  parties  in  decision  making 
are  missing 
in  the  public  administration. 
Contacts  with  lobbyists  are  not  recorded  and 
published.  Gifts  are  not  systematically  registered 
and  made  public  and  the  rules  on  accepting  gifts 
lack  clarity.  Information  on  asset  and  interest 
declarations is not available to the public. A Code 
of Conduct for the civil servants entered into force 
in  January  2020,  setting  out  the  fundamental 
principles  of  ethical  behaviour,  including  rules  on 
acceptance  of  gifts  and  other  benefits.  However, 
for  persons  with 
functions 
top 
(ministers, state secretaries, and political advisors) 
similar  rules  are  missing  (GRECO,  2019).    In 
addition,  proper  monitoring  and  enforcement  are 
also necessary. 

executive 

There 
is  a  potential  for  stronger  ethical 
safeguards  in  the  police.  A  recent  review  by 
GRECO (55) has revealed that security checks and 
risk  assessments  do  not  take  place  at  regular 
intervals  and  do  not  depend  on  exposure  to 
corruption  risks  or  the  required  security  levels 
(GRECO, 2019). 

(55)  Group  of  States  against  Corruption  (GRECO)  is  the 

Council of Europe anti-corruption body. 

Administration'  for  the 2014–2020  funding period 
which provides the bulk of funding for the further 
reform of the justice system. 

Corruption 

for 

offences 

high-level 

corruption 

corruption-related 

Prosecuting 
cases 
continues to pose difficulties. The overall number 
of  charges  (109  in  2016;  117  in  2017;  135  in 
2018), indictments (56 in 2016; 54 in 2017; 50 in 
2018) and sentences (72 in 2016; 98 in 2017; 93 in 
2018) 
has 
fluctuated since 2016, after a sharp drop from 2015 
(General  Prosecutors  Office  (GP  SK),  2018).  The 
number  of  high-level  corruption  cases  under 
investigation  has  risen  slightly  but  remains  very 
low.  The  enforcement  of  measures  against  legal 
persons  is on  the  rise  but only  24%  of  businesses 
surveyed  in  Slovakia  believe  that  those  engaging 
in corrupt practices would be caught by or reported 
to the police or prosecutors and only 22% believed 
they  would  face  charges  or go  to  court (EU:  44% 
and  47%).  Among  the  surveyed  companies,  53% 
stated  that  corruption  is  a  problem  when  doing 
business  in  Slovakia  (Business  Eurobarometer 
Survey, 2019). The level of corruption is perceived 
to  be  higher  than  in  most  EU  countries,  with 
Slovakia scoring 50 points out of 100 over the past 
three  years  in  a  row  (Transparency  International, 
2020).  No  new  measures  were  taken  to  improve 
detection  and  the  analytical  capacity  of  law 
enforcement  agencies,  except 
the 
reorganisation  of  the  National  Crime  Agency  in 
October 2019, which did not receive any additional 
resources.  

than 

for 

There  is  scope  to  improve  the  corruption 
prevention framework and to carry out planned 
reforms.  The  Slovak  Anti-Corruption  Plan  for 
2019-2023  focuses  on  risk  management  and  risk 
analysis,  and  introduces  a  network  of  integrity 
officials  in  central  government.  In  September 
2019,  the  government  approved  the  related  action 
programme  to  prevent  corruption,  the  National 
Anti-Corruption 
Programme.  Whistleblower 
protection  was  reformed  in  early  2019,  but  the 
head  of  the  new  independent  office  has  not  yet 
been appointed. The previous framework, which is 
still  in  place,  raised  concerns  regarding:  the  large 
amount of discretion arising from the requirement 
to  report  in  good  faith,  not  all  categories  of 
officials  receiving  the  same  amount  of  protection, 
and  the  absence  of  simultaneous  internal  and 

51 

 
                                                           
3.4. Competitiveness, reforms and investment 

52 

Box 3.4.1: Investment challenges and reforms in SlovakiaSection 1. Macroeconomic perspective  Investment growth decreased in 2019, due to a more subdued economic outlook and following the large increase in private investment activity in 2018, which was directed mainly at the construction of a new car factory. According to the Commission's 2018 autumn forecast, investment is expected to grow around 2.5-3% year-on-year in 2020-2021. Public investment is projected to assume a more prominent role over the medium term. The absorption rate is currently among the lowest in the EU and a long-standing challenge, leading to one of the highest volatilities in public investment among all EU countries.  Section 2. Assessment of barriers to investment and ongoing reforms  The business environment is not overly conducive to investment. Some reforms could improve the education system, the judiciary, public administration and procurement, but several barriers remain to be addressed (EIB, 2019). In addition, skilled labour shortages and infrastructure gaps hold back productivity growth. Main barriers to investment 1/ The regulatory environment and public administration in general continue to hold back investment. Frequent changes to the legislative and regulatory framework continue to give rise to concern. Entrepreneurship is hindered by burdensome rules for start-ups and a lengthy insolvency process. Likewise, obtaining building permits is cumbersome and time consuming. The absorption of EU structural funds could benefit from an improved efficiency of public administration, notably in relation to accountability and to human resource management. An insufficient degree of competition in public procurement also affects public investment.  2/ Infrastructure, including transport, broadband access, waste management and energy efficiency, remains underdeveloped, not sufficiently sustainable, and is unequally distributed within the country, hindering regional convergence. Moreover, there is a disconnect between educational institutions and labour market needs, as well as weak access to lifelong learning, resulting in skilled labour force shortages (EIB, 2019) and raising questions about Slovakia’s readiness for the digital transformation. Improving practically oriented education and training, including the dual vocational scheme, could help alleviate regional disparities and misallocation. In addition, fragmented research governance holds back investment in R&I. These challenges concern in particular sectors that could increase their overall productivity, such as ICT. Regulatory/ administrative burdenTaxationPublic administrationCSRAccess to financePublic procurement /PPPsCSRCooperation btw academia, research and businessCSRJudicial systemCSRFinancing of R&D&IInsolvency frameworkBusiness services / Regulated professionsCompetition and regulatory frameworkCSRRetailEPL & framework for labour contracts ConstructionWages & wage settingDigital Economy / TelecomCSREducation, skills, lifelong learning CSREnergyCSRTransportCSRLegend:No barrier to investment identifiedSome progressCSRInvestment barriers that are also subject to a CSRSubstantial progressNo progressFully addressedLimited progressNot assessed yetPublic administration/ Business environmentFinancial Sector / TaxationR&D&ISector specific regulationLabour market/ Education 
 
 
 
  
 
 
3.5.  ENVIRONMENTAL SUSTAINABILITY 

Environmental  pressures  and  challenges  weigh 
on  Slovakia’s  sustainable  development.  The 
climate  transition  requires  scaled  up  efforts  and 
targeted investment, implying important economic 
and  social  choices.  Currently  planned  investment 
and funding for mitigation and adaptation may not 
be  sufficient,  with  private  finance  and  capital 
markets  particularly  underdeveloped.  Investing 
into  more  energy  efficient  buildings  remains  a 
priority. A better enabling environment could help 
reverse  the  declining  trend  of  renewable  energy 
sources  in  the  energy  supply.  Air  pollution  from 
solid  fuel  burning  and  rising  emissions  from 
transport pose a serious health concern. Moreover, 
Slovakia  needs  to  adapt  to  a  changing  climate  by 
addressing  and  planning  for 
increased  risks. 
Moving  to  a  more  circular  economy  would  also 
help to make natural resource use more sustainable 
(56). 

Climate and energy transition 

in 

Overall  greenhouse  gas  (GHG)  emissions  are 
already  below  Slovakia’s  2020  target,  but 
energy intensity is higher than the EU average. 
GHG  emissions  have  been  falling  over  time  and 
are  below  the  EU  per  head  average.  For  2030, 
Slovakia  has  announced  a  more  ambitious 
reduction  of  20% 
the  non-ETS  sectors 
(additional 8 percentage points, (Greener Slovakia 
Strategy,  2019).  This  reduction  should  come 
mostly  from  measures  related  to  transport  and 
(Greener  Slovakia 
buildings 
improvements 
intensity 
Strategy,  2019).  Currently,  energy 
remains  rather  high  at  0.21  kgoe/€  in  2017, 
compared  to  the  EU  average  of  0.12  (Eurostat, 
2017b).  The  underlying 
in  energy 
consumption  and  the  fact  that  regulatory  changes 
were  taken  only  recently  make  it  likely  that 
Slovakia  will  fall  short  of  its  energy  efficiency 
target on final energy consumption and possibly its 
target  of  14%  for  2020. 
renewable  energy 
According  to  its  National  Energy  and  Climate 
Plan57,  Slovakia  has  decided  to  bring  the  share  of 
renewable energy to 19.2% by 2030. Final energy 
consumption  was  at  11.1  Mtoe  in  2018,  i.e.  24% 

increases 

legislation 

(56)  Full  analysis  of  implementation  of  environmental  policies 
and 
at:  
https://ec.europa.eu/environment/eir/pdf/report_sk_en.pdf .  
57 The Commission will assess, in the course of 2020, the final 
National  Energy  and  Climate  Plan  submitted  by  Slovakia 
on 20 December 2019. 

available 

Slovakia 

in 

is 

above  the  2020  target  (58).  This  trend  coincides 
with  an 
the  country’s  energy 
dependence  on  imports  to  65%  (Eurostat,  2017b) 
and a deterioration of relative energy prices.  

increase 

in 

Slovakia  needs  to  adapt  to  a  changing  climate. 
Losses  related  to  climate  disasters  and  a  lack  of 
related  insurance  are  mounting  and  could  become 
macro-economically  significant.  While  economic 
losses  from  drought,  floods  and  torrential  rains 
amounted  to  an  estimated  €1.7  billion  from  1980 
to  2017  (EEA,  2019a),  only  6%  of  them  were 
insured, meaning that either the State (as an insurer 
of last instance) or the victims had to absorb them. 
Annual GDP at risk from a major flood (59) is over 
15% for Slovakia (World Bank, 2014). This is why 
increased insurance penetration could help protect 
assets  against  weather-related  impacts.  Higher 
investment  into  green  measures,  such  as  water 
retention  in  cities,  protection  against  cloudburst 
events and of riverbanks, making these available to 
cities  and  municipalities  based  on  their  risk 
assessments,  as  well  as  nature-based  solutions  in 
forestry  and  agriculture,  could  help  reduce  the 
negative impact of climate disasters. (60)  

A  holistic policy  response  can  help  manage  the 
climate  and  energy  transition.  The  announced 
to 
2030  Vision  and  Development  strategy 
implement  the  Agenda  2030  –  on  the  basis  of 
Slovakia’s  set  of  six  national  priorities (61)  –  in  a 
whole-government approach and the establishment 
of  a  new  coordinating  body  in  the  Office  of  the 
Deputy  Prime  Minister  could  provide  the  right 
governance to address these sometimes-conflicting 
objectives  in  a  coherent  way.  Changing  the 
incentive  structure  for  energy  production  and 
including  by  adjusting  carbon 
consumption, 
pricing,  can  support  a  cost-effective  climate  and 

(58)  Eurostat,  table  SDG_07_11.  Primary  energy  consumption 
was of 16.15 Mtoe, below the 2020 target of 16.4 Mtoe but 
on an increasing trend (Eurostat, 2017c). 

the 

(59)  With a probability of occurring once in 100 years. 
(60)  Despite 

investments  available  under  EU  funds 
(operational  programme  Quality  of  the  Environment),  the 
implementation  of  water  retention  measures 
the 
urbanised landscape (residential areas of municipalities) is 
low. Unsettled property rights appear to be one reason for 
this. 

in 

towards 

(61)  National  priorities:  i)  Education  for  a  life  in  dignity,  ii) 
based 
and 
transformation 
iii)  poverty 
environmentally 
reduction and social inclusion, iv) Sustainable settlements, 
regions  and  countryside  in  the  face  of  climate  change, 
v)Rule of law, democracy and security and vi) good health. 

a 
sustainable 

knowledge 
economy, 

53 

 
                                                           
                                                           
3.5. Environmental sustainability 

for  multi-apartment  and  public  buildings,  and 
additional  measures  focusing  on  single-family 
houses  and  public  buildings  could  help  it  meet 
higher  ambition.  In  addition,  following  Eurostat's 
new  rules,  Slovakia  has  embraced  the  energy 
performance  contracts  and  prepared  enabling 
legislation  and  model  contract  to  be  followed  by 
all  public  bodies.  However,  building  owners’  low 
income,  low  awareness  about  energy  renovation 
and  a  lack  of  advisory  services  are  among 
Slovakia’s barriers to change. The NECP estimates 
that  by  2030,  €3  billion  are  needed  to  renovate 
non-residential buildings, out of which €1.2 billion 
are needed for public buildings. 

A  supportive  regulatory  framework  can  help 
increase  the  proportion  of  renewable  energy 
sources  in  Slovakia’s  energy  supply.  Despite 
there  being  a  binding  target  of  14%  for  the 
proportion  of  energy  from  renewable  sources  in 
2020,  this  proportion  has  declined  for  the  second 
year in a row to 11.5% in 2017, and only slightly 
increased to 11.9% in 2018. Reforms in late 2018 
and  2019  introduced  auctions  and  regulated  how 
consumers can participate in producing renewable 
(Renewable  Energy  Act).  However, 
energy 
improved 
reduced 
administrative  burden  could  increase  participation 
the  proportion  of  market-based 
and 
renewables in the energy sector.  

design  with 

auction 

thus 

The implementation of the  new  EU framework 
for  electricity  market  design  can  further 
improve  the  functioning  of  the  energy  market. 
The  integration  of  the  Slovak  electricity  market 
into  the  neighbouring  connected  market  is  an 
important next step that can build on already good 
regional  cooperation.  The  project  ACON  (Again 
Connected  Networks)  is  a  leading  smart  grid 
project in the region of Central Europe and allows 
for a better use of distribution networks and higher 
uptake  of  renewable  electricity.  Experience  and 
know-how from the project ACON can be utilised 
in  development  of  the  PCI  smart-grid  project 
Danube InGrid. 

The transition process of the coal-intensive area 
of  Horná  Nitra  presents  a  structural  challenge 
for  its  further  economic  development.  Slovakia 
extracts coal in the area of Horná Nitra, located in 
the  districts  of  Prievidza  and  Partizánske,  which 
are  part  of  the  self-governing  region  of  Trenčin. 
Although  in  decline,  mining  is  still  an  important 

energy  transition (62).  Precondition  for  successful 
transition  is  the  protection  and  sustainable  use  of 
natural  resources,  biodiversity  and  ecosystems 
services. (Section 3.1).  

The transition requires targeted investment, but 
funding  may  not  be  sufficient,  with  private 
finance  particularly  underdeveloped.  The 
National  Energy  and  Climate  Plan 
(NECP) 
estimates  investment  needs  to  reach  the  19.2% 
Renewable energy contribution by 2030 at around 
€  4.3  billion  and  the  cost  of  energy  efficiency 
measures at 2.2 billion EUR per year (Ministry of 
Economy,  2019).  Cohesion  policy  funds  and 
public finance remain the major source of funding 
for  green  investment,  in  part  leading  to  over-
reliance  on  public  funding.  Covering  investment 
needs  requires  prioritising  where  to  spend  public 
resources, 
finding  additional  and  alternative 
sources  of  finance,  and  balancing  private  and 
public resources to avoid crowding out. There are 
currently no green bonds, deposits or loans linked 
to  environmental  products.  With  weaker  national 
development  banks,  capital  markets,  and  R&D 
centres,  as  well  as  the  relatively  low  cost  of 
commercial  financing,  Slovakia  hardly  utilises 
EFSI and EU innovation funds for clean transport 
and  sector  coupling  initiatives.  Only  the  Slovak 
Investment Holding provides access to finance for 
projects  and  institutions  operating  in  the  areas  of 
transport  infrastructure  and  energy  efficiency. (63) 
Insurance  companies  held  financial  assets  of  €7.8 
billion,  and  pension  funds  held  financial  assets  of 
€9.3  billion  in  2018  (IEP,  2019),  indicating 
potential. The draft 2030 Vision and Development 
Strategy  of  Slovakia  suggests  making  access  to 
public  financial  instruments  conditional  by  using 
the 
environmental  criteria.  A  dialogue  with 
financial  sector  on  green  financial  instruments 
could  help  encourage  the  transfer  of  knowledge 
from other countries.  

Slovakia  prioritises 
into  a  more 
energy efficient building sector. The country has 
been pursuing an ambitious renovation programme 

investing 

(62)  Energy  prices  are  in  general  –  including  electricity  prices 
for  households  –  lower  than  the  EU  average.  Electricity 
prices  for  companies  are  an  exception,  with  prices  in  the 
first  half  of  2019  high  compared  to  regional  peers  and 
slightly above the EU average, according to Eurostat. 
(63)  SIH manages the National Development Fund II (NDF II) 
which  implements  financial  instruments  from  ESIF  in  the 
2014-2020 programming period. 

54 

 
                                                           
3.5. Environmental sustainability 

region 

faces  a 

Košice 
significantly  higher 
unemployment  level  (7.71%).  Key  priorities  for 
support  of  all  selected  regions  by 
the  Just 
Transition Fund are identified in Annex D. 

Air  pollution  from  solid  fuel  burning  is  a 
serious  public  health  concern.  In  2016,  around 
10.2  years  of  life  lost  per  1,000  inhabitants  were 
attributable  to  exposure  to  fine  particulate  matter 
(PM2.5) (67) 
(European  Environment  Agency 
(EEA),  2019b).  Slovakia  was  among  the  four  EU 
countries  with 
the  highest  particulate  matter 
fuel 
(PM10)  daily  values.  Residential  solid 
combustion  is  the  dominant  source  of  particulate 
matter  in  Slovakia,  and  a  main  contributor  to  the 
reported  exceedances  of  the  EU  air  quality  limit 
value  for  particulate  matter  (PM10)  and  the  EU 
target  value  for  Benzo(a)Pyrene  (BaP)  in  ambient 
air. It is estimated that around 120,000 boilers are 
inefficient.  A  pilot  phase  set  to  reach  10,000 
households  is  expected  to  start  in  2020  (68). 
Industry  and  power  generation  are  the  second 
largest  sources  of  particulate  matter  emitted  in 
Slovakia  and  a  major  regional  emitter  of  sulphur 
while  the  agricultural  sector  is  the  ammonia 
source. 

system 

is  not 

transport 

The 
sufficiently 
sustainable.  The  amount  of  traffic  and  old,  more 
polluting  cars  exacerbate  emissions  of  nitrogen 
oxides and particulate matter in the major cities, in 
the  absence  of  a  supporting  policy  framework. 
This calls for significant improvements in transport 
system efficiency, targeted modal shifts and multi-
modality, improved deployment of low- and zero-
further 
emissions 
electrification 
completed, 
sustainable  mobility  plans  for  public  transport  at 
city and regional level can contribute to these goals 
with good practices, such as lower speed limits or 
congestion charges. While low-emission zones are 
allowed  since  2018,  none  have  yet  been 
introduced.  In  March  2019,  an  action  plan 
including 
promoting  e-mobility  was  adopted, 

vehicles (69), 

railways. 

and 

the 

of 

If 

(67)  PM2.5  and  PM10  are  particulate  matter,  the  figures 

indicating respective maximum diameters. 

(68)  A  related  call  for  proposals  under  the  EU  funded 
operational  programme  Quality  of  the  Environment  was 
published  in  September  2019  to  be  implemented  in  the 
2020/2021 heating season. EUR 35 million are allocated to 
this pilot scheme, but more funding will be needed. 

(69)  Only  951  battery  electric  vehicles  (BEV)  and  619  plug-in 
hybrid  electric  vehicles  (PHEV)  in  the  M1  category 
registered (TESLA magazine, 2019). 

the  green 

source  of  employment  in  the  Horná  Nitra  region. 
The  Hornonitrianske  Bane  Prievidza  mining 
company is the biggest employer in the region that 
transition, 
could  be  affected  by 
employing  3,017  persons  in  the  coal  sector  and 
765  in  the  non-coal  sector  (2018) (64).  Over  the 
past  10  years,  the  economy  of  Horná  Nitra 
diversified  to  include  other  sectors,  such  as  the 
automotive  and  machinery  sectors,  manufacturing 
of  plastics  and  production  of  safety  and  control 
technologies.  Moreover, 
local  SMEs  show  a 
pattern  of  regional  specialisation  with  positive 
overlaps  with  the  smart  specialisation  strategy. 
However,  a  significant  number  of  SMEs  that 
generate higher revenues are clearly staying in the 
traditional sectors. 

in  July  2019, 

With  support  from  the  EU  Structural  Reform 
Support  Programme, 
the 
government  adopted  an  Action  Plan  for  the 
transition  of  the  Horná  Nitra  region.  This  key 
strategic  document  envisages  phasing  out  of  coal 
mining  and  coal-fired  electricity  generation  by 
2023.  The  Plan  proposes  a  series  of  support 
measures  for  affected  areas  and  communities, 
including  a  package  of  measures  to  facilitate 
economic growth, job creation, and improvements 
of  infrastructure  and  environmental  rehabilitation. 
For  the  region  to  achieve  a  just  transition,  social 
challenges 
the  re-skilling  of  mine 
employees  will have  to be  taken  into  account (65). 
In  addition,  an  alternative  heating  source  for  over 
50,000  inhabitants  of  Prievidza  and  Novaky  will 
have to be put in place.  

linked 

to 

With its emission-intensive steel manufacturing, 
the  Košice  region  may  also  face  structural 
changes.  The  US  Steel  in  Košice  is  the  country's 
largest  emitter  of  the  carbon  dioxide  and  also  the 
most  important  employer  in  the  region,  currently 
with  almost  12.000  employees.  In  addition,  the 
Vojany  power  plant,  employing  over  200  people, 
will  remain  the  last  coal  power  plant  in  the 
country, once the one in Nováky is closed by 2023.  
Unlike  in  Horná  Nitra,  where  the  unemployment 
rate  is  lower  than  the  national  average (66),  the 

(64)  The proportion of coal mining in overall employment in the 

Horná Nitra region is still approximately 5%. 

(65)  An  ESF-financed  project  provides  requalification  and 
career  guidance  to  miners,  and  will  be  launched  by  the 
Trenčín  Region  in  cooperation  with  the  municipalities  of 
Prievidza, Handlova and Novaky in early 2020. 
(66)  Prievidza district: 4.6%; Partizánske district: 3.2%. 

55 

 
                                                           
                                                           
3.5. Environmental sustainability 

investment 

landfills  if  it  has  not  been  treated.  Slovakia  is 
among  the  first  EU  countries  to  introduce  a 
deposit-refund  system  for  single-use  beverage 
packaging  (72).  The  target  return  rate  is  around 
95%.  Required 
the  EU 
recycling  targets  for  municipal  and  packaging 
waste (2021-2035 period) is estimated at EUR 267 
million. These costs represent the total investment 
that  is  required  beyond  2020  to  achieve  the 
recycling  targets  for  municipal  and  packaging 
waste  adopted  under 
the  Circular  Economy 
Package (Eunomia, 2019). 

to  meet 

(72)  The  law  will  has  entered  into  force  as  of  2020,  with  the 
deposit system expected to be fully operational as of 2022. 

measures such as accelerated depreciation rates of 
electric  vehicles  and  of  charging  stations.  Green 
European  vehicle  licence  plates  and  schemes  to 
promote  accessible  charging  stations  and  the 
purchase  of  electric  vehicles  are  also  being 
implemented,  but 
limited. 
take-up 
Differentiating  vehicle  taxation  based  on  carbon 
content  could  also  help  incentivise  the  use  of 
cleaner cars. 

remains 

Circular economy and natural resources  

2019b). 

addition, 

Moving  to  a  more  circular  economy  can  help 
make  natural  resource  use  more  sustainable. 
Slovakia’s  secondary  raw  material  use  rate  (70)  in 
2016  was  4.9%,  well  below  the  EU  average 
(11.7%),  with  almost  no  progress  since  2010 
(Eurostat, 
intensive 
In 
agriculture,  landscape  fragmentation  and  forest 
management  practices 
impacting  habitats  and 
species  contribute  to  continuing  biodiversity  loss 
(71)  and  soil,  air  and  water  pollution.  The 
effectiveness of the amended legislation to reign in 
forest  logging  is  yet  to  be  seen.  Moving  to  a 
circular  economy,  e.g.  by  promoting  re-use, 
recyclability and secondary raw materials markets, 
can  boost  Slovakia’s  resource  productivity  and 
efficient  use  of  natural  resources,  generate  cost 
savings  and  create  jobs.  Although  the  circular 
economy  is  gradually  gaining  attention  and  there 
are several circular economy initiatives (European 
Sustainable  Business  Federation,  2019), 
the 
governance supporting this transition is weak. 

New legislation aims to increase waste recycling 
and  strengthen  the  enforcement  of  waste 
management rules. However, Slovakia remains at 
a  risk  of  not  meeting  the  50%  municipal  waste 
recycling  target  by  2020,  with  a  recycling  rate  of 
36.3%  in  2018.  The  landfilling  rate  of  municipal 
waste  is  one  of  the  highest  in  the  EU  (55%  in 
2018).  The  landfill  fee  was  increased  in  2019  to 
incentivise separate collection. The national waste 
act  was  amended,  most  recently  in  2019,  to 
improve the sorting of packaging municipal waste 
and  non-packaged  products  and  to  strengthen  the 
rules  for  operation  and  closure  of  landfills.  From 
2021,  it  will  be  prohibited  to  dispose  waste  in 

(70)  The share of material recovered and injected back into the 

economy. 

(71)  In  the  period  2013-2018,  61%  of  habitats  and  76%  of 
species  covered  by  Natura  2000  network  remain  in 
unfavourable conservation status (EEA, 2019c). 

56 

 
                                                           
                                                           
ANNEX A 

Overview table 

Commitments  

Summary assessment ([1])  

2019 country-specific recommendations (CSRs)  

the  medium-term  budgetary 
CSR  1:  Achieve 
objective 
long-term 
sustainability  of  public  finances,  notably  that  of  the 
healthcare and pension systems.  

in  2020.  Safeguard 

the 

Slovakia  has  made  Limited  Progress  in  addressing 
CSR 1  

Achieve  the  medium-term  budgetary  objective  in 
2020.  

The compliance assessment with the Stability and 
Growth Pact will be included in Spring when final 
data for 2019 will be available.  

Safeguard  the  long-term  sustainability  of  public 
finances,  notably  that  of  the  healthcare  and  pension 
systems.  

Limited Progress  

Regarding  healthcare:  In  2019,  the  Ministry  of 
Finance  carried  out  a  third  healthcare  spending 
review.  The  implementation  of  measures  identified 
in  previous  spending  reviews  has  improved  the 
efficiency  of  the  public  health  insurance  system. 
However, the expenditure of university hospitals has 
also increased mainly due to the automatic rise in the 
wage  bill.  The 
introduction  of  a  performance 
budgeting  system,  which  should  improve  allocation 
efficiency,  is  in  preparation.  The  cabinet  approved 
strategic documents focused on follow-up health care 
and  on  modernising 
the  hospital  network. 
Nevertheless,  this  reform  was  not  adopted  by  the 
Parliament  at  the  end  of  2019.  A  system  of  DRG-
based  payments  is  being  implemented.  While  these 
measures  are  crucial,  it  is  expected  that  the  savings 
they  can  bring  about  are  quickly  absorbed  by  the 
system  which  is,  amongst  others  factors,  facing 
increased demand and running sizable arrears.  

Regarding  pensions:  The  2019  legislation  removed 
the  automatic  adjustment  of  the  statutory  retirement 
age to life expectancy and caps the retirement age at 
64,  while  also  granting  women  the  possibility  to 
retire half a year earlier for each child raised, up to a 
maximum  of  three  children.  As  a  consequence,  the 
statutory  retirement  age  will  continue  to  increase, 
albeit at a slower pace, until about 2030 when it will 
reach 64 and will stabilise then. Official estimates of 
the  impact  of  the  reform  are  not  available  yet. 
Furthermore,  in  October 2019,  the  National  Council 
set the minimum pension at 33% of the average wage 
of 2 years ago for those having paid into the system 
for  at  least  30  years,  abolishing  the  previous  link  to 
the  subsistence  minimum.  This  change,  while 
positive  for  pension  adequacy,  was  adopted  in 
Parliament  without  expert  discussion.  Incentives  to 

57 

 
A. Overview table 

contribute  to  the  pension  system  more  than  the 
mandatory  minimum  are  weakened.  These  reforms 
increase  risks  to  long-term  fiscal  sustainability. 
Preliminary  Commission/Ageing  Working  Group 
estimates point to an expenditure increase of 5.2 pps 
of  GDP  over  the  long-term  (from  8.6%  in  2016  to 
13.8% in 2070, instead of 9.8% in 2070 in the 2018 
Ageing  Report).  Counterbalancing  measures  have 
not  been  put 
reforms  capping 
forward.  The 
retirement  age  are  likely  to  put  pressure  on  the  at-
risk-of-poverty-or-social-exclusion  rate  for  elderly, 
in 2016 with 12.3% still among the lowest in the EU, 
as well as on the aggregate replacement ratio in 2016 
with 62% still above EU average. The change in the 
minimum  pensions 
further 
undermine long-term fiscal sustainability.  

formula  may  also 

CSR  2:  Improve  the  quality  and  inclusiveness  of 
education  at  all  levels  and  foster  skills.  Enhance 
access  to  affordable  and  quality  childcare  and  long-
term  care.  Promote  integration  of  disadvantaged 
groups, in particular Roma.  

Slovakia  has  made  Limited  Progress  in  addressing 
CSR 2  

Improve the quality and inclusiveness of education at 
all levels and foster skills.  

inclusive  education, 

Limited  Progress  Progress  in  improving  access  to 
in 
qualitatively  high  and 
particular  for  Roma  children,  remains  limited.  The 
compulsory  preschool  entry  age  as  of  5  will  be 
introduced  as  of  2021,  however,  the  high  quality, 
accessibility  and  inclusiveness  of  early  childhood 
education  will  need  to  be  ensured  to  bring  the 
necessary  results,  in  particular  for  children  from 
marginalised Roma  communities.  Despite the  recent 
pay  increases,  teachers'  salaries  remain  low  and  the 
teaching  profession 
its 
faces 
attractiveness  remains  limited.  The  new  legislation 
and national projects aimed at improving the quality 
of  teaching  will  need  to  be  efficiently  implemented 
and  monitored.  The  new  Accreditation  Agency,  and 
new  legislation  in  higher  education  provide  a  good 
basis for further more substantial reform measures in 
this field.  

shortages 

as 

Enhance  access  to  affordable  and  quality  childcare 
and long-term care.  

facilities 

Limited  Progress  Childcare 
have 
continued to be developed, including through support 
from  the  ERDF,  but  there  were  no  new  systemic 
measures  addressing  lack  of  childcare,  in  particular 
in  the  most  affected  localities  (Bratislava,  Košice). 
The  development  of  long-term  care  services  is 
hindered  by  the  lack  of  strategic  mapping  and 
level.  The  recent 
planning  at 
amendment of the law on Social Services introducing 
an e-tracking tool for social services (to be launched 

the  government 

58 

 
A. Overview table 

in 2021) could support the mapping of the needs.  

Promote  integration  of  disadvantaged  groups,  in 
particular Roma.  

the 

Limited  Progress  Limited  progress  has  been  made 
integration  of  disadvantaged 
in  promoting 
groups.  There  have  been  several  ongoing  projects 
aiming  at  integration  of  Roma,  with  an  increasing 
uptake  of  activities  in  the  last  year.  Nevertheless, 
these  activities  are  still  deployed  on  more  of  an  ad-
hoc  local  basis,  rather  than  through  strong  systemic 
action  covering  the  challenge  from  the  country 
perspective.  

CSR  3:  Focus  investment-related  economic  policy 
on  healthcare,  research  and  innovation,  transport, 
notably  on  its  sustainability,  digital  infrastructure, 
energy  efficiency,  competitiveness  of  small  and 
medium-sized enterprises, and social housing, taking 
into  account  regional  disparities.  Increase  the  use  of 
quality-related  and  lifecycle  cost  criteria  in  public 
procurement operations.  

Slovakia  has  made  Limited  Progress  in  addressing 
CSR 3  

investment-related  economic  policy  on 

Focus 
healthcare,  

for 

Limited Progress In the area of ‘hard’ infrastructure 
(e.g.  hospitals),  a  key  precondition  for  effectively 
stepping  up  public  investment  in  health  care  is  the 
establishment  of  a  medium-to-long-term  investment 
strategy.  A  large  part  of  such  strategy  has  been 
developed by the Slovak health authorities as part of 
their reform proposal for a functional and geographic 
reconfiguration  of  the  national  hospital  network, 
which  set  out  a  more  concentrated  network  of  46 
hospitals  distributed  optimally  across  the  country. 
However,  the  adoption  of  this  reform  has  stalled  in 
December  2019.  Since  a  significant  increase  in 
investment  in  public  health  care  infrastructure  is 
contingent  on  the  adoption  of  this  reform,  the 
preconditions 
this 
recommendation  have  practically  not  materialised 
yet. Another missing enabler for effectively stepping 
up public investment in health care infrastructure has 
been  the  issue  of  hospital  debt.  In  a  context  where 
care  facilities  are  responsible  for  their  own  capital 
investment, the stock of debt of public hospitals has 
kept  increasing  despite  several  bailout  rounds  from 
the  general  government  budget.  As  a  result,  EU 
funds  have  remained  the  main  driver  of  ‘hard’ 
infrastructure  investment  in  the  Slovak  health  care 
sector for both inpatient and outpatient care facilities. 
Investment 
infrastructure  (i.e.  human 
capital) has seen comparatively greater progress over 
the past year. In light of recent projections foreseeing 
significant shortages of health personnel in 2030, the 
government  has  stepped  up  efforts  to  increase  the 

implementation  of 

in  ‘soft’ 

the 

59 

 
A. Overview table 

supply  of  health  professionals  in  the  future  and 
improve their retention within the public health care 
system.  As  per 
in  public  health 
investment 
operations, the implementation of the national cancer 
plan  developed  in  2018  has  started.  The  first 
measures introduced in 2019 included a pilot project 
for  colorectal  cancer  screening  and  the  definition  of 
centres. 
standards  of  mammography 
quality 
Investment  in  general  health  promotion  and  disease 
prevention remains relatively low, as indicated by the 
below-EU  average  share  of  health  spending  on 
preventative  care.  Bearing  in  mind  that  this  specific 
recommendation  presupposes  a  multi-annual  time 
horizon for its implementation, year-on-year progress 
is assessed as ‘limited’ overall, following the 5-point 
assessment  scale  defined  by  the  Social  Protection 
Committee.  

Limited Progress The amounts eligible for the R&D 
tax  deduction  were  raised  by  authorities.  However, 
the  dependence  on  EU  funds  and  failure  to  achieve 
spending  targets  set  in  the  operational  programme 
hamper R&D investment.  

Limited  Progress  In  March  2019,  an  action  plan 
promoting  e-mobility  was  adopted, 
including 
measures  such  as  accelerated  depreciation  rates  of 
electric  vehicles  and  of  charging  stations.  Green 
European  Vehicles  license  plates  and  schemes  to 
promote  accessible  charging  stations  and 
the 
purchase  of  electric  vehicles  are  also  being 
implemented. Yet, take-up remains limited thus far.  

Limited  Progress  The  government  and  telecom 
operators  aim  to  bring  fast  internet  to  all  Slovak 
cities.  The  government  formally  agreed  with  the 
operators  to  cover  the  white  spots  with  broadband, 
and announced that this plan is on track. 5G auctions 
are delayed.  

Some  Progress  Investments  in  renovating  multi-
family  apartment  buildings  are  producing  good 
results,  Slovakia  being  on  track  on  reaching  its 
ambitious  national  goals 
for  2020.  However, 
renovation  of  public  buildings  and  single-family 
dwellings  seem  to  lag  behind.  Additional  measures 
are  also  needed  in  other  areas  of  energy  efficiency 
(e.g.  improving  energy  efficiency  of  productive 
SMEs). In these areas, available funding instruments 
seem very low compared to available financial assets 
(of e.g. insurance companies or pension funds).  

60 

research and innovation,  

transport, notably on its sustainability,  

digital infrastructure,  

energy efficiency,  

 
A. Overview table 

competitiveness  of 
enterprises,  

small 

and  medium-sized 

is 

losing  ground 

Limited  Progress  Despite  the  approval  of  three 
packages  of  measures  to  simplify  the  business 
environment,  Slovakia 
in 
international rankings of competitiveness. Support to 
entrepreneurship 
is  below  EU  average.  High 
regulatory  burden,  frequent  legislative  changes  and 
poor 
implementation  of  adopted  measures  all 
contribute  to  hampering  competitiveness.  Recently, 
the  government  approved  a  draft  Action  Plan  of  the 
Economic  Policy  Strategy  by  2030  consisting  of  31 
measures to improve the business environment.  

and  social  housing,  taking  into  account  regional 
disparities.  

Limited  Progress  Measures  on  supporting  social 
housing  through  social  entrepreneurship  are  being 
prepared under the OP Human Resources. It remains 
to be seen whether and how will these materialise.  

Increase  the use  of quality-related  and  lifecycle  cost 
criteria in public procurement operations.  

life-cycle  costing 

Some  Progress  The 
interest  of  contracting 
authorities  for  increasing  the  use  of  quality  criteria 
and 
rising.  The  Public 
Procurement  Office  and  Central  Coordination 
Authority  make 
in  providing 
methodology  and  training.  Results  will  show  at  a 
later stage, as learning and implementation take time.  

lots  of  efforts 

is 

CSR 4: Continue to improve the effectiveness of the 
justice  system, 
its 
independence,  including  on  judicial  appointments. 
Increase efforts to detect and prosecute corruption, in 
particular in large-scale corruption cases.  

focussing  on  strengthening 

Slovakia  has  made  Some  Progress  in  addressing 
CSR 4  

Continue  to  improve  the  effectiveness  of  the  justice 
system, focussing on strengthening its independence, 
including on judicial appointments.  

Some Progress Slovakia has made some progress in 
improving the effectiveness of the justice system, in 
particular  as  regards  the  quality  and  efficiency.  As 
regards  strengthening  the  independence,  including 
judicial appointments, as a positive development, the 
SK  president  on  10  October  2019  appointed  the 
missing  six  judges  to  the  SK  Constitutional  Court, 
successfully  bringing  to  a  positive  end  an  impasse 
that  had  existed  since  February  2019.  The  SK 
Constitutional  Court  is  now  composed  of  13  judges 
as  foreseen  by  the  SK  Constitution  and  finally  full 
operational  again.  However,  longstanding  concerns 
over  the  overall  integrity  of  Slovakia’s  judicial 
system  continued  to  mount  in  the  second  half  of 
2019  due  to  increasing  evidence  over  close  links  of 
white-collar  criminals  with  the  political  level  and 
individual judges and prosecutors, including a former 
General  Prosecutor.  The  low  perception  of  judicial 
independence  thus  continues  to  be  most  serious 
challenge for Slovakia remains in the bottom of EU 

61 

 
A. Overview table 

Member States.  

Increase efforts to detect and prosecute corruption, in 
particular in large-scale corruption cases.  

Limited  Progress  The  recent  criminal  statistics 
show fluctuation but no explicit improvement. There 
are  reportedly  improved  efforts  to  sanction  legal 
persons (6 cases in 2019).  

Europe 2020 (national targets and progress)  

Employment rate target set in the NRP: 72%.  

R&D target set in the NRP: 1.2% of GDP  

The  employment  rate  has  already  met  the  target  in 
Q1-2018  (72.1%)  and  continued  to  grow  towards 
73.3% in Q2-2019. 

Total  R&D  expenditure  stood  at  0.84  %  of  GDP  in 
2018  and  it  does  not  appear  likely  that  the  target  of 
1.2%  will  be  reached.  R&I  ecosystem  lacks  a  boost 
in both public and private expenditure. However, an 
increase  in  investment  has  to  be  coupled  with 
appropriate  reforms  to  set  Slovak  R&I  on  the  right 
path. 

National  greenhouse  gas  (GHG)  emissions  target: 
+13%  in  2020  compared  with  2005  (in  sectors  not 
included in the EU emissions trading scheme) 

In 2020, emissions are projected to be 20% below the 
2005 level. Slovakia would thereby achieve the 2020 
target. 

2020 renewable energy target: 14%  

Energy efficiency, 2020 energy consumption targets: 

Slovakia's 2020 energy efficiency target is 16.4 Mtoe 
expressed in primary energy consumption (9.0 Mtoe 
expressed in final energy consumption).  

2018 (interim) target: +10% compared with 2005: In 
2018, emissions were 5% below the 2005 level. 

Slovakia had an 11.9% share of renewable energy in 
gross  final  consumption  in  2018.  After  two  years  of 
falling shares this indicates a slight stabilisation, but 
the  upward  trend  would  need  to  be  significantly 
accelerated during the remaining period, in particular 
given the projected increased demand. 

Primary  energy  consumption  was  of  15.8  Mtoe  in 
2018, still below the EU 2020 target, but higher than 
in  2016.  Final  energy  consumption  stood  at  11.1 
Mtoe,  exhibiting  a  trend  that  makes  reaching  the 
2020  target  very  unlikely.  Enhanced  efforts  need  to 
be  put  into  and  additional  measures  considered  for 
keeping  primary  energy  consumption  in  check  and 
considerably reducing final energy consumption. 

Early school/training leaving target: 6%. 

The  school dropout rate is rising  and  there  are  large 
regional disparities.  The  rate of  early  school  leaving 
is  at  8.6%,  still  below  the  EU  average,  but  it  has 
strongly  deteriorated  from  5.3%  in  2012.Eurostat 

62 

 
 
 
A. Overview table 

data  show  sizeable  regional  variation.  The  highest 
and  fastest-rising  drop-out  rate  is  seen  in  Eastern 
Slovakia,  where  the  rate  is  close  to  14%,  while  in 
Western Slovakia it stands at 6.3%. 

Tertiary  education  target:  40%  of  population  aged 
30-34. 

The  tertiary  educational  attainment  rate  is  steadily 
growing. It grew by 11.7 pps since 2010 to 37.7% in 
2018, which is close to the target. The gap to the EU 
average has been narrowing over time, from 15.3 pps 
in  2007  to  only  3  pps  in  2018.  Women  (at  44.6%), 
for  whom  the  national  target  was  met,  strongly 
outperformed  men  (at  31.1%).  The  gender  gap  in 
favour of women at 13.5 pps is above the EU average 
of 10.1 pps. 

Reduce  to  a  rate  of  17.2%  the  number  of  people 
living  in  poverty  or  social  exclusion  (compared  to 
20.6% in 2008) 

The  number  of  people  at  risk  of  poverty  or  social 
exclusion  remained  at  16.3%  in  2018.    Regional 
disparities  are  substantial  and  are  to  a  large  extent 
driven  by  pronounced 
in 
marginalised Roma communities. 

levels  of  poverty 

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

No  progress:  The  Member  State  has  not  credibly  announced  nor  adopted  any  measures  to  address  the 
CSR. This category covers a number of typical situations to be interpreted on a case by case basis taking 
into account country-specific conditions. They include the following:  

  no legal, administrative, or budgetary measures have been announced  

 

in the national reform programme, 

 

in any other official communication to the national Parliament/relevant parliamentary committees or 
the European Commission, 

  publicly (e.g. in a press statement or on the government's website); 

  no non-legislative acts have been presented by the governing or legislative 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 to be taken (unless the CSR explicitly asks for 
orientations or exploratory actions). However, it has not proposed any clearly-specified measure(s) to 
address the CSR. 

Limited progress: The Member State has:  

  announced certain measures but these address the CSR only to a limited extent; and/or 

  presented legislative acts in the governing or legislative body but these have not been adopted yet and 

substantial further, non-legislative work is needed before the CSR is implemented; 

63 

 
 
A. Overview table 

  presented  non-legislative  acts,  but  has  not  followed  these  up  with  the  implementation  needed  to 

address the CSR. 

Some progress: The Member State has adopted measures  

 

that partly address the CSR; and/or  

 

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

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

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

64 

 
ANNEX B 

Commission debt sustainability analysis and fiscal risks 

65 

General government debt projections under baseline, alternative scenarios and sensitivity tests2018201920202021202220232024202520262027202820292030Gross debt ratio49.448.147.346.946.446.145.945.645.345.044.744.444.1Changes in the ratio (-1+2+3)-1.9-1.3-0.8-0.4-0.5-0.3-0.1-0.3-0.3-0.3-0.3-0.3-0.3of which(1) Primary balance (1.1+1.2+1.3)0.30.30.0-0.2-0.4-0.5-0.7-0.7-0.8-0.8-0.9-1.0-1.0(1.1) Structural primary balance (1.1.1-1.1.2+1.1.3)-0.4-0.4-0.6-0.8-0.7-0.7-0.7-0.7-0.8-0.8-0.9-1.0-1.0(1.1.1) Structural primary balance (bef. CoA)-0.4-0.4-0.6-0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8(1.1.2) Cost of ageing0.0-0.1-0.10.00.10.10.20.20.2(1.1.3) Others (taxes and property incomes)0.00.00.00.00.00.00.00.00.0(1.2) Cyclical component0.70.70.60.60.40.20.00.00.00.00.00.00.0(1.3) One-off and other temporary measures0.00.00.00.00.00.00.00.00.00.00.00.00.0(2) Snowball effect (2.1+2.2+2.3)-1.6-1.2-1.2-1.2-0.9-0.8-0.8-1.1-1.1-1.2-1.2-1.2-1.3(2.1) Interest expenditure1.31.21.11.11.00.90.90.80.80.80.70.70.7(2.2) Growth effect-1.9-1.3-1.2-1.2-0.9-0.8-0.8-1.0-1.0-1.0-1.0-1.1-1.1(2.3) Inflation effect-1.0-1.2-1.1-1.0-1.0-0.9-0.9-0.9-0.9-0.9-0.9-0.9-0.9(3) Stock-flow adjustments0.00.20.30.60.00.00.00.00.00.00.00.00.0Note: For further information, see the European Commission Debt Sustainability Monitor (DSM) 2019. b. For the medium term, the risk category (low/medium/high) is based on the joint use of the S1 indicator and of the DSA results. The S1 indicator measures the fiscal adjustment required (cumulated over the 5 years following the forecast horizon and sustained after that) to bring the debt-to-GDP ratio to 60 % by 2034. The critical values used are 0 and 2.5 pps of GDP. The DSA classification is based on the results of five deterministic scenarios (baseline, historical SPB, higher interest rate, lower GDP growth and negative shock on the SPB scenarios) and the stochastic projections. Different criteria are used such as the projected debt level, the debt path, the realism of fiscal assumptions, the probability of debt stabilisation, and the size of uncertainties. c. For the long term, the risk category (low/medium/high) is based on the joint use of the S2 indicator and the DSA results. The S2 indicator measures the upfront and permanent fiscal adjustment required to stabilise the debt-to-GDP ratio over the infinite horizon, including the costs of ageing. The critical values used are 2 and 6 pps of GDP. The DSA results are used to further qualify the long term risk classification, in particular in cases when debt vulnerabilities are identified (a medium / high DSA risk category). [2]Thechartspresentaseriesofsensitivitytestsaroundthebaselinescenario,aswellasalternativepolicyscenarios,inparticular:thehistoricalstructuralprimarybalance(SPB)scenario(wheretheSPBissetatitshistoricalaverage),theStabilityandGrowthPact(SGP)scenario(wherefiscalpolicyisassumedtoevolveinlinewiththemainprovisionsoftheSGP),ahigherinterestratescenario(+1pp.comparedtothebaseline),alowerGDPgrowthscenario(-0.5pp.comparedtothebaseline)andanegativeshockontheSPB(calibratedonthebasisoftheforecastedchange).Anadversecombinedscenarioandenhancedsensitivitytests(ontheinterestrateandgrowth)arealsoincluded,aswellasstochasticprojections. Detailed information on the design of these projections can be found in the FSR 2018 and the DSM 2019.SK - Debt projections baseline scenario[1]Thefirsttablepresentsthebaselineno-fiscalpolicychangescenarioprojections.Itshowstheprojectedgovernmentdebtdynamicsanditsdecompositionbetweentheprimarybalance,snowballeffectsandstock-flowadjustments.Snowballeffectsmeasurethenetimpactofthecounteractingeffectsofinterestrates,inflation,realGDPgrowth(andexchangerates in some countries). Stock-flow adjustments include differences in cash and accrual accounting, net accumulation of assets, as well as valuation and other residual effects.[3] The second table presents the overall fiscal risk classification over the short, medium and long term. a. For the short-term, the risk category (low/high) is based on the S0 indicator. S0 is an early-detection indicator of fiscal stress in the upcoming year, based on 25 fiscal and financial-competitiveness variables that have proven in the past to be leading indicators of fiscal stress. The critical threshold beyond which fiscal distress is signalled is 0.46. 30354045505560657020172018201920202021202220232024202520262027202820292030Debt as % of GDP -SKBaselineEnhanced lower GDP growth scenarioAdverse combined scenarioEnhanced higher interest rate scenario304050607020172018201920202021202220232024(% of GDP)Stochastic debt projections 2020-2024 -SKp10_p20p20_p40p40_p60p60_p80p80_p90p50Baseline30354045505560657020172018201920202021202220232024202520262027202820292030Debt as % of GDP -SKBaselineHistorical SPB scenarioSGP scenario30354045505560657020172018201920202021202220232024202520262027202820292030Debt as % of GDP -SKBaselineHigher interest rate scenarioNegative shock on the SPBLower GDP growth scenarioBaselineHistorical SPBLower GDP growthHigher interest rateNegative shock on SPBStochastic projectionsRisk categoryLOWLOWLOWLOWLOWMEDIUMDebt level (2030)44.150.746.345.745.7Debt peak year20192030201920192019Percentile rank70.0%78.0%Probability debt higher42.1%Dif. between percentiles27.3MEDIUMLong termMEDIUM(S2 = 3.8)S1S2Short termLOW(S0 = 0.3)DSALOWDebt sustainability analysis (detail)Medium termLOWLOW(S1 = -1.8) 
ANNEX C 

Standard tables 

Table C.1: 

Financial market indicators 

(1) Latest data Q3 2019. Includes not only banks but all monetary financial institutions excluding central banks. 
(2) Latest data Q2 2019. 
(3) Quarterly values are annualized. 
* Measured in basis points. 
Source: European Commission (long-term interest rates); World Bank (gross external debt); Eurostat (private debt); ECB (all 
other indicators). 

66 

201420152016201720182019Total assets of the banking sector (% of GDP)(1)84.286.690.391.991.490.8Share of assets of the five largest banks (% of total assets)70.772.372.774.575.6-Foreign ownership of banking system (% of total assets)(2)84.385.183.684.484.985.2Financial soundness indicators:(2)              - non-performing loans (% of total loans)5.24.44.63.73.23.1              - capital adequacy ratio (%)17.317.718.018.617.818.2              - return on equity (%)(3)9.29.79.99.39.38.5Bank loans to the private sector (year-on-year % change)(1)7.410.410.010.39.47.6Lending for house purchase (year-on-year % change)(1)13.613.814.412.811.59.6Loan-to-deposit ratio(2)92.790.390.596.298.5101.5Central bank liquidity as % of liabilities(1)1.11.21.31.71.71.5Private debt (% of GDP)79.080.688.694.590.9-Gross external debt (% of GDP)(2) - public37.833.332.932.430.931.5    - private30.630.833.138.235.033.2Long-term interest rate spread versus Bund (basis points)*90.838.945.359.948.950.6Credit default swap spreads for sovereign securities (5-year)*53.344.939.238.840.941.1 
 
 
   
 
 
C. Standard tables 

Table C.2: 

Headline Social Scoreboard indicators 

(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 and/or living in households with zero or very low work intensity. 
(2) Unemployed persons are all those who were not employed but had actively sought work and were ready to begin workin 
immediately or within two weeks. 
(3) Gross disposable income is defined in unadjusted terms, according to the draft Joint Employment Report 2019. 
(4) Reduction in percentage of the risk of poverty rate, due to social transfers (calculated comparing the 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 2019 for the employment rate, long-term unemployment rate and gender employment 
gap.  
Source: Eurostat 

67 

201420152016201720182019 (5)Equal opportunities and access to the labour marketEarly leavers from education and training (% of population aged 18-24)6.76.97.49.38.6:Gender employment gap (pps)14.614.714.212.813.713.0Income inequality, measured as quintile share ratio (S80/S20)3.93.53.63.53.0:At-risk-of-poverty or social exclusion rate(1) (AROPE)18.418.418.116.316.3:Young people neither in employment nor in education and training (% of population aged 15-24)12.813.712.312.110.2:Dynamic labour markets and fair working conditionsEmployment rate (20-64 years)65.967.769.871.172.473.3Unemployment rate(2) (15-74 years)13.211.59.78.16.55.7Long-term unemployment rate (as % of active population)9.37.65.85.14.03.4Gross disposable income of households in real terms per capita(3) (Index 2008=100) 101.3105.8109.6113.5118.5:Annual net earnings of a full-time single worker without children earning an average wage (levels in PPS, three-year average)116981210612446:::Annual net earnings of a full-time single worker without children earning an average wage (percentage change, real terms, three-year average)1.072.353.08:::Public support / Social protection and inclusionImpact of social transfers (excluding pensions) on poverty reduction(4)35.735.331.029.131.1:Children aged less than 3 years in formal childcare6.51.10.50.61.4:Self-reported unmet need for medical care2.12.12.32.42.6: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) 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. 
(2) PISA (OECD) results for low achievement in mathematics for 15 year-olds. 
(3) Impact of socio-economic status on PISA (OECD) scores. Value for 2018 refers to reading. 
(4) Average of first three quarters of 2019. Data for youth unemployment rate is seasonally adjusted. 
Source: Eurostat, OECD. 

68 

Labour market indicators201420152016201720182019 (4)Activity rate (15-64)70.370.971.972.172.472.6Employment in current job by durationFrom 0 to 11 months9.611.712.012.311.0:From 12 to 23 months7.38.28.69.09.1:From 24 to 59 months17.816.316.916.717.9:60 months or over65.363.862.562.062.0:Employment growth* (% change from previous year)1.42.02.42.22.01.4Employment rate of women(% of female population aged 20-64)58.660.362.764.765.566.8Employment rate of men (% of male population aged 20-64)73.275.076.977.579.279.8Employment rate of older workers* (% of population aged 55-64)44.847.049.053.054.256.6Part-time employment* (% of total employment, aged 15-64)5.15.85.85.84.94.4Fixed-term employment* (% of employees with a fixed term contract, aged 15-64)8.810.59.99.48.17.6Transition rate from temporary to permanent employment(3-year average)39.435.736.0:::Youth unemployment rate (% active population aged 15-24)29.726.522.218.914.915.3Gender gap in part-time employment3.04.13.84.13.73.3Gender pay gap(1) (in undadjusted form)19.719.619.019.8::Education and training indicators201420152016201720182019Adult participation in learning(% of people aged 25-64 participating in education and  training)3.13.12.93.44.0:Underachievement in education(2):27.7::25.1:Tertiary educational attainment (% of population aged 30-34 having successfully completed tertiary education)26.928.431.534.337.7:Variation in performance explained by students' socio-economic status(3)::::17.5: 
 
   
 
 
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) Composition of the connectivity indicator: Fixed broadband (18.5%), mobile broadband (35%), fast broadband (18.5%), 
ultrafast broadband (18.5%), broadband price index (9.5%), from the Digital Scoreboard. 
Source: Eurostat, OECD 

Table C.5: 

Product market performance and policy indicators 

69 

201320142015201620172018Expenditure on social protection benefits* (% of GDP)Sickness/healthcare5.55.55.55.85.6:Disability1.61.61.61.61.6:Old age and survivors7.98.28.18.08.1:Family/children1.71.71.61.61.6:Unemployment0.60.50.50.50.5:Housing0.00.00.00.00.1:Social exclusion n.e.c.0.40.40.30.30.3:Total17.817.917.517.917.7:of which: means-tested benefits0.90.90.80.70.7:General government expenditure by function (% of GDP)Social protection15.315.115.015.114.5:Health6.87.07.17.47.1:Education4.04.14.23.83.8:Out-of-pocket expenditure on healthcare23.318.018.418.218.7:Children at risk of poverty or social exclusion (% of people aged 0-17)*25.523.624.924.422.523.8At-risk-of-poverty  rate(1) (% of total population)12.812.612.312.712.412.2In-work at-risk-of-poverty rate (% of persons employed)5.75.76.06.56.36.0Severe material deprivation rate(2)  (% of total population)10.29.99.08.27.0:Severe housing deprivation rate(3), by tenure statusOwner, with mortgage or loan3.91.63.22.01.50.3Tenant, rent at market price9.19.47.66.011.17.9Proportion of people living in low work intensity households(4) (% of people aged 0-59)7.67.17.16.55.45.2Poverty thresholds, expressed in national currency at constant prices*347834653530355336893780Healthy life yearsFemales3.73.63.84.24.1:Males4.24.34.14.53.8:Aggregate replacement ratio for pensions(5)0.60.60.60.60.60.6Connectivity dimension of the Digital Economy and Society Index (DESI)(6):30.836.439.745.949.4GINI coefficient before taxes and transfers*41.343.239.840.540.3:GINI coefficient after taxes and transfers*24.226.123.724.323.2: 
   
 
C. Standard tables 

*While the indicator values from 2003 to 2013 are comparable, the methodology has considerably changed in 2018. As a result, 
past vintages cannot be compared with the 2018 PMR indicators. 
(1) Value added in constant prices divided by the number of persons employed. 
(2) Compensation of employees in current prices divided by value added in constant prices. 
(3) The methodologies, including the assumptions, for this indicator are shown in detail here: 
http://www.doingbusiness.org/methodology.  
(4) 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 75% and 
above, two if received below 75%, three if refused or rejected and treated as missing values if the application is still pending or 
don't know. 
(5) Percentage population aged 15-64 having completed tertiary education. 
(6) Percentage population aged 20-24 having attained at least upper secondary education. 
(7) 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. 
Please be aware that the indicator values from 2003 to 2013 are comparable, however the methodology has considerably 
changed in 2018 and therefore past vintages cannot be compared with the 2018 PMR indicators. 
(8) Simple average of the indicators of regulation for lawyers, accountants, architects and engineers. 
(9) Aggregate OECD indicators of regulation in energy, transport and communication (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). 

70 

Performance indicators201320142015201620172018Labour productivity per person(1) growth (t/t-1) in %Labour productivity growth in industry-1.1114.386.10-4.45-2.7711.17Labour productivity growth in construction-12.289.091.29-2.147.61-4.42Labour productivity growth in market services3.61-5.751.830.602.021.28Unit labour cost (ULC) index(2) growth (t/t-1) in %ULC growth in industry4.45-9.22-1.227.5710.29-2.58ULC growth in construction14.97-7.773.904.04-4.499.69ULC growth in market services-2.088.472.240.394.304.10Business environment201320142015201620172018Time needed to enforce contracts(3) (days)615775775775775775Time needed to start a business(3) (days)33.526.526.526.526.526.5Outcome of applications by SMEs for bank loans(4)1.070.830.650.610.740.63Research and innovation201320142015201620172018R&D intensity0.820.881.160.790.890.84General government expenditure on education as % of GDP4.004.104.203.803.80:Employed people with tertiary education and/or people employed in science & technology as % of total employment373737383840Population having completed tertiary education(5)181819202122Young people with upper secondary education(6)919191908989Trade balance of high technology products as % of GDP-5.30-5.06-5.72-6.03-4.15-4.12Product and service markets and competition2003200820132018*OECD product market regulation (PMR)(7), overall2.181.621.291.52OECD PMR(7), retail1.141.041.751.54OECD PMR(7), professional services(8)::2.902.78OECD PMR(7), network industries(9)3.332.281.881.41 
 
   
 
 
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 including international aviation (kgoe) divided by 
gross value added in transportation and storage sector (in 2010 EUR). 
Transport carbon intensity: GHG emissions in transportation and storage sector divided by gross value added in transportation 
and storage sector (in 2010 EUR). 
Energy import dependency: net energy imports divided by gross inland energy consumption incl. consumption of 
international bunker fuels. 
Aggregated supplier concentration index: Herfindahl index covering 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. Smaller values indicate larger diversification. 
* European Commission and European Environment Agency - 2018 provisional data. 
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). 

71 

201320142015201620172018MacroeconomicEnergy intensity kgoe / €0.230.210.210.210.21-Carbon intensity kg / €0.590.550.540.530.53-Resource intensity (reciprocal of resource productivity)kg / €0.860.920.890.920.870.94Waste intensity kg / €-0.12-0.13--Energy balance of trade % GDP-6.0-4.0-3.0-2.5-2.9-4.0Weighting of energy in HICP%16.4816.1815.5414.8714.3514.83Difference between energy price change and inflation p.p.-1.9-2.0-2.0-2.4-5.7-0.7Real unit of energy cost% of value added29.525.424.623.9--Ratio of environmental taxes to labour taxesratio0.240.240.230.230.21-Environmental taxes% GDP2.42.42.42.52.52.5Sectoral Industry energy intensity kgoe / € 0.150.130.130.130.13-Real unit energy cost for manufacturing industry excl. refining% of value added22.021.120.720.2--Share of energy-intensive industries in the economy% GDP12.5214.2314.9114.5616.8918.34Electricity prices for medium-sized industrial users€ / kWh0.130.120.110.110.110.12Gas prices for medium-sized industrial users€ / kWh0.040.040.030.030.030.03Public R&D for energy % GDP0.000.010.010.000.000.00Public R&D for environmental protection% GDP0.010.010.010.010.010.01Municipal waste recycling rate%10.810.314.923.029.836.3Share of GHG emissions covered by ETS*%50.951.451.351.850.950.3Transport energy intensitykgoe / €0.700.510.440.550.59-Transport carbon intensitykg / €1.120.810.760.890.870.91Security of energy supplyEnergy import dependency%60.862.160.160.664.8-Aggregated supplier concentration indexHHI68.369.167.865.566.9-Diversification of energy mixHHI21.821.120.520.320.4- 
  
 
ANNEX D 

Investment guidance on Just Transition Fund 2021-2027 for 
Slovakia 

Building  on  the  Commission  proposal,  this  Annex (73)  presents  the  preliminary  Commission  services’ 
views on priority investment areas and framework conditions for effective delivery for the 2021-2027 Just 
Transition  Fund  investments  in  Slovakia.  These  priority  investment  areas  are  derived  from  the  broader 
analysis  of  territories  facing  serious  socio-economic  challenges  deriving  from  the  transition  process 
towards a climate-neutral economy of the Union by 2050, assessed in the report. This Annex provides the 
basis for a dialogue between Slovakia and the Commission services as well as the relevant guidance for 
the  Member  States  in  preparing  their  territorial  just  transition  plans,  which  will  form  the  basis  for 
programming  the  Just  Transition  Fund.  The  Just  Transition  Fund  investments  complement  those  under 
Cohesion  Policy  funding  for  which  guidance  in  the  form  of  Annex  D  was  given  in  the  2019  Country 
Report for Slovakia (74). 

The region of Trenčín faces a number of economic and social challenges in terms of transition to a climate 
neutral economy. Over 4,000 people are directly employed in coal mining activities in the area of Horná 
Nitra (Prievidza and Partizánske districts), which constitute a supply chain for the Nováky coal power plant 
due to be closed by 2023 on environmental efficiency grounds. Around 1 000 people are indirectly related 
to  coal  mining  activities.  In  Trenčín,  there  is  also  an  important  high  carbon  intensive  cement  producer 
(Považská cementáreň in Ladce). 

In  the  region  of  Košice,  steel  production  is  a  source  of  significant  CO2  emissions,  with  the  U.S.  Steel 
Corporation being the single largest CO2 emitter in Slovakia. The Vojany coal power plant and the cement 
production  in  Turňa  and  Bodvou  represent  other  important  employers  in  an  otherwise  relatively 
economically weak region. 

Based on this preliminary assessment, it appears warranted that the Just Transition Fund concentrates its 
intervention on these regions, capitalising on the smart specialisation strategies that provide an important 
framework to set priorities for innovation in support of economic transformation. 

In  order  to  tackle  the  transition  challenges  and  support  the  sustainable  competitiveness  of  these  regions, 
high priority investment needs have been identified. Key actions of the Just Transition Fund could target in 
particular: 

 

 

Investments in regeneration and decontamination of sites, land restoration and repurposing 
projects; 
Investments  in  research  and  innovation  activities  and  fostering  the  transfer  of  advanced 
technologies; 

  Upskilling and reskilling of workers; 
 

Investments  in  the  deployment  of  technology  and  infrastructures  for  affordable  clean 
energy, in greenhouse gas emission reduction, energy efficiency and renewable energy; 

  Technical assistance. 

In order to increase the use of digital public services, priority investment needs have been identified.  Key 
actions of the Just Transition Fund could target in particular: 

  Digitalisation and digital connectivity. 

In  order  to  further  support  sustainable  regional  and  local  development,  investment  needs  have  been 
identified. Key actions of the Just Transition Fund could target in particular: 

 

 

Investments  in  the  creation  of  new  firms,  including  through  business  incubators  and 
consulting services; 
Investments  in  enhancing  the  circular  economy,  including  through  waste  prevention, 

(73)  This Annex is to be considered in conjunction with the EC proposal for a Regulation  of the European Parliament and of the 
Council  on  the  Just  Transition  Fund  2021-2027  (COM(2020)22  and  the  EC  proposal  for  a  Regulation  of  the  European 
Parliament  and  of the  Council  laying  down  common  provisions  on  the  European  Regional Development  Fund,  the  European 
Social Fund Plus, the Cohesion Fund, and the European Maritime and Fisheries Fund and financial rules for those and for the 
Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument (COM(2020)23) 

(74) SWD(2019)1024 final 

72 

 
                                                           
D. Investment guidance on Just Transition Fund 2021-2027 for Slovakia 

reduction, resource efficiency, reuse, repair and recycling. 

Territories in both Trenčín and Košice regions are expected to suffer from substantial job losses, which 
might  not  be  entirely  offset  by  the  creation  and  development  of  SMEs.  Exceptionally,  and  where 
necessary for the implementation of the territorial just transition plan, support to productive investments 
in large enterprises could therefore be considered.  

Furthermore,  industrial  sites  in  these  regions,  performing  activities  listed  in  Annex  I  to  Directive 
2003/87/EC  employ  a  substantial  number  of  workers  and  their  activity  is  at  risk  due  to  their  high 
greenhouse gas emissions. Support to investments to reduce the emissions could be considered, provided 
that  they  achieve  a  substantial  reduction  of  emissions  (going  substantially  below  the  relevant 
benchmarks used  for  free  allocation  under  Directive  2003/87/EC)  and  on  the  condition  that  the 
investments are compatible with the European Green Deal. 

73 

 
 
ANNEX E 

Progress towards the Sustainable Development Goals (SDGs) 

Assessment of Slovakia’s short-term progress towards the SDGs (75) 

Table E.1 shows the data for Slovakia and the EU-28 for the indicators included in the EU SDG indicator 
set used by Eurostat for monitoring progress towards the SDGs in an EU context (76). As the short-term 
trend at EU-level is assessed over a 5-year period, both the value at the beginning of the period and the 
latest available value is presented. The indicators are regularly updated on the  SDI dedicated section of 
the Eurostat website. 

Table E.1: 

Indicators measuring Slovakia’s progress towards the SDGs 

(75)  Data  extracted  on  9  February  2020 

from 

the  Eurostat  database 

(official  EU  SDG 

indicator 

set; 

see 

https://ec.europa.eu/eurostat/web/sdi/main-tables).  

(76)  The EU SDG indicator set is aligned as far as appropriate with the UN list of global indicators, noting that the UN indicators are 
selected for global level reporting and are therefore not always relevant in an EU context. The EU SDG indicators have strong 
links with EU policy initiatives. 

(Continued on the next page) 

74 

 
 
                                                           
 
  
 
E. Progress towards the Sustainable Development Goals (SDGs) 

Table (continued) 

(Continued on the next page) 

75 

 
 
 
 
   
 
E. Progress towards the Sustainable Development Goals (SDGs) 

Table (continued) 

(Continued on the next page) 

76 

 
 
 
 
   
 
E. Progress towards the Sustainable Development Goals (SDGs) 

Table (continued) 

(Continued on the next page) 

77 

 
 
 
 
   
 
E. Progress towards the Sustainable Development Goals (SDGs) 

Table (continued) 

Source: Eurostat 

78 

 
 
 
 
   
 
REFERENCES 

AOPP  (2018),  Supplements,  dissatisfaction  with  staff  and  lack  of  capacity  in  facilities  (Príplatky, 
nespokojnosť  s  personálom  aj  nedostatok  kapacít  v  zariadeniach.  Aj  to  odhalil  prieskum  o  dlhodobej 
starostlivosti), 
(https://aopp.sk/clanok/priplatky-nespokojnost-s-personalom-aj-nedostatok-kapacit-v-
zariadeniach-aj-odhalil-prieskum-o-dlhodobej-starostlivosti). 

Barrios,  S  et  al.  (2015),  ‘The  fiscal  impact  of  work-related  tax  expenditures  in  Europe’,  European 
Economy Economic No Papers 545, February, Publications Office of the European Union, Luxembourg 
(https://ec.europa.eu/economy_finance/publications/economic_paper/2015/pdf/ecp545_en.pdf). 

Bleha, B. et al. (2017), Štúdia demografického potenciálu hlavného mesta Slovenskej republiky Bratislavy 
do roku 2050 (Study of the demographic potential of the capital of the Slovak Republic in Bratislava until 
2050), 
Bratislava 
Infostat, 
(https://bratislava.blob.core.windows.net/media/Default/Dokumenty/Stránky/Chcem%20vediet/Štúdia%2
0demografického%20potenciálu%20Bratislavy.PDF). 

Business 
Slovakia 
(https://www.alianciapas.sk/category/ipp/). 

Alliance 

of 

(2019), 

The 

business 

environment 

index 

Business 
Eurobarometer 
(https://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/General/index). 

Survey 

(2019), 

Centre  for  Social  and  Economic  Research  (2018),  Study  and  Reports  on  the  VAT  GAP  in  the  EU-28 
Member 
(TAXUD/2015/CC/131) 
Final 
(https://ec.europa.eu/taxation_customs/sites/taxation/files/2018_vat_gap_report_en.pdf). 

States: 

Report 

2019 

CEPEJ  (2017),  Report:  Efficiency  and  Quality  of  the  Slovak  judicial  system,  Assessment  and 
recommendations  on  the  basis  of  CEPEJ  tools,  European  Commission  for  the  Efficiency  of  Justice, 
Council  of  Europe,  Brussels  (https://rm.coe.int/slovakia-assessment-report-on-efficiency-and-quality-of-
theslovak-jud/16807915c9). 

Council for Budget Responsibility (2019), Report on the Long-term Sustainability of Public Finances for 
2018, 
Bratislava 
(rozpoctovarada.sk/download2/eng_sustainability_report_2019_zhrnutie_final.pdf). 

Responsibility, 

Secretariat 

Council 

Budget 

the 

for 

of 

DESI  (2019),  Digital  single  market,  DESI  visualizations  (https://digital-agenda-data.eu/charts/desi-see-
the-evolution-of-an-indicator-and-compare-breakdowns#chart={"indicator":"desi_2b3_ictg","breakdown-
group":"total","unit-measure":"pc_grad","ref-area":"SK"}) 

Drahokoupil,  J.  and  Fabo,  B.  (2019),  The  limits  of  foreign-led  growth:  Demand  for  digital  skills  by 
foreign  and  domestic  firms  in  Slovakia,  Working  and  discussion  papers  WP  7/2019,  Research 
Department, National Bank of Slovakia (https://ideas.repec.org/p/svk/wpaper/1065.html). 

EIB  (2019),  EIB  Group  survey  on  investment  and  investment  finance  2019  country  overview  Slovakia, 
Brussels (https://www.eib.org/attachments/efs/eibis_2019_slovakia_en.pdf). 

Eunomia (2019), Study on investment needs in the waste sector and on the financing of municipal waste 
management 
the  European  Union,  Luxembourg 
(https://op.europa.eu/en/publication-detail/-/publication/4d5f8355-bcad-11e9-9d01-
01aa75ed71a1/language-en/format-PDF). 

in  Member  States,  Publications  Office  of 

European Central Bank (ECB) (2019), Opinion of the European Central Bank of 26 November 2019 on 
increasing 
(CON/2019/40) 
financial 
selected 
levy 
(https://www.ecb.europa.eu/ecb/legal/pdf/en_con_2019_40_sign.pdf). 

institutions, 

special 

the 

on 

79 

 
References 

European Commission (2015), Harvan, P et al., ‘The impact of rapid credit growth on Slovakia’s housing 
market’, 
December 
(https://ec.europa.eu/info/sites/info/files/file_import/eb006_en_2.pdf). 

Economic 

brief 

006, 

No 

European  Commission  (2016):  Communication  from  the  Commission  to  the  European  Parliament,  the 
Council,  the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  on  reform 
recommendations for regulation in professional services (COM(2016) 820 final) and the accompanying 
Commission  Staff  Working  Document  (SWD(2016)  436  final),  Brussels  (https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52016SC0436&from=DE). 

European  Commission  (2017),  Education  and  Training  Monitor  2017  –  Country  analysis  (Slovakia). 
Publication  Office  of  the  European  Union,  Luxembourg  (https://op.europa.eu/en/publication-detail/-
/publication/6e709b4c-bac0-11e7-a7f8-01aa75ed71a1/language-en/format-PDF/source-115380245). 

European Commission (2018a): ‘Fiscal Sustainability Report 2018’, Institutional Paper No 094, January, 
Publications 
Luxembourg 
(https://ec.europa.eu/info/publications/economy-finance/fiscal-sustainability-report-2018_en). 

European 

Union, 

Office 

the 

of 

European Commission (2018b): Pension Adequacy report 2018: Current and future income adequacy in 
the  old  age 
the  European  Union,  Luxembourg 
(https://op.europa.eu/en/publication-detail/-/publication/f0e89c3f-7821-11e8-ac6a-
01aa75ed71a1/language-en). 

the  EU,  Publications  Office  of 

in 

European  Commission  (2019a),  ‘Joint  Report  on  Health  Care  and  Long-Term  Care  Systems  &  Fiscal 
Sustainability - Country Documents 2019 Update’, Institutional paper No 105, June. Publications Office 
of 
(https://ec.europa.eu/info/sites/info/files/economy-
finance/ip105_en.pdf). 

European  Union, 

Luxembourg 

the 

European  Commission  (2019b),  Commission  Staff  Working  Document  Country  Report  Slovakia  2019, 
SWD(2019)  1024  final,  Brussels,  Publications  Office  of 
the  European  Union,  Luxembourg 
(https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-report-
slovakia_en.pdf). 

European Commission (2019c), Education and Training Monitor 2019, Slovakia. Publication s Office of 
the  European  Union,  Luxembourg  (https://ec.europa.eu/education/sites/education/files/document-library-
docs/et-monitor-report-2019-slovakia_en.pdf). 

European Commission (2019d), Assessment of the Implementation of the 2011 Council Recommendation 
on Policies to Reduce Early School Leaving. Case study: Slovakia, Publications Office of the European 
Union,  Luxembourg 
(https://publications.europa.eu/en/publication-detail/-/publication/72f0303e-cf8e-
11e9-b4bf-01aa75ed71a1). 

European  Commission  (2019e):  Regional  Innovation  Scoreboard  2019,  Publications  Office  of  the 
European Union, Luxembourg (https://ec.europa.eu/growth/sites/growth/files/ris2019.pdf). 

European  Commission 
market/en/digital-scoreboard). 

(2019f):  Digital  Scoreboard,  2019 

(https://ec.europa.eu/digital-single-

European Commission (2019g): Annual Report on European SMEs 2018/2019, Research & Development 
the  European  Union,  Luxembourg 
and 
(https://ec.europa.eu/growth/smes/business-friendly-environment/performance-review_en). 

Innovation  by  SMEs,  Publications  Office  of 

80 

 
 
References 

European  Commission  (2020a):  ‘The  Debt  Sustainability  Monitor  2019’,  Institutional  Paper  No  xxx, 
January. Publications Office of the European Union, Luxembourg. 

European  Commission  (forthcoming),  The  2020  EU  Justice  Scoreboard,  Communication  from  the 
Commission  to  the    European  Parliament,  the  Council,  the  European  Central  Bank,  the  European 
Economic and Social Committee and the Committee of the Regions COM(2020) XXXX, Brussels. 

European Environment Agency, EEA (2019a), Economic losses from climate-related extremes in Europe, 
Indicator  Assessment,  Copenhagen  (https://www.eea.europa.eu/data-and-maps/indicators/direct-losses-
from-weather-disasters-3/assessment-2). 

European  Environment  Agency  (EEA)  (2019b),  Air  quality  in  Europe  –  2019  report;  pages  32-33  and 
Luxembourg 
table 
(https://www.eea.europa.eu/publications/air-quality-in-europe-2019). 

Publications 

European 

Union, 

Office 

10.2, 

the 

of 

European  Environment  Agency 
dashboards, 
(https://www.eea.europa.eu/themes/biodiversity/state-of-nature-in-the-eu/article-17-national-summaries). 

(2019c),  Article 

summary 

national 

17 

European  Sustainable  Business  Federation  (2019),  Circular  Economy  update:  overview  of  circular 
economy 
(https://ecopreneur.eu/wp-
Econpreneur.eu, 
content/uploads/2019/09/Ecopreneur-Circular-Economy-Update-report-2019.pdf). 

Brussels 

Europe 

(2019), 

in 

Eurostat  (2017a),  ICT  specialists  –  statistics  on  hard-to-fill  vacancies 
(https://ec.europa.eu/eurostat/statistics-explained/index.php/ICT_specialists_-_statistics_on_hard-to-
fill_vacancies_in_enterprises). 

in  enterprises,  2017 

Eurostat 
(https://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=t2020_rd310). 

Productivity 

(2017b), 

(T2020_RD310), 

Energy 

Table 

on 

Eurostat 
(https://ec.europa.eu/eurostat/databrowser/view/sdg_07_10/default/table?lang=en). 

(2017c), 

Primary 

Energy 

Consumption 

Table 

on 

(SDG_07_10), 

Eurostat  (2019a):  Population  change  -  Demographic  balance  and  crude  rates  at  national  level 
(https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=demo_gind&lang=en). 

Eurostat 
economy/indicators). 

(2019b),  Circular 

economy 

indicators, 

(https://ec.europa.eu/eurostat/web/circular-

Eurostat  (2019c),  Sustainable  development  in  the  European  Union  —  Monitoring  report  on  progress 
towards  the  SDGs  in  an  EU  context  —  2019  edition,  (https://ec.europa.eu/eurostat/web/products-
statistical-books/-/KS-02-19-165). 

Eurydice (2019), Eurypedia, National Education Systems – Slovakia (https://eacea.ec.europa.eu/national-
policies/eurydice/content/slovakia_en) and (https://rokovania.gov.sk/RVL/Material/23492/2). 

Flachenecker  et  al.  (forthcoming),  High  Growth  Enterprises:  demographics,  financing  &  policy 
measures, JRC Technical Report, Joint Research Centre, Brussels. 

FRA (2018): Second European Union Minorities and Discrimination Survey, Roma – Selected findings, 
Luxembourg 
the 
Publications 
(https://fra.europa.eu/sites/default/files/fra_uploads/fra-2016-eu-minorities-survey-roma-selected-
findings_en.pdf). 

European 

Union, 

Office 

of 

81 

 
 
References 

Frediksson,  G.  et  al.  (2018),  ‘Is  the  European  automotive  industry  ready  for  the  global  electric  vehicle 
revolution’,  Policy  Contribution 
(http://bruegel.org/wp-
content/uploads/2018/12/PC-26_2018.pdf). 

Issue  No  26,  December,  Bruegel 

General  Prosecutors  Office  (GP  SK)  (2018),  Report  on  the  activities  of  the  Office  of  the  Special 
Prosecutor's Office and the findings of the Office of the Special Prosecutor's Office on the state of legality 
for  the  year  2018  (Správa  o  činnosti  Úradu  špeciálnej  prokuratúry  a  poznatky  Úradu  špeciálnej 
prokuratúry  o  stave  zákonnosti  za  rok  2018),  Bratislava  (https://www.genpro.gov.sk/spravy-o-
cinnosti/sprava-o-cinnosti-uradu-specialnej-prokuratury-a-poznatky-uradu-specialnej-prokuratury-o-st-
3a46.html). 

GRECO  (2019),  Fifth  evaluation  round,  Preventing  corruption  and  promoting  integrity  in  central 
governments  (top  executive  functions)  and  law  enforcement  agencies,  Evaluation  Report,  Slovak 
Republic,  Group  of  States  against  Corruption 
(GRECO),  Council  of  Europe,  Strasbourg 
(https://rm.coe.int/grecoeval5rep-2018-9-final-eng-slovakrep-public/168096d061). 

Greener Slovakia Strategy (2019), Greener Slovakia: Strategy of the Environmental Policy of the Slovak 
Republic until 2030, (https://www.minzp.sk/files/iep/03_vlastny_material_envirostrategia2030_def.pdf). 

Hellebrandt, T. et al. (2019): Revízia výdavkov na skupiny ohrozené chudobou alebo sociálnym vylúčením 
Priebežná správa (Spending review on groups at risk of poverty or social exclusion. Preliminary report). 
Ministry of Finance, Value for money division (https://www.minedu.sk/data/att/14208.pdf ). 

Hrustič, T and Podolinská, T. (2010), God between barriers. Social inclusion of Roma by religious means 
(Boh  medzi  bariérami.  Sociálna  inklúzia  Rómov  náboženskou  cestou),  Institute  of  Ethnology,  Slovak 
Academy of Sciences, Bratislava. 

Hudakova,  J.  (2018).  Analýza  internej  migrácie  vo  vybraných  krajoch  Slovenska  (Analysis  of  internal 
migration in selected regions of Slovakia), Ministry of Finance, Insitute for Financial Policy, Bratislava 
(https://www.mfsr.sk/sk/financie/institut-financnej-politiky/publikacie-ifp/komentare/komentare-z-roku-
2019/nova-web-stranka.html). 

IEP (2019), Green financing for greener Slovakia (Zdelené financovanie pre zelenšie Slovensko), Institute 
for 
Bratislava 
(https://www.minzp.sk/files/iep/2019_3_zelene_financovanie_pre_zelensie_slovensko.pdf). 

Environmental 

Environment, 

Ministry 

Policy, 

the 

of 

Institute of Health Policies (2018), Review of health expenditure II Interim report (Revízia výdavkov na 
zdravotníctvo  II  Priebežná  správa),  Bratislava  (https://www.mfsr.sk/files/archiv/uhp/3370/76/Revizia-
vydavkov-zdravotnictvo-II.pdf). 

International  Monetary  Fund  (IMF)  (2019a):  Slovak  Republic:  2019  Article  IV  Consultation. 
(https://www.imf.org/en/Publications/CR/Issues/2019/07/11/Slovak-Republic-2019-Article-IV-
Consultation-Press-Release-Staff-Report-47103). 

IMF  (2019b),  ‘Slovak  Republic:  Technical  Assistance  Report  –  Public  Investment  Management 
Assessment’,  IMF  Country  Report  No.  19/330,  October,  International  Montary  Fund  Publication 
Services,  Washington 
(https://www.imf.org/en/Publications/CR/Issues/2019/10/30/Slovak-Republic-
Technical-Assistance-Report-Public-Investment-Management-Assessment-48773). 

Institute of Financial Policy Employment (IFP) (2019), Flash info IFP - Unemployment also stagnated in 
August (Nezamestnanosť stagnovala aj v auguste), Ministry of Finance, Bratislava. 

82 

 
 
References 

Institute for Environmental Policy (2019), ‘Práca s ľuďmi bez domova prináša ovocie celej spoločnosti, 
Analýza vplyvu aktivít OZ Vagus na verejné financie (Working with homeless people is bearing fruit for 
the  whole  of  society,  Analysis  of  the  impact  of  Vagus  OZ  activities  on  public  finances)’,  Ekonomická 
Bratislava 
analýza 
(https://www.minzp.sk/files/iep/praca_s_ludmi_bez_domova_prinasa_ovocie_celej_spolocnosti_iep_ope
vs.pdf). 

6,  Ministry 

Environment 

Republic, 

Slovak 

the 

of 

of 

Institute  for  Labour  and  Family  Research  (IVPR)  (2018),  Navrh  cielov  Koncepcie  prevencia  a  riesenie 
bezdomovestva  (Objectives  of  the  Conception  of  Prevention  and  Addressing  Homelessness),  Bratislava 
(https://www.ceit.sk/IVPR/index.php?lang=en). 

Kešelová  et  al.,  2018:  Daniela  Kešelová,  Darina  Ondrušová,  Jana  Urdziková:  Kvalita  služieb 
zamestnanosti:  Individualizované  služby  zamestnanosti  a  vybrané  skupiny  uchádzačov  o  zamestnanie  
[Quality  of  Employment  Services:  Individualised  Employment  Services  and  Specific  Groups  of  Job-
Seekers], 
2018. 
(https://www.ceit.sk/IVPR/images/IVPR/vyskum/2018/Keselova/kvalita_sluzieb_zamestnanosti_keselov
a_2018.pdf). 

Bratislava 

výskum 

rodiny, 

Inštitút 

práce 

pre 

a 

Kríglerová,  E.G.  et  al.  (2015):  Kríglerová,  E.G.,  Chudžíková,  A.,  Medľová,  K.,  2015:  Štátne  deti  na 
jednej lodi? Rómske deti v detských domovoch (The children of the state in the same boat. Roma children 
in  children’s  homes),  CVEK,  Bratislava  (http://cvek.sk/wp-content/uploads/2015/11/Statne-deti-na-
jednej-lodi.pdf). 

MESA10,  (2019),  Learning  Makes  Sense  (To  da  rozum)  (2019).  Analyza  zisteni  o stave  skolstva  na 
Slovensku  (Analysis  of  findings  on  the  state  of  play  of  education  in  Slovakia).  European  Social  Fund  – 
Operational Programme, Effective public administration (https://analyza.todarozum.sk/docs/). 

Ministry  of  Economy  (2019),  Integrated  national  energy  and  climate  plan  processed  under  Regulation 
(EU) 2018/1999 of the European Parliament and of the Council of the Governance of the Energy Union 
and Climate Action for the period 2021-2030, Bratislava 

Ministry  of  Education  (2018a),  Národný  program  rozvoja  výchovy  a  vzdelávania,  Kvalitné  a  dostupné 
vzdelanie pre Slovensko, NPRVV, 2018-2027, (National Programme of Education Development, Quality 
and available education for Slovakia, NPRVV, 2018-2027), (https://www.minedu.sk/data/att/13285.pdf). 

Ministry of Finance (2018), Tax Report of the Slovak Republic 2018 (October 2018), (Daňový report SR 
2018(október  2018)),  Institute  for  Financial  Policy,  Bratislava  (https://www.mfsr.sk/sk/financie/institut-
financnej-politiky/publikacie-ifp/ekonomicke-analyzy/50-danovy-report-slovenskej-republiky-2018-
oktober-2018-2.html), pg. 49. 

Ministry  of  Finance  (2019a),  Draft  Budget  Plan  of  the  Slovak  Republic  for  2020  (Návrh  rozpočtového 
plánu  Slovenskej  republiky  na  rok  2020);  (https://ec.europa.eu/info/sites/info/files/economy-finance/17-
01-2020_sk_dbp_en.pdf). 

Ministry  of  Finance (2019b):  Value  for  Money:  Review  of  Health  Expenditure  II  Final  Report (Revízia 
Bratislava 
II 
výdavkov 
(https://www.mfsr.sk/sk/financie/hodnota-za-peniaze/revizia-vydavkov/zdravotnictvo/). 

zdravotníctvo 

Záverečná 

October, 

správa), 

na 

Ministry  of  Finance  (2019c),  Value  for  Money:  Review  of  expenditure  on  groups  at  risk  of  poverty  or 
social exclusion, 24.1.2019 (Revízia výdavkov na skupiny ohrozené chudobou alebo sociálnym vylúčením, 
24.1.2019),  Value 
(https://www.mfsr.sk/sk/financie/hodnota-za-
peniaze/revizia-vydavkov/ohrozene-skupiny/). 

for  Money  Division,  Bratislava 

83 

 
 
References 

Ministry  of  Finance  (2019d):  Národný  program  reforiem  Slovenskej  republiky  2019  (National  Reform 
Programme  of  the  Slovak  Republic  2019)  (https://www.finance.gov.sk/sk/financie/institut-financnej-
politiky/strategicke-materialy/narodny-program-reforiem/narodnyprogram-reforiem.html). 

Ministry of Health (2018), Information on the state of medical staff in the Slovak Republic - new version, 
(Informácia  o  stave  zdravotníckeho  personálu  v  Slovenskej  republike  -  nové  znenie),  Bratislava 
(https://rokovania.gov.sk/RVL/Material/23194/1). 

Ministry  of  Interior  (2019a),  Annual  Report  of  the  Financial  Intelligence  Unit  for  2018,  Ministry  of 
Interior  of  the  Slovak  Republic,  Presidium  of  the  Police  Force,  National  Criminal  Agency,  Financial 
Intelligence 
Bratislava 
Unit, 
(https://www.minv.sk/swift_data/source/policia/fsj/FIU%20Annual%20report%20for%202018.pdf). 

Ministry  of  Interior  (2019b):  Atlas  of  the  Roma  Communities  (Atlas  rómskych  komunít  2019) 
(http://www.minv.sk/?atlas-romskych-komunit-2019). 

Ministry  of  Interior  (2020),  Roma  Plenipotentiary  Office  2020:  Chudobou  je  ohrozených  až  85  % 
domácností  z  marginalizovaných  rómskych  komunít,  ukazuje  nový  výskum  EU  SILC  MRK  (Roma 
Plenipotentiary Office 2020: Up to 85% of households from marginalized Roma communities are at risk 
of poverty, a new EU SILC MRK research shows), (http://www.minv.sk/?spravy_rk&sprava=chudobou-
je-ohrozenych-az-85-domacnosti-z-marginalizovanych-romskych-komunit-ukazuje-novy-vyskum-eu-
silc-mrk). 

Ministry of Labour, Social Affairs and Family (2019), Potreby trhu práce v odvetviach a zamesnaniach 
do  roku  2024  (Labour  market  needs  in  the  sectors  and  employment  until  2024),  Trendyprace 
(https://www.trendyprace.sk/sk/trendy-trhu-prace/sk-trendy/zamestnania). 

Müller, T. et al. (2019): Müller, T., Vandaele, K. and Waddington, J., Collective bargaining in Europe: 
Brussels 
towards 
(https://www.etui.org/Publications2/Books/Collective-bargaining-in-Europe-towards-an-endgame.-
Volume-I-II-III-and-IV). 

endgame, 

European 

Institute, 

Unions 

Trade 

and 

National Association of Service Supporters and Providers (APPVI) (2019) (https://asociaciavi.sk/) 

National  Bank  of  Slovakia  (NBS)  (2019),  Financial  stability  report  November  2019,  Bratislava 
(https://www.nbs.sk/_img/Documents/ZAKLNBS/PUBLIK/SFS/FSR_112019.pdf). 

National  Bank  of  Slovakia  (NBS)  (2019b),  Financial  stability  report  May  2019,  Bratislava 
(https://www.nbs.sk/_img/Documents/ZAKLNBS/PUBLIK/SFS/FSR_052019.pdf). 

National  Council  (2019),  Amending  Act  no.  245/2008  Coll.  on  Education  (Education  Act) 
(https://www.nrsr.sk/web/Dynamic/DocumentPreview.aspx?DocID=468868). 

Nemec,  J.  (2018).  Public  administration  characteristics  and  performance  in  EU28:  Slovakia 
(https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8123&furtherPubs=yes 
).  OECD 
(2017), Assessment of key anti-corruption related legislation in the Slovak Republic, OECD Publishing, 
Paris 
(https://www.oecd.org/governance/ethics/Assessment-anti-corruption-legislation-Slovak-
Republic.pdf). 

OECD  (2019),  2019  OECD  Economic  Survey  of  the  Slovak  Republic:  Towards  and  innovative  and 
inclusive  society,  OECD  Publishing,  Paris  (https://read.oecd-ilibrary.org/economics/oecd-economic-
surveys-slovak-republic-2019_eco_surveys-svk-2019-en#page1). 

84 

 
 
References 

OECD  (2019b),  Country  Note:  Programme  for  International  Student  Assessment  (PISA),  Results  from 
PISA 
Paris 
Slovak 
(https://www.oecd.org/pisa/publications/PISA2018_CN_SVK.pdf). 

Publishing, 

Republic, 

OECD 

2018, 

OECD  (2019c):  Country  Note:  Education  at  a  Glance  2019  –  Slovakia,  OECD  Publishing,  Paris. 
(https://www.oecd.org/education/education-at-a-glance/EAG2019_CN_SVK.pdf). 

OECD  (2019d):  TALIS  2018  Results  (Volume  I):  Teachers  and  School  Leaders  as  Lifelong  Learners, 
TALIS. OECD Publishing, Paris (http://www.oecd.org/education/talis/). 

OECD  and  European  Observatory  on  Health  Systems  and  Policies  (2019):  Slovakia  -  Country  Health 
Profile  2019,  State  of  Health  in  the  EU,  OECD  Publishing,  Paris/European  Observatory  on  Health 
Brussels.  
Systems 
(https://ec.europa.eu/health/sites/health/files/state/docs/2019_chp_sk_english.pdf) 

Policies, 

and 

OECD  (2020),  Skills  Strategy  Slovak  Republic:  Assessment  and  Recommendations,  OECD  Skills 
Studies, OECD Publishing, Paris ( https://doi.org/10.1787/bb688e68-en ). 

Office of the Civil Service Council (2019), Správa o stave a vývoji štátnej služby (Report on the current 
situation  and  development  of  civil  services  in  the  year  2018,  Office  of  the  Civil  Service  Council 
(https://radaprestatnusluzbu.vlada.gov.sk/data/files/7330_report-on-civil-service-2018-eng.pdf). 

Pavlínek,  P  (2014),  Whose  success?  The  state-foreign  capital  nexus  and  the  development  of  the 
automotive 
Journals 
(https://journals.sagepub.com/doi/10.1177/0969776414557965). 

Slovakia, 

industry 

Sage 

in 

Perignáthová  M.  (2019),    Attractivity  of  the  Teacher  Profession  –  Results  of  a  Qualitative  Survey, 
Education Policy Institute, Ministry of Education, available at https://www.minedu.sk/komentar-032019-
atraktivita-ucitelskeho-povolania/  

Polish  Economic  Insitute  (PEI)  (2019),  The  automotive  industry  in  the  Visegrad  Group  countries, 
Warsaw (http://pie.net.pl/wp-content/uploads/2019/08/PIE-Raport_Automotive.pdf). 

Price  Waterhouse 
Survey 
(https://www.pwc.com/sk/en/odvetvia/automobilovy-priemysel/pwc-automotive-supplier-survey-
2019.html). 

(2019):  Automotive 

and  Coopers 

Supplier 

(PWC) 

2019 

Repková, K., (2019): Zavádzanie podmienok kvality sociálnych služieb – prieskum stavu implementácie u 
poskytovateľov sociálnych služieb (Introduction of the quality conditions in social services – a mapping 
survey on the state of implementation by providers of social services), Inštitút pre výskum práce a rodiny 
(Institute 
Bratislava. 
(https://www.ceit.sk/IVPR/images/IVPR/vyskum/2019/Repkova/zavadzanie_podmienok_kvality_socialn
ych_sluzieb_repkova_2019.pdf). 

Research), 

Family 

Work 

and 

for 

Santiago, P. et al. (2016): OECD Reviews of School Resources: Slovak Republic, OECD Publishing, Paris 
(www.oecd.org/education/school/OECD%20Reviews%20of%20School%20Resources%20-
%20Slovak%20Republic%20-%20Summary.pdf). 

Škobla,  D.  et  al.,  (2018),  Škobla,  D.,  Hrustič.  T,  and  Poduška,  O.,  Evaluácia  dopadu  terénnej  sociálnej 
práce 2018, Zhrnutie záverečnej správy (Evaluation of the impact of field social work 2018, Summary of 
the 
Report), 
(https://www.academia.edu/39641587/EVALUÁCIA_DOPADU_TERÉNNEJ_SOCIÁLNEJ_PRÁCE_2
018_Zhrnutie_záverečnej_správy). 

Final 

85 

 
 
References 

Slovak Credit Bureau (2019), TASR based on analysis CRIF, Superodpočet si vlani uplatnilo zatiaľ 260 
subjektov 
(https://www.vssr.sk/clanok-z-titulky/superodpocet-si-vlani-uplatnilo-zatial-260-subjektov-
spravodajstvo-10-2019.htm). 

Slovak  National  Centre  for  Human  Rights  (2018),  Report  on  the  Observance  of  Human  Rights, 
Introducing  the  principle  of  equal  treatment  in  the  Slovak  Republic  for  the  Year  201,  Bratislava 
(http://www.snslp.sk/CCMS/files/sprava_2017_eng.pdf). 

Supreme  Audit  Office  of  the  Slovak  Republic  (2019),  Are  teachers  motivated  to  provide  high  quality 
performance?  Remuneration  of  pedagogical  employees  at  elementary  schools  (Analytical  paper), 
Bratislava 
(https://www.nku.gov.sk/documents/10157/1460168/Odme%C5%88ovanie+pedagogick%C3%BDch+za
mestnancov+na+z%C3%A1kladn%C3%BDch+%C5%A1kol%C3%A1ch ). 

Szabo,  S  (forthcoming),  ‘Transition  to  Industry  4.0  in  the  Visegrád  countries’,  European  Economy 
Economic Briefs, Issue xxxx, Publications Office of the European Union, Luxembourg. 

Szcurek,  M.  and  Tomaszewski,  M.  (2017),  The  Slovak  Republic  diagnostic  paper:  Assessing  progress 
and  challenges  in  developing  a  sustainable  market  economy,  European  Bank  for  Reconstruction  and 
Development, London (https://www.ebrd.com/publications/country-diagnostics). 

Tesla magazine (2019), The MoE SR published the statistics of electric vehicles and hybrids registered in 
Slovakia  (MH  SR  zverejnilo  štatistiky  elektromobilov  a  hybridov  registrovaných  na  Slovensku) 
(https://www.teslamagazin.sk/elektromobily-plug-in-hybridy-pocet-slovensko-registracie/). 

Times 
(https://www.timeshighereducation.com/student/where-to-study/study-in-slovakia#survey-answer). 

Education 

university 

(2020), 

Higher 

world 

The 

rankings 

Transparency  International  Slovakia  (2017),  Slovak  supervisory  and  regulatory  authorities  need  more 
independence 
nezávislosti) 
(https://transparency.sk/sk/slovenske-kontrolne-regulacne-urady-potrebuju-viac-nezavislosti/). 

(Slovenské 

regulačné 

potrebujú 

kontrolné 

úrady 

viac 

a 

Transparency 
(https://www.transparency.org/cpi2019). 

International 

(2020), 

Corruption 

perceptions 

index 

2019 

Transport & Environment (T&E) (2019): Electric Surge: Carmarkers’ electric car plans across Europe 
2019-2025 
(https://www.transportenvironment.org/sites/te/files/publications/2019_07_TE_electric_cars_report_final.
pdf). 

UBS  (2017):  « Q-series:  UBS  Evidence  Lab  Electric  Car  Teardown  –  Disruption  ahead?” 
(https://neo.ubs.com/shared/d1mFW2YvNRvHXA/). 

Varsik, S. (2019): Držím ti miesto. Analýza kapacít materských škôl pre 5-ročné deti (I have a place for 
you.  Analysis  of  kindergartens  capacity  for  5-year-olds.),  Ministry  of  Education,  Education  Policy 
Institute, Bratislava (https://www.minedu.sk/data/att/15248.pdf). 

Vitale, C.; et al. (2019), ‘2018 Update of the OECD PMR Indicators and Database - Policy Insights for 
OECD  Countries’,  OECD  Economics  Department  Working  Papers  No.XXX,  forthcoming,  OECD 
Publishing, Paris (https://www.oecd.org/economy/reform/indicators-of-product-market-regulation/). 

World Bank (2014), Europe and Central Asia Country Risk Profiles for Floods and Earthquakes, Global 
Facility  For  Disaster  Reduction  and  Recovery,  The  World  Bank  Group,  Washington 

86 

 
 
References 

(https://www.gfdrr.org/sites/default/files/publication/-
Europe%20and%20Central%20Asia%20Country%20Risk%20Profiles%20for%20Floods%20and%20Ear
thquakes%20smaller.pdf). 

World  Bank  (2018).  Expanding  GP  competencies  in  the  Slovak  Republic:  policy  routes  and 
recommendations. 
(http://www.zvld.sk/wp-
content/uploads/2017/11/Slovakia_GP_service_profile_FOR_EDITORS.pdf). 

Bank 

World 
(https://www.doingbusiness.org/content/dam/doingBusiness/media/Profiles/Regional/DB2019/OECD-
High-Income.pdf). 

business 

training 

(2019): 

Doing 

2019, 

for 

reform 

competitiveness 
World 
(http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf). 

Economic 

(2019), 

Forum 

global 

The 

report, 

Geneva 

87