Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Slovenia and delivering a Council opinion on the 2020 Stability Programme of Slovenia
Date: 2020-05-20
Institutions: European Commission, Secretariat-General
Subjects: Slovenia, economic policy, economic recovery, economic reform, employment policy, epidemic, health policy, infectious disease, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 20.5.2020  COM(2020) 524 final  Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Slovenia and delivering a Council opinion on the 2020 Stability Programme of Slovenia  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2020 National Reform Programme of Slovenia and delivering a Council opinion 
on the 2020 Stability Programme of Slovenia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

On  17  December  2019,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Strategy,  marking  the  start  of  the  2020  European  Semester  for  economic  policy 
coordination. It took due account of the European Pillar of Social Rights, proclaimed 
by the European Parliament, the Council and the Commission on 17 November 2017. 
On  17  December  2019,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  also  adopted  the  Alert  Mechanism  Report,  in  which  it  did  not  identify 
Slovenia as one of the Member States for which an in-depth review would be carried 
out. On the same date, the Commission also adopted a recommendation for a Council 
recommendation on the economic policy of the euro area. 
The 2020 country report for Slovenia2 was published on 26 February 2020. It assessed 
Slovenia’s  progress  in  addressing  the  country-specific  recommendations  adopted  by 
the Council on 9 July 20193, the follow-up given to the recommendations adopted in 
previous years and Slovenia's progress towards its national Europe 2020 targets.  

(3) 

On 11 March 2020, the World Health Organization officially declared the COVID-19 
outbreak  a  global  pandemic.  It  is  a  severe  public  health  emergency  for  citizens, 

1 
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3 

OJ L 209, 2.8.1997, p. 1. 
SWD(2020) 523 final. 
OJ C 301, 5.9.2019, p. 117. 

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societies  and  economies.  It  is  putting  national  health  systems  under  severe  strain, 
disrupting  global  supply  chains,  causing  volatility  in  financial  markets,  triggering 
consumer  demand  shocks  and  having  negative  effects  across  various  sectors.  It  is 
threatening  people’s  jobs,  their  incomes  and  companies’  business.  It  has  delivered  a 
major  economic  shock  that  is  already  having  serious  repercussions  in  the  European 
Union. On 13 March 2020, the Commission adopted a Communication4 calling for a 
coordinated economic response to the crisis, involving all actors at national and Union 
level. 

Several  Member States have declared a state of  emergency or introduced emergency 
measures.  Any  emergency  measures  should  be  strictly  proportionate,  necessary, 
limited in time, and in line with European and international standards. They should be 
subject to democratic oversight and independent judicial review. 

On  20  March  2020,  the  Commission  adopted  a  Communication  on  the  activation  of 
the general escape clause of the Stability and Growth Pact5. The clause, as set out in 
Articles 5(1), 6(3), 9(1) and 10(3) of Regulation  (EC) 1466/97 and Articles 3(5) and 
5(2) of Regulation (EC) 1467/97, facilitates the coordination of budgetary policies in 
times  of  severe  economic  downturn.  In  its  Communication,  the  Commission  shared 
with the Council its view that, given the expected severe economic downturn resulting 
from  the COVID-19 outbreak, the  current  conditions  permit  activation of the clause. 
On  23  March  2020,  the  Ministers  of  Finance  of  the  Member  States  agreed  with  the 
assessment of the Commission. The activation of the general escape clause allows for 
a temporary departure from the adjustment path  towards the medium-term budgetary 
objective,  provided  that  this  does  not  endanger  fiscal  sustainability  in  the  medium 
term. For the corrective arm, the Council may also decide, on a recommendation from 
the Commission,  to  adopt  a revised  fiscal  trajectory. The  general  escape  clause does 
not suspend the procedures of the Stability and Growth Pact. It allows Member States 
to depart from the budgetary requirements that would normally apply while enabling 
the  Commission  and  the  Council  to  undertake  the  necessary  policy  coordination 
measures within the framework of the Pact. 

Continued  action  is  required  to  limit  and  control  the  spread  of  the  pandemic, 
strengthen  the  resilience  of  the  national  health  systems,  mitigate  the  socio-economic 
consequences through supportive measures for business and households and to ensure 
adequate  health  and  safety  conditions  at  the  workplace  with  a  view  to  resuming 
economic  activity.  The  Union  should  fully  use  the  various  tools  at  its  disposal  to 
support  Member  States’  efforts  in  those  areas.  In  parallel,  Member  States  and  the 
Union should work together to prepare the measures necessary to get back to a normal 
functioning of our societies and economies and to sustainable growth, integrating inter 
alia  the  green  transition  and  the  digital  transformation,  and  drawing  all  lessons  from 
the crisis. 

The  COVID-19  crisis  has  highlighted  the  flexibility  that  the  single  market  offers  to 
adapt  to  extraordinary  situations.  However,  in  order  to  ensure  a  swift  and  smooth 
transition to the recovery phase and the free movement of goods, services and workers, 
exceptional  measures that prevent  the single market  from  functioning  normally must 
be removed as soon as they are no longer indispensable. The current crisis has shown 
the need for crisis preparedness plans in the health sector, which include in particular 
improved  purchasing  strategies,  diversified  supply  chains  and  strategic  reserves  of 

(4) 

(5) 

(6) 

(7) 

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COM(2020) 112 final. 
COM(2020) 123 final. 

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(8) 

(9) 

essential  supplies.  They  are  key  elements  for  developing  broader  crisis  preparedness 
plans. 
The  Union  legislator  has  already  amended  the  relevant  legislative  frameworks6  to 
allow  Member  States  to  mobilise  all  unused  resources  from  the  European  Structural 
and  Investment  Funds  so  they  can  address  the  exceptional  effects  of  the  COVID-19 
pandemic. Those amendments will provide additional flexibility, as well as simplified 
and streamlined procedures. To alleviate cash flow pressures, Member States can also 
benefit  from  a  100%  co-financing  rate  from  the  Union  budget  in  the  2020-2021 
accounting year. Slovenia is encouraged to make full use of those possibilities to help 
the individuals and sectors most affected by the challenges. 

The  socio-economic  consequences  of  the  pandemic  are  likely  to  be  unevenly 
distributed  across  Slovene  regions  due  to  different  specialisation  and  concentration 
patterns  of  economic  activities.  This  entails  a  substantial  risk  of  aggravating  the 
already observed trend of widening disparities between the capital city and the rest of 
the  country.  Combined  with  the  risk  of  a  temporary  unravelling  of  the  convergence 
process  between  Member  States,  the  current  situation  calls  for  targeted  policy 
responses. 

(10)  On  30  April  2020,  Slovenia  submitted  its  2020  National  Reform  Programme  and  its 
2020  Stability  Programme.  In  order  to  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time.  

(11)  Slovenia  is  currently  in  the  preventive  arm  of  the  Stability  and  Growth  Pact  and 

subject to the debt rule.  

(12)  On  13  July  2018,  the  Council  recommended  Slovenia  to  ensure  that  the  nominal 
growth  rate  of  net  primary  government  expenditure7  does  not  exceed  3,1%  in  2019, 
to  an  annual  structural  adjustment  of  0,65%  of  GDP.  The 
corresponding 
Commission’s  overall  assessment  confirms  a  significant  deviation  from 
the 
recommended adjustment path towards the medium-term budgetary objective in 2019 
and  over  2018  and  2019  taken  together.  However,  in  light  of  the  activation  of  the 
general  escape  clause,  further  steps  under  the  Significant  Deviation  Procedure  for 
Slovenia are not warranted. 

(13) 

In  its  2020  Stability  Programme,  the  government  plans  the  headline  balance  to 
deteriorate  from  a  surplus  of  0,5%  of  GDP  in  2019  to  a  deficit  of  8,1%  of  GDP  in 
2020.  After  decreasing  to  66,1%  of  GDP  in  2019,  the  general  government  debt-to-
GDP  ratio  is  expected  to  increase  to  82,4%  of  GDP  in  2020  according  to  the  2020 

6 
Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending 
Regulations  (EU)  No  1301/2013,  (EU)  No  1303/2013  and  (EU)  No  508/2014  as  regards  specific  measures  to 
mobilise  investments  in  the  healthcare  systems  of  Member  States  and  in  other  sectors  of  their  economies  in 
response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) (OJ L 99, 31.3.2020, p. 5) and 
Regulation  (EU)  2020/558  of  the  European  Parliament  and  of  the  Council  of  23  April  2020  amending 
Regulations  (EU)  No  1301/2013  and  (EU)  No  1303/2013 as  regards  specific  measures  to  provide  exceptional 
flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak 
(OJ L 130, 24.4.2020, p. 1). 
7 
Net  primary  government  expenditure  comprises  total  government  expenditure  excluding  interest 
expenditure,  expenditure  on  Union  programmes  fully  matched  by  Union  funds  revenue  and  non-discretionary 
changes  in  unemployment  benefit  expenditure.  Nationally  financed  gross  fixed  capital  formation  is  smoothed 
over a four-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. 
One-off measures on both the revenue and expenditure sides are netted out. 

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(14) 

Stability  Programme.  The  macroeconomic  and  fiscal  outlook  is  affected  by  high 
uncertainty due to the COVID-19 pandemic.  

In response to the COVID-19 pandemic, and as part of a coordinated Union approach, 
Slovenia has adopted budgetary measures to increase the capacity of its health system, 
contain  the  pandemic,  and  provide  relief  to  those  individuals  and  sectors  that  have 
been  particularly  affected.  According  to  the  2020  Stability  Programme,  those 
budgetary measures amounted to 4,4% of GDP. The measures include short-term work 
schemes  for  temporarily  laid-off  employees  and  the  self-employed  (2,3%  of  GDP), 
higher  healthcare  spending  (0,5%  of  GDP),  compensations  for  workers  remaining  in 
the  workplace  (0,4%  of  GDP),  crisis  bonus  for  public  sector  employees  (0,4%  of 
GDP), tax deferrals (0,4% of GDP) and financial aid for vulnerable groups (0,2% of 
GDP).  In  addition,  Slovenia  has  announced  measures  that,  while  not  having  a  direct 
budgetary  impact,  will  contribute  to  support  liquidity  to  businesses,  which  the  2020 
Stability  Programme  estimates  at  5,1%  of  GDP.  Those  measures  include  loan 
guarantees  (4,8%  of  GDP),  tax  deferrals  (0,2%  of  GDP)  and  exemption  of  social 
the 
security  contributions  for 
Commission  2020  spring  forecast  considers  all  tax  deferrals  as  liquidity  measures 
without a negative budgetary impact in 2020. Overall, the measures taken by Slovenia 
are  in  line  with  the  guidelines  set  out  in  the  Commission  Communication  on  a 
coordinated  economic  response  to  the  COVID-19  outbreak.  The  full  implementation 
of  those  measures,  followed  by  a  refocusing  of  fiscal  policies  towards  achieving 
prudent medium-term fiscal positions when economic conditions allow, will contribute 
to preserving fiscal sustainability in the medium term. 

the  self-employed  (0,1%  of  GDP).  However, 

(15)  Based on the Commission 2020 spring forecast under unchanged policies, Slovenia’s 
general government balance is forecast at -7,2% of GDP in 2020 and -2,1% of GDP in 
2021. The general government debt ratio is projected to reach 83,7% of GDP in 2020 
and 79,9% of GDP in 2021.  

(16)  On 20 May 2020, the Commission issued a report prepared in accordance with Article 
126(3)  of  the  Treaty  due  to  Slovenia’s  planned  breach  of  the  3%  of  GDP  deficit 
threshold in 2020. Overall, the analysis suggests that the deficit criterion as defined in 
the Treaty and in Regulation (EC) No 1467/1997 is not fulfilled. 

(17)  Slovenia  declared 

the  COVID-19  epidemic  on  12  March  2020  under 

its 
Communicable Disease Act and took public health measures to contain the spread of 
the virus. This included coordinating the respective roles of public health, primary and 
secondary care and other services, as well as introducing appropriate testing protocol. 
In  parallel,  Slovenia  introduced  strict  confinement  measures,  while  leaving  food 
stores, pharmacies, banks, petrol stations and post offices open. The public health and 
confinement measures  helped  Slovenia in  the first  wave (March-May) to prevent  the 
number of severely ill exceeding the capacity of the country's health system. Because 
of the confinement measures, many companies shut down temporarily or reduced their 
activities.  In  an  open  and  export-oriented  economy  like  Slovenia,  disruptions  in  the 
supply chain and a reduced global demand for products have had a particularly strong 
impact on growth. Given the uncertainty regarding the economic development, many 
investment  decisions  in  the  private  sector  are  being  postponed.  As  transport  and 
tourism, two of Slovenia’s most important sectors are expected to be the most affected 
with 70% drop in turnover in 2020, a very sharp fall in GDP is projected for 2020.    

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(18)  By  the  end  of  April  2020,  the  authorities  had  adopted  two  packages  of  measures  to 
counterbalance  the  COVID-19  shock8.  The  first  mitigation  package,  worth  around 
EUR 3,1  billion  equivalent  to  around  6,4%  of  GDP  focuses  primarily  on  protecting 
jobs and socially vulnerable groups. The state covers pay compensation, sick pay and 
social  security  contributions  for  temporary  lay-offs  as  well  as  the  pension  insurance 
contributions for employees who remain in the workplace. To alleviate businesses and 
households’ liquidity constraints, the servicing of loans can be postponed for up to 12 
months. The second package, worth some EUR 2 billion, equivalent to around 4,2% of 
GDP,  mainly  provides  liquidity  aid  to  companies.  The  package  includes  a  state 
guarantee  scheme  via  banks,  that  enable  loans  to  be  granted  to  large  companies 
guaranteed by the state for up to 70% of the principal and loans to be granted to small 
and  medium-sized  enterprises  (SMEs)  guaranteed  for  up  to  80%.  Deferring  tax 
payments  and  exemption  of  social  contributions,  and  speeding  up  contractual 
payments  by  public  authorities,  is  to  help  businesses  mitigating  their  problems  with 
the liquidity and access to finance.  

(19)  With  an  increasing  demand  for  health  services  at  the  beginning  of  the  COVID-19 
outbreak,  Slovenia  faced  challenges  to  ensure  a  sufficient  healthcare  capacity.  The 
outbreak of the virus has revealed structural problems in health system. For instance, 
the  relatively  low  density  of  doctors  is  an  additional  challenge  in  fighting  the 
epidemic. It is therefore important to recruit more trained health workers, protect their 
working  conditions  and  employ  them  where  needs  are  greatest.  Deployment  of 
diagnostics, tests and e-health tools that enable follow-up and telemedicine is crucial. 
Targeted research and innovative solutions are also important to help the public health 
services  collect  and  use  anonymised  data  for  making  informed  decisions.  The  crisis 
underlines the need to protect the financing capacity of the health and long-term care 
systems,  which  are  both  pending  structural  reforms.  The  timely  adoption  and 
implementation  of  a  new  Health  Care  and  Health  Insurance  Act,  broadening  the 
financial sources of the health system, and developing financial buffers, will mitigate 
the fluctuation  of financial resources during the economic cycle. The lack of a long-
term  care  act  has  limited  Slovenia’s  ability  to  fight  the  COVID-19  outbreak  in  the 
most  affected  care  settings.  As  the  elderly,  people  with  disabilities  and  people  with 
chronic  diseases  have  an  increased  risk  of  severe  illness  due  to  the  virus,  further 
significant  efforts  are  necessary  to  ensure  quality  long-term  care  services,  well 
integrated with health services.   

(20)  The health and economic crisis caused by COVID-19 has put unprecedented pressure 
on  Slovenia’s  labour  market  and  social  protection  system.  According  to  the 
Commission forecast, unemployment is expected to rise to 7% in 2020 and recover to 
5.1%  in  2021.  To  curb  the  rapid  increase  in  unemployment  in  the  most  affected 
sectors,  Slovenia  has  adopted  a  comprehensive  policy  response  that  combine 
preventive measures with measures intended to facilitate the fast re-entry of workers in 
the labour market. Key policy responses, made in consultation with the social partners, 
should  focus  on  achieving  a  sustained  and  equitable  recovery  by  strengthening 
existing  active  labour  market  policies  and  employment  retention  schemes,  including 
short-time  work  schemes,  and  introducing  other  time-bound  support  for  businesses, 
such  as  wage  subsidies  and  exemptions  from  social  security  contributions.  These 
measures  would  help  lessen  income  losses  for  all  workers,  including  those  in  non-
standard  employment,  as  well  as  the  self-employed.  Flexible  working  arrangements, 

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The Commission has adopted a temporary State aid framework for such aid measures, which inter  alia 
comprises safeguards as to the viability of firms; OJ C 91I , 20.3.2020, p. 1. 

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including  flexibility  in  working  place  (e.g.  teleworking  provisions),  flexibility  in 
working  time  (e.g.  flexitime  provisions)  and  flexibility  in  work  organisations  (e.g. 
company in-house services) may significantly sustain  employment during lockdowns 
and  when  economic  activity  resumes.  Nurturing  the  entrepreneurial  spirit  will  be 
crucial  for  restarting  the  economy  and  making  the  necessary  adjustments  after  the 
crisis.  It  is  therefore particularly  important  to  support the self-employed by  reducing 
the administrative burden and financial disadvantages compared to employees.  

(21)  To  mitigate  the  social  impact  of  this  crisis,  it  is  essential  that  Slovenia  continues  to 
provide  an  adequate  package  of  social  benefits.  For  this,  it  will  be  necessary  to 
monitor the effects of the crisis on poverty regularly. Special attention should be payed 
to  the  elderly,  and  in  particular  women,  for  whom  the  at-risk-of-poverty  or  social 
exclusion  rates  were  higher  than  the  EU  average  already  before  the  crisis.  The 
amendment to the pension legislation, adopted by the National Assembly in November 
2019,  is  expected  to  improve  the  adequacy  of  pensions  for  new  pensioners,  while 
current pensioners, including those at or below the poverty line, will not benefit from 
it.  Additional  financial  assistance  offered  to  the  organisations  working  on  the  front 
lines  would  ensure  that  the  COVID-19  pandemic  does  not  disproportionately  affect 
people  at  risk  of  social  exclusion  and  that  they  have  their  basic  needs  met,  such  as 
daily meals and health-care.  

(22)  Liquidity  measures  were  introduced  for  businesses  in  April  2020,  but  there  are  still 
viable businesses such as smaller innovative and high-growth firms whose bank credit 
ratings are not  yet sufficiently well established to entitle them to the  aforementioned 
loan  guarantees  via  banks.  Improved  access  to  alternative  finance,  including  equity 
financial  instruments  (e.g.  venture  capital)  might  be  necessary,  particularly  in 
countries like Slovenia where equity markets are underdeveloped. Slovenia’s existing 
equity capital tools could be a means to channel relief funds to those businesses that 
are successfully exiting from the crisis, such as innovative SMEs, start-ups and scale-
ups, as planned by other Member States. Applying the safeguards provided for in EU 
rules will ensure that these injections will not adversely affect companies’ efficiency 
or economic competition. 

(23)  The COVID-19 crisis has severely affected the capacity of otherwise viable businesses 
and  households  to  pay  their  bills.  If  no  action  was  taken,  a  large  part  of  the  private 
sector  would  face  insolvency.  Among  its  liquidity  measures  for  businesses,  the 
Slovenian  government  introduced  a  12-month  moratorium  on  the  repayment  of 
performing  bank  loans  for  the  non-financial  corporations  and  households.  The 
efficiency and effectiveness of this and similar measures need to be carefully assessed 
and monitored. Any adverse effect of the measures should also be remedied quickly, 
so that financial stability is ensured at all times. 

(24)  Struggling  firms,  and  notably  smaller  ones,  require  not  only  liquidity  and  financing, 
but  also  a  supportive  business  environment.  This  includes  the  speedy  and  non-
bureaucratic implementation of the COVID-19 relief measures but  goes  beyond this. 
The country’s high regulatory and administrative burden create costs that hard-pressed 
firms  can  simply  not  afford  in  these  challenging  times.  Cutting  red  tape  related  for 
example  to  permits,  reporting  obligations  and  tax  procedures  is  an  effective  way  to 
provide  immediate,  noticeable  relief  to  firms,  without  burdening  the  national  budget 
and indirectly the taxpayer. Modernising the rules will allow professions to offer more 
cost-effective and innovative services that firms now need. Slovenia has created tools 
to reduce administrative burden, including the ‘Single Document’ and ‘SME test’. The 
use of those tool can now be maximised to  provide immediate relief. The crisis  will 

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put  additional  stress  on  commercial  disputes  settlement  and  economic  crime 
prosecution.  The  insolvency  framework  will  also  need  a  greater  focus  on  avoiding 
crisis-related insolvencies, on a speedy winding down of non-viable businesses and a 
second chance for those involved.  

(25)  To  foster  the  economic  recovery,  it  will  be  important  to  front-load  mature  public 
investment  projects  and  promote  private  investment,  including  through  relevant 
reforms.  Advancing  the  green  transition  with  sustainable  projects,  such  as  the 
transition away from coalmines and coal-powered electricity production, could be one 
such investment. Investing in the green transition as described in Slovenia’s National 
Energy and Climate Plan can help bring short- term stimulus to the recovery and the 
medium-term  aftermath  of  the  COVID-19  outbreak.  This  can  involve  increasing  the 
current low share of renewables, strengthening the energy infrastructure, reducing air 
pollution, which is above the EU average in Slovenia’s towns and cities, strengthening 
the circular economy, supporting social entrepreneurship, and accelerating the efforts 
to limit the potential impacts on the regions and sectors most affected by the transition. 
The current drop in emissions would be short-lived if insufficient attention is given to 
clean  energy  and  climate  investments  in  recovery  packages,  making  Slovenia  fall 
behind  on  its  climate  targets.  The  programming  of  the  Just  Transition  Fund  for  the 
period 2021-2027 could help Slovenia to address some of the challenges posed by the 
transition  to  a  climate  neutral  economy,  in  particular  in  the  territories  covered  by 
Annex D to the country report. This would allow Slovenia to make the best use of that 
fund. 

(26)  For an economic recovery that incorporates the principle of sustainability, investment 
will  be  needed  to  further  develop  sustainable  transport,  and  to  support  public 
passenger transport and sustainable connections, particularly for rail. The COVID-19 
crisis  has  led  to  additional  challenges  for  freight  and  transit  transport  and  although 
Slovenia  took  the  necessary  action  and  enabled  the  flow  of  goods  -  in  particular 
critical goods, this will have a negative impact on the country’s economic growth. 

(27)  As part of an exit and recovery strategy, it will be important to support investment in 
research  and  innovation,  which  is  a  critical  driver  of  productivity  and  economic 
growth.  Even  before  the  crisis,  Slovenia  was  rated  only  a  ‘moderate  innovator’, 
slowing its efforts to catch up with best performers. The business sector is responsible 
for 75% of spending on R&D. The economic downturn is once again putting business 
R&D and innovation at risk. Relatively low rates of innovation, especially by SMEs, 
slow  down  the  development  and  diffusion  of  innovative  business  processes  and 
solutions, which are called for by the COVID-19 crisis. Investment is needed to help 
innovative SMEs - including startups - whose activities involve emerging technologies 
and  breakthrough  innovations,  to  scale  up  their  production.  Cooperation  between 
academia  and  business  is  mostly  limited  to  the  medium-and  high-tech  sectors.  The 
effectiveness of knowledge transfer offices set up by research organisations and higher 
education  institutions  varies  considerably.  Links  between  academia  and  business  are 
essential  for  successfully  translating  knowledge  into  innovation,  improving  the 
country’s research and innovation performance, and driving economic growth. Public 
spending on R&D was modest, and partly reliant on EU Structural Funds. Recovering 
from  this  crisis  will  require  the  prioritisation  of  public  investment  into  research  and 
innovation, including technological and applied research. 

(28)  Digital transformation will be key to the post-crisis economic recovery. The country’s 
potential  in  this  area  was  illustrated  by  the  fast  rollout  of  teleworking  schemes  and 
online  commerce  solutions  by  some  Slovenian  companies  at  the  start  of  the  crisis. 

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Greater digitalisation in business models and production processes would extend these 
transformations  to  more  sectors  of  economy.  Slovenia  can  build  on  existing 
knowledge and excellent capacities in robotics, artificial intelligence and block chain 
technology  to  support  the  expansion  of  digitalisation  to  less  advanced,  traditional 
industries.  Reusing  the  broad  range  of  public  sector  data  currently  available  could 
support innovation and the big data economy. Improving workers’ digital skills could 
increase  their  employability  relatively  quickly  and  support  the  economic  recovery. 
Introducing user-friendly e-government services and digital public services would help 
further reduce the administrative burden for businesses. While a range of online public 
services are already available, their up-take by individuals and businesses will require 
efforts to increase people’s trust in and security of online transactions (e.g. rollout of a 
national  electronic  identifier,  cyber  security  and  privacy  features).  Fast  and  reliable 
broadband connections (fixed and mobile), including in rural areas, are indispensable 
for  developing  key  online  social  and  economic  services.  Roll  out  of  5G  depends  on 
timely 5G spectrum assignment. 

(29)  Regular classes for all education levels have been replaced by distance learning during 
the  COVID-19  confinement.  Online  learning  requires  adequate  digital  infrastructure, 
education  materials,  and  teachers  with  the  necessary  skills  and  support  to  teach 
effectively.  All  learners,  in  particular  vulnerable  groups,  including  those  with 
disabilities  and  those  from  rural  areas,  need  to  have  adequate  access  to  distance 
learning and decent digital skills to fully benefit from distance learning. Digital skills 
should  feature  more  prominently  in  school  curricula  and  programmes,  to  improve 
workers’ skills. This would allow a broader use of teleworking and digital services, a 
better match of digital skills with the requirements of the labour market, as well as the 
inclusion of vulnerable groups like the elderly or people living in rural areas. 

to  address  medium- 

(30)  While the present recommendations focus on tackling the socio-economic impacts of 
the  pandemic  and  facilitating  the  economic  recovery,  the  2019  country-specific 
recommendations adopted by the Council on 9 July 2019 also covered reforms that are 
essential 
structural  challenges.  Those 
recommendations remain pertinent and will continue to be monitored throughout next 
year’s  European  Semester  annual  cycle.  That  also  applies  to  recommendations 
regarding investment-related economic policies. The latter recommendations should be 
taken  into  account  for  the  strategic  programming  of  cohesion  policy  funding  post-
2020, including for mitigating measures and exit strategies with regard to the current 
crisis. 

long-term 

to 

(31)  The  European  Semester  provides  the  framework  for  continuous  economic  and 
employment  policy  coordination  in  the  Union,  which  can  contribute  to  a  sustainable 
economy.  Member  States  have  taken  stock  of  progress  regarding  United  Nations’ 
Sustainable  Development  Goals  (SDGs)  implementation  in  their  2020  National 
Reform  Programmes.  By  ensuring  the  full  implementation  of  the  recommendations 
below, Slovenia will contribute to the progress towards the SDGs and to the common 
effort of ensuring competitive sustainability in the Union.  

(32)  Close coordination between economies in the economic and monetary union is key to 
achieve  a  swift  recovery  from  the  economic  impact  of  the  COVID-19.  Slovenia 
should,  as  a  Member  State  whose  currency  is  the  euro  –  and  taking  into  account 
political  guidance  by  the  Eurogroup  –  ensure  its  policies  remain  consistent  with  the 
euro area recommendations and coordinated with those of the other euro area Member 
States.  

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(33) 

In  the  context  of  the  2020  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Slovenia’s  economic  policy  and  published  it  in  the  2020 
country  report.  It  has  also  assessed  the  2020  Stability  Programme  and  the  2020 
National  Reform  Programme  and  the  follow-up  given  to  the  recommendations 
addressed  to  Slovenia  in  previous  years.  It  has  taken  into  account  not  only  their 
relevance  for  sustainable  fiscal  and  socioeconomic  policy  in  Slovenia,  but  also  their 
compliance with Union rules and guidance, given the need to strengthen the Union’s 
overall  economic  governance  by  providing  Union-level  input  into  future  national 
decisions.  

(34) 

In  the  light  of  that  assessment,  the  Council  has  examined  the  2020  Stability 
Programme and its opinion9 is reflected in particular in recommendation (1) below, 

HEREBY RECOMMENDS that Slovenia take action in 2020 and 2021 to: 

1. 

2. 

3. 

In  line  with  the  general  escape  clause,  take  all  necessary  measures  to  effectively 
address the pandemic, sustain the economy and support the ensuing recovery. When 
economic  conditions  allow,  pursue  fiscal  policies  aimed  at  achieving  prudent 
medium-term  fiscal  positions  and  ensuring  debt  sustainability,  while  enhancing 
investment. Ensure the resilience of the health and long-term care system, including 
by  providing  the  adequate  supply  of  critical  medical  products  and  addressing  the 
shortage of health workers.   

income  replacement  and  social  protection.  Mitigate 

Provide  adequate 
the 
employment  impact  of  the  crisis,  including  through  enhancing  short-time  work 
schemes  and  through  flexible  working  arrangements.  Ensure  that  these  measures 
provide adequate protection for non-standard workers. 

Continue  to  swiftly  implement  measures  to  provide  liquidity  and  financing  to 
businesses  and  households  and  reduce  administrative  burden.  Front-load  mature 
public investment projects and promote private investment to support the economic 
recovery. Focus investment on the green and digital transition, in particular on clean 
and efficient production and use of energy, environmental infrastructure, sustainable 
transport,  research  and  innovation  and  on  the  rollout  of  the  5G  network.  Promote 
digital  capacities  of  businesses,  and  strengthen  digital  skills,  e-Commerce  and  e-
Health. 

Done at Brussels, 

For the Council 
The President 

9 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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