Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Slovenia
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Slovenia, budget policy, economic and social cohesion, economic policy, economic recovery, economic reform, employment policy, fiscal policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 624 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Slovenia {SWD(2024) 600 final} - {SWD(2024) 624 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies 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 Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29  April  2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3(3) 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) 

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Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic  and  social  recovery  and  implement  sustainable  reforms  and  investment,  in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights.  
The  REPowerEU  Regulation3,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 
security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 

the  Recovery  and  Resilience  Facility 

OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
(OJ  L  57,  18.2.2021,  p.  17),  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1), ELI: http://data.europa.eu/eli/reg/2023/435/oj. 

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(3) 

(4) 

(5) 

renewables,  energy  storage  capacities  and  energy  efficiency.  Slovenia  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’4, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market  emerge  as  paramount  policy  priorities  for  reform  and  investment  to  address 
current productivity challenges as well as to build up the long-term competitiveness of 
the EU and its Member States.  On 14 February  2024, the Commission  followed this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report5.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified.   

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey6, marking the start of the 2024 cycle of the European Semester for economic 
policy coordination. The European Council endorsed the priorities of the 2024 Annual 
Sustainable  Growth  Survey  around  the  four  dimensions  of  competitive  sustainability 
on 22 March 2024. On 21 November 2023, the Commission also adopted an opinion 
on  the  2024  Draft  Budgetary  Plan  of  Slovenia.  The  Commission  also  adopted  a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which was adopted on 12 April 2024 by the Council, as well as the proposal for 
the 2024 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 11 March 2024.  

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States7.  The  objectives  of  the 
new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual  fiscal consolidation  as  well as reforms  and  investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 
commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 

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COM(2023) 168 final. 
COM(2024) 77 final. 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 
29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 

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depending on the regular length of the national legislature. The net expenditure8 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) No 2024/1263, including the requirements to put or 
keep  general  government  debt  on  a  plausibly  downward  path  by  the  end  of  the 
adjustment period at the latest, or for it to remain at prudent levels below 60% of GDP, 
and to bring and/or maintain the government deficit below the 3% of GDP reference 
value  over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of 
reforms and investments in accordance with the criteria set out in Regulation (EU) No 
2024/1263, the adjustment period may be extended by 3 years at most. For the purpose 
of supporting the preparation of those plans, on [21 June] 2024, the Commission is set 
to  provide  Member  States  with  guidance  on  the  content  of  the  plans  and  the 
subsequent  annual  progress  reports  that  they  will  need  to  submit  and,  in  accordance 
with  Article  5  of  Regulation  (EU)  No  2024/1263,  will  transmit  to  them  technical 
guidance  on  the  fiscal  adjustments  (reference  trajectories  and  technical  information 
where  applicable).  Member  States  should  submit  their  medium-term  fiscal-structural 
plans by 20 September 2024, unless the Member State and the Commission agree to 
extend the deadline by a reasonable period of time. Member States should ensure the 
involvement  of  their  national  parliaments,  and  the  consultation  of  independent  fiscal 
institutions, of social partners and other national stakeholders, as appropriate. 

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  country-
specific  recommendations  remain  equally  relevant  also  for  recovery  and  resilience 
plans  revised,  updated  or  amended  in  accordance  with  Articles  14,  18  and  21  of 
Regulation (EU) 2021/241.  

On 30 April 2021, Slovenia submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 20 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery  and  resilience  plan  for  Slovenia9,  which  was  amended  on  17  October  2023 
following Article 11(2) of Regulation (EU) 2021/241 to update the maximum financial 
contribution for non-repayable financial support, as well as to include the REPowerEU 
chapter10. The release of instalments is conditional on a decision by the Commission, 
taken in accordance with Article 24(5) of Regulation (EU) 2021/241, that Slovenia has 

(6) 

(7) 

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Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024 (OJ L 
2024/1263,  30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).  Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 
Council Implementing Decision of 20 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Slovenia (10612/21). 
Council Implementing Decision of  16 October 2023 amending the Implementing Decision of  20 July 
2021 on the approval of the assessment of the recovery and resilience plan for Slovenia (13615/1/23). 

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(8) 

(9) 

the 

satisfactorily  fulfilled  the  relevant  milestones  and  targets  set  out  in  the  Council 
Implementing  Decision.  Satisfactory  fulfilment  presupposes  that  the  achievement  of 
preceding milestones and targets has not been reversed. 
The Commission published the 2024 country report for Slovenia11 on 19 June 2024. It 
relevant  country-specific 
in  addressing 
assessed  Slovenia’s  progress 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
Slovenia’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  Slovenia’s  progress  on  implementing 
the  European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  
Based  on  data  validated  by  Eurostat12,  Slovenia’s  general  government  deficit 
decreased from 3.0% of GDP in 2022 to 2.5% in 2023, while the general government 
debt  fell  from  72.5%  of  GDP  at  the  end  of  2022  to  69.2%  at  the  end  of  2023.  As 
announced in the fiscal policy guidance for 2024 13, the Commission is taking the first 
step for the opening of deficit-based excessive deficit procedures, in line with existing 
legal  provisions.  On  19  June  2024,  the  Commission  adopted  a  report  under  Article 
126(3) of the TFEU 14. That report assessed the budgetary situation of Slovenia, as its 
planned  general  government  deficit  in  2024  exceeds  the  reference  value  of  3%  of 
GDP. The report concluded that in the light of this assessment, and after considering 
the  opinion  of  the  Economic  and  Financial  Committee  as  established  under  article 
126(4)  TFEU,  the  Commission  intends  to  not  propose  in  July  to  open  an  excessive 
deficit procedure for Slovenia. 

(10)  On  12  July  2022,  the  Council  recommended  that  Slovenia  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance15,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people fleeing Ukraine. Slovenia was recommended to adjust current spending to the 
evolving  situation.  Slovenia  was  also  recommended  to  expand  public  investment  for 
the  green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. In 2023, according to the Commission estimates,  the 
fiscal stance16 was contractionary, by 0.5% of GDP, in a context of high inflation. The 

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SWD(2024) 624 final. 
Eurostat-Euro Indicators, 22.4.2024 
COM(2023) 141 final. 
Report  from  the  Commission,  prepared  in  accordance  with  Article  126(3)  of  the  Treaty  on  the 
Functioning of the European Union, 19.6.2024, COM(2024)598 final. 
Based on the Commission Spring 2024 Forecast, the medium-term potential output growth of Slovenia 
in 2023, which is used to measure the fiscal stance, is  estimated at 11.5% in nominal terms, based on 
the 10-year average real potential growth rate and the 2023 GDP deflator. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from the Recovery and Resilience Facility and other Union funds. 

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growth  in  nationally  financed  primary  current  expenditure  (net  of  discretionary 
revenue measures) in 2023 provided a contractionary contribution to the fiscal stance 
of  0.4%  of  GDP.  This  includes  the  reduced  cost  of  the  targeted  emergency  support 
measures to  households  and firms  most vulnerable to  energy price hikes  by 0.3% of 
GDP. The growth of nationally financed primary current expenditure in 2023 was in 
line  with  the  Council  recommendation.  Expenditure  financed  by  Recovery  and 
Resilience  Facility  grants  and  other  EU  funds  amounted  to  1.3%  of  GDP  in  2023. 
Nationally  financed  investment  amounted  to  4.6%  of  GDP  in  2023,  representing  an 
annual  decrease  of  0.2  percentage  points  as  compared  to  2022.  Slovenia  financed 
additional  investment  through  the  Recovery  and  Resilience  Facility  and  other  EU 
funds.  Slovenia  financed  public  investment  for  the  green  and  digital  transitions,  and 
for energy security, for example in railway infrastructure, renewable sources of energy 
and  prevention  of  natural  disasters,  which  are  partly  funded  by  the  Recovery  and 
Resilience Facility and other EU funds. 

(11)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  2.3%  in  2024 
and 2.6% in 2025, and HICP inflation to stand at 2.8% in 2024 and 2.4% in 2025. 

(12)  The Commission Spring 2024 Forecast projects a government deficit of 2.8% of GDP 
in 2024, while the general government debt-to-GDP ratio is set to decrease to 68.1% 
by the end of 2024. The increase of the deficit in 2024 mainly reflects higher public 
investment,  including  nationally-financed  expenditure  for  post-flood  reconstruction, 
and  indexation  of  social  benefits,  while  it  is  partly  offset  by  a  decline  in  subsidies, 
withdrawal  of  revenue-decreasing  measures  to  mitigate  the  impact  of  high  energy 
prices  and  a  temporary  increase  in  corporate  income  tax  rate.  Based  on  the 
Commission’s estimates, the fiscal stance is projected to be contractionary by 0.2% of 
GDP in 2024. 

(13)  Expenditure amounting to 0.7% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.2%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast. 
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of Slovenia. Expenditure amounting to 0.4% of 
GDP is expected to be backed by loans from the Recovery and Resilience Facility in 
2024, compared to 0.1% of GDP in 2023, according to the Commission Spring 2024 
Forecast. 

(14)  On  14  July  2023,  the  Council  recommended17  that  Slovenia  ensure  a  prudent  fiscal 
policy,  in  particular  by  limiting  the  nominal  increase  in  net  nationally  financed 
primary  expenditure18  in  2024  to  not  more  than  5.5%.  When  executing  their  2023 
budgets  and  preparing  their  Draft  Budgetary  Plans  for  2024,  Member  States  were 
invited  to  take  into  account  that  the  Commission  would  propose  to  the  Council  the 
opening of the deficit-based excessive deficit procedures based on the outturn data for 
2023.  According  to  the  Commission  Spring  2024  Forecast,  Slovenia’s  net  nationally 

17 

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Council  Recommendation  of 14 July 2023 on the 2023 National Reform Programme  of Slovenia and 
delivering a Council opinion on the 2023 Stability Programme of Slovenia, OJ C 312, 1.9.2023, p. 224. 
Net primary expenditure is defined as nationally financed expenditure net of  (i) discretionary revenue 
measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and 
other temporary measures. 

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financed  primary  expenditure  is  projected  to  increase  by  5.6%  in  202419,  which  is 
above  the  recommended  maximum  growth  rate.  This  excess  spending  over  the 
recommended  maximum  growth  rate  in  net  nationally  financed  primary  expenditure 
corresponds to less than 0.1% of GDP in 2024. This risks being not fully in line with 
what was recommended by the Council.  

(15)  Moreover,  the  Council  recommended  that  Slovenia  take  action  to  wind  down  the 
emergency energy support measures in  force, using the  related savings to  reduce the 
government  deficit,  as  soon  as  possible  in  2023  and  2024.  The  Council  further 
specified  that,  should  renewed  energy  price  increases  necessitate  new  or  continued 
support  measures,  Slovenia  should  ensure  that  these  were  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings. According to the Commission Spring 2024 Forecast, the net budgetary 
cost20 of emergency energy support measures is estimated at 1.4% of GDP in 2023 and 
projected at 0.1% in 2024, and 0.0% in 2025. In particular, compensation for suppliers 
of gas and electricity sold at administratively set prices is assumed to remain in force 
in  2024,  albeit  with  a  minor  impact.  If  the  related  savings  were  used  to  reduce  the 
government deficit, as recommended by the Council, these projections would imply a 
fiscal  adjustment  of  1.3%  of  GDP  in  2024,  whereas  net  nationally  financed  primary 
expenditure21  provides  a  contractionary  contribution  to  the  fiscal  stance  of  0.1%  of 
GDP in that year. The emergency energy support measures are projected to be wound 
down  as  soon  as  possible  in  2023  and  2024.  This  is  in  line  with  what  was 
recommended  by  the  Council.  However,  the  related  savings  are  not  projected  to  be 
fully  used  to  reduce  the  government  deficit.  This  risks  being  not  in  line  with  the 
Council recommendation.  

(16) 

In addition, the Council also recommended that Slovenia preserve nationally financed 
public  investment  and  ensure  the  effective  absorption  of  Recovery  and  Resilience 
Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally  financed 
public investment is projected to increase to 5.3% of GDP in 2024 (from 4.6% of GDP 
in 2023). This is in line with what was recommended by the Council. In turn, public 
expenditure  financed  from  revenues  from  EU  funds,  including  Recovery  and 
Resilience Facility grants, is expected to remain stable at 1.3% of GDP in 2024 from 
1.3% of GDP in 2023. 

(17)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects  a  government 

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21 

This takes into account 0.7% of GDP one-off measures in 2024, relating to short term emergency costs 
for reconstruction after floods in August 2023 (as well as  0.4% of GDP in 2023, relating to the same 
cause). In addition, the EU Solidarity Fund is projected to provide 0.15% of GDP of emergency costs in 
2023, 0.3% of GDP in 2024 and 0.15% of GDP in 2025. On 14 July 2023, the Council also referred to 
the devastating floods that hit Italy in May 2023 and agreed that the cost of direct emergency support 
related  to  those  floods  would  be  taken  into  account  in  subsequent  assessments  of  compliance  and 
would,  in  principle,  be  considered  as  one-off  and  temporary  measures.  A  similar  approach  has  been 
followed with regard to the devastating floods that hit Slovenia in August 2023. 
The figure represents the level of the annual budgetary cost of those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 
This contribution is measured as the change in general government primary expenditure, net of (i) the 
incremental  budgetary  impact  of  discretionary  revenue  measures,  (ii)  one-offs,  (iii)  cyclical 
unemployment  expenditure  and  (iv)  expenditure  financed by  non-repayable  support  (grants)  from  the 
Recovery  and  Resilience  Facility  and  other  EU  funds,  relative  to  the  medium-term  (10-year)  average 
potential nominal GDP growth rate, expressed as a ratio to nominal GDP. 

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deficit of 2.2% of GDP in 2025. The decrease of the deficit in 2025 mainly reflects an 
introduction  of  a  new  long-term  care  contribution,  to  be  levied  as  from  July  2025, 
which is projected to increase social contributions by around 0.4% of GDP. Gradually 
lower expenditure for post-flood reconstruction will impact public investment, which 
is  projected  to  decline  by  0.4  percentage  points  to  5.4%  of  GDP.  The  general 
government debt-to-GDP ratio is set to decrease to 66.4% by the end of 2025. 

(18)  A substantial increase in ageing costs is projected for Slovenia, resulting in increases 
in  spending  on  healthcare,  long-term  care  and  pensions  in  the  next  decades.  The 
recovery  and  resilience  plan  already  contains  several  measures  to  support  the  fiscal 
sustainability. Beyond the plan, it would be important to monitor spending to ensure 
the adequacy and fiscal sustainability of social protection. Spending reviews could be 
used to identify areas of lower priority or inefficient spending.  Freed up funds could 
then  be  reallocated  to  address  new  fiscal  challenges,  including  in  the  area  of  social 
protection.  To  ensure  that  spending  becomes  more  effective,  it  would  be  crucial  for 
follow-up  measures  to  be  implemented  swiftly  and  to  be  consistent  with  ongoing 
structural reforms. 

(19)  Slovenia’s  tax-to-GDP  ratio  remains  below  the  EU  average  and  its  composition  not 
very growth-friendly. The top personal income tax bracket and the labour tax wedge 
for various income levels  remain  among  the highest  in  the  EU while property taxes, 
including  recurrent  property taxes,  remain very low, with  a share below  half  the EU 
average. Reducing the labour tax wedge would bring down labour costs, boost labour 
demand  and  improve  competitiveness.  Higher  net  wages  could  boost  labour  supply. 
Although  the  share  of  environmental  tax  revenue  is  above  the  EU  average,  the  tax 
system  could  be used to further promote green objectives,  including  by applying the 
‘polluter pays’ principle.   

(20)  Public investment in Slovenia is above the EU average and it has increased over the 
last few years. However, its effectiveness and efficiency could be improved by better 
coordinating  the  planning  for  public  investment  across  sectors  and  ministries.  A 
coherent set of long-term planning documents and an integrated medium-term plan for 
potential  investments  would  also  be  tools  to  improve  the  efficiency  of  public 
investment, including the prioritisation of projects in line with national and European 
priorities.  This  would  also  help  increase  the  country’s  growth  potential  and  fiscal 
sustainability. 

(21) 

this 

tight 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant country-specific recommendations, as well as its national energy and climate 
plan.  Within 
the  effective 
implementation  of  the  plan,  including  the  REPowerEU  chapter,  is  essential  to  boost 
Slovenia’s  long-term  competitiveness  through  the  green  and  digital  transition,  while 
ensuring social fairness.  To deliver on the commitments of the plan by August 2026, 
it is essential for Slovenia to continue the implementation of reforms and to accelerate 
investments  by  addressing  emerging  delays  while  ensuring  strong  administrative 
capacity. The systematic involvement of local and regional authorities, social partners, 
civil  society  and  other  relevant  stakeholders  remains  essential  to  ensure  broad 
ownership for the successful implementation of the recovery and resilience plan.  

timeframe,  proceeding  swiftly  with 

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(22)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article  18  of  Regulation  (EU)  2021/1060,  Slovenia  is  required  to  review  each 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  Slovenia  has  made  progress  in  implementing 
cohesion  policy  and the  European Pillar of Social  Rights,  but  challenges  remain  and 
pronounced disparities persist between the capital  region  and the rest  of the country. 
Accelerating  the  implementation  of  cohesion  policy  programmes  and  strengthening 
administrative capacity at national and regional level is crucial. The priorities agreed 
in the programmes are still relevant. Beyond the administrative capacity measures, it is 
particularly  important  to  continue  green  investments,  especially  flood  protection  and 
climate  change  mitigation  measures,  prioritising  nature-based  solutions.  It  is  equally 
important to continue investments in sustainable transport to reduce the heavy reliance 
on  passenger-car  commuting.  The  implementation  of  the  territorial  just  transition 
plans, supporting the coal phase-out, remains key. Public-private R&D partnerships to 
increase  labour  productivity  remain  pertinent.  Furthermore,  it  is  important  to  foster 
adult learning, including in digital and green skills, and active labour market policies, 
while modernising and digitalising social and labour market services. It is a priority to 
accelerate  deinstitutionalisation  and  development  of  quality,  adequate  and  affordable 
community-based  social  services,  in  particular  long-term  care,  to  support  social 
inclusion.  Slovenia  could  also  make  use  of  the  Strategic  Technologies  for  Europe 
Platform  initiative  to  boost  investments  in  the  development  and  manufacturing  of 
clean  and  resource-efficient  technologies,  in  particular  in  the  renewable  energy  and 
heating sector.  

(23)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Slovenia  faces  several  additional  challenges  related  to  the 
sustainability  of  its  public  finances,  skills  and  labour  shortages  as  well  as  scarce 
venture capital investment and investments in R&D and innovation. 

(24)  The  2022  Programme  for  International  Student  Assessment  (PISA)  test  revealed  a 
significant deterioration of basic skills (in particular in reading and mathematics). The 
increase in  the share of  low-performing  15-year-old  students and the decrease  in  top 
performers in mathematics and reading can adversely impact Slovenia’s skills supply 
and  competitiveness  in  the  future.  The  ongoing  reform  of  the  school  curricula  could 
also  include  measures  helping  to  strengthen  basic  skills  alongside  green  and  digital 
skills,  language  learning  and  improving  entrepreneurial  and  financial  competences, 
furthermore the teacher profession could be made more attractive.  

(25)  Based  on  the  Commission’s  business  confidence  survey22,  business  managers  in 
Slovenian  industry  have  been  reporting  labour  shortages  as  a  very  strong  factor 
limiting activity since mid-2021. Vacancy rates are also significantly higher than the 
EU  average.  Despite  measures  taken  under  the  recovery  and  resilience  plan,  there  is 
still  a  significant  backlog  of  foreign  workers’  applications,  due  to  excessively 
cumbersome legal requirements. Labour and skills shortages are already holding back 
investment  and  production,  especially  in  industry.  They  also  hinder  the  smooth 
provision  of  services including  of healthcare and long-term  care. Therefore, to boost 
competitiveness and  growth, it is  key to  increase labour supply, including  by further 

22 

Time series - European Commission (europa.eu) 

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stimulating  labour  market  participation,  attract  workers  from  non-EU  countries,  and 
strengthen the integration of migrant workers into the labour market and society.  

(26)  Public  research  expenditure,  non-research  innovation  expenditure  by  companies  and 
innovation  expenditure  per  employee  are  still  relatively  low  in  Slovenia.  Venture 
capital  investment relative to  GDP is  also  low, especially  when compared to  the EU 
average, adversely affecting business dynamism and therefore companies’ innovation 
and  growth  capacity.  This,  in  turn,  hinders  Slovenia’s  competitiveness.  Further 
improving  the  conditions  for  venture  capital  could  help  attract  more  foreign  capital 
and help innovative start-ups to scale up.  

(27) 

In view of the close interlinkages between the economies of euro area Member States 
and of their collective contribution to the functioning of the Economic and Monetary 
Union,  in  2024  the  Council  recommended  that  the  euro  area  Member  States  take 
action,  including  through  their  recovery  and  resilience  plans,  to  implement  the 
recommendation  on 
the  euro  area.  For  Slovenia, 
recommendations  (1),  (2)  and  (3)  help  implement  the  first,  second,  third  and  fourth 
euro area recommendations. 

the  economic  policy  of 

HEREBY RECOMMENDS that Slovenia takes action in 2024 and 2025 to:  

1. 

2. 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  In  line  with  the 
requirements  of  the  reformed  Stability  and  Growth  Pact,  limit  the  growth  in  net 
expenditure23 in 2025 to a rate consistent with putting the general government debt 
on  a  plausibly  downward  trajectory  over  the  medium  term  and  maintaining  the 
general government deficit below the 3% of GDP Treaty reference value. Ensure the 
fiscal  sustainability  of  social  protection  and  rebalance  tax  revenues  towards  more 
growth-friendly  and  sustainable  sources.  Improve  the  efficiency  of  public  spending 
by  carrying  out  spending  reviews  and  through  better  management  of  public 
investment.  

Strengthen administrative capacity to manage EU funds, accelerate investments and 
maintain momentum in the implementation of reforms. Address emerging delays to 
allow  for  continued,  swift  and  effective  implementation  of  the  recovery  and 
resilience  plan,  including  the  REPowerEU  chapter,  ensuring  completion  of  reforms 
and  investments  by  August  2026.  Accelerate  the  implementation  of  the  cohesion 
policy programmes. In the context of their mid-term review, continue focusing on the 
agreed  priorities,  while  considering  the  opportunities  provided  by  the  Strategic 
Technologies for Europe Platform initiative to improve competitiveness. 

23 

According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  ‘net  expenditure’  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

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3. 

Strengthen  competitiveness  by  boosting  skills  levels  further,  ensuring  that  the 
ongoing  curricula  reform  also  helps  strengthen  basic  skills,  by  addressing  labour 
shortages,  and  by  promoting  business  dynamism  and  the  creation  of  high-growth 
companies  by  improving  the  conditions  for  venture  capital  investment  and 
institutional  investors  as  well  as  investments  in  research,  development  and 
innovation. 

Done at Brussels, 

For the Council 
The President 

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