2019 OECD ECONOMIC SURVEY OF THE SLOVAK REPUBLIC

Towards an innovative and inclusive society Bratislava, 5th February

@OECD@OECDeconomy

www.oecd.org/economy/surveys/slovak-republic-economic-snapshot

The economy is flourishing

2

3

Growth has been robust

GDP index, volume

Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).

100

110

120

130

140

150

160

170

180

190

2001 2003 2005 2007 2009 2011 2013 2015 2017

SVK CZE HUN POL OECD

4

Public debt is low and stable

Gross public debt, % of GDP

Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).

0

20

40

60

80

100

120

2001 2003 2005 2007 2009 2011 2013 2015 2017

Slovak Republic, Maastricht definition OECD

5

The labour market is strong

The unemployment is at historic lows Unemployment rate (%)

Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).

0

5

10

15

20

25

1995 2000 2005 2010 2015 2020

6

Capacity constraints are beginning to bite

Labour shortages are already limiting productionShare of manufacturing firms pointing to labour shortages as a factor limiting production, (%)

Source: Eurostat, Industry Database.

0

5

10

15

20

25

30

35

40

2012 2013 2014 2015 2016 2017 2018

Diversification and more innovation will help sustain Slovakia’s economic success

7

8

The production is narrowly specialised and based on downstream activities

The economy is specialized in the car production with very little value added

Source: OECD STAN Database.

05

101520253035

SVK

FRA

HUN

ESP

CZE

ITA

POL

SVN

GBR

AUT

DEU

% Domestic value added ratio to gross output

02468

101214

FRA

GBR ITA

AUT

ESP

POL

SVN

DEU

CZE

HUN

SVK

% Share of car production in gross output

9

Slovakia’s employment looks vulnerable to the likely increase in automation

Source:L. Nedelkoska and G. Quintini (2018), “Automation, skills use and training”.

010203040506070

NZL

SWE

USA

GBR

NLD

CAN

BEL

IRL

EST

KOR

ISR

OECD AU

TCZ

EFR

APO

LIT

AES

PSV

NDE

UJP

NTU

RSV

K

%

High risk of automation (>70%)Risk of significant change (50-70%)

More than 60% of jobs are at risk of automation Percent of jobs at risk by degree of risk

10

The Slovak workforce is not sufficiently prepared for the digital transition

Source: OECD (2017), Education at a Glance 2017: OECD Indicators.

0

5

10

15

20

25

30

GRC

POL

SVN IRL

ISR

KOR

SVK

EST

USA

CZE

AUT

OECD

GBR³

DEU

CAN

BEL³

DNK

AUS

NOR

NZL

JPN

NLD

SWE

FIN

%

Proportion of adults having high-level skills 16-65 year olds

11

Improving education outcomes should be a priority

PISA average of mean scores in science, reading and mathematics

Source: OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education.

460

470

480

490

500

510

2006 2009 2012 2015

OECD Slovak Republic

12

Tertiary education needs to improve so fewer students choose to study abroad

Percentage of total tertiary students studying abroad, 2016

Source: OECD (2018), Education at a glance 2018: OECD Indicators.

02468

101214161820

USA

AUS

CHL

JPN

MEX

TUR

DEN

NLD

POL

ESP

GBR

OECD BE

LCA

NIS

RKO

RNZ

ECZ

EFI

NFR

ADE

UHU

N ITA

PRT

SVN

SWE

AUT

GRC

CHE

IRL

LVA

NOR

EST

ISL

SVK

LUX

74

Capacity to innovate and adopt new technologies should be strengthened

13

Innovative large firms High R&D spenders, % of all large businesses (250 employees or more)

Source: OECD (2017), OECD Science, Technology and Industry Scoreboard 2017.

0

20

40

60

80

100

CHL

SVK

HUN

EST

POL

JPN

NZL

TUR

LVA

GBR

AUS

DNK

ESP

CZE

NOR

NLD

FIN

KOR

SWE

LUX

PRT

FRA

ITA

IRL

BEL

GRC

LTU

SVN

CHE

AUT

ISL

DEU

14

Facilitate immigration of skilled workers

Source: OECD International Migration Database.

0

1

2

3

4

5

6

7

OECD average EST CZE HUN SVK

Immigrants in population Net flows, per 1000 inhabitants, 2016

15

Strengthen the quality of public services

Source: Gallup World Poll (database).

Low trust in the judicial system and courtsShare of "yes" answers to the question: Do you have confidence in judicial system and the courts?

0102030405060708090

100

CHL

ITA

SVN

MEX

SVK

PRT

LVA

GRC

ESP

USA

TUR

HUN

POL

CZE

BEL

FRA

OECD IS

RES

TAU

S ISL

CAN

GBR

NLD

JPN

AUT

SWE

NZL

DEU IRL

LUX

FIN

CHE

DNK

NOR

%

16

Recommendation on moving up the global value chain

Increase the time spent on general and digital training in vocational education.

Strengthen initial and continuing teacher training.

Create larger, internationally visible research units and reorient tertiaryeducation funding to foster research at high international standards.

Include research collaboration with innovative companies in the assessment of universities and public research institutions.

Continue to work with the ongoing Council of Europe project on judicial reform, and implement its suggestions.

Accelerate the handling of insolvency procedures.

Lower licensing restrictions for legal services, architects and engineers.

Continue to simplify work visa and residence procedures for highly skilled workers.

Making growth inclusive

17

18

The Slovak Republic has one of the continent's largest Roma populations

Estimated number of Roma in the EU

Note: The shares represent the average of different estimates.Source: Council of Europe, https://www.coe.int/en/web/portal/roma/

0

2

4

6

8

10

12

FRA EU GRC ESP CZE HUN ROM SVK BLG

%

19

Roma face social exclusion in almost every aspect of everyday life

Selected indicators of Roma exclusion

Source: EU (2016), Second European Union Minorities and Discrimination Survey, Roma – Selected findings, European Union,Agency for Fundamental Rights; B. Gavurová et al. (2014), “Meranie zdravia a zdravotných rizík vo vybraných rómskych osadách naSlovensku – fakty a reflexie”, in Nerovnost’ a chudoba v Európskej únii a na Slovensku, 22-24 October, Košice.

General population Roma

At-risk-of-poverty rate (%) 13 87

Employment rate, 20-64, (%) 68 25

NEET rate - neither in work nor in education, aged 16-24, (%) 14 65

Drop-out rate from education, (%) 7 58Share of households living without a toilet, bathroom and shower inside the dwelling 0.6 43Share of households living in areas affected by crime, violence and vandalism 8.7 30

20

Social exclusion is exacerbated by mistrust between Roma and non-Roma groups

Note: Out of all Roma respondents at risk of discrimination on grounds of Roma background in at least one of the domains of daily life asked about in the survey in the past 5 years.Source: EU (2016), Second European Union Minorities and Discrimination Survey, Roma – Selected findings, European Union, Agency for Fundamental Rights.

More than half of the Roma felt discriminated when looking for jobDiscrimination based on Roma background in the past 5 years (%)

0102030405060

Education (self oras parent)

At work Housing Other public/private services

Looking for work

%

21

Roma can be trapped in a cycle of poverty for generations

Probability of ending up in poverty according to parents' economic and ethnic status

Source: OECD calculation based on J. Rizman (2018), "Jablko padá ďaleko od stromu", Institute of Financial Policy, Ministry of Finance of the Slovak Republic, Policy Brief, No. 09.

01020304050607080

General population General population - 5% ofthe poorest households

Roma from concentratedareas

Probability, %

22

Demographic trends underline the importance of Roma integration

Source: Šprocha, B. (2014), Reprodukcia rómskeho obyvateľstva na Slovensku a prognóza jeho populačného vývoja, INFOSTAT –Výskumné demografické centrum.

-2.5 -1.5 -0.5 0.5 1.5 2.51

11

21

31

41

51

61

71

81

91

101A. Roma population by age, 2015

Men Women

-2.5 -1.5 -0.5 0.5 1.5 2.51

11

21

31

41

51

61

71

81

91

101B. Non-Roma population by age, 2015

Men Women

23

Social inclusion of Roma will have positive effect on the economy

Estimated effect of Roma integration by 2060 as a % of GDPIncreasing the Roma employment rate and their productivity to the level of the general population

Source: Geva, A., S. Hidas and G. Machlica (2018), “The benefits of social inclusion of Roma in the Slovak Republic”, Technical background paper, forthcoming.

0

2

4

6

8

10

12

14

Effect on GDP Effects on fiscal revenues

% pts of GDP

24

The education system should become more inclusive

Pre-school attendance is low, especially for RomaShare of children age 4-6 (%) who participate in pre-school education

Source: OECD Family database; EU (2016), Second European Union Minorities and Discrimination Survey, Roma – Selected findings, European Union, Agency for Fundamental Rights

0102030405060708090100

Roma General population EU 2020 target

%

25

Improving living conditions for Roma is key

% of Roma vs Non-Roma living in substandard housing or slums

Source: United Nations Development Programme (2016), Database on vulnerability of Roma based on UNDP/WB/EC Regional Roma Survey 2011 and Pilot survey 2011 conducted by the EU Agency for Fundamental Rights (FRA); EU (2016), Second European Union Minorities and Discrimination Survey, Roma – Selected findings, European Union, Agency for Fundamental Rights.

0

10

20

30

40

50

CZE HUN SVK

Non-Roma Roma

%

26

Access to health care should be bolstered

Infant mortality is high for Roma

Source: MoF (2018), “Spending Review on Groups at Risk of Poverty or Social Exclusion”, Expenditure reviews, (forthcoming); OECD Family database.

0

2

4

6

8

10

12

14

SVN

FIN

JPN ISL

NOR

CZE

EST

SWE

KOR

ESP

LUX

ITA

PRT

AUT

ISR

AUS

DEU IRL

NLD

BEL EU DNK

FRA

CHE

GBR

OECD GR

CPO

LHU

NLT

USV

K, no

n-Ro

ma CAN

NZL

SVK

USA

TUR

SVK,

Rom

aME

X

Deaths per 1000 live births

27

Recommendation on enhancing the social integration of Roma

Give the office of the Plenipotentiary a bigger role in coordinating national policies and ensuring integrated provision of public services to Roma where they live.

Scale up successful EU-funded pilot programmes and ensure sustained financing through the national budget.

Continue expanding the provision of high-quality early education.

Provide more funding for disadvantaged schools and higher salaries for teachers teaching in disadvantaged schools.

Increase the number of teaching assistants speaking Roma, and provide Slovak language support for Roma children.

Expand health-care mediator programmes, with more mediators specialising in maternal health information and preventive check-ups for mothers.

Provide support to formalisation of Roma property rights, including legal, financial and technical support to municipalities and Roma households.

28

For more information

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www.oecd.org/economy/surveys/slovak-republic-economic-snapshot