OECD ECONOMIC SURVEY OF SLOVENIA 2017

1 OECD ECONOMIC SURVEY . OF SLOVENIA 2017 . Boosting investment through better skills and regulation Ljubljana, 5 September 2017 . @OECD economy The economy is rebounding after a long recession 2. Growth is strengthening Quarterly GDP (Y-o-Y changes). 10. Contribution of domestic demand (percentage points) Real GDP growth (%). 8. 6. 4. 2. 0. -2. -4. -6. -8. -10. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 . Source: OECD Analytical Database. 3. Income convergence has resumed Income/capita gap to the upper half of OECD countries %. - 30. - 40. - 50. - 60. SVN CZE HUN POL SVK. - 70. 2006 2008 2010 2012 2014 2016. Source: OECD Analytical Database.

2 4. The unemployment rate is declining % of labour force aged 15-64. 15. 12. 9. 6. 3. 0. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 . Source: OECD Employment and Labour Market Statistics (database). 5. Well-being is high OECD Better Life Index (higher is better). SLOVENIA OECD Income and wealth 10. Subjective well-being Jobs and earnings 8. 6. Personal security 4 Housing 2. 0. Environmental quality Work and life balance Civic engagement and Health status governance Social connections Education and skills Source: OECD (2016), Better Life Index database 6. Income inequality is low Income redistribution (90/10 ratio of the average income of the top decile to that of the bottom decile), latest available data Ratio 60.

3 90/10, before redistribution 90/10, after redistribution 50. 40. 30. 20. 10. 0. KOR. POL. GBR. ISR. ISL. NLD. LTU. DEU. CAN. FIN. LUX. AUT. IRL. PRT. USA. NOR. ITA. SWE. GRC. CZE. FRA. TUR. SVN. DNK. CHE. LVA. CHL. BEL. SVK. EST. ESP. Source: Calculations based on the OECD Income Distribution Database 7. Bolstering investment is key for higher productivity Total investment, as a percentage of GDP. 35. SLOVENIA Hungary Czech Republic Poland Slovak Republic 30. 25. 20. 15. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016. Source: OECD, Analytical database 9. Firms are facing increasing labour shortages % of firms reporting labour shortages 40.

4 SVN EU28 Euro area 35. 30. 25. 20. 15. 10. 5. 0. 2009 2010 2011 2012 2013 2014 2015 2016 2017 . Source: Eurostat, Industry database. 10. Businesses face a heavy regulatory burden Product market regulation indicator, index scale of 0 6 from least to most restrictive, latest available data Index KOR. ISR. JPN. ISL. POL. GBR. OECD. CAN. LUX. NLD. FIN. DEU. PRT. AUT. ITA. AUS. IRL. NOR. GRC. MEX. SWE. CZE. TUR. HUN. FRA. NZL. BEL. ESP. CHE. CHL. SVN. DNK. SVK. EST. Source: OECD PMR indicators database. 11. Securing fiscal sustainability 12. Gross public debt is now declining % of GDP. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016. Source: OECD. 13. The fiscal deficit is still falling % of GDP.

5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016. Source: OECD. 14. Ageing endangers fiscal sustainability General government gross debt, % of GDP. 200. Balanced budget scenario 1 % of GDP deficit Without offsetting ageing-related costs 180. 160. 140. 120. 100. 80. 60. 40. 20. 0. 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051 2054 2057 2060. Source: OECD calculations based on OECD ( 2017 ), OECD ECONOMIC Outlook: Statistics and 15. Projections (database), December; OECD ( 2017 ), Main ECONOMIC Indicators. Key fiscal and spending recommendations The government should pursue its 2020 fiscal balance objective, and preferably frontload consolidation to avoid overheating.

6 It should also maintain spending ceilings, pursue efficiency improvement and adjust the structure of public spending to avoid a renewed increase in public debt. Faster, well thought-out privatisation would reduce public debt and the high level of contingent liabilities. Pension system: Raise the effective and statutory retirement ages. Cover shortfalls through additional contributions and lower pension indexation. Increase incentives to work longer. Health-care system: Allow hospitals to adjust their health services to changing demand, by including multi-year investments and allowing them to keep cost savings. 16. Raising wages and living standards by investing in capital and skills 17.

7 Long-term unemployment remains high Share of long-term unemployed (over one year) in total unemployment %. 70. 60 SVN OECD EU28. 50. 40. 30. 20. 10. 0. 2000. 2001. 2002. 2003. 2004. 2005. 2006. 2007. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. Source: OECD, Labor Force SURVEY - Sex and Age composition database 18. Older workers retire early, undermining inclusiveness Employment rate for older workers (aged 55-64), 2016. %. 90. 80. 70. 60. 50. 40. 30. 20. 10. 0. POL. KOR. ISR. ISL. GBR. OECD. JPN. LUX. AUT. ITA. PRT. NLD. FIN. CAN. USA. AUS. DEU. GRC. MEX. IRL. NOR. SWE. TUR. HUN. FRA. CZE. NZL. SVN. BEL. SVK. ESP. LVA. CHL. EST. DNK. CHE. Source: OECD, Labor Force SURVEY - Sex and Age composition database 19.

8 Older workers have low literacy skills Mean literacy and numeracy proficiency scores for 55 65 year-olds, 2015. Score Literacy Numeracy 300. ITA. 250. 200. 150. 100. 50. 0. ISR. KOR. POL. OECD. JPN. ITA. AUT. DEU. FIN. CAN. NLD. GRC. IRL. UK2. AUS. USA. UK1. NOR. TUR. FRA. SWE. CHL. SVN. NZL. ESP. DNK. CZE. BEL. EST. SVK. Source: OECD, SURVEY of Adult skills(PIAAC), Table (L) and (N). 20. Better tertiary educational outcomes will boost investment in skill-intensive sectors Mean literacy and numeracy proficiency scores for adults with tertiary education, 2015. Score Literacy Numeracy 350. 300. 250. 200. 150. 100. 50. 0. ISR. KOR. OECD. POL. CAN. JPN. ITA. DEU. NLD. GRC. IRL. UK2.

9 UK1. AUT. USA. AUS. FIN. NOR. TUR. SWE. CHL. FRA. ESP. SVN. EST. DNK. NZL. CZE. SVK. BEL. Source: OECD, SURVEY of Adult skills(PIAAC), Table (l) and (N). 22. Key recommendations in the labour market and skills development Improve general skills of vocational students through use of problem-based learning, combined with retraining of teachers. Raise the work-experience content of technical programmes. Increase training to help long-term unemployed to re-enter the labour market. Improve life-long learning by using adult training vouchers or tax credits to increase training opportunities. Eliminate the legal requirement that wages increase automatically with age. Harmonise the maximum duration of unemployment benefit across age groups.

10 Link university funding to students' labour market outcomes. Equalise tuition fees for full- and part-time students on a per course basis, coupled with grants and loans for those from poor families. 23. Fostering productivity by improving regulation and enhancing competition 24. Regulatory quality could be improved 4. Transparency of ex post evaluation Best Systematic adoption of ex post evaluation 3. Oversight of ex post evaluation Methodology of ex post evaluation 2. Worst 1. 0. ISR. KOR. GBR. ISL. POL. EU. CAN. DEU. JPN. NLD. LUX. AUT. AUS. PRT. ITA. MEX. USA. FIN. NOR. SWE. GRC. IRL. NZL. CHE. TUR. FRA. HUN. DNK. EST. BEL. CZE. CHL. SVN. SVK. ESP. Source: 2014 Regulatory Indicators SURVEY results 25.