Ministry of Finance of the Slovak Republic National Reform Programme of the Slovak Republic 2018 April 2018 Table of Contents Summary ....................................................................................................................................................... 4 1 Identification of challenges in the Slovak economy ................................................................................. 6 2 Measures taken in 2017 .......................................................................................................................... 8 3 Macroeconomic framework and medium-term forecast ......................................................................... 19 4 Planned measures in structural topics ................................................................................................... 21 4.1 Fiscal policy and public finance ......................................................................................................22 4.2 Education, science, and innovations ..............................................................................................26 4.2.1 Regional education.........................................................................................................................28 4.2.2 Tertiary schools ..............................................................................................................................29 4.2.3 Research and development ...........................................................................................................30 4.3 Employment, pension scheme, and social inclusion ......................................................................31 4.3.1 Employment ...................................................................................................................................34 4.3.2 Pension scheme .............................................................................................................................36 4.3.3 Social inclusion...............................................................................................................................36 4.4 Health .............................................................................................................................................39 4.5 Modernization of public administration and the business environment ..........................................42 4.5.1 Modernization of public administration ...........................................................................................44 4.5.2 Business environment ....................................................................................................................48 4.6 Transport infrastructure ..................................................................................................................50 4.7 Environmental sustainability and energy sector .............................................................................54 5 EU cohesion policy ................................................................................................................................ 56 6 Institutional framework for the Europe 2020 strategy and NRP ............................................................. 59 Annex 1: National targets under the Europe 2020 Strategy and other indicators ........................................ 60 2 List of Boxes Box 1: Employment rate of mothers in Slovakia ......................................................................................... 35 Box 2: Integration of marginalized Roma communities ................................................................................. 37 Box 3: Effectiveness of local governments ................................................................................................ 43 List of Charts Figure 1: Performance indicators, standard deviation from the sample average (OECD/EU) ......................................... 6 Figure 2: Disaggregation of performance indicators by means of supplementary indicators, standard deviation ........... 6 Figure 3: Contributions to GDP growth in Slovakia, 2011 - 2021 (in pp) ....................................................................... 19 Figure 4: Structure of consumer inflation - y/y accruals of CPI components (in pp) ..................................................... 19 Figure 5: Effective VAT tax rate (%) .............................................................................................................................. 24 Figure 6: Effective corporate income tax rate (%, tax collected from the net operational surplus) ................................ 24 Figure 7: Expenditure on education, 2014 ..................................................................................................................... 26 Figure 8: Wages of primary school teachers as a ratio of average wage of employees with tertiary education (2015) 26 Figure 9: Inputs and outputs of R&D as a percentage of V3 average ........................................................................... 27 Figure 10: PISA testing results (average score) ............................................................................................................ 27 Figure 11: Quarterly unemployment rate (% active population, seasonally adjusted data, LFS) .................................. 31 Figure 12: Long-term unemployment (%, 4Q 2016, 4Q 2017) ...................................................................................... 31 Figure 13: Low-skilled workforce in the labour market (%, 2017) .................................................................................. 32 Figure 14: Education and labour market outcomes of Roma in Slovakia (2016) ........................................................... 32 Figure 15: Relationship between unemployment and the job vacancy rate in time (Beveridge curve) ......................... 33 Figure 16: Indicators of labour market overheating (normalized in %) .......................................................................... 33 Figure 17: Migration balance by country origin (thousands of persons) ........................................................................ 33 Figure 18: Percentage of immigrants in population for the selected OECD countries (%, 2015) .................................. 33 Figure 19: Entrance or return to the labour market after childbirth in months (permanent employment only) ............... 35 Figure 20: Entrance or return to the labour market after childbirth in months (permanent employment and contractual work) .............................................................................................................................................................................. 35 Figure 21: Employment rate with at least 6 months worked in a year (% in the age group of 20 - 64 years) ................ 37 Figure 22: Comparison of participation in the ALMP programmes and the unemployment rate (%) ............................. 37 Figure 23: Participation in pre-primary education (%) ................................................................................................... 38 Figure 24: Results of nationwide testing of fifth grade and ninth grade primary school students (2016, success rates considering the full scores in %) .................................................................................................................................... 38 Figure 25: Public expenditure on healthcare, 2016 (% of GDP) .................................................................................... 39 Figure 26: Amenable mortality, 2015 ............................................................................................................................. 39 Figure 27: Efficiency of healthcare systems of OECD countries ................................................................................... 40 Figure 28: Liabilities of 13 state-run hospitals ............................................................................................................... 40 Figure 29: Scores in the Doing Business ranking (DB 2018 method) ........................................................................... 42 Figure 30: Comparison of areas in the DB ranking (standard deviation from the OECD average) ............................... 42 Figure 31: Disposition time in days, civil and commercial matters, 2014 ...................................................................... 43 Figure 32: Clearance rate in V4, civil and commercial matters in %, 2010-2014 .......................................................... 43 Figure 33: Expenditure of the MTC SR chapter and the organisations set up by the MTC SR on transport (in billions EUR) .............................................................................................................................................................................. 50 Figure 34: Capital expenditure of NDS and Slovak railways + payment for availability in the PPP projects (in billions EUR) .............................................................................................................................................................................. 50 Figure 35: Construction of motorways and highways in Slovakia (in km) ...................................................................... 51 Figure 36: SSC's expenditures (million EUR) and condition of the 1st class roads ...................................................... 51 Figure 37: Municipal waste recycling ratio ....................................................................................................................