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2022 OECD Economic Surveys: Slovak Republic 2022

image of OECD Economic Surveys: Slovak Republic 2022

After a deep recession in 2020, economic activity has rebounded. However, supply disruptions and a low vaccination rate are making the future pace of the recovery more uncertain. An ambitious recovery plan and substantial inflows of EU funds provide a unique opportunity to strengthen the economy, but effective and timely implementation will require continued efforts to improve public procurement and public investment management. In the medium-term, rapid population ageing will exacerbate fiscal challenges and weigh on long-term growth. To prepare for an ageing society, pension, health and long-term care, and labour market reforms are needed to extend working lives, improve the health of the ageing population, and enhance the efficiency of public spending. At the same time, population ageing reinforces the need to boost productivity. To reinvigorate the economic convergence process and make growth more inclusive and sustainable, policies to promote adequate skills, foster domestic innovation capacity, and better price environmentally harmful activities are needed.

SPECIAL FEATURE: ADDRESSING THE CHALLENGES FROM POPULATION AGEING

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Tackling the challenges of population ageing

Slovakia’s population is ageing rapidly, with the share of the working-age population expected to shrink by about a fifth in the next 30 years. Ageing-related costs are projected to increase much more strongly than in other EU countries and ageing will put pressure on potential growth and living standards. To prepare for an ageing society, pension, health and long-term care, as well as labour market reforms are needed to extend working lives, improve the health of the ageing population, and enhance the efficiency of public spending. Linking the retirement age to life expectancy and tightening early retirement pathways notably for mothers and disability pensioners is important to extend working lives and improve pension sustainability. Health outcome are lagging behind other OECD countries largely due to high preventable mortality, especially among disadvantaged groups, highlighting the importance of a national strategy to reduce preventable mortality, as well as targeted approaches. Measures are also needed to improve the efficiency of health and long-term care spending, notably through reforming the network of hospitals, expanding central procurement of pharmaceuticals, and expanding the supply of in-home long-term care services. Higher employment of older workers is hampered by a range of labour market barriers, including fewer training opportunities, higher job strain, and a lack of flexible working arrangements. Labour participation of mothers with young children is also low, reflecting excessively long parental leave, low financial work incentives, and a lack of childcare facilities.

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