A successful transition followed by rapid catching-up with the EU average has permitted Slovenia to increase employment over the past decade. The overall employment rate is now close to the Lisbon target of 70%. Human resources have been largely reallocated towards more productive activities, not least within a manufacturing sector that is still large by OECD standards, and which has become increasingly export-oriented.

Nevertheless, young people continue to face high barriers to entering the labour market, largely reflecting the difficulty of combining education with work. For older workers, low employment and a high incidence of long-term unemployment remains a structural problem. A better integration of both young and older workers in the labour market will be especially important to help deal with a rapidly ageing population. However, the combination of a well-developed safety net and a moderately progressive tax system results in low overall income inequality, thus attenuating the rather wide wage inequality that is related to differences in human capital.