1. The 2015 OECD Economic Survey of Slovenia report finds that while well-being is high in Slovenia, recovery from the crisis has been slow with long-term unemployment becoming entrenched. 2. Banking and corporate sector restructuring remains incomplete and public debt has risen steeply. Numerous rigidities in the labour market and product markets also hinder adjustment. 3. The report recommends further enhancing the role of the bank asset management company, increasing active labour market policies, fiscal and pension reforms, and continuing structural reforms to privatize companies and ease business regulations to boost growth.

1. www.oecd.org/eco/surveys/economic-survey-slovenia.htm
2015 OECD ECONOMIC
SURVEY OF SLOVENIA
Return to stronger growth
Ljubljana, Monday 4th May 2015
OECD
OECD Economics

2. Well-being is high
1. Each well-being dimension is measured by one to four indicators from the OECD Better Life Index set. Normalised indicators are averaged with equal
weights. Indicators are normalised to range between 10 (best) and 0 (worst) according to the following formula: (indicator value - minimum value) /
(maximum value - minimum value) x 10.
Source: OECD (2014), OECD Better Life Index, www.oecdbetterlifeindex.org.
0
2
4
6
8
10
Income and wealth
Jobs and earnings
Housing
Work and life balance
Health status
Education and skillsSocial connections
Civic engagement and governance
Environmental quality
Personal security
Subjective well-being Slovenia OECD
Well-being outcomes: Better Life Index
From 0 (worse) to 10 (best), 2014¹
2

3. Slovenia grew rapidly until 2008, but the
crisis hit hard
Source: OECD Economic outlook 96 database.
90
110
130
150
170
190
210
230
250
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Index, 1991 = 100
GDP in volume
Slovenia Czech Republic Euro periphery
Poland Hungary
3

4. Recovery has been slow - bank credit to the
private sector is still falling
Source: ECB Statistical Data Warehouse.
-20
-15
-10
-5
0
5
10
15
Y-o-y % change
Credit growth
Slovenia - Enterprises Slovenia - Households
EA - Enterprises EA - Households
4

5. Unemployment is becoming entrenched and
has increased among the young
1. Unemployed of one year or more as a percentage of total unemployment, 2007 and 2013. Countries are shown in ascending order of the incidence
of long-term unemployment in 2013. Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted
average of 33 OECD countries excluding Chile.
2. Data are seasonally adjusted and refer to the unemployment rate of individuals aged 15-24.
Source: OECD calculations based on quarterly national labour force surveys, for Panel A; and OECD Short-Term Labour Market Statistics database, for
Panel B.
0
10
20
30
40
50
60
70
80
KOR
MEX
NOR
NZL
CAN
ISR
SWE
AUS
FIN
ISL
AUT
TUR
DNK
USA
LUX
CHE
G7
OECD
NLD
GBR
POL
FRA
JPN
EST
DEU
CZE
BEL
EU28
ESP
HUN
SVN
PRT
ITA
IRL
SVK
GRC
%
A. Long term unemployment, 2013¹
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014
%
B. Youth unemployment rate²
5

6. 0
10
20
30
40
50
60
70
80
90
100
2006 2007 2008 2009 2010 2011 2012 2013 2014
% of GDP
Gross public debt, Maastricht criterion
Public debt has risen steeply
Source: OECD Economic outlook 96 database.
6

7. Numerous rigidities hinder adjustment
Note: the numerical PMR indicators represent the stringency of regulatory policy in specific areas on a scale of 0 to 6 with a higher number indicating a
policy stance that is deemed less conducive to competition. In each case, it characterises the stance of regulation as it stood in early 2013 and does not
reflect the reforms implemented since then.
Source: OECD PMR indicators database.
0
0.5
1
1.5
2
2.5
Netherl…
United…
Austria
Denmark
New…
Italy
Australia
Estonia
Finland
Germany
Portugal
Hungary
Slovak…
Belgium
Czech…
Japan
Canada
Spain
Ireland
Luxemb…
Norway
France
OECD
Iceland
Switzerl…
Chile
Sweden
Poland
Slovenia
Greece
Korea
Mexico
Israel
Overall Product Market Regulation (PMR) indicator, 2013
7

8. Recent reform efforts will help growth
The impact of recent structural reforms on GDP over 10 years
GDP
Via Employment
growth
Via Productivity
growth
Impact on GDP growth over the horizon of 10 years (in %)
Product Market Reform 1.3 1.3
Labour Market Reform
Employment Protection Legislation 0.3 0.3
Pension reform 0.4 0.4
Total 2.0 0.4 1.6
1. OECD estimates for the impact of product market reform include changes to the product market regulation (PMR) as captured by the change in
the OECD PMR indicator between 2008-2013, announced privatisations and reforms via EU commitments. The 2008-2013 change in the PMR is
assumed to start having an effect on growth two years before other reforms.
2. Impact on the labour market reform is assessed via the effect of the change in the employment protection legislation (EPL) on growth. Effect of
the pension reform is based on a judgement and assesses the effect on employment via increased incentives for older people to stay in the labour
market.
Source: OECD calculations. 8

9. Main Findings
1. Slovenia grew rapidly before the crisis and today compares well on
well-being indicators.
2. The crisis exposed important weaknesses. The banking sector and the
corporate sector need further restructuring.
3. Long-term unemployment is high and unemployment among the young
has increased steeply.
4. Rising public debt has to be put on a downward path, particularly in view
of looming pressures from population ageing.
5. Business environment and regulation could be further improved to boost
investment and attract capital.
9

10. Key Recommendations
1. Enhance the leading role of the Bank Asset Management Company to
ensure swift restructuring of companies and liquidation of assets.
2. Increase resources for active labour market policies and better target
assistance to the long-term unemployed and the low-skilled.
3. Focus fiscal consolidation on structural measures and strengthen the
fiscal framework by a credible fiscal rule and fiscal council.
4. Pursue further pension reform and thoroughly reform the health sector to
improve efficiency.
5. Continue with structural reform, including by privatising state owned
enterprises and easing regulation on businesses.
10

11. Challenges in the banking and corporate
sectors
11

12. Restructuring has strengthened banks
Source: IMF Financial Soundness Indicator database.
8
10
12
14
16
18
20
2011 2012 2013 2014
% Regulatory Tier 1 Capital to Risk-Weighted Assets
12

13. But more is needed
1. 2014 Q4 or latest data available.
2. Average return on asset in the four quarters of 2014, except for France and Germany whose data refers to 2013.
Source: IMF Financial Soundness Indicator database.
0
5
10
15
20
25
30
35
40
EST
LUX
DEU
AUT
BEL
FRA
LTV
SVK
ESP
PRT
SVN
ITA
IRL
GRC
% A. Non-performing loans to total gross loans¹
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
PRT
GRC
AUT
ITA
IRL
BEL
SVN
ESP
FRA
NLD
DEU
LUX
LTV
SVK
EST
% B. Return on assets²
13

14. Corporates are highly indebted
Source: OECD, Financial indicators database.
0
20
40
60
80
100
120
140
160
180
CHE
USA
SWE
LUX
FRA
GBR
AUS
ISR
BEL
DNK
CHL
ESP
CAN
EST
FIN
IRL
HUN
POL
DEU
CZE
SVK
NLD
AUT
TUR
GRC
SVN
ITA
KOR
JPN
PRT
NOR
Debt to equity ratio
2013 or latest data available
14

15. Challenges in the banking and corporate
sectors
1. Identify the most important firms to be restructured, and transfer all
their assets to the Bank Asset Management Company.
2. Safeguard the independence and high standards of governance in the
Bank Asset Management Company.
3. Monitor the implementation of the new insolvency regulation. Provide
training for judges and insolvency administrators, and make out-of-court
restructuring faster and more attractive.
4. Privatise state-owned banks as planned, without retaining blocking
minority shareholdings.
15

16. Fiscal reform
16

17. Spending control is a challenge
1. Total general government expenditure corrected for exceptional net capital transfers and payments and other exceptional transfers.
Source: OECD Economic outlook 96 database.
-2
0
2
4
6
8
10
12
14
ISR
POL
CAN
DEU
USA
CZE
HUN
CHE
AUT
GRC
AUS
SWE
EST
NLD
PRT
ITA
NOR
OECD
KOR
TUR
FRA
GBR
ESP
ISL
SVK
JPN
MEX
NZL
IRL
BEL
SVN
DNK
FIN
% points of GDP
Growth in public expenditure¹ net of one-offs, 2007-14 change
17

18. Ageing-related spending will rise
1. Based on "Cost-containment scenario", (Oliveira Martins and de la Maisonneuve, 2014). Where projections are not available over the period 2015-
30, linear interpolation has been applied.
Source: Secretariat calculations based on Economic Outlook no 96 projections.
0
1
2
3
4
5
6
HUN
ITA
CHE
PRT
USA
GRC
EST
POL
SWE
GBR
CZE
JPN
DNK
ESP
FRA
IRL
ISR
AUS
ISL
CAN
SVK
DEU
SVN
NZL
KOR
AUT
NLD
FIN
BEL
LUX
% of GDP
Increased spending¹ on pensions and health care, change 2015-30
18

19. The tax mix hinders growth
1. Marginal tax wedge in % of total earnings, 2013: Individual earning 167% of average wage, single person with no children.
2. 2013 or latest year available.
Source: Public Sector, Taxation and Market Regulation database.
0
10
20
30
40
50
60
70
80
Chile
Mexico
Korea
NewZealand
Japan
Switzerland
Poland
Canada
Spain
Australia
Estonia
Austria
UnitedStates
Germany
Israel
SlovakRepublic
OECD
Turkey
Iceland
CzechRepublic
Hungary
UnitedKingdom
Netherlands
Luxembourg
Norway
Denmark
Ireland
Greece
Finland
France
Slovenia
Portugal
Italy
Sweden
Belgium
%
A. Taxes on labour are high for high earners¹
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Estonia
Mexico
SlovakRepublic
CzechRepublic
Austria
Slovenia
Chile
Germany
Netherlands
Portugal
Sweden
Norway
Poland
Finland
Hungary
Turkey
Denmark
Switzerland
OECD
NewZealand
Spain
Greece
Ireland
Australia
Iceland
Korea
Israel
Italy
Japan
UnitedStates
Luxembourg
Canada
Belgium
France
UnitedKingdom
% of GDP
Property taxation revenues²
19

20. Fiscal reform
1. Focus fiscal consolidation on structural measures to increase cost
efficiency in education, public administration and local government.
2. Adopt a fiscal rule with a credible and transparent expenditure rule and
charge an independent and effective fiscal council with assessing
adherence.
3. Reduce top tax rates on labour income. Increase recurrent taxes on real
estate.
4. Increase the statutory and minimum pension ages and link them
explicitly to life expectancy. Calculate pension rights over lifetime
contributions.
20

21. Structural reform
21

22. Spending on active labour market
programmes is low
1. 2012 or latest data available.
Source: OECD Social Expenditure database.
0.0
0.5
1.0
1.5
2.0
2.5
MEX
CHL
USA
ISR
JPN
CAN
SVK
CZE
SVN
NZL
EST
AUS
KOR
POL
ITA
PRT
NOR
CHE
OECD
LUX
DEU
HUN
AUT
BEL
ESP
FRA
IRL
NLD
FIN
SWE
DNK
% of GDP
Public expenditure on active labour market programmes¹
22

23. People should work longer
Source: OECD Economic outlook 96 database.
0
10
20
30
40
50
60
70
80
90
TUR
SVN
HUN
GRC
LUX
POL
BEL
ITA
AUT
FRA
SVK
ESP
EU
PRT
CZE
MEX
IRL
OECD
GBR
FIN
AUS
NLD
USA
CAN
DNK
KOR
CHL
EST
DEU
ISR
JPN
NOR
CHE
SWE
NZL
ISL
%
Labour force participation rate, 2013 - population aged 55-64
23

24. State-involvement and regulation are still
high
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Public ownership State involvement in
business operation
Complexity of
regulatory
procedures
Administrative
burdens on startups
Regulatory
protection of
incumbents
Explicit barriers to
trade and
investment
Other barriers to
trade and
investment
Components of Product Market Regulation (PMR) indicator
Slovenia Best Performers¹ Euro area
Note: the numerical PMR indicators represent the stringency of regulatory policy in specific areas on a scale of 0 to 6 with a higher number indicating a
policy stance that is deemed less conducive to competition. In each case, it characterises the stance of regulation as it stood in early 2013 and does not
reflect the reforms implemented since then.
1. The simple average of the five countries with the lowest values of each indicator is shown.
Source: OECD PMR indicators database. 24

25. FDI is low
1. Inward position at year end.
Source: OECD FDI series of BOP and IIP aggregates database.
0
20
40
60
80
100
120
1997 99 2001 03 05 07 09 11 13
% of GDP
Evolution of FDI¹
Czech Republic Estonia Hungary Poland Slovak Republic Slovenia
25

26. High R&D spending does not convert into
much innovation
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Greece
SlovakRepublic
Poland
Turkey
Luxembourg
Spain
Italy
Portugal
Hungary
Canada
UnitedKingdom
Norway
Estonia
CzechRepublic
EU28
Netherlands
EU15
France
Belgium
OECD
Slovenia
Austria
Germany
Denmark
Sweden
Finland
Japan
Korea
Israel
% of GDP
Gross domestic expenditure on R&D
0
0.5
1
1.5
2
2.5
3
Mexico
SlovakRepublic
Turkey
Chile
Greece
Poland
Portugal
CzechRepublic
Slovenia
Spain
Estonia
Hungary
Australia
NewZealand
Italy
Norway
Iceland
Luxembourg
Ireland
Canada
UnitedKingdom
EU28
Belgium
Austria
France
UnitedStates
OECD
Denmark
Israel
Netherlands
Korea
Germany
Finland
Sweden
Switzerland
Japan
% of GDP billion
USD PPPs
Triadic patent families
Source: OECD Main Science and Technology Indicators database.
26

27. Structural reform
1. Increase resources for active labour market policies and better target
assistance to the long-term unemployed and the low-skilled.
2. Help older workers adapt to new tasks and technologies through life-long
learning and targeted training programmes.
3. Continue privatising state-owned enterprises and strengthen their
governance.
4. Introduce the ‘silence is consent’ rule for issuing licences to start a
business and make obtaining construction permits and registering
property faster. Reduce entry barriers in professional services.
5. Implement the government’s unified innovation policy. Strengthen
collaborative links between major stakeholders of innovation policy.
27

28. More Information…
www.oecd.org/eco/surveys/economic-survey-slovenia.htm
OECD
OECD Economics
Disclaimers:
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without
prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
28