The Slovenia Times

Productivity and digitalisation seen as key to prosperity

Science & Technology

Ljubljana - Slovenia's future development and prosperity will depend of the country's ability to step up its productivity growth and digital transformation with a report drawn up by the government's economic think-tank suggesting the current trends are not encouraging.

This year's productivity report, drawn up by the Institute of Macroeconomic Analysis and Development (IMAD), was presented at an online debate on Wednesday hosted by IMAD and the European Commission Representation in Slovenia.

IMAD director Maja Bednaš noted that higher productivity should not be seen as a goal in itself but as a basis for a well-functioning economy and greater social prosperity.

As a key message of the report, IMAD's Peter Wostner emphasized the need to attain a much higher growth in productivity in order to catch up with the advanced economies, taking into account the current level of employment and expected demographic change.

The trends are not encouraging with the productivity growth falling from 3% in the period between 2000 and 2008 to 0.6% between 2009 and 2019.

The report also finds that despite some positive trends in digital transformation, Slovenia is losing ground in comparison, the point being that those who enter the transformation process first will emerge stronger than those who lag behind.

"Being ambitious is not enough, we also need to be fast," said Wostner, adding that this way the risks such as the threat to some types of jobs would be easier to avoid. "If we're slow, the risks will only get bigger."

Manfred Bergmann, director at the European Commission DG for Economic and Financial Affairs, argued that as a small and open economy Slovenia needed more investment, both private and public.

Slovenia is slowed down there by administrative and regulatory barriers, the still strong role of state-owned enterprises and underdeveloped capital markets. Bergmann also noted the need to invest in people, education, lifelong learning and welfare.

As substantial financial funds will be available over the coming two years in the EU's recovery fund, the official noted that Slovenia had not heeded all the EU recommendations in the past.

This time that would be one of the key requirements to tap on the EUR 2.5 billion the country hopes to get from the EU recovery fund, along with the funding of a green and digital transformation. "If the country doesn't implement recommendations, there will be no cash flow," said Bergmann.

The government adopted a draft National Recovery and Resilience Plan that will serve as a basis to draw money in October and is currently adjusting the document in talks with the European Commission.

Monika Kirbiš Rojs, the state secretary at the Government Office for Development and European Cohesion Policy, expects the document to be agreed with the Commission and social partners by 1 December and get the final go-ahead from the government on 17 December.

The state secretary noted that Slovenia's capacity to absorb EU funds had averaged between 300 million and 400 million a year since the country joined the bloc, while over the next few years it would need to learn how to efficiently tap on about a billion euro a year.

Jernej Salecl, an official from the Economy Ministry, said that all key stakeholders would have to change their mindsets to achieve greater productivity, from the government and public administration to social partners.

Meanwhile, Bojan Ivanc, chief analyst with the Chamber of Commerce and Industry, reported that labour productivity in the private sector grew at an average rate of 2.2% a year in the past decade, which compares to 1.6% in Austria.

This means that Slovenia has reduced its gap to Austria by 10 percentage points, noted Ivanc, projecting that labour productivity would fall by 4-5% this year but would then grow at a higher pace in the years ahead.

Jakob Počivavšek, the head of the Pergam association of trade unions, argued for a comprehensive reproach to productivity, including all its consequences, noting that the growth in productivity should also reflect on wages to a great enough extent.


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