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EC praises, chides Slovakia

MORE effective collection of value added tax, a war against tax fraud, better services for job seekers, an increase in the labour-market participation of women, old people and marginalised groups, an effort to attract young people to the teaching profession, and more transparency when setting energy tariffs on the Slovak market: all these were among a set of recommendations issued by the European Commission to Slovakia on May 29 as part of its regular review of the country’s condition.

MORE effective collection of value added tax, a war against tax fraud, better services for job seekers, an increase in the labour-market participation of women, old people and marginalised groups, an effort to attract young people to the teaching profession, and more transparency when setting energy tariffs on the Slovak market: all these were among a set of recommendations issued by the European Commission to Slovakia on May 29 as part of its regular review of the country’s condition.

Slovakia received an ‘excellent’ grading from Brussels in terms of its efforts to reduce its public finance deficit through significant consolidation efforts, Slovak Finance Minister Peter Kažimír said in response to the EC report, suggesting that the commission regarded Slovakia as being on course to eradicate its excess deficit.

“The macro-economic scenario, which serves as the basis for budgetary prognoses, is realistic, according to the commission,” Kažimír said, as quoted by the SITA newswire. He also said that the EC had praised the government’s pension reform, the establishment of a fiscal council and changes to the education system.

The recommendations

The EC recommended that Slovakia implement its envisaged budget for 2013, so as to correct its excessive deficit in a sustainable manner. However, the EC also suggested that Slovakia “avoid cuts in growth-enhancing expenditure and step up efforts to improve the efficiency of public spending”, especially in sectors such as education, innovation and transport infrastructure.

According to the commission, if the government wishes to raise additional funds by broadening the tax base it should do this through taxes that are less detrimental to growth, such as property taxation and environmental taxation. Also, in order to progress in fighting tax fraud, the EC says that further measures are needed to improve, for example, IT infrastructure, broaden the “competences and audit capacity of the authorities and ensure judicial follow-up”.

When it comes to Slovakia’s jobless rate, Brussels suggested that the country should boost the capacity of public employment services to provide what it calls personalised services to job seekers, while addressing long-term unemployment through measures encouraging people to take up jobs as opposed to living on state subsidies, and via tailored training.

“Increasing the labour-market participation of women and older people would help to increase the overall employment rate and reach the 2020 national employment target of 72 percent,” the EC said in its official report, noting that the lack of adequate child-care facilities, in particular for children under three, makes it more difficult for mothers to return to the labour market.

Yet the commission also warned that the labour potential of “marginalised communities that face significant barriers when seeking to enter the labour market and the education system” is under-utilised and that “no effective action was taken in 2012 and the living conditions of marginalised communities, including Roma, remain difficult”.

The commission also recommended that Slovakia take action to attract young people to the teaching profession, while boosting educational outcomes. Brussels also articulated a message that the local business community has been conveying to the government for some time: “in vocational education and training, reinforce the provision of work-based learning in companies”.

It also stressed that in higher education the country should create more jobs-oriented programmes.
“Foster effective knowledge transfer by promoting cooperation between academia, research and the business sector,” the EC wrote in its report.

Slovakia ranks fifth among the most energy-intensive member states, with relatively high electricity prices, especially for small and medium-sized industrial customers, the EC noted. It suggested that a solution for Slovakia could lie in increasing the transparency of the tariff-setting mechanism as well as by enhancing the accountability of the regulator. Stronger interconnections with neighbouring countries are also desirable, according to the EC.

Brussels also recommended implementing measures to improve the efficiency of the judicial system and promoting alternative dispute resolution procedures, while noting that “there has been no progress in reforming the judicial system, judicial proceedings remain lengthy, in particular in insolvency cases, and alternative dispute resolution is not sufficiently used”.

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