In recent years, Slovakia has introduced wide-ranging reforms in the tax, pension, social and health care systems. These reforms have increased incentives to work, to create jobs and to invest, and have thus fostered growth and economic catching-up. The supply-side driven growth has so far ensured favourable price and wage developments. However, it is not clear whether this positive trend will continue in the medium term. The availability of a sufficiently skilled labour force has decreased significantly while young and unskilled unemployed have so far not benefited to any significant degree from the strong employment growth. At the same time, the public education system does not seem to be ensuring that everybody has sufficient skills to participate in the labour market, and is failing young people from disadvantaged backgrounds in particular. Moreover, R&D investment in Slovakia has been very low and falling in recent years. Hence, in order to ensure that employment and productivity continue to grow strongly in the coming years, Slovakia should focus on improving educational attainment and stimulating R&D investment.

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