The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.
The recession is accentuating the deleveraging challenge for over-indebted enterprises. Financial distress is reportedly rising in both publicly and privately-owned enterprises, which is a major cause of high levels of non-performing loans. As a result, large domestically-owned banks have recorded sizeable losses, necessitating further recapitalisations and depressing lending to healthy firms. Barriers in the business environment and weak corporate governance in state-owned enterprises hinder investment and FDI, and the labour market is segmented and insufficiently flexible. Past cost-competitiveness losses have thus not been reversed and export market shares continue to decline.
Slovenia has launched some of the reforms that are necessary to address the CSRs of the 2012 Council Recommendation. There has been some short-term consolidation of the public finances. Parliament adopted a constitutional basis for establishing a general government budget balance/surplus rule in structural terms. However, further consolidation measures and improvements in the medium-term budgetary framework are needed. A pension reform was adopted in December 2012, but it reduces the burden on public finances only until 2020. To maintain financial sector stability, parliament adopted legislation for bank restructuring, but the envisaged asset quality review is still pending, bank balance sheets remain to be cleansed, bank governance has to be improved and, relatedly, bank privatisation plans are at an early stage. An important reform tackling labour market rigidity and segmentation was adopted in March and is due to be followed by the necessary regulation of student work. The public sector wage bill has been reduced, but the minimum wage has continued to rise, and there is room for improvement in the matching of workforce skills with employer needs. The Slovenia Sovereign Holding (SHH) is not yet in place and announced legislative amendments may jeopardize necessary corporate governance improvements and envisaged privatisations. A quick sale of the 15 companies recently slated for full privatisation, including several major firms, will signal a more welcoming business environment and help to attract much-needed FDI. Albeit with some delay, the process of deregulating professional services has started, and the Competition Protection Agency has been established.
2013 European Commission's recommendations for Slovenia in brief
The Commission has issued nine country specific recommendations (CSRs) to Slovenia to help it improve its economic performance. These are in the areas of: