10.6092/issn.1561-8048/15691
The European Commission approved Slovenia’s recovery and resilience plan (RRP) on 1 July 2021. Although the RRP and the partnership agreement and programmes under cohesion policy funds for 2021–2027 took into consideration Country Specific Recommendations and investment guidance sound strategic priorities set at the national level are lacking. Moreover, proposed projects do not take uneven regional distribution sufficiently into account. While the main focus of the RRP lies on the implementation of the so-called green and digital transitions, it also envisages a number of reforms and investments that directly impact the labour market (training, education and pension reform, for example). The goal of this article is to present the reforms in the context of the European Pillar of Social Rights and the Country Specific Recommendations issued within the European Semester.
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National Recovery and Resilience Plan: Slovenia
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2022-10-30
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2022-11-03
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Valentina Franca
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10.6092/issn.1561-8048/15691
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National Recovery and Resilience Plan: Slovenia
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    National Recovery and Resilience Plan:                                           Italian Labour Law e-Journal
    Slovenia                                                                        Special Issue 1, Vol. 15 (2022)
    Polona Domadenik Muren                          The NextGeneration EU in Action: Impact on Social and Labour
    polona.domadenik@ef.uni-lj.si                                                                          Policies
    Valentina Franca                                                                              ISSN 1561-8048
    valentina.franca@fu.uni-lj.si                                  https://doi.org/10.6092/issn.1561-8048/15691




          National Recovery and Resilience Plan: Slovenia
                Polona Domadenik Muren - Valentina Franca+


                                                    Abstract

     The European Commission approved Slovenia’s recovery and resilience plan (RRP) on 1 July
     2021. Although the RRP and the partnership agreement and programmes under cohesion policy
     funds for 2021–2027 took into consideration Country Specific Recommendations and
     investment guidance sound strategic priorities set at the national level are lacking. Moreover,
     proposed projects do not take uneven regional distribution sufficiently into account. While the
     main focus of the RRP lies on the implementation of the so-called green and digital transitions,
     it also envisages a number of reforms and investments that directly impact the labour market
     (training, education and pension reform, for example). The goal of this article is to present the
     reforms in the context of the European Pillar of Social Rights and the Country Specific
     Recommendations issued within the European Semester.



     Keywords: NGEU, Slovenia, RRP, Covid-19 Pandemic, European Pillar of Social Rights,
     Social Scoreboard, Country Specific Recommendations, European Semester.




1. Slovenia’s position on the NextGenerationEU recovery plan.

   The direct economic and social costs caused by the Covid-19 crisis in different countries
depend on the structure of national economies, resilience and global connectedness. It was
expected that the depth of the shock caused by the Covid-19 crisis would depend on the
magnitude of the main causes: increased uncertainty among customers and firms, with
consequences for spending and saving decisions, temporary halts on recruitment and
investment, labour supply reductions because of the closure of non-essential workplaces,
where remote working is not possible or when workers had to take care of dependents


    Full professor at the Faculty of Economics, University of Ljubljana, Slovenia.
+
    Associate professor at the Faculty of Public Administration, University of Ljubljana, Slovenia.
    Polona Domadenik Muren                                                            Italian Labour Law e-Journal
    Valentina Franca                                                                 Special Issue 1, Vol. 15 (2022)
                                                                       The NextGeneration EU in Action: Impact on
                                                                                         Social and Labour Policies




(children, elderly), sectoral and supply side disruptions (travel, tourism), liquidity shocks and
financial market implications.1
   For Slovenia, as one of the smallest European countries, cooperation with the EU and
other Member States is extremely important, also because the Slovenian economy is
predominantly export-oriented. Covid-19 has had an expectedly marked impact on Slovenian
companies. A firm-level survey in October 2020, which complemented the surveys done at
the end of March, June and August 2020, revealed fairly negative expectations on the part of
companies, but these have improved along with the general health circumstances.2 It was
primarily the manufacturing sector, and in particular small companies, that suffered most
from the numerous challenges that lockdown gave rise to. The survey respondents expected
the crisis to last for more than 20 months, mainly as a result of lower domestic and export
demand, and therefore planned to reduce tangible and intangible investments and
employment.3 Therefore, it was estimated that mitigating the negative consequences of
Covid-19 crises arising from the expected negative consequences and a K-type recovery (with
some industries recovering fast, while others entered a long recession) would be the main
consideration when designing national programmes in the context of the recovery and
resilience plan (RRP). In 2021, however, economic sentiment improved significantly and
because of various crisis relief measures (Acts Determining the Intervention Measures to
Contain the Covid-19 Epidemic and Mitigate its Consequences for Citizens and the
Economy 1-7 in 2020) the general economic conditions and employment did not deteriorate
as expected.
   The national RRP for Slovenia (RRP)4 was submitted on 30 April 2021; the European
Commission approved it on 1 July 2021;5 and it was adopted by the Council on 28 July 2021.6
By then, the possibilities for its implementation and financing had been discussed. The
timeframe is quite tight as all reforms and investment have to be completed by August 2026.
Remarks regarding the initial document did not identify the relevant projects directly but
rather highlighted strategic topics.


1 Directorate-General for Economic and Financial Affairs, European Economic Forecast – Spring 2020, Publications
Office of the European Union, Luxembourg, 6 May 2020, available at: https://economy-
finance.ec.europa.eu/publications/european-economic-forecast-spring-2020_en, accessed 20 June 2022.
2 Redek T., Domadenik P., Koman M., Zupan N., The impact of Covid-19 on Slovenian companies and the role of remote

work, in Domadenik P., Koman M. and Redek T. (eds.), The virus aftermath: A socio-economic twist?, Časnik Finance,
Ljubljana, November 2020, 251-273.
3 Ibidem.
4 Government of the Republic of Slovenia, Načrt za okrevanje in odpornost, 2021:

https://www.gov.si/zbirke/projekti-in-programi/nacrt-za-okrevanje-in-odpornost, accessed 20 June 2022.
5 European Commission, NextGenerationEU: European Commission endorses Slovenia's €2.5 billion recovery and resilience

plan, Press Release, Brussels, 1 July 2021, https://ec.europa.eu/info/sites/default/files/com-2021-384-
slovenia_press-release_en.pdf, accessed 20 June 2022.
6 Council of the European Union, Council implementing decision on the approval of the assessment of the recovery and

resilience plan for Slovenia, 20 July 2021, 10612/21, 2021/0192(NLE):
https://data.consilium.europa.eu/doc/document/ST-10612-2021-INIT/en/pdf, accessed 20 June 2022;
Council of the European Union, Annex to the Council Implementing Decision on the approval of the assessment of the
recovery and resilience plan for Slovenia, 20 July 2021, 10612/21ADD1, 2021/0192(NLE),
https://data.consilium.europa.eu/doc/document/ST-10612-2021-ADD-1/en/pdf, accessed 20 June 2022.

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    Polona Domadenik Muren                                                     Italian Labour Law e-Journal
    Valentina Franca                                                          Special Issue 1, Vol. 15 (2022)
                                                                The NextGeneration EU in Action: Impact on
                                                                                  Social and Labour Policies




    The government states that more than 2,000 stakeholders were involved and consulted in
the adoption of the RRP. According to our research, however, participation was only formal,
mainly in the sense of providing information rather than consultation. For example, the RRP
proposal was presented at an event for businesses with about 1,300 attendees, where they
could learn about the RRP but did not have the opportunity to actually discuss and submit
their proposals. Moreover, partnership in coordinating the RRP was not required under the
relevant European legislation. National legislation must also be taken into account, however,
namely the Decree on Development Planning Documents and Procedures for the
Preparation of the Central Government Budget,7 which requires such procedures. Similarly,
the social partners were not systematically involved in the elaboration and implementation
of the RRP. There was also a general lack of cooperation in the form of consultations,
exchanges of views and joint strategic actions in the preparation of the RRP. Most of the
material was prepared unilaterally by the government.
    Officially, Slovenian representatives held 39 consultations with European Commission
directorates at the administrative and technical levels,8 but to our knowledge there was no
really thorough substantive assessment by the European Commission. Both the European
Commission and the Council reviewed the formal requirements; the only substantive
suggestion was that there should be more projects in the field of green transition. From the
point of view of Slovenia's development needs and not least the capacity of state institutions,
the role of the European Commission was also substantive, namely in relation to the state’s
orientation towards an innovation-based society.
    One of the main criticisms put forward by Slovene EU policy experts on the adoption of
the RRP was that projects requiring financial funds based on the RRP should be planned
together with projects based on EU Cohesion Policy 2021–2027 funding (3.54 billion euros
[€]),9 and therefore lacks sufficient strategic orientation. Although the partnership agreement
and programmes under cohesion policy funds for 2021–2027 took into consideration
Country Specific Recommendations and investment guidance, trying to reap synergies and
complementarities with other EU funding mechanisms, sound strategic priorities set at the
national level are lacking. Likewise, in our opinion, proposed projects did not sufficiently
take uneven regional distribution into account.
    The Slovene government was satisfied with political negotiations at the level of the
European Council and fund allocation. They plan to implement a series of reforms tied to
NextGenerationEU (NGEU) on long-standing constraints in health care, pensions, labour
and administration to raise productivity and reduce the burden of demographic ageing, which
is among the most severe in the EU. Because Slovenia registered among the highest GDP
growth rates in the EU in 2021, however, the level of grants in the RRP mechanism will be

7 Official Gazette of the Republic of Slovenia, No 54/10 and 35/18.
8  European Commission, Slovenia’s recovery and resilience plan, 2021, https://ec.europa.eu/info/business-
economy-euro/recovery-coronavirus/recovery-and-resilience-facility/slovenias-recovery-and-resilience-
plan_en, accessed 20 June 2022.
9 European Commission, Cohesion Policy 2021–2027, 2021, available at:

https://ec.europa.eu/regional_policy/en/2021_2027/#:~:text=EU%20Cohesion%20Policy%20contributes
%20to,the%20green%20and%20digital%20transition, accessed 20 June 2022.

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     Polona Domadenik Muren                                                         Italian Labour Law e-Journal
     Valentina Franca                                                              Special Issue 1, Vol. 15 (2022)
                                                                     The NextGeneration EU in Action: Impact on
                                                                                       Social and Labour Policies




lowered by 15 per cent and policymakers will have to rethink the projects planned to be
financed from RRP grants.


2. Slovenia’s RRP: how far do the green and digital transitions go?

   In its RRP, Slovenia has identified development areas with corresponding reforms and
investments that will not only help to mitigate the negative economic and social impacts of
the Covid-19 pandemic, but also provide an adequate response to the challenges of green
and digital transformation in the context of higher productivity growth and improvements
in well-being. The RRP lays down measures in the following areas: (i) green transition; (ii)
digital transformation; (iii) smart, sustainable and inclusive growth; and (iv) health and social
security.10 Based on this, the Slovenian government’s RRP projects 59 investments and 34
reforms, comprising 209 milestones.11 In terms of funding requested this means €1.8 billion
in grants and €0.7 billion in loans.12 As already mentioned, because Slovenia recorded one of
the highest GDP growth rates in 2021, the amount of grants automatically decreased by €286
million.
   Under the NextGenerationEU stimulus instrument,13 whose aim is to help repair the
immediate economic and social damage resulting from Covid-19 and within the framework
of which the RRP enshrines the most valuable financial incentives, along with ReactEU,
Horizon Europe, InvestEU, Rural Development, JTF and RescEU, Slovenia is eligible for
about €5.7 billion, of which €3.2 billion is in loans and €2.1 billion is in grants (€312 million
from the React-EU initiative, €134 million from the Just Transition Fund, €1.8 billion from
the Recovery and Resilience Mechanism RescEU, and €68 million for rural development).
But although Slovenia was eligible to allocate €3.2 billion in loans, policymakers decided to
use only 21.8 per cent of the funds. The main argument was that the interest rate on loans
was higher than those on government bonds. Short-termism has shown its negative
consequences already in 2022, especially after the automatic downward adjustment of grants
because of high GDP growth in 2021.




10 SVRK, Načrt za okrevanje in odpornost, 2021, https://www.eu-skladi.si/sl/po-2020/nacrt-za-okrevanje-in-
krepitev-odpornosti, accessed 20 June 2022.
11 See Directorate-General for Economic and Financial Affairs, nt. (1).
12 Directorate-General for Internal Policies, First Recovery and Resilience Dialogue with the European Commission,

Think Tank - European Parliament, May 2021. Available at:
https://www.europarl.europa.eu/RegData/etudes/IDAN/2021/659651/IPOL_IDA(2021)659651_EN.pdf,
accessed 20 June 2022.
13 European Union, NextGenerationEU. Make it Real, 2022, https://europa.eu/next-generation-eu/index_en,

accessed 20 June 2022.

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     Polona Domadenik Muren                                               Italian Labour Law e-Journal
     Valentina Franca                                                    Special Issue 1, Vol. 15 (2022)
                                                           The NextGeneration EU in Action: Impact on
                                                                             Social and Labour Policies




2.1. Main reforms and investments.

    As already mentioned, the Slovenian RRP envisions four areas for reform and investment:
(i) green transition, (ii) digitalisation, (iii) smart, sustainable and inclusive growth, and (iv)
health and social security. Considering the planned distribution of funds, the main priorities
are green transition and digitalisation, which account for 42 and 21.46 per cent of the plan,
respectively. In other words, Slovenia aims with its RRP to accelerate transition towards a
greener economy, speed up the digital transformation of public administration and
companies, and ensure social-economic cohesion and resilience. From a developmental
perspective, this is the right approach, as Slovenia falls short in these two areas. The main
dispute among policymakers and experts, however, is that it should devote more funds to
the green and digital transformations and less to tangible infrastructure.
    The plan envisages measures to support the decarbonisation of the economy and climate
change adaptation. It is expected to contribute significantly to Slovenia’s digitalisation, not
only though supporting investment in digital infrastructure, but also by strengthening digital
skills through education and lifelong learning. The plan also focuses strongly on increasing
the resilience of the health care system, setting up a long-term care system and improving
access to affordable housing
    The Green Transition Plan has five components: renewable energy sources (including
modernisation of electricity distribution and energy efficiency), sustainable renovation of
buildings, a clean and safe environment, sustainable mobility, and a circular economy. These
reforms would increase the share of clean energy in total energy production and improve
resource efficiency by increasing energy productivity (less energy consumption per euro of
GDP produced). According to the government, the planned reform will unlock renewable
energy potential (hydro, solar and wind energy) and improve sustainable mobility, which are
essential steps in decarbonising the energy, transport and building sectors.
    Immediate action should be taken in the area of digitalisation, as Slovenia lags behind
other European countries, especially as regards digital public services and digital skills. This
is recognised by the RRP. The key measures are directed mostly to improving digitalisation
in the public sector and public administration. After that come investments in the digital
skills of different segments of society, with a lot of focus on reforming the school system.
Investment in the digital transition for companies is at the tail end of this list.
    International comparison shows that Slovenia will spend about 0.7 per cent of GDP less
on digitalisation than the other countries of central and eastern Europe,14 which is worrying.
According to the Institute of Macroeconomic Analysis and Development (IMAD),
underinvestment in smart transformation will be felt especially later on, when the available
funds have already been allocated and fiscal rules will make it very difficult to increase funds
for digital transformation from the integrated EU budget. It should also be taken into


14IMAD, Poročilo o razvoju (Development Report), Ljubljana, September 2022, available at:
https://www.umar.gov.si/fileadmin/user_upload/razvoj_slovenije/2022/angleski/Development_Report_20
22.pdf, accessed 15 July 2022.

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     Polona Domadenik Muren                                                          Italian Labour Law e-Journal
     Valentina Franca                                                               Special Issue 1, Vol. 15 (2022)
                                                                      The NextGeneration EU in Action: Impact on
                                                                                        Social and Labour Policies




account that Slovenia has received a number of Country Specific Recommendations on
digitalisation in the past and it is a focus of OECD inspection in 2022.
    The third, more broadly defined area is economic and social resilience, composed of
smart, sustainable and inclusive growth, and health and social security. Smart, sustainable and
inclusive growth has six components: research, development and innovation; increasing
productivity; a friendly business environment for investors; labour market measures to
mitigate the consequences of negative structural trends; transformation of Slovenian tourism
and investment in infrastructure in the field of tourism and cultural heritage; and
strengthening skills, especially digital skills and skills required for new professions and
effective public institutions. The RRP in our opinion appropriately addresses the challenges,
such as low investment rates, low inclusion of older workers in the labour market and skills
mismatch, but a more holistic reform of social sub-systems is needed. While the RRP
provides substantial financial support in terms of grants and loans to investment projects in
critical areas of digital and green transition, there is a lack of systemic reforms. Affordable
housing, especially for the younger generation, is a problem – the RRP plans to support this
with only €60 million in investment. Such reforms are in the right direction, but it would
make more sense to implement a thorough strategic plan.
    A similar problem could be observed in the last reform area, the health and social security
system, where long-term care was on the table and a law was passed at the end of 2021, but
its implementation is scarcely possible in practice because of how the law was drafted. Its
lack of feasibility is recognised by experts15 and politicians.16 The current capabilities of the
health care system do not allow for additional burdens as regards financial, infrastructural
and human resources. Therefore, the government has proposed to postpone implementation
of the law until 1 January 2024, but the opposition has submitted a request for a referendum.
Regulation is essential for the further sustainable development of society, while investment
in the existing public health system must be boosted. The RRP in our opinion successfully
introduces some of most important tangible investments (in hospitals and other facilities),
but falls short on holistic reform of the health system.


2.2. Impact of labour market reforms.

   The planned reforms will certainly have a direct impact on the labour market, mostly the
measures to mitigate the consequences of negative structural trends. Others will probably
have an indirect impact, as any improvement in the business environment that leads to higher
GDP growth improves employability and provides more jobs. Just 8 per cent of the funds
of the Smart and Sustainable Slovenia package are allocated to this reform, however, and
thus it is questionable how much progress can be made.

15 Strban G., Grebenc V., Kobal Tomc B., Zakon o dolgotrajni oskrbi - (ne)izvedljiv v praksi?: okrogla miza na XXI.
Dnevi delovnega prava in socialne varnosti, Kongresni center GH Bernardin, Portorož, 26 May 2022.
16 A fact recognized also by the current health minister. See RTV, 2022, https://www.rtvslo.si/slovenija/ker-

je-zakon-o-dolgotrajni-oskrbi-neizvedljiv-bodo-iskali-resitve-kako-ga-ustaviti-in-popraviti/631824.

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     Polona Domadenik Muren                                                          Italian Labour Law e-Journal
     Valentina Franca                                                               Special Issue 1, Vol. 15 (2022)
                                                                      The NextGeneration EU in Action: Impact on
                                                                                        Social and Labour Policies




    Regarding employment protection we can identify a specific reform. Programmes aimed
at strengthening digital skills, if done appropriately, can improve employability. From a
financial perspective, 36 per cent of the Smart and Sustainable Slovenia package funds are
planned for these activities, which should be a good starting point for further development.
The extremely low level of lifelong learning (especially among the unskilled) is the most
critical aspect of human resources in Slovenia and needs to be supported financially.
Programmes should focus on projects related to digital skills acquisition, and only then on
software investment. During the period from May to November 2022, students in the last
triad of elementary school, high school and college students, and seniors aged 55 and over
are entitled to a digital voucher of €150 to purchase computer equipment. Seniors should
attend digital literacy training subsidised under the Promotion of Digital Inclusion Act17 to
redeem their voucher. This type of intervention can be useful in general, but without real
benefit if it does not also strengthen skills for working in a digital environment. It is
questionable whether this type of training will meet the needs of seniors, as “one size does
not fit all”, and whether it will help improve digital literacy. Moreover, as reported in the
media, younger people have used the voucher to buy more expensive devices, such as
headphones.
    The planned reform is likely to have a direct impact on social protection in the area of
long-term care and also by improving the current capacity of the public health system.
Substantial financial resources are planned to be spent on improving digitalisation
infrastructure in educational institutions and the digital skills of teachers at all levels. The
housing challenges are also mentioned in the RRP, but they are not set as a priority, even
though this is a very pressing issue in Slovenia.


3. Social and labour dimensions of the RRP.

3.1 European Commission assessment.

   On 30 April 2021, Slovenia submitted its national recovery and resilience plan to the
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant to
Article 19 of Regulation (EU) 2021/241, the Commission assessed the relevance,
effectiveness, efficiency and coherence of the recovery and resilience plan, in accordance
with the assessment guidelines of Annex V to that Regulation. On 28 July 2021,18 the Council
adopted its Decision on the approval of the assessment of the recovery and resilience plan
for Slovenia. According to the Bruegel classification,19 Slovenia plans to spend 19.7 per cent

17 Official Gazzette of the Republic of Slovenia, No. 35/22.
18 European Commission, Analysis of the recovery and resilience plan of Slovenia, 1 July 2021, COM(2021) 384 final,
2021, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52021SC0184&from=EN,
accessed 20 June 2022.
19 Bruegel, European Union Countries’ Recovery and Resilience Plans, 9 June 2022. Available at:

https://www.bruegel.org/dataset/european-union-countries-recovery-and-resilience-plans, accessed 15 June
2022. Due to the shortcomings of the EC categorisation Bruegel adopted its own categorisation, based on three

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 Polona Domadenik Muren                                                            Italian Labour Law e-Journal
 Valentina Franca                                                                 Special Issue 1, Vol. 15 (2022)
                                                                    The NextGeneration EU in Action: Impact on
                                                                                      Social and Labour Policies




of total RRF for digital transformation and 51.91 per cent on green transition. The average
shares of funding allocated to digitalisation and green transition in European countries are
24.94 and 46.8 per cent, respectively.
   As regards social and labour policy, the European Commission stresses that the planned
reforms are in line with the economic and social challenges highlighted for Slovenia in the
2019 and 2020 European Semesters. The Commission also assessed that the measures
adequately address social vulnerabilities and target young people, all in line with the principles
of the European Pillar of Social Rights. In particular, they highlight reforms in long-term
care, health care, pensions and the labour market, education and skills, R&D and innovation,
the business environment, and public procurement. According to the Bruegel classification,
Slovenia plans to spend €1.1 billion on measures related to social, economic and institutional
development.20


3.2 The Slovenian RRP and the European Pillar of Social Rights.

    The European Pillar of Social Rights provides a framework for monitoring convergence
towards better working and living conditions in the EU, operationalised by the Social
Scoreboard and its 20 principles on equal opportunities and access to the labour market, fair
working conditions, social protection and inclusion. In the case of equal opportunities and
labour market access, Slovenia was the best performing country on three headline indicators
– early leavers from education and training, youth NEETs and income distribution – but
needs to direct its attention towards attaining a basic level of digital skills. The gender
employment gap also needs to be monitored. In the case of dynamic labour markets and fair
working conditions most indicators signal average or above average performance compared
with other EU economies. The most challenges remain in the subfield of social protection
and inclusion, with a disability employment gap and risk of poverty or social exclusion. When
it comes to the risk of poverty or social exclusion for children, however, it is among the top
performers.21
    In our opinion, the RRP plan mainly addressed the following principles of the European
Pillar of Social Rights: education, training and lifelong learning (especially attaining digital
skills), health care, long-term care and access to essential services. In accordance with the
guidelines of the 19th key principle of the European Pillar of Social Rights (housing and
assistance for the homeless), the RRP programme strives to ensure access to social housing
or quality housing help for everyone who needs it, especially the socially underprivileged and



categories, including sub-categories: (1) green transition; (2) digital transformation; (3) social, economic and
institutional development; and (4) uncategorized.
20 Bruegel, nt. (19).
21 Eurostat, European Pillar of Social Rights: Social Scoreboard of Indicators, 2022. Available at:

https://ec.europa.eu/eurostat/web/european-pillar-of-social-rights/indicators/social-scoreboard-indicators,
accessed 20 June 2022.

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     Polona Domadenik Muren                                                           Italian Labour Law e-Journal
     Valentina Franca                                                                Special Issue 1, Vol. 15 (2022)
                                                                       The NextGeneration EU in Action: Impact on
                                                                                         Social and Labour Policies




other marginalised groups. Among projects worth mentioning are the establishment of a
rental housing financing scheme and the implementation of public rental apartments.


3.3 The Slovenian RRP and implementation of the CSR.

     Educational performance overall is good, but major gaps persist between genders,
nationalities (for example, Roma pupils, students from migrant families) and disadvantaged
social backgrounds. In addition, the disability employment gap calls for a better, more
targeted approach. Also the CSRs (201922 and 2020) mentioned that Slovenia should increase
the employability of low-skilled and older workers by making education and training more
sensitive to labour market needs, as well as providing lifelong learning and activation
measures. Also measures, including improving digital literacy and digital skills in general,
should be directed to disadvantaged citizens.
     Reforms and investments in the RRP are focused on incorporating digital and sustainable
development competences in curricula at all levels of education, improving adaptation to
labour market needs by improving cooperation between educators and employers, and
promoting vocational education and training. The RRP programme proposes curricular
reform, namely the updating of preschool, primary and general education, secondary
education and adult education in particular subject areas, and relevant exam skills in selected
areas, with the development of a comprehensive supporting environment for those lagging
behind. The higher education system should also be more responsive to the needs of the
environment (providing the skills needed on the labour market) and provide workers capable
of solving future challenges. Two key documents (Guidelines for the Renewal of Professional
Higher Education,23 with a proposal for an implementation plan, and Blueprint for Investing
in Green, Resilient, Sustainable and Digitally Connected Higher Education24) will provide
the basis for systemic changes in higher education on three levels: (i) substantive (curriculum
renewal with the introduction of competencies that are key to a green and digital transition,
taking into account labour market needs in terms of knowledge and skills and the
restructuring of the existing and future workforce to shape Society 5.0 by means of lifelong
learning); (ii) normative (optimisation and flexibility of the study process and creation of
study programmes and sufficient places in accordance with company personnel needs); and
(iii) infrastructural (in support of changing study processes with increased use of ICT and
consideration of the environmental aspects of greening, such as the development of


22 European Commission, Recommendation for a Council Recommendation on the 2019 National Reform Programme of
Slovenia and delivering a Council opinion on the 2019 Stability Programme of Slovenia, 5 June 2019, COM(2019) 524,
https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1560258747457&uri=CELEX%3A52019DC0524,
accessed 20 June 2022.
23 Makovec Radovan D., Radovan M., Smernice za izvajanje poklicnega in strokovnega izobraževanja v kombinirani obliki,

Ljubljana, 2020, https://cpi.si/wp-content/uploads/2020/11/cpi-smernice-ku.pdf, accessed 20 June 2022.
24 Ministry of Education, Science and Sport, Smernice za prenovo visokošolskega strokovnega izobraževanja s predlogom

izvedbenega načrta, 14 June 2022, https://www.gov.si/assets/ministrstva/MIZS/Dokumenti/Visoko-
solstvo/Javni_razpisi/NOO_poziv_reforma/2022-06-14_Smernice_v1-3.pdf, accessed 20 Jun. 2022.

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     Polona Domadenik Muren                                                    Italian Labour Law e-Journal
     Valentina Franca                                                         Special Issue 1, Vol. 15 (2022)
                                                                The NextGeneration EU in Action: Impact on
                                                                                  Social and Labour Policies




sustainable and smart lecture halls, as well as low-carbon ethical digitisation using intelligent
equipment).
   The third part of competence development refers to the modernisation of secondary
vocational and professional education (VET and short-cycle higher vocational education),
including apprenticeships, updating of post-secondary study programmes and establishing
digitally supported learning sites. In the period 2021–2026, implementation of the following
key activities is foreseen. (i) Updating of 25 educational programmes of vocational and
professional education (VET) and 16 higher education study programmes (short-cycle higher
vocational education), mainly by making better use of the possibilities of the open part of
the curriculum. Greater emphasis will be placed on green, digital and other competencies
that future graduates will need when working in technologically advanced environments. (ii)
Evaluation of the management model of apprenticeships within the framework of secondary
vocational education and establishment of guidelines for upgrading the apprenticeship
system together with stakeholders. (iii) Development of various models of school
cooperation with their stakeholders (employers).
   As communicated by policymakers, however, more social policy actions targeting
specifically those who are more likely to be left behind (by lifelong learning, for example) will
be designed within EU Cohesion Policy.


4. Reception of the Slovenian RRP.

    According to the EU Commission and Council the RRP implements the Country Specific
Recommendations formulated in the European Semester cycles 2019 and 2020. It is
important to note that three much-needed structural reforms are needed to confront the
fiscal challenges associated with population ageing: reform of pension benefits, health care
and long-term care. Preparation of pension system reform (in cooperation with social
partners) that would be sustainable in the long run and adequately addresses the needs of
people and the ageing problem should be a key deliverable under the RRP in 2022–2023.25
The OECD’s country recommendations were very clear. The average retirement age is one
of the lowest among EU countries, while labour taxes (taxes and social contributions) are
among the highest among the OECD countries.26 Unfunded increases in pension benefits in
recent years have contributed to one of the highest projected pension spending increases in
the OECD. As of late summer 2022, no official proposal to change pension legislation had
been drafted. A special working group had been formed at the Ministry of Labour, Family,
Social Affairs and Equal Opportunities, however, to prepare legislative changes in the


25 European Commission, 2022 Country Report – Slovenia, 2022, 23 May 2022, SWD(2022) 626 final. Available
at: https://ec.europa.eu/info/system/files/2022-european-semester-country-report-slovenia_en.pdf, accessed
20 June 2022.
26 OECD, Slovenia: accelerate structural reforms to keep recovery on track, 4 July 2022:

https://www.oecd.org/newsroom/slovenia-accelerate-structural-reforms-to-keep-recovery-on-track.htm,
accessed 20 August 2022.

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     Polona Domadenik Muren                                                         Italian Labour Law e-Journal
     Valentina Franca                                                              Special Issue 1, Vol. 15 (2022)
                                                                     The NextGeneration EU in Action: Impact on
                                                                                       Social and Labour Policies




direction of extending the insurance period to 42 years, as well as other changes that have
not yet been disclosed to the public.
    The second Country Specific Recommendation for 201927 and 202028 was to create a
coherent regulatory framework for long-term health care and social services and a financially
sustainable health-care system in general. As part of the RRP, Slovenia adopted the Long-
Term Care Act in December 2021 but introducing compulsory long-term care insurance,
which should cover at least 30 per cent of the costs, has been postponed to 2025. The RRP
includes needed complementary investment in additional facilities for long-term care. The
third structural reform concerns the health-care system to improve its quality, accessibility
and resilience based on investment in new hospitals and new organisation and financing
systems.
    The third part of the RRP concerns housing policy. The proportion of the population at
risk of poverty or social exclusion has decreased, but among the elderly it remains above the
EU average.29 In order to mitigate the social consequences of the Covid-19 crisis, it is
essential that Slovenia continues to provide an adequate package of social benefits.
Therefore, it will be necessary to regularly monitor the effects of the crisis on poverty. Special
attention should be paid to the elderly, especially women, who were particularly at risk of
poverty or social exclusion even before the crisis, above the EU average.30 Therefore, the
RRP proposes reforms and investments to promote the social inclusion of people who are
threatened by poverty or social exclusion, namely by providing public rental housing, which
will be aimed primarily at young people, the socially vulnerable and other marginalised
groups. The goal is to increase the number of public rental apartments; ensure easier access
to housing for the young, the elderly and other more vulnerable groups; reduce the burden
of housing costs on socially vulnerable households; lower the proportion of households
below the housing poverty threshold; establish sustainable conditions for the continuous
supply of public rental apartments; activate existing, but unoccupied housing; and promote
residential mobility.
    Although the RRP addresses some critical challenges faced by Slovene society a number
of others are not covered. Most of them are related to the sustainability of public finance,
insufficient productivity growth and the business environment. As all three indirectly address
social and labour issues, we will touch on this briefly. The health-care and long-term care
reforms that are planned within the RRP framework represent a major threat to the long-
term sustainability of public finance. The proportion of expenditure related to demographic
ageing is expected to experience one of the highest growth rates in the EU by 2035. There is
no plan on how to ensure additional financial resources, while the reforms in health-care and
pension systems in recent years have mainly extended access to high-quality services and


27 European Commission, Recommendation for a Council Recommendation on the 2019 National Reform Programme of
Slovenia and delivering a Council opinion on the 2019 Stability Programme of Slovenia, 5 June 2019, COM(2019) 524.
28 European Commission, Recommendation for a Council Recommendation on the 2020 National Reform Programme of

Slovenia and delivering a Council opinion on the 2019 Stability Programme of Slovenia, 20 May 2020, COM(2020) 524.
29 European Commission, nt. (27).
30 European Commission, nt. (28).



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     Polona Domadenik Muren                                                          Italian Labour Law e-Journal
     Valentina Franca                                                               Special Issue 1, Vol. 15 (2022)
                                                                      The NextGeneration EU in Action: Impact on
                                                                                        Social and Labour Policies




improved social inclusion.31 Moreover, the shortages of health workers limit access to health-
care services in particular regions. Long waiting times for certain medical treatments increase
absenteeism and indirectly lower economic productivity.


5. Lessons from the previous crisis.

    During the pandemic, a number of measures were taken to mitigate its effects. From the
employers' perspective, the payment of wage compensation for various absences caused by
the lockdowns was well received in the labour market. In addition, the government passed
ten acts (Acts Determining the Intervention Measures to Contain the Covid-19 Pandemic
and Mitigate its Consequences for Citizens and the Economy) that provided several subsidies
to individuals and organisations to mitigate the negative consequences of the pandemic and
lockdowns. The great financial crisis that seriously hit the Slovene economy in 2009–2013
had completely different causes (indebtedness of private companies and sovereign debt
crisis) and policymakers reacted very differently, applying strict austerity measures as
suggested by European Commission. The Fiscal Balance Act passed in 2012 worsened the
situation significantly, as it limited the use of public funds, with severe cuts for labour and
social policy. A pessimistic business environment and high country risk32 constrained the
investment activities of Slovene firms and therefore increased the unemployment rate and
poverty. Inappropriate austerity measures implemented by the EU authorities and threat of
imposing the Troika limited the growth of the Slovene economy for the next five years.
    Specific country recommendations for Slovenia might include the following: (i) fiscal
recommendations ensuring the sustainability of public finances in the medium and long term
by gradually normalising fiscal policy, constraining increases in primary expenditure and
implementing reforms addressing the long-term sustainability of the health-care and long-
term care systems; (ii) using additional revenue sources to rebalance the tax mix towards
green and more growth-friendly taxes; (iii) improving the business environment by
implementing measures to speed up payments across the economy, and reducing
bureaucracy; (iv) limiting the power of state-owned and state-controlled companies in non-
strategic sectors regarding competition and market entry; (v) increasing green investments
and diversifying the energy supply (increasing the share of renewables), renewing electricity
distribution networks, improving energy productivity and infrastructure; (vi) speeding up the
circular transformation of the economy and eco-innovation.33 There were no specific
recommendations regarding social or employment protection policies, although the
document mentions issues related to public financing of the health system. Health-care


31 European Commission, nt. (25).
32 Country risk in general refers to the uncertainty associated with investing in a particular country, and more
specifically to the degree to which that uncertainty could lead to losses for investors due to political, economic,
exchange-rate or technological influences. Slovenia has been in a very tough financial position during financial
crises (2009–2012), with low country ratings (high probability of default) and high interest rates.
33 European Commission, nt. (25).



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     Polona Domadenik Muren                                              Italian Labour Law e-Journal
     Valentina Franca                                                   Special Issue 1, Vol. 15 (2022)
                                                          The NextGeneration EU in Action: Impact on
                                                                            Social and Labour Policies




spending in Slovenia is expected to increase by 1.5 percentage points of GDP per year until
2070 and long-term care costs are projected to double by 2055.34 Population ageing in
Slovenia represents a high fiscal sustainability risk in the medium and long term and has been
addressed accordingly in the Recovery and Resilience Plan. The reforms will be implemented
in several steps and mainly extend access to high-quality services and improve social rights
and inclusion.
   The specific country recommendations for Slovenia are therefore focused merely on fiscal
policies (to ensure medium- and long-term fiscal stability to cope with the rapid growth of
expenditure to tackle demographic ageing), reducing bureaucracy and green transition. But
indirect effects on job creation and human capital formation could also be identified.
Improved productivity would create more fiscal space for social protection in the future.
   In relation to social and employment protection, in addition to the digital transition, the
recommendations propose ensuring the long-term fiscal sustainability of the health and long-
term care systems, as already mentioned, and introducing compensatory measures to
complete the shift away from taxing labour, including by switching to greener and more
growth-friendly taxes.
   There have been several discussions related to increasing the funds devoted to
digitalisation. Opposition parties also suggested increasing the amount of loans to a higher
level, but the government argued that it would be cheaper to issue government bonds.
   The Country Specific Recommendations that will help Slovenia to recover from the
Covid-19 crisis and strengthen its resilience to deal with acute issues (such as ageing) support
the full-fledged implementation of the Recovery and Resilience Plan, in line with the relevant
milestones and targets.35 However, it has been noted that the systematic involvement of
social partners and other relevant stakeholders (in line with the idea of broad ownership of
the reforms) remains important for the successful implementation of proposed reforms and
projects.
   Policymakers rejected the option of introducing austerity measures because of the
significant negative impact on the economy and society. Fiscal measures, in order to be
effective in mitigating a deep recession, should be countercyclical. Moreover, the exogeneous
shock of the Covid-19 pandemic makes the imposition of austerity measures highly
inappropriate.


6. Final considerations.

   At the policy and societal level, the Covid-19 crisis has caused many people to question
the current functioning of the economy and society, especially in the form of citizens’




34   European Commission, nt. (25).
35   European Commission, nt. (25).

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     Polona Domadenik Muren                                                               Italian Labour Law e-Journal
     Valentina Franca                                                                    Special Issue 1, Vol. 15 (2022)
                                                                           The NextGeneration EU in Action: Impact on
                                                                                             Social and Labour Policies




initiatives. One example is the so-called “Monde d’après” (“the world to come”) initiative.36
People around the world are currently thinking about the Monde d’après, collecting ideas (for
example, on the make.org platform) on how to solve the biggest societal challenges. The
proportion of precarious workers is increasing because of the gig economy and workers’
bargaining power is deteriorating; public institutions are being eroded by austerity measures;
and value is being siphoned off from the economy in favour of shareholders through stock-
buyback schemes. The familiar economic instruments have proven to be ineffective in
combating serious exogenous shocks.37 An alternative approach would be to support
investment in research and development, increase wages and on-the-job training. The current
state of emergency could be used as an opportunity to start building a more inclusive and
sustainable economy by structuring government support properly. Laplane and Mazzucato38
suggest that states should go beyond “market correction” by playing a leading role especially
in the case of critical public infrastructure and highly risky projects, delivering immediate
solutions that serve the long-term public interest. An “entrepreneurial state” should invest
more in innovation in combating different societal challenges, from artificial intelligence to
public health, electric mobility and other things, and to overcome the often parasitic
relationship in public–private partnerships, not only by contributing to the costs of
innovation, but also in negotiating the returns on public investments. The current crisis calls
for a new policy approach, based on the theoretical foundations of (i) the developmental
state, (ii) legal institutionalism and (iii) the entrepreneurial state.
    In contrast to what happened after the 2007–2008 great financial crisis, the EU monetary
and fiscal authorities have tried to limit the negative economic impact of the Covid-19
pandemic. The Stability and Growth Pact and other institutional budget constraints have
been suspended. This has allowed many EU governments to adopt expansionary fiscal
measures to support businesses and households. The ECB has launched the Pandemic
Emergency Purchase Programme (PEPP), and the European Council has approved, among
other things, the NGEU. Will these and other EU policies be effective in tackling the
negative economic impact of the Covid-19 crisis in member countries and have a positive
impact on growth in the medium and long term?
    In principle, the logic of the proposed RRP reforms in the area of labour and social policy
cannot be disputed. Their implementation remains a real challenge, however. The first
attempts are not proving to be particularly successful, however. The recently adopted Law
on Long-term Care has been particularly ineffectual.



36 Lecossier A. and Pallot M., Innovation Strategies of Mature Resilient Businesses during the Covid-19 Crisis, IEEE
International Conference on Engineering, Technology and Innovation (ICE/ITMC), Cardiff, 2020,
https://ieeexplore.ieee.org/abstract/document/9198355, accessed 20 June 2022.
37 Mazzucato M., Capitalism’s triple crisis, Department of Economics - University of Toronto, 30 March 2020.

https://www.economics.utoronto.ca/gindart/2020-03-30%20-%20Capitalism's%20triple%20crisis.pdf,
accessed 20 June 2022.
38 Laplane A., Mazzucato M., Socializing the risks and rewards of public investments: Economic, policy, and legal issues, in

Research Policy, 49, 2, December 2020. Available at: https://doi.org/10.1016/j.repolx.2020.100008, accessed 20
June 2022.

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     Polona Domadenik Muren                                                Italian Labour Law e-Journal
     Valentina Franca                                                     Special Issue 1, Vol. 15 (2022)
                                                            The NextGeneration EU in Action: Impact on
                                                                              Social and Labour Policies




   Investment in workers' knowledge and skills is needed to enable them to work in the
digital environment. There must be accessible, efficient and high-quality training. Vouchers
for purchasing computer equipment may be welcome, but they will not solve the problem
of the gap between needs and the actual level of digital skills.
   Regarding the future development of the RRP, the current situation is characterised by
geopolitical risks and significant cost of living increases. It will also be difficult to change the
RRP because the allocation of resources has already been announced, focused on a narrow
group of actors who will actually fight change. Real change in the future would involve a
switch in policy paradigm that would improve the resilience of companies, enabling them to
manage future disruptions and handle the most important global challenges (demographic
and green transitions, inequalities and energy shortages) by making the most of synergies
between collaboration, digitalisation and sustainability.39 The “Monde d’après” initiative has
not yet been recognised as a game changer in the policy discussion, however.




Copyright © 2022 Polona Domadenik Muren, Valentina Franca. This article is released under
a Creative Commons Attribution 4.0 International License




39   See nt. (37).

https://doi.org/10.6092/issn.1561-8048/15691                                                           15
