Secondly, the functioning of Slovakia’s labour market must be further improved and the high structural unemployment reduced. While the reform of the educational system might help to reduce unemployment in the medium term, making labour legislation more flexible as well as eliminating existing wage rigidities would help to alleviate pressures in the labour market more rapidly.
Any temptation to introduce wage indexation schemes should be resisted; social partners should focus on labour productivity growth and competitiveness as the main factors in any wage adjustments. Refraining from any kind of mechanical wage indexation is particularly important today to avoid any spillovers from the recent more elevated levels of inflation to wages and salaries.