Executive summary

The fiscal deficit has fallen sharply to near balance. Public debt is declining but is still high, which, combined with large contingent liabilities such as state guarantees, make public finances vulnerable.

The government should pursue its 2020 fiscal balance objective with consolidation totalling ¾ per cent of GDP in 2018-20; frontloading of planned consolidation efforts could help to avoid overheating.

Maintain spending ceilings, pursue efficiency improvements, and adjust the structure of public spending to avoid a renewed increase in public debt.

Pursue faster, well thought-out privatisation so as to further reduce public debt and the high level of contingent liabilities.

Ageing will put upward pressure on spending in the years ahead.

Raise the statutory retirement age to 67, and ensure a continuing increase in the effective retirement age. Cover eventual pension shortfalls by a combination of additional contributions, lower pension indexation and increased incentives to work longer.

Allow hospitals to adjust their health services to changing demand, including by closing under-performing departments.

Give hospitals greater scope to engage in multi-year investments and to keep their realised cost savings.

Vocational education graduates have poor literacy skills. Technical programme graduates often do not pursue the occupation for which they have trained.

Improve general skills of vocational students through use of problem-based learning, combined with retraining of teachers.

Raise the work-experience content of technical programmes.

Time spent in training by adults is low.

Distribute adult training vouchers, or provide tax credits to increase workers’ training opportunities.

Long-term unemployment is high.

Increase training to help long-term unemployed to re-enter the labour market, including through a change in career.

The low employment rate for older workers undermines inclusiveness. Age-related unemployment and disability benefits encourage premature retirement.

Eliminate the legal requirement that wages increase automatically with age.

Harmonise the maximum duration of unemployment benefit across age groups.

Full-time tertiary enrolment is high, while the high tuition fees for part-time students keep enrolment among older cohorts low. In addition, outcomes are mediocre and completion rates low. Career guidance is limited.

Equalise tuition fees for full- and part-time students on a per course basis, coupled with grants and loans for those from poor families.

Link university funding to students’ labour market outcomes.

Poor co-ordination between regulatory bodies creates cumbersome procedures, uncertainty and higher costs.

Ensure that the regulatory impact authority’s common RIA framework is applied consistently with effective quality control including through methodology guidance and training.

The competition authority has had few successful cases, and court procedures are long.

Simplify judicial proceedings.

Increase resources and staff expertise at the authority.

The large number of regulated professions has curbed productivity.

Shrink the list of regulated professions, and, where regulation is retained, move to less restrictive forms.

Infrastructure development has focused on large projects.

Develop a common approach to cost-benefit analysis for project selection.

There are over 650 public enterprises (SOEs – owned by various levels of government), many with subsidiaries in unrelated sectors.

Strengthen SOE governance by directing them to focus on core activities, allowing more management pay flexibility and strengthening supervisory boards.

Follow through with privatisation, and narrow the group of SOEs that are considered strategic.

Vertically and horizontally integrated state-owned enterprises in network sectors hamper market entry.

Implement effective separation of activities and non-discriminatory third-party access to networks. Privatise competitive activities, except in sensitive sectors.

Policies to reach the renewable-energy target are costly.

Avoid technology biases in renewable-energy subsidies.