Strong progress with improved employment outcomes for most, but not all
After the dissolution of Czechoslovakia into its two constituent parts in 1993, the Slovak Republic witnessed considerable catch-up growth relative to EU average. GDP per capita more than doubled and was at 70% of the EU average in 2020. Growth has been driven by a strong inflow of foreign direct investment facilitated by relatively low wages, skilled labour, and the proximity to Western Europe. This development resulted in marked regional disparities, with Western Slovakia benefitting more from the presence of foreign investors. The rapid transformation led to EU membership in 2004 and the classification as a high-income country in 2007. After a 4.4% decline in economic output in the pandemic year of 2020, forecasts predict a quick recovery. GDP Growth was at 3% in 2021. Using funds from the European Recovery and Resilience Facility, Slovakia is supporting the country’s green and digital transitions.
The significant progress made on income convergence with the EU has translated into substantial improvement of employment outcomes. The country reduced its long-standing unemployment problem from a peak unemployment rate of 20% in 2000 to 5.8% in 2019, rising close to the EU average (7%) with 6.8% in 2021. With one of the strictest lockdowns in Europe, Slovakia experienced a high loss of working hours in 2020 (10.9% vs. the EU27 average of 7.4%) and 2021 (8.7% vs. the EU average of 2.7%). This was equal to almost 274,000 full-time jobs in 2020 and 217,800 full-time jobs in 2021 (based on a 40-hour week). Most of these jobs were preserved as firms resorted to reduced working hours and did not dismiss workers. Public job retention schemes played an important role. Fiscal stimulus measures in 2020 amounted to 5.1% of GDP, with additional spending in 2021. Continue reading
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The Slovak Republic is under the responsibility of the ILO Decent Work Technical Support Team and Country Office for Central and Eastern Europe