Upload
benoit
View
60
Download
8
Tags:
Embed Size (px)
DESCRIPTION
STRUCTURAL REFORMS IN SLOVENIA. Ljubljana, November 2005. Structure. Why reforms ? Motivation: Economic growth → Welfare Four priorities : Development P riority I – Competition and G rowth Development P riority II – Knowledge Development P riority III – Efficient S tate - PowerPoint PPT Presentation
Citation preview
1
STRUCTURAL REFORMS IN SLOVENIA
Ljubljana, November 2005
2
Structure
Why reforms? Motivation: Economic growth → Welfare Four priorities:
Development Priority I – Competition and Growth Development Priority II – Knowledge Development Priority III – Efficient State Development Priority IV – Modern Welfare State
3
Priorities and Measures (1)
Priority I
Competitiveness and growth
Measures
1. Restructuring of public finances
2. Tax system reform
3. Increasing competitiveness
4. Efficient use of EU funds for accelerated development
5. Privatisation and development of financial system
6. Liberalisation and competitiveness of public utilities
4
Priorities and Measures (2)
Priority II
Efficient accumulation, two-way flows and use of knowledge for development, and quality jobs
Measures1. Reform of the university system2. Efficient use of knowledge and
innovation.3. Technological and innovation
programmes4. Alliances between the economy
and universities5. Programmes for transfer and rise
of knowledge in the economy
5
Priorities and Measures (3)
Priority III
More efficient and cost-effective state
Measures
1. Improved budget preparation procedures
2. Rationalisation of public sector activities
3. Impact assessment of regulations
4. Improving the system for drawing EU funds
6
Priorities and Measures (4)
Priority IV
Modern welfare state and higher employment
Measures
1. Flexible labour market and higher employment
2. Fairer and more motivating system of social transfers
3. Changes and adjustments of the pension system
4. Health care reform
7
Why Reforms?
Transition inertia – stable economic growth (1993-2002) Development push in the reformed countries Slow pace of restructuring
The highest state share in the economy:126/127 (Fraser 2005)
Non-competitive country The second highest labour costs per unit GDP in the EU
(Development Report 2005) The highest level of the labour tax wedge in the EU (OECD 2004) Dramatic drop of competitiveness 35→52/60 (IMD 2005)
8
Key Proposals
1. Simpler and more business-friendly environment,2. Simplified tax system with lower tax burden,3. Privatisation4. More efficient knowledge accumulation and stimulation of
knowledge flows btw. the economy and universities,5. Selection of large national projects to be co-financed from EU
funds,6. Modernisation of the welfare state so as to motivate the
individuals for activity,7. More rational health-care system,8. More sustainable pension system encouraging longer activity
9
Development Priority I: Competition and Growth
10
Development Priority ICompetition and Growth
1. Tax reform2. Privatisation and withdrawal of the state
from active ownership3. Deregulation, demonopolisation and
promotion of competition and competitiveness
4. Liberalization of public utilities (PU)
11
1. Tax Reform
Motivation for a tax reform To increase the competitiveness of the Slovene
economy and enable it to achieve the Lisbon Strategy goals by:
Simplifying the tax administrative procedures Reducing the tax wedge on labour Decreasing absolute and relative labour costs of
the highly-skilled labour force Enabling companies to invest (via increased
profits) into R&D, new products, new jobs
12
Tax Reform Proposal
Following the OECD guidelines, transferring the focus of taxation from production to consumption (from direct to indirect taxes).
Simultaneously:Tax reform (as from 1 January 2007): Abandon the pay-roll tax (- SIT 78 bn.) Introduce the flat personal income tax (20%; - SIT 39 bn.) Introduce the flat VAT (20%) (+ SIT 115 – 135 bn.) Introduce the flat corporate tax (no exemptions and allowances)
Gradual decrease of public expenditures by 2% GDP: 2006: by 0.7% GDP 2007: by 0.8% GDP 2008: by 0.5% GDP
13
Impact of Flat-Tax on the Economy
Increasing the profits of firms: SIT 78 bn. from the pay-roll taxes SIT 39 bn. from the personal income tax Total SIT 117 bn. (approximately 1.8 % GDP annually)
Reducing the cost of highly-skilled labour force by 15 % (2GW) to31% (5GW)
Hence, creating a space for capital and R&D intensive investments and new jobs, and increasing demand for highly-skilled labour force
Consequential decrease of the public exp. by 1% GDP and by additional 2% within the proposed term plan
14
Impact on Firms’ Cost (in SIT million)
Gorenje Mura KD MercatorNo. of employees 5,594 4,583 45 8,577Payroll tax 639.5 87.8 91.2 664.8Gross wages 244.1 12.3 161.4 40.1Total 883.5 100.1 252.7 704.9
15
Budget Sustainability of Flat Tax (in SIT bn, 2004)
- Reduction of budget revenues Increase of revenues / reduction of exp. +
Pay-roll tax-125 + (35 - 45) Pay-roll tax
Personal income tax - (65 - 70) + (25 – 30) Personal income tax
+ (115 - 135) VAT
Corporate income tax 0 + 30 Corporate income taxCapital income tax n.a. n.a. Capital income tax
Total - (190 – 195) + (205 – 250)
Net Lower bound: + 15
Upper bound: + 55
16
Social Sustainability of Flat Tax(Current system vs. Flat tax, with child allowance)
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
1100
00
1275
01
1425
01
1575
01
1725
01
1875
01
2011
43
2086
43
2175
01
2325
01
2475
01
2625
01
2775
01
2925
01
3125
01
3375
01
3635
96
3885
96
4500
01
5235
49
5985
49
6835
01
7585
01
9200
01
Odstotek pov prečne bruto plače v 2004
Efe
kti
vn
a s
top
nja
do
ho
dn
ine
sedanji sistem z OO EDS z OO EDS s tax credit
17
2. Privatisation (1)
State capital funds (KAD & SOD)
Sale of KAD and SOD shares in public share-holding companies according to the term plan by the end of the year 2008;
Keep max 5% each of the shares in individual firms; Transformation of KAD and SOD into portfolio investors
and withdrawal from active ownership; Restructuring their portfolios into globally diversified
investments and clearly defined annual obligations of KAD wrt the pension budget;
18
2. Privatisation (2)
Privatisation of state-owned companies Establishing competent privatization commissions Adopting the privatisation programmes for the biggest
companies privatized according to the model 26XY Launching preparations for being listed on the SE in all
partly privatized companies with a large number of shareholders (Telekom, Zavarovalnica Triglav, NLB)
Using IPOs where strategic investors are not optimal
Measures on the capital market for an easier withdrawal of the state from the economy.
19
3. Promotion of Competition
Improvement of the market competition (prod. factors)
Improvement of Slovenia’s competitiveness on the global market of business locations
Implementation of a small number of large projects of national significance.
20
4. Liberalisation of Public Utilities
Market restructuring of the electricity energy sector - renewal of the gross trading and abolishment of the critical ineffectiveness
Competitive supply of final energy consumers Use of the public communication structure of all PU Competitive transport and logistic services
21
Development Priority II:Knowledge
22
Reform of the University System
Deregulation of the university system Promotion of private and regional universities (7-10 universities,
at least half of them private) Promoting multidisciplinary university programmes.
Financing Voucher system, combined with the system of postponed student
fees. Tax encouragements for donations to the universities
Other measures Adjustments of the study programmes, employment of the
teachers Encouraging alliances between the universities and institutions Promoting international cooperation and student exchange Abolishing limitations regarding the use of English
23
Improving Knowledge Accumulation Increase of the public by 0.5% GDP and private investments into science
and technology by 1% GDP by the year 2010 (NRRP 2005) Total 3% GDP for R&D (2010) Additional public funds from privatization (similar to Finland) Distribution of new funds for R&D in ratio 80 : 20 (technology : science)
Centralization of the technology and innovation policy under one Ministry
Simplification of the system of raising and using local public funds Simplification of drawing EU funds
Promotion of knowledge flows between universities and the economy Financing of the projects applied for by the economy in cooperation with
the university ( through TIA ) Program of young experts employed in the economy, Students grant schemes for promoting science and technical studies.
Promotion of establishing high-tech companies Establishing a fund for promotion of HT companies Legislation referring to the risk funds Technological parks Incubators at the faculties
24
Development Priority III:Efficient State
25
Efficient and Cost-Effective State
Reducing public exp. by 2 pps by 2008 (and additional 2 pps by 2012)
Introduction of PPP for financing infrastructural projects
Setting up of central registers Register of incomes form public funds Real estate register Establishing of common one-stop offices for the economy (VEM) and the
inhabitants (CSD).
Linking and joining of institutions Tax Administration and Customs Administration
Financing of model tools for simulating the effects of the economic policy Microsimulation models for monitoring financial effects of the reforms.
CGE – OLG model for simulation of impacts of the reforms on employment and growth.
26
Improvement of the System of Drawing the EU Funds
Concentration of funds for co-financing the EU operative programs under a single budget item
Permanent education and training of personnel to be engaged in Cohesion Policy
Selecting the operation programmess and setting up implementing structures for Cohesion Policy 2007 – 2013.
Establishing the Management Authority for managing all operating programmes in Slovenia, as well as the Paying Authority.
27
Effective Use of the EU Funds
Development-oriented restructuring of the budget for co-financing the projects
The use of EU funds
€ 3.5 bn. in 2007-2013 Distribution of funds
70% for 5-8 large projects 30% for small projects
Preparation of standards for selecting large projects Selection of project ideas for large projects.
28
Selection of the Project Ideas for Large Projects
Cohesion Policy
Cohesion Fund (CF) Environment and nature (at least 50% of the funds)
Sustainable use of natural and energy resources. Protection of drinking water wells as long-term strategic
natural resources. Transport infrastructure (at the most 50% of KS funds) Phyrn Highway Third Development Axis
29
Selection of Project Ideas for Large Projects
Structural Funds
European Regional Development Fund (ERDF): A net of logistic and technological centres and business
zones. Mobility for development breakthrough (public transport/
access to knowledge). Selection of projects for developing services through
linking of natural and cultural potentials (spas/health care/knowledge/nature/cultural heritage/concentration of economic subjects)
European Social Fund (ESF): Establishing alliances between R&D and the economy
(regional technological universities) National centre for industrial design
30
Development Priority IV: Modern Welfare State and Higher
Employment
31
Measures to Improve the Labour Market and the Welfate State
More flexible labour market and easier employability
Incentives for activity and employment More transparent and fairer system of social
transfers Sustainability of pension and health
insurance systems
32
More Flexible Labour Market and Easier Employment
Reducing the obstacles to more flexible forms of employment: part-time employment, shorter working hours and other (proportion of work-related costs)
Establishing temporary employment agencies and abolishing tax privileges of students’ work.
Reducing the extent of job regulation. Stimulate also temporary and part-time jobs. Linking the unemployment benefit to minimum wage rather than guaranteed
wage. Setting out the maximum redundancy pay (6 wages), simplify procedures for
laying off for fault liability, ease rigidity of collective redundancy, shorten the statutory notice period.
Abolishing compulsory supplements for length of service (possibility of a contract agreement).
Employees’ profit sharing schemes
33
Stimulating Activity of the Unemployed
Unemployment assistance could be replaced by social assistance linked to job seeking activity.
Abolishment of obstacles to combining part-time pension with part-time employment.
Setting up “job rotation” programmes. All unemployed should enter the employment programmes and a
number of advisers should rise (up to 150 unemployed per an adviser).
34
Changes in Employment Policy and Life-long Learning
Joining Active Employment Policy (AEP) programmes and clearly defining of goals
Including regional partners in special projects Decentralization of setting the target groups Independent evaluation of projects Motivation programmes for attracting candidates to education and
training projects and business incentives Putting in place of the international standard “ Investing into people” Regional domain of adult education.
35
Student Scholarship Scheme
Replacing national scholarship with a “schooling supplement” paid in addition to child benefit
Forming of a scholarship fund for sponsor and deficit professions scholarships at the level of the region; scholarships for the talented; co-financing by employees.
All existing scholarship forms should be integrated into the new system.
36
Fairer and Motivating System of Social Transfers
37
Fairer and Motivating System of Social Transfers
Setting up a central register of rights from public resources and linking of the information systems (IS)
Creation of a central decision-making point. Unifying the criteria for social rights. Unifying the valorization mechanisms. Setting up and unifying the ceiling of redundancy
payments. Unified system of the long-term nursing. More possibilities for activity. Entitlement to social assistance (DSP) related to activity. Modification of standards and conditions with the goal of
stimulating for work.
38
Improved Efficiency of the System
Advantages: Simpler system for the user. Simpler system also for decision-maker, one decree. Higher payment for the active workers’ encouragement for work. Fairer Easier monitoring
Savings: Reduction of the procedures, decrees and money-orders. Less possibilities of abuse. Assets should be taken into account. Reduction of the incomes in case of criteria modifications for being
entitled to some social rights and payments of the non-active with the work ability.
Changes of the valorization mechanisms. Limitations of the redundancy payment.
39
Adjustments and Amendments of the Pension System
40
Proposals
Encouragements for longer activity To reinforce the system of bonus and malus. Part exemption from contributions of the employers when employing the elderly.
To support the combination of part-time pension and part-time activity.
Expanding the coverage with the insurance Contribution payment defining the thickness of the employment even out of the
smaller amount of the working hours. Expand the insurance possibilities for the smaller volume of rights
Combination of social acceptability and economic maintenance To prolong the period of defining the pension payment bases. The valorization methods should come to terms with the rules at other transfers
and financial options.
Arranging the collective and individual insurance Revise the options of directing one part of the contributions of the employers
into the capital covered pension insurances. To allow the plans without a guaranteed profit for individual extra insurance and
to release the investments strategies.
41
More Efficient Health Care
42
Introduction of the Economic Calculus and Management into Health Care
Introduction of the business and professional standards and measurable indicators.
Gradual and pilot privatization of hospitals. Material liability of the management for the results of public institutions. Compulsory management training Rationalizing of public procurement.
43
Adjustment of the Compulsory Health Insurance System
To review the rights referring to the opportunity costs. To limit the length of the sick-leave. System insurance for a long-term nursing. To “clean up” the health care budget. To establish the fund for demographic transition.