The Slovak government has emphasised the need to support the digital sector, where the country is lagging behind, but the first plans of the ‘reform menu’, presented in October do not specifically address it.
Digitisation in the country should be supported mainly through state initiatives, by investing in areas such as digital education, improving eGovernment, cybersecurity, or ultra-fast internet connectivity.
Support for the industry in this sector is therefore rather indirect: the state´s plans refer to tax reform, reform of the building law, or more effective management of R&D.
Employers and the digital sector say that even the proposed creation of new counselling centres, agencies or strategies will not be sufficient.
According to them, the money that will support the industry in digitisation should be used much more purposefully. Similarly to the surrounding countries, they suggest providing it for projects executed directly in companies.
Slovaks are late
Although Prime Minister Matovič promised Slovakia a “summer of reforms” and a series of public debates on how to use European money as effectively as possible, the debates took place only between experts and behind closed doors.
The Slovak contribution to the Recovery Plan was initially presented by the finance ministry in October.
However, it turned out not to be a specific list of investment projects as required by the European Commission, but more of a “reform menu” from which the government and various ministries have to choose.
The published document is rather a long-term plan for the next ten years and it may become the basis for a debate, as its implementation would not cost € 7.5 billion, which Slovakia is to receive from Brussels, but about €30 billion. According to the “menu”, approximately €500 million would be set aside for digitisation.
Veronika Remišová, the head of the junior coalition party For the People (Za ľudí) and a deputy prime minister responsible for informatization and investment, has similarly expressed her dissatisfaction with the proposal.
Her party, just like other coalition parties, presented its own priorities and a “recovery plan.”
According to it, the digital transformation should be based on the availability of high-speed internet for households, eGovernment, development of digital skills, digital economy and innovation, and security in the digital space (EUR 90 million).
Resources for companies
Germany wants to finance the recovery of its economy and increase the resilience of companies primarily through loans. France has also chosen to support companies in the form of grants, which are to account for up to 40% of the planned funds. The neighbouring Czech Republic plans to use 32 billion Czech crowns to help companies as well.
However, in the current version of the Slovak Recovery Plan, support for companies is not envisaged. Therefore, the Slovak private sector is not yet enthusiastic about it.
Experts say that while most EU countries intend to support fourth-generation industry and build its resilience, the Slovak government fears that the market will lose jobs with new technologies.
In general, a healthy market should not be built with state subsidies, the Minister of Economy Richard Sulík thinks.
Slovak industry lags significantly behind digitisation standards in the surrounding countries. The pandemic, or rather the recovery after it, may exacerbate these differences.
According to Eurostat, the country already supports its companies less than other EU countries, including those in its neighbourhood.
Moreover, almost three-quarters of Slovak companies do not have their own capacity to grasp the topic of Industry 4.0 professionally, although they consider it important, survey reveals.
“This is a far-reaching problem because the disadvantageous position of Slovak companies in the European competitive environment will be further deepened,” warn experts from employers’ associations and Slovak digital platforms.
They are currently presenting their own, detailed plan to rebuild the sector after the pandemic to the government.
“If we manage to achieve that companies in Slovakia will know what they need and where they can get it, we will be able to talk about the so-called qualified demand. (…) But if we only get to the point that companies know what they need, we remain halfway through, because the actual digital transformation of these companies will not take place,” employers warn in their own plan proposal.
Similar to other EU countries, they consider it necessary “to allocate resources to projects, executed directly in companies”.
Investments in small as well as larger companies
Given the gap that Slovakia has in the field of the digital transformation of its economy and society, companies are proposing allocating a total of almost €1.73 billion for digitisation.
In addition to connectivity, eGovernment, human resources, and R&D support in digital technologies, they recommend investing in digital capacities and the application of advanced technologies (€ 315 million), or in the greening of the digital sector (€6 million).
Investment in the digitalisation of business and industry (€460 million) should also be significant.
They propose the allocation of public funds to the budget of digital innovation centres, innovation vouchers (consulting services focused on project identification) or digitization credits (transition between vouchers and complex demand calls), demand calls, but also state-guaranteed loans to be the most suitable tools.
Slovakia, like other countries, must submit the plan to the Commission by April 2021 at the latest.
[Edited by Zoran Radosavljevic/Samuel Stolton]