Greenovated transition: Slovenia’s sustainable shift

It is obvious that we have entered a period of the greatest economic changes in history. These changes are driven by a variety of interconnected shifts – climatic, technological, geostrategic, social. In light of this, it becomes imperative for economies, including Slovenia, to adapt to the unfolding dynamics of the new era.

The changes we are talking about need certain adjustments in several areas. On the one hand, we must reduce the carbon and energy intensity of our industries. On the other hand, Slovenia’s strategic focus is to rapidly increase its added value. All this aligns with the rise of new technologies, with artificial intelligence being one of the most important drivers of this restructuring. It’s basically a mix of changes affecting all industries. 

Our common consideration is how to design an economic policy geared towards positioning Slovenia among the victors of this time. These big changes determine exactly that – emerging winners and unfortunate losers.

Our initiatives are geared towards making our future greener with eco-friendly solutions – now a universal and ultimate requirement for every business. According to a PwC survey, 50% of Slovenian companies believe that climate change will not have a significant impact on their operations. This same percentage of companies very likely believes they will not be affected by the artificial intelligence. Looking at this pessimistically, it’s a sign that half of the Slovenian economy is not prepared for big changes. On a more positive note, half of the companies recognise how megatrends can influence their business. 

The scale of these changes requires adjustments, even in individual industries. Slovenia is strongly embedded in European industrial networks, particularly in the automotive industry, which faces substantial upheavals amid the shift to electric mobility. Slovenia has the ambition to fortify its economy with a greater share of finished products, as well as domestic brands, which will be the outcome of Slovenian knowledge, innovation and design tailored to global demands. 

In this era marked by a revival of industrial policy, investors are coming to Slovenia, they are interested in how our country, as an EU member, competes with its European counterparts in providing incentives for their investments. To bolster our competitiveness, we must create a predictable business environment. In today’s unpredictable global landscape, Slovenia, given its small size and significant international involvement, must ensure its internal systems are flexible enough to effectively react to the ongoing changes. The goal is to remain steadfast in turbulent times, always act as an internal, compact, and resilient entity, capable of flexibly adapting to external changes. 

Through an extensive tax reform, our focus needs to be on alleviating the burden on labor while simultaneously adjusting property taxation upwards. Indeed, if the ambition is to position ourselves as a new European hub for innovation, maintaining low property taxation is not a magnet to help us achieve this objective. On the other hand, the magnet is a more competitive taxation of labour, recognising its pivotal role as a key development factor in generating innovation, knowledge, and creativity. 

The action plan I’m referencing is precisely aimed at this coordination: to engage in concrete discussions about our economic vision and related measures. On one front, these measures are the responsibility of our ministry and we can feasibly realise them independently. On the other front, it involves measures that must be achieved through an interdepartmental approach if we want to realise the mentioned vision. But first we need to know where we want to go, so that we can then integrate the various measures into a whole that will effectively propel us towards achieving our goal.

While our ministry isn’t primary responsible for key licensing functions, we are very interested in helping to make this important transition. We recognise talent is a pivotal driver for innovation and technological advancements – we proposed a re-evaluation of the “fast track” system for high-tech profiles some time ago. Under the proposed procedure, upon the submition of a complete application, a permit to work and reside in Slovenia is automatically issued. Subsequently, the administrative body would validate or revoke the permission based on whether the stipulated conditions are met. This would enable better access to global talent in the economy, while maintaining the necessary safeguards in the system. Notably, a comparable system was effectively implemented by Germany last year, which recognises, as we should all, that labour is one of the key inputs in the economy. 

Countries compete with each other, so we need to strengthen our competitiveness. And Slovenia holds quite a few advantages: a safe community, fantastic conditions for a high quality of life with exceptional opportunities for contact with nature, sports, and recreation, as well as a solid education system, inclusive and accessible universities and globally competitive research institutes. Our strengths extend to an excellent location, beautiful natural landscape, not to mention that we are a ‘wine and culinary superpower’. This network of advantages is crucial to position ourselves as a green destination for life and work. To this we must add friendly, fast procedures and implement a tax reform that will alleviate the burden on labour. 

Undoubtedly, Slovenia’s path serves as an example for many in the Adriatic region. As a country, we have largely successfully navigated the processes and challenges facing the region. The goal is clear: prompt and complete integration of the Adriatic countries into full EU as soon as possible. I am confident that current geopolitical and geostrategic circumstances will make it possible. 

In Bled we finally agreed on the timelines and concrete strategies to stimulate the region’s economic integration into the EU internal market. We now have a destination and a clear path. The objective is to increase investments and improve economic infrastructure in the Adriatic region, a goal Slovenia is committed to supporting, both politically, with a lot of knowledge and experience about opportunities in the EU internal market, and practically through the direct engagement of our companies, which are strongly present in the region, particularly in banking and insurance.  

The economies of the Adriatic region will do better, while the risk of potential conflicts will diminish. I truly believe in the potential of this region. I am convinced that we are significantly more complementary than competitive. As a society, we share a certain affinity with this area, embodying a blend of German precision and engineering brilliance on one side, and a Mediterranean laid back attitude on the other – a reminder that life extends beyond work. 

I would emphasise the more efficient use of resources, including energy, and the creation of new value that will push us further up the supply chains. Take, for example, eco–design, which designs products to enable their recyclability and extended lifespan. At the highest level, we have the Net Zero Industrial Act serving as the European Union’s strategic framework that defines how to utilise and enforce strategically important technologies necessary for the green transition. There is a whole range of strategic technologies being developed in Slovenia, from wind technologies to carbon capture storage, heat pumps, and nuclear technology. Today, Europe is significantly dependent on China for many of these technologies. This underscores an opportunity for Slovenia to step in with its knowledge and products as a provider of innovative solutions.