Slovenian Minister for Economic Development: We Want to Become a Sustainable Society

On his Twitter account, Zdravko Počivalšek, Slovenian Minister for Economic Development and technology says “I am the president of the party by the title and the entrepreneur in my soul”. We have asked him: “How do these two roles go together?”, but apparently it is to early to say, says the Minister.

“I have always considered myself more as an entrepreneur or let us say manager than anything else. I was not a member of any political party, when former Prime Minister Miro Cerar invited me to become a minister for economic development and technology in his government approximately five years ago. For 30 years I was working as a director and in all that time, the teams and companies I was managing felt consequences of changing regulation, made by different governments – and in most of the cases I did not agreed with political decisions. So, I have decided it is time for me to engage more deeply and try to change the system for the better”, explains our interlocutor.“After few years in politics I have finally realised that you cannot really play for the team if you do not wear its’ jersey, so I decided to become a member of SMC, recently also the president of the party, which for me is a great commitment, a personal and professional challenge. So, it is a bit too soon to answer your question, ask me how I am managing these roles after a year” says Pocivalsek.

Deciding about the future of Adria Airways has both political and economic dimensions, and it also reflects on tourism, which is one of your major areas of interest and intervention. What are your thoughts about the situation and what is the real solution?

 First of all I have to say I am dissatisfied by the situation Adria Airways finished in. Our government had very limited resources to help the company because of regulations and private ownership of the company. However, we were intensively talking with different institutions in order to find the best solution – in fact we found one, but our condition was that we receive a sustainable business plan. Without one, it would be irresponsible to invest in Adria Airways. You can imagine our disappointment when the owners did not response to this, although our door was always open for them. But this is the past.

Now, when the company filed for bankruptcy, it looks like Slovenia has two options – either we let the situation to be regulated by the market on the principle of supply and demand or we establish a new company in public-private partnership. Slovenian government will take a decision based on analysis and considering the interests of our national economy and its needs.

According to your estimates, tourism has to bring 4 billion EUR by 2021. Are the results in 2019 supporting the growth trend?

Sure they are! In the first eight months of 2019, more than 4.5 million tourist arrivals and more than 11.7 million overnight stays were recorded in Slovenia, which is 6 % more arrivals and 3 % more overnight stays than in the same period last year. And even more important – foreign guests generated 8 % more arrivals and 4 % more overnight stays.

We are really putting a great amount of effort in development and promotion of tourist offers. In order to achieve our strategic goal, we have redesigned the marketing management system, we are promoting product development and striving to improve competitiveness, and we are strengthening the “I feel Slovenia” brand and focusing the promotion on key markets and accelerating digitization.

We are expecting this year to be another record one for the Slovenian tourism. We strongly believe that the goal set in tourism strategy will be completely achieved, or very close to its fulfilment.

But if Slovenia is to become a boutique European tourist destination, which is also the goal of our strategy, we must have the 5-star hotel industry. In Slovenia today, as much as 70 % of tourist accommodation capacities or hotels are state-owned, but with very scattered ownership, which is far from optimal. We want to bring the management of the hotels under one umbrella to ensure stable ownership, which will allow for different synergies, reduce management costs, increase the profitability and value of these investments in the long term and lastly but most important – add value to our tourism. The state does not intend to remain a long-term owner of tourism companies, but it is up to us to ensure that these companies together with their capacities continue to develop for the benefit of Slovenia, Slovenian tourism and all employees.

Development of the creative industry, low carbon circular economy, enhancing digitization and sustainable tourism are the priorities of the Government. How does Slovenia compare to its EU counterparts in these aspects?

The priorities you mention are definitely a huge challenge for Slovenian and at the same time for the European economy and but Slovenia is well aware of this. Slogan of our national economy tells you, where we want to go – green, creative, smart. I am happy with the fact that Slovenia is referred to as a sustainable country, because our goal should not be only to become a sustainable economy. Our goal should be to become a sustainable society!

Sure, we have many examples of good practices in the area of transition to a circular economy, but individual examples are simply not enough. In fact, this is a debate about competitiveness. It is true that our economy can only grow with clear constraints set up from social and natural environment. And I am not trying to please anyone with this thought. Raw materials and energy represent up to 60 % of the total cost in industry. On the contrary, labour costs represent only about 20 %. Material efficiency thus has a key impact on competitiveness!

Slovenian companies are also well aware of the future development opportunities digitalisation brings. Slovenia is ranked 15th in the Digital Economy and European Commission index. There are almost 2500 industrial robots in Slovenia. We are above European average with 144 robots per 10,000 employees in manufacturing – this is where companies from the automotive industry have taken us.

Last but not least important, since tourism represent a huge share of Slovenian GDP, in 2016 we were proclaimed as World’s First Green Country in the world. Slovenia also received the award Sustainable Destinations 2018 Top 100 Best of the Planet – Best of Europe. And this year, The European Travel Commission has recognized us in its report on Sustainability Schemes as the only destination involved in the study that has taken a systematic approach to the implementations of sustainability schemes.

How do you rate the success of the traditional industry in Slovenia in catching up with the Industry 4.0.? Which governmental measures are designed to support this transition?

Industry is a key driver of growth. It represents the core of the Slovenian economy and exports and is crucial for the long-term competitiveness of the economy. Therefore, the already existing Slovenian Industrial Policy has set the guidelines for increasing the competitiveness of the business environment, strengthening entrepreneurship and innovation capacity of the economy, for responding effectively to societal challenges, and defining activities for the long-term development of the industry. The central goal of industrial policy is to increase productivity or value added per employee.

In 2015, industrial policy was upgraded with the Slovenian Smart Specialization Strategy, which identified priority areas for investment in research, development and innovation. These are promising areas where we have the appropriate competencies and capacities, which need to be further strengthened if we are to achieve a technological breakthrough.

I believe that we are on the right track and strengthening the competitiveness of the industry, which is also reflected in economic growth, stronger exports and increased employment. But we cannot pass by societal challenges we have touched in the previous question. We need to equip Slovenia for the future – it is necessary to prepare for the global race, not the local championship. In this context, innovation, investment and training are essential.

This is why The Ministry of Economic Development and Technology supports projects of companies and consortia with the aim of increasing value added, promoting competitiveness and raising entrepreneurial activity in the priority areas of smart specialization. We also support R&D projects in the framework of international cooperation in the Eureka and Eurostars programs. It is important to note that companies can benefit from a 100 % tax deduction for investment in R&D.

All around the region countries are suffering from the brain-drain and shortage of skilled workers. How Slovenia fairs in that respect?

The key question is how to find and then (even harder) retain talent.

Focusing on the professions of the future, such as mechatronics, is surely a way to secure the right staff. We have to take the size of our country and comparability of our education system as an advantage. We can be more agile, faster. The education system must respond more quickly to the needs of the market, the needs of the Slovenian economy. Monitoring the quality of educational programs of all Slovenian faculties through the announcement of the employability of graduates, masters and doctoral students through public announcements on an annual basis would be a good measure for obtaining the data of the most recruited staff.

Four main sources of workers

In general I see four main sources of workers. Skilled or not – this is always a question of our educational system and its cooperation with the market. First, young people must be confronted with the labour market as soon as possible to make it easier for them to transition. Second, we must also be aware of the macroeconomists’ estimates that we are approaching the natural unemployment rate, which occurs somewhere in the 60,000 unemployed – now we have about 70,000. We need to train these 10,000 people properly to work and make sure they work at home and not across borders.  Third, we must make it possible for older people to work as well. Of course, to those who are still capable and, above all, interested in working although retired. And fourth, of course, we should not be afraid to look abroad for workers.