Impact case study database

During the early 2010s, the Slovak government was repeatedly criticized for insufficient use of evidence in policy making (see, for example, “Slovak Republic: Developing a Sustainable Strategic Framework for Public Administration Reform”, OECD, June 2014 and “COUNCIL RECOMMENDATION of 8 July 2014 on Slovakia’s 2014 national reform programme and delivering a Council opinion on the Stability Programme of Slovakia, 2014”, EUR-Lex 2014/C 247/23). These analyses identified weak analytical capacity as a key factor behind this shortcoming. In order to remedy this, the Government Office undertook to create an analytical unit to provide analytical support for the Government and the Prime Minister.

On this backdrop, the Government Office created an Analytical Unit in the first half of 2015 and set out to recruit a senior economist to lead it. Dr Fidrmuc was asked to become the Head of the Unit from October 2015. His assignment was to lead and mentor a team of analysts (4 at the time) in their analytical work, and to help transform the Unit into a larger Institute which would have the status of a separate section of the Government Office. The Institute for Strategy and Analysis (Inštitút pre stratégie a analýzy, ISA) was formally constituted in May 2016. The stated mission of ISA is to provide analytical support for the economic and social policies of the Government. Since its inception, the ISA has growth from initially 5 (4 analysts and Dr Fidrmuc himself as its external Head) to 12 staff members (9 analysts, 1 administrative staff, Institute Director, and Dr Fidrmuc as External Advisor).

The impact of Dr Fidrmuc’s (on-going) engagement with ISA takes several forms.

(1) Institution building: ISA. Before 2015, Slovak government institutions had limited analytical capacities, and those that existed pre-2015 were mainly concentrated in the Institute for Financial Policy at the Ministry of Finance. This created a rather unbalanced situation, with most analysts within the civil service being concerned with work related to budgetary issues and macroeconomic forecasting. From 2015 onwards, the Government Office, the Deputy Prime Minister’s Office and most Ministries have created their own analytical units. Among these, ISA is one of the large ones, with at present 12 staff members. As part of the Government Office (a civil-service body that supports the work of the Prime Minister and provides support for the regular activities and meetings of the Government), its mission is to provide analytical and strategic support to the Prime Minister and the Government. Dr Fidrmuc helped prepare the concept document based on which ISA was constituted (the same document recommended the establishment of our sister institution, the Implementation Unit, established at the Government Office in 2017). Since its inception, Dr Fidrmuc has participated in recruiting and training new staff, advised and mentored them in their work, and participated in key managerial decisions (especially during the first 3 years, 2015 to 2018).

(2) Institution building: NPB. Slovakia, being a member of the Eurozone, is required to create a National Productivity Board (as mandated by the COUNCIL RECOMMENDATION of 20 September 2016 on the establishment of National Productivity Boards, 2016/C 349/01). The purpose of the Board is to monitor the economic performance of the country’s economy, identify areas where improvements in productivity and/or competitiveness are possible, and publish an annual Report on Productivity and Competitiveness. The Board was officially constituted in September 2019 and includes nominated representatives of key institutions representing the government and the private sector. ISA has been charged with serving as its Secretariat, responsible for organizing its meetings and for preparing the draft of the Report which is then submitted to the Board for its approval. The first Report has been completed in March 2020 and was released in June 2020 (Source 2).

(3) Policy Analysis. ISA has undertaken a number of research projects designed to assess the economic effects of national or European policies and/or to provide the basis for formulation of economic and social policies. Specifically, Dr Fidrmuc and the ISA investigated the effects of financial transfers under the EU Cohesion Policy on regional economic growth; they devised a happiness-based measure of wellbeing as an alternative to output based measures such as GDP per capita; assessed the early outcomes of a regional aid scheme for less-developed districts in Slovakia; proposed a methodological framework for measuring the relative performance of Slovakia, and its individual regions, on a number of criteria using the synthetic counterfactual method; and evaluated the budgetary impact of new wage rates for employees in public administration.

(4) Policy Advice. ISA has advised various sections of the government. In 2015, the Slovak Government has adopted a Law on support for least developed districts. This established a policy framework for supporting regions with persistently high unemployment. Dr Fidrmuc and the ISA collaborated with the Section on Regional Development and with the Office of the Government Plenipotentiary for Least Developed Regions on preparing background reports on the districts subject to this law. These reports provided basic information on economic and social background of these districts. That information was then used to identify areas for policy intervention and to prepare tailored action plans for each district. The action plans proposed measures and policies to help the individual districts reinvigorate their economies and lower unemployment. In a subsequent analysis, Dr Fidrmuc and the ISA found that municipalities in the districts awarded extra support (i.e. those for which we helped identify areas where policy intervention could bear fruit) indeed saw their unemployment rates fall faster than in similar municipalities located in districts without policy intervention.

The Director of the ISA confirms that this analytical work has had a direct impact on the people in some of the poorest region in the country. He writes, “while in 2016, Slovakia still saw an unemployment rate of 9.6%, we can now report a significantly decreased rate of 4.92%. This puts the country even below the European average of 6.3% for the first time since it became independent in 1993” (Source 1). Likewise, he says, “Rimavská Sobota, one of the least developed regions in the country which had a long-term problem with unemployment reaching well over 20%, reported an unemployment rate of 16.10% in 2019” (Source 1).

The work of the ISA and the NPB has also been used to prepare Slovakia for the economic recovery period following COVID-19. As a result of the pandemic, Slovakia is facing a great health, social, and economic crisis and the long-term sustainability of public finances will need to be restored in order to keep the consequences of COVID-19 moderate and prevent a long-term recession. The first Report produced by the ISA and the NPB on the performance of the country’s economy (see above, (2) Institution building: NPB) makes clear that, “the National Productivity Board supports the broad application of evidence-based economic and social policy making rather than adoption of policies motivated by ideological preferences or political objectives” in order to restore the sustainability of public finances following the pandemic (Source 2). “The choice of specific measures”, the report states, “will require detailed analysis of the benefits and impacts of alternative measures” (Source 2). Benefiting from Dr Fidrmuc’s research, the ISA and NPB are prepared to participate in such analyses and keep the consequences of COVID-19 at bay and protect people’s livelihoods.