FDI Summit calls for action to turn risks into opportunity
Ljubljana, 28 February - A major event focusing on development issues and ways to improve the Slovenian investment environment, this year's FDI Summit discussed the challenges but also the opportunities of escalating geopolitical risks. One of the major challenges is labour force shortages.
The event, held at the Ljubljana School of Economics and Business on Tuesday, heard that Slovenia should realise its potential to create a friendly and stimulating work environment for a highly-skilled labour force and continue to invest in supply companies. It also needs to implement reforms.
"We have ambitious plans in the fields of different reforms like healthcare, pensions, the public sector, housing policy, tax system and others ... we plan to improve business processes and ensure more efficient public services," Finance Minister Klemen Boštjančič said.
He said the goal was to make the Slovenian economy more competitive while ensuring stable fiscal revenue. He underscored that compared to other countries Slovenia's labour taxation was too high and tax on wealth was too low.
Dagmar von Bohnstein, president of the German-Slovenian Chamber of Commerce and Industry, talked about the three demands set out by the chamber in a position paper which it has sent to Prime Minister Robert Golob.
They urge addressing the shortage of skilled workers in Slovenia, fully respecting the rules of the EU's internal market, in particular treating European foreign companies equal to the national ones, and modernising and expanding the transport infrastructure.
Bohnstein also mentioned challenges concerning red tape, healthcare, and challenges employers face when they want to hire, keep and reward good staff. Due to those issues "Slovenia runs the risk to be overtaken by the dynamics of its competitors for foreign investment," said Bohnstein.
One of the panel debates found that Slovenia needs to provide a stable and competitive regulatory framework, ensure transparency and improve human resources management to attract more foreign direct investment.
Iztok Seljak, managing director of Hidria Holding, the parent company of the eponymous industrial group, noted that investors are attracted by the country's market-growth size or low labour costs. "Slovenia has neither," he said.
Matevž Frangež, a state secretary at the Economy Ministry, said the government would like to make the Slovenian economy more competitive not only for FDI, but more broadly. Slovenia comes top in terms of cross-border cooperation, but only ranks 109th when it comes to issuance of building permits.
Uroš Kušar, managing director of Brinox, a company providing solutions and equipment for the pharmaceutical, biopharmaceutical and food industries, spoke about the need to tackle the labour market and to motivate people to work and increase their productivity.
One thing that needs to be looked at first is whether there may be too much talk of quantity of the labour force and too little about the quality and special skills of the labour force, said Kušar.
Aleš Poljanšek, general manager of ebm-papst Slovenija, agreed. He cited data showing that Slovenians work only 37.5 hours a week, which he said was less than elsewhere, especially if the country wants to compete at global levels with regions such as Asia.
Doris Hanzl-Weiss, an economist from the Vienna Institute for International and Economic Studies, talked about the positive economic and social impact of FDI in Slovenia, Eastern Europe and South Eastern Europe.
The region has seen a high FDI inflow in recent decades, in particular the Baltic and Western Balkan countries. The Western Balkans has been gaining ground in FDI recently, also in the wake of the Covid-19 pandemic, which has shaken up supply chains globally.
Economist Mojmir Mrak discussed the challenges of the increasingly multi-polar world bearing on smaller players such as the EU. If the EU wants to keep pace with major global players, it needs to act fast as time is running out.
The key challenges that Slovenia should address in his opinion is to look for opportunities within the fixed macroeconomic frameworks, review the existing development priorities, implement structural reforms, and continue strong internationalisation of its economy.
The Slovenian economy's position in light of the escalating geopolitical risks was also discussed at a panel debate. Matjaž Han, minister of the economy, tourism and sport, said Slovenia needed a solid social pact more than ever. "We definitely need reforms, but a precondition for their effective implementation is a suitable environment," he said.
Another debate focused on ways to attract and retain talent. Companies need to apply well-thought-out and targetted measures, while the state should create an attractive environment by acting fast, flexibly and responsively.
One problem of Slovenia's labour market is a gap between retirement and entering the labour market, and the other is complicated administrative procedures for foreign workers, said Tilen Prah, CEO and founder of Kariera, a human resources services provider. Another issue is that society in general has reservations about foreign labour force.
Rebecca Koch, chief people officer at DB Schenker Europe, noted that Slovenia is not the only country looking for labour force and that competition is fierce. "People do not come only for a job, they come for a life, a nice lifestyle." This entails many factors and decision-makers sometimes forget about some of those aspects. A competitive economy can only be part of a comprehensively functioning society.
Started in 2007, the FDI Summit is organised by the Ljubljana School of Economics and Business, the Slovenian-German Chamber of Commerce and The Slovenia Times.