In the period 2000–2008, Slovenia successfully reduced its development gap with the most advanced EU Member States. As a result, the standard of living of the population has also risen. The financial crisis turned all this on its head. We delayed the recovery of banks, which stalled our convergence with the most advanced countries in the EU. While we were the most developed new EU Member State in 2004, the Czech Republic and Cyprus have already overtaken us, and Estonia and Lithuania will overtake us any time now. In 2000, for example, Estonia's gross domestic product per capita in purchasing power parity terms was still twice as low as Slovenia's.
But it is not primarily about pride. The forecasts of rising public spending due to an ageing population are relentless.
While, according to the latest data from the Office for Macroeconomic Research and Development, we spent 16.9 percent of GDP on healthcare, pensions and long-term care in 2019, this figure will rise to 17.6 percent by 2025, 18.7 percent by 2030 and a whopping 22.3 percent of GDP by 2040.
In other words: in 2019, we spent just under €8.2 billion on healthcare, pensions and long-term care. In 2025, this figure will already have risen by €350 million relative to GDP in 2019. In 2030, we will have to pay almost a billion more for these services. In 2040, however, these state expenditures will be closer to €11 billion relative to 2019 GDP. In fact, due to the projected growth in gross domestic product, these figures will likely be even higher.
Long-term projections of social expenditure
Slovenia therefore needs to find more than €2.5 billion extra by 2040 to finance healthcare, pensions and long-term care. We dare to say that these amounts cannot be achieved in the current structure of the Slovenian economy without a significant reduction in the standard of living of the population. We are already witnessing this today: the quality of public health care is getting worse, fast-track care is increasingly being paid for out of pocket, pension increases are struggling to keep up with inflation, and access to long-term care is poor.
Slovenians have always been proud of our solidarity, of the welfare state, of social equality. We have looked contemptuously towards the United States, saying how you are only worth as much as you have under your thumb there. But when a person is ill, he will not ask himself whether it is fair that he can pay for his own treatment while someone else cannot, and this is the scenario that Slovenia is rushing towards.
If we want to maintain or even strengthen the current level of the welfare state, we will need to create more as a society. This means that the economy will have to produce more high value-added products and services, i.e. more high-tech products that can be sold at higher prices due to their complexity and unique nature.
This will require a fundamental change in Slovenia's development model. The country and companies will need to focus on the goal of a substantial increase in the high-tech sector. This increase must go hand in hand with an increase in social equity.
According to the Organisation for Economic Co-operation and Development (OECD), Slovenian companies are divided into two groups in terms of productivity. The first group comprises those that compete on the global market, producing higher-quality products and services, which enable them to offer higher wages to their employees and pay more taxes to the state budget. The second group includes companies working for the domestic market, with lower-quality products and services, and thus lower wages and taxes paid, which are likewise spent on social services.
The State urgently needs to encourage the growth and development of the first group of companies, but incentives must be carefully thought out. According to Eurostat data for 2022, corporate R&D expenditure is very close to the European average. We are also not bad when it comes to the education of the population. The key factors of the economic environment are not bad. So what needs to change?
Slovenia compared to EU countries on key high-tech indicators
