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Slovenia: Keep supporting the economy until growth is fully restored

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After five years of robust growth that lifted employment, wages and well-being, Slovenia’s economy has been hit hard by the Covid-19 crisis. Further support to businesses and households may be needed to reinforce the recovery and avoid lasting scars, particularly given the underlying pressures of an ageing population, according to a new OECD report.

The latest OECD Economic Survey of Slovenia coincides with the country’s 10th anniversary of becoming an OECD member, a decade that has seen Slovenia carry out labour and pension reforms and further integrate into global value chains. Slovenia has also defied the rise in income inequality seen in many other OECD countries. Slovenia now needs to support the recovery from the coronavirus crisis until it is self-sustaining, including providing training and job search support to low-skilled workers, then return its focus to raising productivity, strengthening public finances and adapting the labour market and social system for a smaller and older workforce.

“Slovenia has made remarkable economic and social progress since joining the OECD, and the government has acted admirably to manage the health and economic fallout of the Covid-19 pandemic,” said OECD Secretary-General Angel Gurría. “It is vital now to stay on track, to stand ready to provide further support where needed to restore growth and then continue with measures to tackle the long-term economic challenges of an ageing population.”

Slovenia acted quickly to halt the spread of Covid-19 and its healthcare system managed the outbreak well. Financial measures to support jobs, income and businesses softened the shock to the economy. As these measures are withdrawn, the economy may need a fiscal stimulus in the form of some rapid and easy-to-implement temporary measures, the Survey says. The main risks to the economy now are a spike in bankruptcies and a further rise in unemployment.

Assuming no significant second wave of Covid-19 infections later this year, the Survey projects Slovenia’s GDP to grow by  4.5% in 2021 after declining by 7.8% in 2020. However, in the event of a second wave, GDP is projected to grow only 1.5% in 2021 after a contraction of 9.1% in 2020.

Once the recovery is well on track, stimulus can be wound down and the focus revert to tackling the challenges arising from population ageing, which by 2055 will have doubled the ratio of over-65s to working-age people to 60%, creating the double challenge of addressing ageing-related spending pressures as the revenue base contracts. If these pressures are not contained or offset, the sustainability of public finances will be at risk, the Survey says.

Future growth will depend on employing workers in the most efficient way possible, for example by keeping older, experienced workers in jobs for longer, doing more to help low-skilled workers and improving labour allocation so workers can achieve their full productivity and wage potential. To ease the pressure from a projected tripling in the public pension deficit, the Survey recommends raising the retirement age to 67 and, if needed, linking future rises to life expectancy.

The Survey recommends further reforms to lower barriers to competition and foreign investment, to strengthen governance of state-owned enterprises and to make the tax mix more growth-friendly and inclusive by shifting the burden from labour to property taxes.

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Finance

European Innovation Council announces new wave of start-up champions

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The European Commission’s European Innovation Council has selected 65 innovative start-ups and SMEs to receive €363 million of funding for breakthrough innovations. Each company will receive a combination of grant financing and equity investment of up to €17 million to develop and scale up their ground-breaking innovations in healthcare, digital technologies, energy, biotechnology, space and other. This is the first batch of companies that will be funded under the fully-fledged European Innovation Council (EIC) Accelerator.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth, said: “The EIC Accelerator is a unique European funding instrument of the European Innovation Council. It supports the development of top-class innovations through crowding-in private investors and offers a portfolio of services to support their scaling-up. With the European Innovation Council we aim to bring Europe to the forefront of innovation and new technologies, by investing in new solutions for the health, environmental and societal challenges we are facing.”

The companies were selected following a new two-step process, introduced under Horizon Europe. Applications are rigorously assessed by external experts and followed by an interview with a jury of experienced investors and entrepreneurs. Among the companies selected are:

  • Dutch Sensius BV that developed a thermotherapy system to treat the head and neck cancer without negative side effects;
  • French Alice & Bob that invented a new type of self-correcting quantum hardware to build the world’s first fault-tolerant commercial quantum computers;
  • Lithuanian UAB INOVATYVI MEDICINA that developed a smart, sensory, tele-operated robotic system, which allows an endovascular procedure to be performed without exposure to harmful X-rays;
  • Norwegian Bluegrove AS that introduced the most advanced salmon welfare monitoring and prediction solution to take care of fish welfare.

The 65 successful companies are established in 16 countries. The demand for equity financing through the new EIC Fund was particularly high, with 60 out of the 65 companies. This means that €227 million out of the total €363 million are expected to be in the form of investment component.

Background

The EIC Accelerator offers start-ups and SMEs grants of up to €2.5 million combined with equity investments through the EIC Fund ranging from €0.5 to €15 million. In addition to financial support, all projects benefit from a range of Business Acceleration Services that provide access to leading expertise, corporates, investors and ecosystem actors. 

The EIC was launched in March 2021 as a major novelty under the Horizon Europe programme, and following a successful pilot phase between 2018 and 2020. It has a budget of over €10 billion of which approximately €1.1 billion is available in 2021 for the EIC Accelerator. The majority is open to breakthrough innovations in any field, while €495 million is earmarked for Strategic Health and Digital technologies and Green Deal solutions.

There were two rounds of direct equity investments under the EIC Pilot earlier this year, in January and in June, with 111 highly innovative start-ups and SMEs receiving more than €500 million to scale up breakthrough innovations. Among them there were two ‘unicorn’ companies.

A new start-up friendly application process has been introduced this year, under Horizon Europe, where companies can submit their ideas at any time for an immediate fast assessment. Successful candidates are invited to prepare a full application with the help of free business coaching. The full applications are then evaluated at regular cut-off dates approximately every 3 months. Since March over 4,000 start-ups and SMEs have sent their ideas, of which 801 presented full applications to the first cut-off on 16 June 2021 and a further 1098 to the second cut-off on 6 October, which are now being assessed. The results of this second batch of EIC Accelerator companies will be announced by the end of the year and the next cut-off date is expected in the beginning of 2022.

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Environment

Greenpeace Africa reacts to DRC President’s decision to suspend illegal logging concessions

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The President of the Democratic Republic of Congo (DRC), Félix Tshisekedi, ordered on Friday, October 15th, the suspension of all dubious logging concessions, including the 6 granted in September 2020. Greenpeace Africa, one of the civil society organizations that denounced these concessions, applauds the decision taken by the Head of State and encourages him to remain vigilant and ensure its effective execution by Deputy Prime Minister Ms. Eve Bazaiba.

Greenpeace Africa reiterates its call for maintaining the moratorium on new industrial logging concessions to prevent a human rights and climate catastrophe. This logging sector, characterized by bad governance, favors corruption and remains out of touch with the socio-economic needs of the Congolese people and the climate crisis we live in.

Irène Wabiwa Betoko, Head of the International Congo Basin Forest Project of Greenpeace: “The decision of H.E. President Tshisekedi against the illegal actions of former Minister Nyamugabo sends an important message to the Congolese people and their government. It is also a red light for the plans of Ms. Ève Bazaiba, current Minister of the Environment, to open a highway to deforestation by multinational logging companies through lifting the moratorium on new industrial concessions.”

The President asks to “Suspend all questionable contracts pending the outcome of an audit and report them to the government at the next cabinet meeting.” Greenpeace Africa maintains that the review of illegalities in the forest sector must be transparent, independent, and open to comments from civil society organizations.

Ms. Wabiwa adds that “Both the protection of the rights of Congolese peoples and the success of COP26 require that the moratorium on granting new forest titles be strengthened. We again call on President Tshisekedi to strengthen the 2005 presidential decree to extend the moratorium.”

Ms. Wabiwa concludes that “instead of allowing new avenues of destruction, the DRC needs a permanent forest protection plan, taking into account the management by the local and indigenous populations who live there and depend on them for their survival.”

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Tech News

Standards & Digital Transformation – Good Governance in a Digital Age

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In celebration of World Standards Day 2021, celebrated on 14 October every year, the United Nations Industrial Development Organization (UNIDO) is pleased to announce the launch of a brochure, “Standards and Digital Transformation: Good Governance in the Digital Age”.

In the spirit of this year’s World Standards Day theme “Shared Vision for a Better World”, the brochure provides insights into the key drivers of the digital transformation and its implications for sustainable development, particularly people, prosperity and planet. Noting the rapid pace of change of the digital transformation, with the COVID-19 pandemic serving as an unanticipated accelerator, the brochure highlights the role of standards in digital transformation governance. It further considers the principles necessary for guiding the collaborative development of standards in the digital technology landscape to ensure that the technologies remain human-centered and aligned to the goals of sustainability.

This year’s World Standards Day theme highlights the Sustainable Development Goals (SDGs) representing a shared vision for peace and prosperity, for people and planet. Every SDG is a call for action, but we can only get there if we work together, and international standards offer practical solutions we can all stand behind.

This brochure is a summary of a publication set to be released in November 2021.

Download it here.

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