In this paper, we examine the dynamics of paper industry, its productivity, the capital-labour ratio, as well as the connections between the development of employment, labour costs and its competitiveness. An extended Leontief model with induced effects is used. We show that the Slovak paper industry grew faster than in most of the European countries. However, compared to the manufacturing sector or the whole Slovak economy, it experienced a slower growth. The final demand for the products of the paper industry generated in 2013 more than 18 thousand jobs and more than EUR 650 million of value added. The final use of paper for EUR 1 million generates value added in the Slovak economy directly and indirectly for EUR 630 thousand. One employee in the production of paper generates 3.6 jobs in the remaining industries.