Governments must implement comprehensive structural reform programmes to sustain stronger, greener and more inclusive growth that will extend beyond the current cyclical upswing, according to the OECD’s annual Going for Growth report.
Going for Growth 2018 assesses what the country-specific reform priorities are and how policy measures can be packaged together to boost long-term growth, improve competitiveness and productivity, create jobs and ensure a more inclusive and sustainable economy.
This year’s edition reveals that governments continue prioritising employment and social protection reforms, which are important for achieving greater inclusiveness and a more balanced distribution of income, and that these actions have delivered results. Employment rates of youth and low-skilled workers have continued to improve. However, the share of youth neither in employment nor at school or training remains high in some countries, and more needs to be done to improve the gender balance in employment and wages.
The report points to a further slowdown in 2017 from the already modest pace of reform observed in the previous two years, and finds little sign of any imminent pick-up.
OECD Secretary-General Angel Gurría said:
“With the major economies of the world all enjoying a widespread upswing, a window of opportunity has opened for ending the long period of stagnating living standards faced by a large share of the population in too many of our countries. But coherent structural reform strategies — and the political will to deploy them — will be needed for the global upswing to be sustained and deliver a durable improvement in productivity and living standards. These reforms are difficult, but the return of strong growth means that there is a much better chance that they bear fruit more rapidly.”
Going for Growth 2018 suggests governments should concentrate reform efforts around policy packages designed to unlock skills development and innovation capacity, promote business dynamism and the diffusion of knowledge, and preserve social cohesion while helping workers make the most of a dynamic labour market.
“Significant reforms across G20 countries have been too few and far between to boost productivity and reduce the reliance of our economies on macro-policy stimulus,” Mr Gurría said. “Individually and collectively, policy makers need to find ways to address well-known growth bottlenecks and lay the groundwork for their economies, and all of their citizens, to make the most of the digital transformation.”
Presenting Going for Growth with Argentine Finance Minister Nicolás Dujovne during the G20 Meeting of Finance Ministers and Central Bank Governors taking place in Buenos Aires, Mr Gurría said that implementing the report’s reform recommendations would help to achieve the G-20 objectives for stronger and more inclusive and sustainable growth.
The Going for Growth analysis is part of the OECD’s wider contribution to the G20 Framework for Strong, Sustainable and Balanced Growth. The OECD works with G20 countries to quantify their efforts to boost GDP and to achieve national growth strategy objectives.
The recipe for reform varies by country, spanning recommendations on creating a more competitive business environment by lowering regulatory barriers to firm entry and exit; helping workers to cope with the rapid turnover of firms and jobs through effective job search assistance, lifelong training programmes and other measures to facilitate the return of laid off workers to quality jobs; and better prepare youth for the labour market of the future with improvements in access to, and outcomes from, basic and vocational education.
Going for Growth 2018 notes that the pace of reforms continues to vary across both countries and policy areas. It points out that governments have tended to concentrate reform efforts in specific policy areas, running the risk of missing potential gains from policy synergies and reform complementarities. Improved packaging of reforms would make them easier to implement, maximise the impact on growth and job creation, help avoid unintended spill-over effects across policy areas, and contribute to reduce income inequality.
Among the highlights in this year’s report:
- The pace of reform has, on average across countries, remained similar to the relatively slow pace observed in the past two years. In both advanced and emerging economies, there are few signs of a return to the higher pace of reform seen immediately following the global economic crisis.
- Notwithstanding the slow pace of reform, some bold actions were taken. Notable examples include reforms to strengthen social protection in Greece and Italy, a long-overdue reform of the labour market in France, significant measures in Japan to increase childcare capacity, a goods and services tax in India and a comprehensive tax reform in Argentina.
- Among reforms to boost skills acquisition and innovative capacity, actions to increase the size and efficiency of R&D support have been particularly widespread, with fewer significant reforms in higher education.
- The bulk of actions taken to promote business dynamism and knowledge diffusion have focused on strengthening physical and legal infrastructure, as well as on making product market regulation more competition-friendly.
- While a high number of actions have been taken to reform social benefits, more reforms are needed to help workers cope with rapid changes in jobs and tasks, including in complementary areas such as active labour market policies and housing policies, to facilitate the job market transition and mobility.
Further information on Going for Growth 2018 is available at: http://www.oecd.org/eco/going-for-growth.htm. Detailed country notes are available on OECD and G20 countries.
If you’re interested in global mobility and expatriate management, take a look at the programme for our leading Global Mobility summit taking place on the 6th June 2018.