OECD’s Going for Growth 2013 pinpoints labor utilization as priority
February 15, 2013, Angel Gurría, Secretary-General of the OECD and Anton Siluanov , Finance Minister of Russia, presented the OECD Going for Growth report in Moscow.
On February 15th, the OECD released its annual report Going for Growth report in Moscow. The latest edition provides a broad assessment of the progress that countries have made on structural reform priorities identified in 2011 and identifies new priority areas needed to lift growth across OECD and BRIICS (Brazil, Russia, India, Indonesia, China and South Africa) countries.
“This new issue of Going for Growth comes at a time when the likelihood of worst-case economic scenarios has receded but the road to a strong and balanced recovery is still fraught with many challenges,” Angel Gurría, OECD Secretary-General remarked at the releasing event. He elaborated that “with fiscal and monetary policies showing diminishing returns in most countries, structural reforms are more than ever a priority for the G20. Structural reforms can boost long-term growth and welfare but also take some pressure off macroeconomic policies and underpin the rise in confidence.”
The report points out that structural reforms have gained momentum in the aftermath of the recent recession. Market pressure from the eurozone crisis has acted as a driving force and continues to be the catalyst for reforms. For instance, the first chapter of the report explains that “Euro area countries under financial assistance programs or direct market pressures (e.g. Greece, Ireland, Italy, Portugal and Spain), are among the OECD countries whose responsiveness was highest, and also where it increased most compared with the previous period.”
By comparing labor productivity and labor utilization across OECD and BRIICS countries, the report proposes policy recommendations for each individual country against the background of performance weakness by country. For most European countries, it suggests raising the labor utilization rate by lowering regulatory barriers to job creation, and taking an active role in the labor market through training policies, etc.; for advanced OECD countries, especially in Asia, increasing labor productivity should be the focus; for relatively low-income OECD countries and the BRIICS, it is suggests reducing the heavy economic and social costs associated with excessive employment in informal sectors.
In addition, the report explores potential side effects of policy recommendations for achieving growth, such as income inequality and environmental concerns. For example, measures recommended for improving employment opportunities for low-skilled workers and young people may widen wage distribution and thus exacerbate income inequality in the short run. It suggests, “Policymakers must be aware of such trade-offs in order to design policy packages that best meet their objectives.”
Mr. Gurría presented the report in Moscow with the Russian Federation’s finance minister Anton Siluanov, ahead of the meeting of G20 finance ministers that occurred on February 15th-16th.
Going for Growth reports have been published by the OECD every year since 2005. The analysis identifies five structural reform priorities to boost real income for each OECD country and for the European Union as a whole. Since the 2011 edition, the report has also addressed the economic situation in the BRIICS. Going for Growth has contributed to the G20’s Mutual Assessment Process established at the 2009 Pittsburg Summit.