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This Working Paper looks at structural policies which would improve Greece’s long-term economic performance and help speed economic and social convergence with average European Union member countries. It focuses on a number of key areas which are particularly important for rapid growth as they offer substantial scope for catching up with international best practice. These areas are: getting more people into work through higher flexibility in the labour market and more effective labour market policies; competition policy reform; the liberalisation of product markets, in particular the energy, telecommunication and transport sectors; policies to foster entrepreneurship; and financial market reform, including the implementation of a better corporate governance regime. A number of Annexes provide additional information on the reform of the energy markets (electricity, gas, oil), the telecommunications sector, maritime transport and financial markets. This Working Paper relates to the 2005 OECD Economic Survey of Greece (www.oecd.org/eco/surveys/Greece)
Low investment rates are limiting Brazil’s future potential growth rate. This paper analyses a number of potential reasons for these low investment rates and discusses policy options to achieve faster capital accumulation. A shortage of domestic saving appears to be a major constraint to higher investment rates in Brazil. Due to high levels of current expenditures, in particular pension entitlements, public sector saving is negative. In addition to being costly, the pension system redistributes income to individuals with relatively low saving propensities, thereby reducing private saving as well. In order to control pension expenses in the future, this paper suggests a number of parametric pension system reforms. Beyond a scarcity of domestic savings, major curbs on investment include the high level of real interest rates, whose reasons are not easy to pin down, and thin long term credit markets, which are dominated by the national development bank BNDES. Going forward, engaging commercial lenders in the provision of long term funding will be necessary to cover the country’s investment needs. This will require leveling the playing field, which can only be achieved by removing BNDES’ exclusive access to low-cost funding from a workers’ welfare fund and through budget transfers. Another factor limiting investment is the fragmented tax system, which raises firms’ compliance costs and adds to an already high tax burden. Finally, regulatory reforms, including the removal of remaining entry restrictions as well as reductions in trade protection, may reduce firms’ costs and enhance investment incentives. This Working Paper relates to the 2011 OECD Economic Review of Brazil 2011 (www.oecd.org/eco/surveys/Brazil).
Raising productivity requires addressing a wide range of policies that affect resource allocation, the creation and diffusion of technology, human capital and the creation and financing of start-ups. The greatest gains can be achieved in the service sector and in SMEs, where productivity has fallen to less than a third of large firms. Regulatory reform, increased international openness and labour flexibility would support such reallocation and technology diffusion. Korea’s large investment in R&D and education should be leveraged to raise productivity by enhancing university and public research and strengthening its links with the business sector and global innovation networks. To take advantage of innovation, the relatively low skill levels of workers above age 35 calls for increased lifelong learning. Perhaps most important, it is essential to shift SME policies away from promoting the survival of firms and towards productivity gains. Given market failures in indirect financing, developing capital markets, including venture capital investment, is a priority to boost firm creation. This Working Paper relates to the 2016 OECD Economic Survey of Korea (www.oecd.org/eco/surveys/economic-survey-korea.htm)
This paper provides an illustrative assessment of the impacts on potential GDP over a 5 to 10-year horizon of structural reform scenarios in the areas of product and labour markets, relying on existing OECD empirical studies. Results of simulations suggest that a gradual alignment of product market regulations to best practice in a broad range of non-manufacturing sectors could boost aggregate labour productivity levels by several per cent over the next decade in many OECD countries, and by over five per cent across most of continental Europe, as well as for the BRIICS. Relaxation of job protection legislation could also raise productivity growth for a while in many OECD and non-OECD G20 countries, although the effects are estimated to be smaller than those from product market reforms. In a scenario under which they would be phased in relatively quickly, labour market reforms in the areas of unemployment benefit systems, activation policies, labour taxes and pension systems could raise employment rates by several percentage points in a number of OECD countries over a 10-year horizon. Large continental European countries would have the largest benefits to reap from reforms. The overall potential GDP gain for the average OECD country from undertaking the full range of reforms considered here might come close to 10% at a 10-year horizon, indicating the presence of ample room for structural reforms to offset the permanent GDP losses from the recent crisis.
Despite having low government spending, Switzerland scores highly in various public policy outcomes, including health, education and transportation. But, as the population grows and ages, efficiency of public spending will have to rise to maintain low tax rates. Given its high returns, the provision of early childhood education and care should be boosted, especially for children from disadvantaged socio-economic backgrounds, including those from immigrant families. Cantons should avoid oversupplying baccalaureates, thereby lowering university dropout rates. Policies will also need to adapt to structural changes in the labour market, by boosting the supply and attractiveness of fields of study that are facing high demand on the labour market, and by further clarifying study streams across tertiary education. Health-care efficiency could be raised by further developing managed-care networks. Enforcing systematic data collection for the quality of care would also help patients and providers make better informed choices. Generic drugs’ prices are too high due to a poorly designed price-fixing mechanism. Transportation suffers from congestion that could be reduced by implementing peak-load pricing on roads and trains. But efficiency in public spending is also about allocating public funds optimally. Switzerland’s rapidly rising social security entitlements and its fiscal equalisation system constrain public spending and risk crowding out important expenditures. Fast-rising social security entitlements could be addressed via indexing the retirement age to life expectancy. Fiscal equalisation weakens tax-raising incentives for some cantons; this could be addressed by allowing them to keep a larger part of their increased revenues. Efficiency in allocating public expenditure could also be raised by increasing the share of public spending allocated by tender and harmonising procurement regulations across all levels of government. This Working Paper relates to the 2015 OECD Economic Review of Switzerland (http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm)

A highly educated and skilled workforce has been an important driver of productivity performance and prosperity in Belgium. This paper examines skills policies that could help improve productivity and inclusiveness. An increased focus on lifelong learning, improved and more flexible working conditions for older workers, and a more efficient allocation of students and skills would benefit productivity growth. Improving inclusiveness requires increasing access and participation in tertiary education, especially for students with disadvantaged backgrounds. Digitalisation holds the promise of large gains in labour productivity, but is disrupting the nature of employment relationships. It calls for measures that encourage information and communication technology (ICT) upskilling and for adapting tax and benefit systems to the rise of on-demand jobs linked to the use of e-platforms.

The rapid growth after independence stopped in 2008 as the global crisis exposed important structural weaknesses. Large state involvement and rigid labour and product markets lowered productivity. Weak corporate governance and easy credit before the crisis led to high indebtedness and overinvestment. Slovenia was slow to deal with the underlying structural problems. Gradually, important reforms have been implemented which raised credibility of Slovenia in the financial markets and boosted confidence. But economic recovery has been sluggish, many people are unemployed and living standards still remain below the pre-crisis levels. Cost competitiveness and export market performance deteriorated, and there have been marked improvements only recently. Better corporate governance and management practices in the state owned sector and privatisations can attract FDI and raise efficiency. Low innovative activity could be boosted by more FDI, stronger framework for entrepreneurial activity and better start-up support. Relatively high minimum wage is potentially reducing employment opportunities of low-skilled workers. Limiting the minimum wage growth, and lowering the high tax wedge on labour income could boost employment. Efficiency should be raised in early and tertiary education to enhance skills. Despite generous public support, overall students’ performance could be improved and there are marked differences between students from different socioeconomic backgrounds. This Working Paper relates to the 2015 OECD Economic Survey of Slovenia (www.oecd.org/eco/surveys/economic-survey-slovenia.htm).

Higher living standards and well-being, as well as convergence with more advanced economies, will depend on achieving higher productivity, which in turn would be boosted by more investment in capital. In particular, investment in knowledge-based capital and greater inward FDI can help Slovenia develop its economy and improve global integration. Complementing such investments requires a workforce that is given the opportunities and incentives to continuously engage in upskilling and seek employment where they are most productive, in the process raising their incomes. Reskilling can be improved by boosting the links between educational institutions and local and foreign firms, helping Slovenia to overcome its problems of long-term unemployment and low employment rates of older workers. Improving life-long learning will allow workers to adapt to a changing economic environment and thereby contribute to their own well-being. Adjusting wage determination and broadening labour market activation measures can smooth these adjustments.
This Working Paper relates to the 2017 OECD Economic Survey of Slovenia
(www.oecd.org/eco/surveys/economic-survey-slovenia.htm).

Indonesia’s government needs more revenue to fund spending that can boost GDP growth, raise well-being and reduce poverty. The tax-to-GDP ratio is low relative to other emerging market economies. The difficulty is to raise revenues without denting growth or worsening inequality. Successive reforms have modernised the tax administration and increased the number of taxpayers. Nonetheless, raising compliance is an ongoing challenge and investing in the tax administration rightly remains a government priority. There is also scope to improve the design of various taxes. Broadening the bases of income and consumption taxes would raise more revenue and reduce distortions. Expanding property taxation, if appropriately implemented, could provide additional funds for local governments. Taxes can also be used more extensively to discourage activities and behaviours with negative health and environmental externalities. Strengthening property rights and fighting illegal extraction would increase revenues from Indonesia’s natural resource wealth.

This Working Paper relates to the 2018 OECD Economic Survey of Indonesia (www.oecd.org/eco/surveys/economic-survey-indonesia.htm).

The recovery from the current deep recession caused by the COVID-19 pandemic will require raising productivity through structural reforms. This implies a number of challenges for economic policies. With large parts of the economy shielded from competition, firms face weak incentives to become more productive. Sizeable shares of labour and capital are trapped in low-productivity firms that survive on the back of support from distortive policies. Reallocation mechanisms such as continuous firm entry, exit or the growth of stronger firms on the expense of less productive ones appear weaker than elsewhere. Domestic regulatory burdens and market entry barriers are high, reducing domestic competitive pressures. External competition is hampered by high trade barriers that have precluded Brazil from the opportunities that an increasingly integrated world economy can offer. A fragmented tax system gives rise to one of the world’s highest tax compliance costs and a wide array of exemptions and special regimes reduces fairness and the redistribution effect of taxes. Financial markets used to be dominated by directed credit, but thanks to a successful policy reform that aligned directed lending rates with market rates, they are now undergoing a profound transformation. Challenges in contract enforcement suggest scope for changes in the organisation of the judiciary to reduce judicial uncertainty and reduce trial durations.

Despite significant progress made, improving skills remains one of Portugal’s key challenges for raising growth, living standards and well-being. Upskilling the adult population remains a priority and lifelong learning activities should focus more on the low skilled. While active labour market policies have increased their training content in recent years, spending per unemployed is still low. A systematic monitoring of the different programmes would allow concentrating resources on the policies that are more effective in raising skills and employment prospects. In the education system, successive increases in compulsory education have not eliminated early school leaving, and a significant share of youth is left without completed secondary education, thus facing poor labour market prospects and a risk of falling into poverty. Another challenge for the education system is to reduce the link between learning outcomes and socio-economic backgrounds. This could be achieved by providing earlier and individualised support to students at risk of falling behind, strengthening teachers and principals training and exposure to best practices, and creating incentives to attract the more experienced teachers to disadvantaged schools. Vocational education and training (VET) has received less attention than general education until recent years and has suffered from fragmented management. This has curtailed the employment prospects of youth not wishing to pursue tertiary education. Establishing a single VET system and reinforcing work-based learning in companies would address this issue. Tertiary education has expanded considerably over recent years but could have a stronger focus on labour market needs, including by developing tertiary technical education. Enhanced support for business research activities could be coupled with strengthening management skills and the ties between businesses and researchers, for example by creating incentives for academics to cooperate with the private sector.
This Working Paper relates to the 2017 OECD Economic Survey of Portugal (www.oecd.org/eco/surveys/economic-survey-portugal.htm).

Portuguese
Economic participation of women in the labour force or as entrepreneurs is low compared to peers and has declined over the past decades despite strong growth. The gap with men is over 50%--the largest among key emerging markets. Participation declines with higher education achievements and family incomes. The reasons are complex: socioeconomic and cultural factors are important - family status increases if women stay home, house work has become more attractive than poorly paid market work as husband’s incomes have risen; and safety concerns and poor infrastructure keep women from market work. Nevertheless, high unemployment among educated women and revealed preference for work in surveys indicate that many women would work if conditions improved. Availability of jobs is also an issue as the high growth has not created enough jobs for men and especially for women.

Specific gender policies will be needed to enlarge economic opportunities for women and to overcome socioeconomic and cultural barriers. This paper analyses the determinants of low female economic participation and recommends policies for raising it. The paper also estimates long-term growth effects of raising participation with selected policies. More and better jobs for women in India could raise growth by about 2 percentage points a year over time. This Working Paper relates to the 2014 OECD Economic Survey of India (http://www.oecd.org/eco/surveys/economic-survey-india.htm).

As in other catch-up countries inflation is likely to stay high going forward due to nominal convergence. To better cope with the risk of a too rapid pick up of wages during the convergence process on the one hand and to raise the adjustment potential of the economy to macroeconomic shocks on the other, labour and product market flexibility is essential. Three main areas for improvement are discussed in this chapter. First, wage flexibility should be safeguarded by avoiding significant increases in minimum wages and by abolishing legal extension of collective wage settlements. Second, competition needs to be strengthened, especially in the liberal professions where entry and conduct regulation should be eased. In addition, the points of single contact that already exist for small enterprises should be extended to entrepreneurs of the liberal professions. Third, a wider use of information and communication technology (ICT) could lead to important productivity gains. Removing obstacles to the spread of e-business and a swift implementation of e-government are imperative. This Working Paper relates to the 2009 OECD Economic Survey of the Slovak Republic.
Germany’s manufacturing sector, which plays an important role for exports, has been performing well over the past decade in terms of labour productivity growth and international competitiveness. However, the services sector has had much slower growth rates. Competition often appears to be hindered by protection of incumbents. Reforming and deregulating the domestically oriented sectors, including network industries, crafts and professional services would release hidden growth potential and prove beneficial to the economy as a whole. It could also help strengthen domestic demand and reduce dependence on exports. This Working Paper relates to the 2014 Economic Survey of Germany (www.oecd.org/eco/surveys/economic-survey-germany.htm).

This paper examines the underpinnings of the successful performance of the US economy in the late 1990s. Relative to the early 1990s, output growth has accelerated by nearly two percentage points. We attribute this to rapid capital accumulation, a surge in hours worked, and faster growth of total factor productivity. The acceleration of productivity growth, driven by information technology, is the most remarkable feature of the US growth resurgence. We consider the implications of these developments for the future growth of the US economy ...

Two out of five OECD countries contract out some of the job brokerage and counselling functions of publicly financed employment services using outcome-based payment models. This paper examines several important aspects related to the design and implementation of such outsourcing. First, innovative payment models can improve incentives for external providers to offer training and more effective services for hard-to-place clients. Second, providing forward guidance to providers and accounting for contingencies can mitigate their risks, e.g. of being underpaid relative to expenses incurred, thus lowering service costs. Third, letting individuals choose a provider can result in services that are better tailored and foster ongoing competition between providers. Finally, automating data exchange can, somewhat paradoxically, improve data privacy and data protection while enabling new payment models. These and related findings are discussed with country examples based on desk research and interviews with stakeholders in several OECD countries. The paper builds on work conducted in the project “Reforming the Swedish Public Employment Service”, which was carried out with funding from the European Union via the Technical Support Instrument and was implemented by the OECD in cooperation with the European Commission's Directorate-General for Structural Reform Support.

This paper is part of the joint project between the Directorate General for Migration and Home Affairs of the European Commission and the OECD’s Directorate for Employment, Labour and Social Affairs on “Review of Labour Migration Policy in Europe”. This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. Grant: HOME/2013/EIFX/CA/002 / 30-CE-0615920/00-38 (DI130895) A previous version of this paper (DELSA/ELSA/MI(2015)5) was presented and discussed at the OECD working party on migration in June 2015. The functioning of labour markets in the European Union can benefit if third-country nationals become more mobile between EU member states. Using micro data from the EU Labour Force Survey, this paper measures their mobility and investigates whether it is raised by naturalisation or long-term resident status. While third-country nationals are overall less mobile than EU citizens, tertiary-educated persons appear equally mobile in both groups. Raising the mobility of all third-country nationals to the level of EU citizens would add at least 25 000 mobile persons. Causal effects on mobility from long-term resident status and naturalisation are identified through a difference-in-difference approach. Results suggest that long-term resident status increases the mobility of third-country nationals by 2%-6%. To avoid selection bias in the results for naturalisation, this paper draws on a natural experiment: following the accession of Central and Eastern European countries to the EU, all their citizens indiscriminately obtained the rights of EU citizens. The evidence suggests that those who were already living in other EU countries became more mobile as a result. These findings highlight that intra-EU mobility of third-country nationals depends on their rights to reside and work in other EU countries.

Kazakhstan has made tremendous progress in ensuring universal access to primary and lower-secondary education. Nevertheless, results international surveys reveal that almost two-thirds of students from Kazakhstan complete schooling without mastering the basic skills needed to be successful, and that student achievement is increasingly inequitable.

This policy perspective provides Kazakhstan with recommendations about how to strengthen its initial teacher education and support for early career teachers in order to improve the learning outcomes of all students. It is part of a larger OECD review of Kazakhstan that is published as four policy perspectives, each examining a key policy issue.

Population ageing is setting in earlier in Germany than in most other OECD economies and will be marked. It could lead to a substantial decline in employment, weighing on GDP per capita, and will raise demand for health-related public services. Germany has already implemented far-reaching reforms to mitigate the implications of ageing for per capita income, well-being and the sustainability of public finances. Nonetheless, continued efforts are needed to help older workers to improve their work-life balance and adjust their working hours to their ability and desire to work. Moreover, stressful working conditions and unhealthy lifestyles contribute to poor self-reported health and reduce the ability and willingness to work at higher age. There is scope to promote life-long learning. As the generosity of the public pension system will diminish, the contribution of private pensions to ensure pension adequacy needs to be strengthened.
  • 19 Nov 2008
  • R. J. Nicholls, S. Hanson, Celine Herweijer, Nicola Patmore, Stéphane Hallegatte, Jan Corfee-Morlot, Jean Château, Robert Muir-Wood
  • Pages: 62
  • in OECD Environment Working Papers
This global screening study makes a first estimate of the exposure of the world's large port cities to coastal flooding due to storm surge and damage due to high winds. This assessment also investigates how climate change is likely to impact each port city's exposure to coastal flooding by the 2070s, alongside subsidence and population growth and urbanisation. The study provides a much more comprehensive analysis than earlier assessments, focusing on the 136 port cities around the world that have more than one million inhabitants in 2005. The analysis demonstrates that a large number of people are already exposed to coastal flooding in large port cities. Across all cities, about 40 million people (0.6% of the global population or roughly 1 in 10 of the total port city population in the cities considered here) are exposed to a 1 in 100 year coastal flood event. For present-day conditions (2005), the top ten cities in terms of exposed population are estimated to be Mumbai, Guangzhou, Shanghai, Miami, Ho Chi Minh City, Kolkata, Greater New York, Osaka-Kobe, Alexandria and New Orleans; almost equally split between developed and developing countries. When assets are considered, the current distribution becomes more heavily weighted towards developed countries, as the wealth of the cities becomes important. The top 10 cities in terms of assets exposed are Miami, Greater New York, New Orleans, Osaka-Kobe, Tokyo, Amsterdam, Rotterdam, Nagoya, Tampa-St Petersburg and Virginia Beach. These cities contain 60% of the total exposure, but are from only three (wealthy) countries: USA, Japan and the Netherlands. The total value of assets exposed in 2005 is across all cities considered here is estimated to be US$3,000 billion; corresponding to around 5% of global GDP in 2005 (both measured in international USD)...
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