Global inequalities
“The pandemic is a painful reminder that our growth model was often unsustainable and left many people behind,” said OECD Secretary General Angel Gurría.
The OECD report underlines how the economic and social crisis triggered by Covid-19 has been exacerbated by difficulties that have been dragging on for some time, starting with the low productivity growth in many countries. The pandemic has also highlighted the structural weaknesses in health systems, unprepared to face the emergency after years of savings, and the holes in social assistance networks, which have exposed many to the risk of poverty. These frailties have increased the costs of the crisis both in the short and long term, with the risk of “persistent scars on growth, job prospects and sustainability”.
In a vicious circle, as a result of the pandemic, inequalities have widened, both between different economies and within individual countries, as the IMF has already pointed out in its recent World Economic Outlook. The massive use of digitization, as a response to restrictions to stem infections, has made more evident the lack of training, infrastructure and access to internet services, in part of the population, which risks falling further and further behind.
Work smoother, but with caution
The OECD returns to recommending “more fluid” labor markets, “characterized by greater voluntary job changes”, in order to reduce the risk of long-term unemployment and help young people in particular to find quality jobs, at the height of their training. Greater fluidity, according to the OECD, can increase people’s bargaining power and reduce wage inequalities.
And yet, the report stresses, reducing worker protection can have recessionary effects in times of economic crisis. The organization then renews its invitation to lower the tax wedge on income from work.