The COVID-19 pandemic-induced crisis has exposed major weaknesses in economies that can only be fixed through greater global co-operation and strong, targeted policy action, according to a new report by the Organisation for Economic Cooperation and Development (OECD) presented to the leaders of the G20 countries at their virtual summit recently.
New Horizons, a report requested by the G20 to support its action plan in response to the crisis, says governments need to plan now for the recovery while continuing to live with the virus.
Emergency economic measures to tackle the crisis will need to be adapted, support to people and businesses become more targeted, and new policies put in place to make the objective of a stronger, sustainable and inclusive global economy, a reality, according to an OECD press release.
Speaking at the summit, OECD secretary general Angel Gurría said ambitious reforms are needed to ensure a vigorous recovery.
The OECD identifies the need for stronger co-operation between governments in a number of fields, including health, trade, taxation of multinationals as the economy becomes increasingly digitalised, environmental sustainability and preventing sudden outflows of capital and sovereign debt crises in emerging markets and developing countries.
The report says exceptional fiscal spending and monetary support should be maintained as long as needed to buffer the shock of the pandemic, and outlines how governments should work on three main fronts: to reallocate resources; support people; and build a sustainable and resilient economic system for the future.
Governments will need to assist workers and businesses to transition from shrinking to expanding sectors; by removing barriers to mobility, by increasing competition, and by making it easier for firms to access finance and advanced technologies or to restructure, the report said.
Improving training and building skills, particularly among the low-skilled, youths and women who are often vulnerable in the labour market, will be key. Job retention schemes will need to evolve to ensure that people, rather than their jobs, are protected, that their opportunities are widened and their income safeguarded.
The New Horizons report is part of the broad range of analysis and recommendations from the OECD and other international organisations to support the work of the G20.
Gurría said OECD is continuing to work with the G20 towards achieving a political agreement on how to tax the digital economy by mid-2021.
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