By Vivienne Russell | 18 February 2013

The world’s richest countries have been urged to make labour market and welfare changes to secure a strong economic recovery, the Organisation for Economic Co-operation and Development has said.

In its annual Going for growth report, the OECD said such structural reforms were a ‘powerful tool’ and could boost long-term growth, underpin confidence and take some of the pressure off monetary and fiscal policies to support recovery.’

Ángel Gurría, OECD secretary general, said: ‘The road to a strong recovery remains fraught with challenges but measures taken in Europe and the United States have reduced the likelihood of a worst-case scenario. We have reached a point where bold and concerted action to get the right mix of macro and structural policies can make an upside scenario a real possibility.’

The report recommended strategies for particular economies. For example, it said European countries whose unemployment was still higher than before the financial crisis, including France, Denmark, Italy, Spain and Sweden, should lower barriers to job creation, hiring and mobility and improve incentives to take up work.

Japan and Korea needed to encourage greater participation of women in their workforces, a change that would require a better benefits system and improved childcare policies.

Lower-income OECD countries, such as Mexico, Chile and Brazil, should tackle the number of people working ‘informally’ and encourage them to take jobs in the formal sector.

The US needed to beef up training and employment services to help long-term unemployed people back into work.

The report was published on February 15 and presented at the Moscow meeting of the Group of Twenty finance ministers. Gurría said its country-specific structural reform recommendations were applicable to OECD and G20 nations alike.