By Judith Ugwumadu | 9 February 2015

Governments have been warned not to slow the pace of policy reforms needed to boost growth and create jobs, after a ‘significant acceleration’ of changes during the global economic crisis.

Presenting its report, Going for growth 2015, the Organisation for Economic Cooperation and Development cautioned that a slowdown in the ‘pace and breath’ of structural reforms presented a risk to economic growth.

The 10th annual study, which examined changes across the think-tank’s 34 members, endorsed the flagship pledge of G20 leaders to implement new measures to lift their collective output by 2% over the next five years.

To achieve this, the report encouraged both advanced and emerging economies to push ahead with their national growth plans and to remove obstacles to employment and labour market participation of under-represented groups such as women, youth, low-skilled and older workers.

At a launch event in Istanbul today, OECD secretary general Angel Gurría said pursuit of ‘comprehensive reform’ could be one of the keys to addressing rising inequalities and the lingering social consequences of the crisis.

Reform activity had declined in most Nordic countries, Greece, Ireland, Portugal and Spain, but had increased in Japan, the OECD said of its members.

‘Restoring healthy growth, while ensuring that the gains are broadly shared, requires determined and systematic actions across a broad range of policy areas,’ OECD chief economist Catherine Mann said.

‘In this context, the slowdown in the pace of structural reforms observed across a majority of OECD countries over the past two years and documented in this report does not augur well.’

Mann said governments may have been delaying reforms because it could increase unemployment, which was already at high levels.

‘These are legitimate concerns,’ she said. ‘In some of the countries hardest-hit by the crisis, substantial labour market reforms aimed at restoring competitiveness have been introduced without commensurate and parallel efforts in product markets and without the availability of fiscal resources to cushion the social impact.

‘Yet, a slowdown in the pace and breath of reforms carries a bigger risk. That is of letting a vicious circle develop, whereby weak demand undermines potential growth, the prospects of which in turn further depress demand.’