OECD calls on Italy to reform

9 Apr 19

Far-reaching reforms are needed in Italy to ensure a sustained economic recovery, says the OECD.

The organisation for developed economies is proposing an ambitious package of measures to achieve stronger, more inclusive and sustainable growth, better job opportunities and a cut in public debt.

Its latest Economic Survey of Italy warns that the country’s GDP is expected to fall by about 0.2% this year, before growing by 0.5% in 2020.

“The Italian economy has many strengths – exports, private consumption, investment flows and a dynamic manufacturing sector have driven growth in recent years while labour market reforms have helped raise the employment rate by 3 percentage points since 2015,” said OECD Secretary-General Angel Gurría.

“But the country continues to face important economic and social challenges.

“Tackling them requires a multi-year reform package to achieve stronger, more inclusive and sustainable growth, and revive confidence in the capacity to reform.”

The OECD survey notes that GDP per capita is broadly at the same level of 20 years ago and poverty remains high, especially among young Italians.

While the number of people in work has risen to 58% of the working age population, Italy’s employment rate is still one of the lowest among OECD countries, and job quality is low.

The organisation says low productivity growth and wide social and regional inequalities are longstanding challenges, and public debt as a share of GDP remains far too high – at 134%.

It is proposing a package of reforms to boost employment and productivity and put the debt-to-GDP ratio on a downward path.

Its recommendations include measures to strengthen the effectiveness and efficiency of the public administration and justice systems, the introduction of in-work benefits, and increasing competition in local public services.

The OECD has warned that a reduction in the retirement age to 62 could lower economic growth in the medium term by reducing work among older people.

To help reduce wide regional divides across Italy, it is calling for improved coordination between central and local authorities.

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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