Targeted economic relief measures ought to be implemented more effectively, according to the head chief economist of the OECD.
The Chief Economist of the Organisation for Economic Co-operation and Development (OECD), Laurence Boone, has called for an adjustment of governments' rescue strategies during the coronavirus crisis. Boone believes that multi-billion dollar rescue packages were right, but they need to be more targeted.
Boone suggests that governments should support only companies that have a future and are moving towards more digitalization and climate protection in the second phase of the crisis. This approach aims to ensure that the support goes to companies that are not only surviving the crisis but also contributing to a more sustainable and future-proof economy.
However, Boone warns against neglecting the concerns of many people about growing mountains of debt. To address this, Boone proposes a plan that does not cut debt-financed spending too early in the years 2021 and 2022, but describes a realistic multi-year path for the time after 2023. This plan is designed to maintain economic support while ensuring fiscal sustainability in the long term.
One of the specific recommendations made by the OECD is for the German government to follow the Netherlands' example, allowing short-time workers to qualify and work part-time. This measure, which has been effective in the Netherlands, helps to prevent widespread layoffs while allowing businesses to adjust to the changing economic conditions.
While the search results do not provide direct OECD detailed recommendations specifically on industry promotion during the coronavirus crisis, OECD data indicates that labor shortages and firm constraints persisted into the pandemic recovery, suggesting a need for targeted policies to support production and industry adjustment. Generally, the OECD calls for fostering flexibility and re-skilling in labor markets to enable adaptation to recovery demands.
The search results do not explicitly detail OECD recommendations regarding government or corporate debt management during the coronavirus crisis. However, based on OECD general work on economic stabilization and recovery, prudent fiscal support combined with targeted interventions like short-time work are preferred to avoid long-term debt burdens and promote sustainable recovery.
In summary, the OECD strongly supports short-time work schemes as a key instrument for employment stabilization during the crisis, encourages policies that enhance labor market matching and re-skilling to promote industry recovery, and advocates cautious fiscal strategies to manage debt sustainably through the pandemic rebound. Following such a plan, according to Boone, would increase people's trust. Boone does not support keeping employees on short-time work for two years and warns against the risk of accumulating too much debt during the crisis.
The OECD advocates for governments to implement targeted fiscal strategies, specifically supporting companies that are embracing digitalization and climate protection in the second phase of the crisis. This is aimed at ensuring economic support whilst fostering a sustainable and future-proof economy.
Moreover, the OECD endorse short-term debt-financed spending to maintain economic support, but emphasize the importance of a realistic multi-year plan for long-term fiscal sustainability, beyond 2022, to prevent excessive debt burdens and promote a sustainable recovery.
