Browse by: "2018"

Greece is on track to recover from a deep depression. Reforms have gathered pace and fiscal consolidation has strengthened credibility, lowering uncertainty. Exports have led the expansion and labour market reforms have improved competitiveness, supporting employment growth, but wages and productivity remain low. Real investment has yet to recover due to tight financial conditions and structural impediments. The tax collection system is improving, but the tax system still relies on high rates and narrow bases, hampering growth and creating inequities. The public debt remains high and is a source of vulnerabilities. Reducing the debt ratio will hinge on raising long-term growth, maintaining prudent fiscal policy and additional debt restructuring as needed. Improving processes to negotiate employment agreements, better matching workers’ skills with workplaces’ needs, strengthening firms’ incentives to innovate and train workers in addition to continuing social protection reforms will raise employment and wages, and reduce poverty. The government has improved important areas of the investment climate, but more is required to fully implement the product market reforms already passed, improve regulatory quality and transparency, fight corruption and address informality. Reducing non-performing loans and phasing out capital controls while preserving financial stability will improve financing conditions and boost confidence.

SPECIAL FEATURES: BOOSTING INVESTMENT; SUPPORTING INCOMES THROUGH EMPLOYMENT AND SOCIAL PROTECTION

Indonesia's steady economic growth, with help from government policies, has raised incomes and lowered poverty rates to record lows. Prudent macroeconomic policies have contributed to economic stability, muted inflation and limited government debt. However, government infrastructure investment and social spending is constrained by low revenues. There is ample scope to grow revenues by strengthening the tax administration to raise compliance and broadening tax bases. Indonesia has a youthful population that will boost growth in coming years. Reaping the benefits requires shifting the employment mix towards better jobs in the formal sector. That, in turn, means tackling informality and raising skill levels, including through further structural reforms and better quality education. Indonesia's wealth of natural resources and rich cultural diversity offer many opportunities to grow tourism across the country. The recent surge in arrivals is generating export revenue but it is also increasing pressure on the environment. Developing tourism more sustainably will involve investing in skills and supporting infrastructure accompanied by local stakeholder involvement.

SPECIAL FEATURES: TAX POLICY; SUSTAINABLE TOURISM

Living standards are high in Ireland, with recent improvements underpinned by the strongest post-crisis output recovery in the OECD. The economy is projected to continue expanding over the next two years, albeit at a more sustainable pace and amid heightened economic uncertainty primarily relating to the future trading relationship with the United Kingdom. Greater uncertainty makes it vital to further improve the fiscal position, which could be partly achieved by broadening the tax base and raising the property tax yield. Vulnerabilities in the financial sector also need to be further addressed by introducing stronger incentives for banks to reduce the high level of non-performing loans that remain on their balance sheets. The future resilience of the Irish economy hinges on unblocking the productivity potential of local enterprises and enhancing productivity spillovers; most Irish firms have experienced declining productivity over the past decade, causing the large productivity gap between foreign-owned and local enterprises to widen. Given strong international competition to attract foreign-owned firms, the economy should not be overly reliant on the performance of such entities. Improving the productivity performance of the local business sector can be achieved by reducing high regulatory barriers to entrepreneurship, further improving Irish infrastructure and raising the absorptive capacity of local businesses. Other significant challenges for wellbeing and inclusiveness exist in the areas of housing, health and getting people into work. To address these challenges, stringent housing regulations that are constraining dwelling supply should be rationalised, universal healthcare coverage provided and some social benefits withdrawn more gradually as labour earnings rise.

SPECIAL FEATURE: RAISING PRODUCTIVITY

Israel’s economy continues to register remarkable macroeconomic and fiscal performance. Growth is strong and unemployment is low.  The external surplus is comfortable, and the public debt-to-GDP ratio, already well below the OECD average, is still falling. However, Israeli society remains marked by weak social cohesion and significant disparities, which penalise parts of the population and threaten the longer-term sustainability of these good results. Despite better employment outcomes among Israeli-Arabs and the Haredim, workers from these communities are often trapped in low-paid jobs due to their weak skill sets, implying persistent poverty and weak aggregate productivity. Moreover, low social transfers imply that the often large families in these communities face deprivation that contributes to child poverty. High cost of living and house prices also weigh on the social situation and well-being, and public transport deficiencies are detrimental to work-life balance and cause urban congestion and poor air quality. The authorities have continued their reform process over the last few years to address these issues. Making growth stronger, more inclusive and more sustainable will require further action and more public investment in education to improve the skills of Israeli-Arabs and Haredim together with additional product market reforms and better transport infrastructure.  

SPECIAL FEATURES: EDUCATION AND SKILLS; INFRASTRUCTURE

Economic growth picked up in 2017, but reforms are needed to sustain Korea's convergence toward the income levels in the most advanced countries. Its labour productivity is only half of that in the top half of OECD countries, reflecting problems in the service sector. In addition, productivity in small and medium-sized enterprises (SMEs) in manufacturing is only one-third of that in large firms. The segmentation of the labour market between regular and non-regular workers has resulted in one of the highest levels of wage inequality among OECD countries. The employment rate of women is relatively low and the gender wage gap is the largest in the OECD. Korea faces the most rapid population ageing in the OECD area, which is projected to drive up government social spending from 10% of GDP to 26% by 2060. This Economic Survey of Korea assesses the country's recent macroeconomic performance and prospects. It also offers recommendations on how to achieve the government's objective of a paradigm shift from growth led by business groups (chaebols) to a greater role for SMEs and innovative start-ups through wide-ranging reforms to enhance competition, improve corporate governance, promote entrepreneurship and upgrade SME policies. This should be accompanied by labour market reforms to increase employment of women, youth and older persons and to break down dualism to achieve more inclusive growth.

SPECIAL FEATURES: REFORMING THE LARGE BUSINESS GROUPS; ENHANCING DYNAMISM IN SMES

Since renewed independence in 1991 and transition from a centrally planned to a market economy, Lithuania has substantially raised well-being of its citizens. Thanks to a market-friendly environment the country grew faster than most OECD countries over the past ten years. The financial system is resilient, and fiscal positions stabilised after a long period of deficits and rising debt. Yet productivity has remained subdued due to stringent labour market regulations, informality and skills mismatch. Wage and income inequality are high, fuelling emigration. The population is ageing fast and declining, particularly because of emigration, putting pressure on the pension system. A wide-reaching labour market, unemployment benefits and pension reform entitled “new social model” implemented in 2017 is expected to reinvigorate inclusive growth, strengthen the social safety net and underpin the sustainability of public finances. However, catch-up and more inclusive growth will require raising productivity that still remains well below the OECD average, and has slowed down recently. And rapid ageing and high emigration shrink the labour force by 1% every year, requiring a comprehensive approach to address the economic consequences.

SPECIAL FEATURES: PRODUCTIVITY AND INCLUSIVENESS; AGEING TOGETHER

The Netherlands is experiencing strong growth and tight labour markets, with favourable economic prospects and sound public finances. But there are downward financial risks to the economic outlook and the country is exposed to Brexit. Looking forward, reforms are needed to move toward a more inclusive society in the context where digitalisation and globalisation will alter the functioning of the economy. The tax system needs to be streamlined to support growth, without increasing inequality. Labour-market inclusiveness could also be enhanced along several dimensions. A combination of tax and regulatory reforms would ensure a better job quality for the self-employed and workers on temporary contracts without discouraging these types of work. There is also scope to reduce the large gender gap in part time work and enhance skills of vulnerable workers. Finally, adressing population ageing will also require reforms to occupational pension plans and ensuring an adequate supply fo health professionals.

SPECIAL FEATURE: LABOUR MARKET INCLUSIVENESS

The Polish economy is expanding rapidly and living standards continue to rise, catching up with those in other OECD countries. To sustain this trend Poland needs to invest further in skills and infrastructure and develop its capacity to innovate. Indicators of scientific research quality are below those in the leading OECD countries, and business R&D investment remains weak despite rapid recent growth. Vocational training suffers from limited business engagement, and adult learning is not well developed, inhibiting citizens’ ability to acquire stronger basic and digital skills. This is holding back the economy’s capacity to innovate and the ability of Poland’s plentiful small enterprises to adopt new technologies, modernise their organisation and production procedures, and thus improve their productivity and grow. The government plans a higher education reform and the development of a skills strategy to address those issues. To help Poland confront rapid ageing, policies need to bolster seniors' and female employment, while making Poland more attractive to domestic and foreign workers alike. Poland also needs a strategy how to ensure continued financing for investment in infrastructure, skills and innovation from domestic sources should the availability of EU Structural Funds decline in the next EU budgetary cycle.

SPECIAL FEATURES: INNOVATION; FINANCING INNOVATIVE BUSINESS INVESTMENT

The Spanish economy continues its strong growth, thanks to past structural reforms, robust employment growth and accommodative macroeconomic policies. However, the legacy of the crisis has not yet been fully overcome and imbalances remain. The robust recovery provides an opportunity to keep reducing macroeconomic and financial vulnerabilities, such as high public and external debt. The resilience of public finances should be increased to address medium-term challenges, including spending pressures from demographic changes. Income inequality is high and displays regional differences in Spain. More effective use of taxes and transfers, bringing people back into employment and reducing regional disparities would make growth more inclusive. Improving productivity growth, which remains subdued, will require firms to be more exposed to competition and innovation. Policies to improve education and skills will deliver results not only in terms of productivity growth, but also better employment prospects and wages. Spain is a highly decentralised country, making the effective implementation of national reforms dependent on regional policies. More effective coordination and cooperation across different levels of government are needed to improve the effectiveness of policies.

SPECIAL FEATURE: REDUCING REGIONAL DISPARITIES

Tunisia has experienced strong economic and social progress in recent decades and, more recently, a successful democratic transition. The convergence process has slowed down, however, due to the low level of investment since the early 2000s, while regional and labour market inequalities have persisted. Since 2011, the external and public debt-to-GDP ratios have risen sharply. To put them back on a sustainable path, structural reforms that can sustain growth and competitiveness are needed. In order to boost business investment, regulatory and administrative constraints - including the many licences, permissions to operate and administrative authorisations, pricing constraints and restrictions on competition in certain sectors - need to be reduced. Strengthening Tunisia's competitiveness in global value chains through trade facilitation measures and greater efficiency of logistics services is also key. Encouraging women's participation in the labour market, adapting training to the needs of employers and reducing social security contributions on payroll will help create quality jobs. A new regional development policy, emphasising the specific assets of each region around the development of urban centres, is needed.

SPECIAL FEATURES: INVESTMENT; EMPLOYMENT AND REGIONAL DEVELOPMENT

The Turkish economy bounced back strongly after the failed coup in July 2016 but going forward growth is set to be closer to potential. The exchange rate has depreciated considerably, inflation is high and so is the current account deficit. Growth has been overly dependent on consumption and external savings and should be rebalanced by improving export performance. There is ample room to improve the quality of governance, including with respect to fiscal, monetary and macroprudential policy. Progress in these areas would help bring about disinflation and reduce risk premia, thus lowering financing costs. Coupled with increased foreign direct investment, this would contribute to improve the quality of business capital formation, and to generate high-quality sustainable jobs for the rapidly expanding labour force.

SPECIAL FEATURE: UPGRADING BUSINESS INVESTMENT

The current expansion in the United States is one of the longest on record. Economic growth since the financial crisis has also been amongst the strongest in the OECD. Robust job growth has helped bring people into employment and reduce the unemployment rate. Partly as a result, material wellbeing is high and Americans are doing well on average in comparison with residents of other OECD counties. The near-term outlook for growth is strong, partly as a result of substantial fiscal stimulus. In the longer run, improving the business environment would help sustain growth, by reanimating firm creation and productivity growth. Labour force participation rates of prime age workers are relativley low and have only recently begun to recover from the decline after the crisis. Job losses have become more persistent in areas hit by adverse structural shocks, contributing to the decline in participation. In addition, changing jobs has become more difficult over time, which is a concern with the potential for automation and globalisation to disrupt local labour markets. Labour market participation is also adversely affected by opioid addiction, which also costs many lives, harms livelihoods and entails significant public healthcare spending.

SPECIAL FEATURES: LABOUR-MARKET DISRUPTIONS FROM TRADE AND AUTOMATION; OPIOIDS AND EMPLOYMENT

OECD Factbook 2013 is a comprehensive and dynamic statistical annual publication from the OECD. More than 100 indicators cover a wide range of areas: agriculture, economic production, education, energy, environment, foreign aid, health, industry, information and communications, international trade, labour force, population, taxation, public expenditure, and R&D. This year,  the OECD Factbook features a focus chapter on gender.

Data are provided for all OECD member countries including area totals, and in some cases for selected non-member economies (including Brazil, China, India, Indonesia, Russia & South Africa). For each indicator, there is a two-page spread: a text page includes a short introduction followed by a detailed definition of the indicator, comments on comparability of the data, an assessment of long-term trends related to the indicator and a list of references for further information on the indicator; the opposite page contains a table and a graph providing – at a glance – the key message conveyed by the data. A dynamic link (StatLink) is provided for each table where readers can download the corresponding data.

The OECD Factbook is also available as a free app for your mobile device! Visit your app store.

OECD Reviews of Digital Transformation: Going Digital in Sweden analyses recent developments of the digital economy in the country, reviews policies related to digitalisation and makes recommendations to increase policy coherence in this area. The report examines recent developments in infrastructures for the digital economy, telecom markets and related regulations and policies in Sweden. It reviews trends in the use of digital technologies by individuals, businesses and the government, and examines policies to foster diffusion. Digital security policies are discussed with a view to assess its strengths and limitations. The report also examines opportunities and challenges raised by digitalisation in key areas and analyses policy responses to these changes. The areas covered range from global value chains and innovation to jobs, skills and work in the digital economy.

The report reconsiders these policies in relation to their coherence among different domains and in order to foster synergies across government ministries, levels and institutions, based on the policy framework of the OECD-wide "Going Digital: Making the Transformation Work for Growth and Well-being" project.

This report is part of the OECD Tax Policy Reviews. The Reviews are intended to provide independent, comprehensive and comparative assessments of OECD member and non-member countries’ tax systems as well as concrete recommendations for tax policy reform. By identifying tailored tax policy reform options, the objective of the Reviews is to enhance the design of existing tax policies and to support the adoption of new reforms.

This report provides a comprehensive tax policy assessment of the taxes paid by individuals in Slovenia as well as tax reform recommendations. The report is divided into six chapters, with a summary of the main findings upfront, followed by more detailed recommendations at the end of chapters 3 to 6.  Chapter 1 sets the scene for tax reform in Slovenia. Chapter 2 focuses on the labour market, social policy and tax policy related challenges. The ensuing chapters assess the financing of the social security system (Chapter 3), identify strategies to strengthen the design of personal income tax (Chapter 4), indirect taxes (Chapter 5), and the taxation of capital income at the individual level (Chapter 6).