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The OECD recommends that Latin American countries improve the efficiency of public spending and raise the educational level | Economy

To heal the economic wounds that the pandemic continues to inflict, governments in Latin America will have to spend better and improve education, according to recommendations issued by the Organization for Economic Cooperation and Development (OECD) in its annual report. Going for Growth 2021 posted on Wednesday. Although each country has its particular weaknesses and difficulties, these are two common denominators. “The recession runs the risk of leaving considerable economic and social scars,” add specialists from the Paris-based institution.

Argentina, Mexico, Colombia, Brazil, Chile and Costa Rica should ensure that spending is well targeted to provide a true social safety net and improve the performance of their institutions. Also raise the educational level and job opportunities of their populations. The United States should do the same for its Latino population and other minorities.

“The post-pandemic recovery creates new opportunities to lay the foundations for a vibrant recovery,” says the 244-page report. “With continued macroeconomic support, policymakers can shape the recovery to drive growth, enhance resilience and inclusion, and enhance environmental sustainability.” The report offers specific recommendations for 46 countries, six of them in Latin America.

The social support programs for the pandemic, such as the one in Brazil and Chile, have been good, the report acknowledges, what follows is to ensure that this spending is efficient, so that monetary transfers go only to those who need it in a manner social security. This could be done in the form of permanent unemployment insurance programs and aid for women, especially in Argentina and Mexico, countries where the pandemic exacerbated gender inequalities and where there is great potential to incorporate women into the working market.

In Argentina, the OECD recommends that “improving the conditions for companies to prosper, compete and create quality jobs, while investing in skills and opportunities for people, should be high on the political agenda.” The economic difficulties triggered by the macroeconomic crisis in El Paso have been exacerbated by the pandemic, making the need for more effective social protection now clear, even for vulnerable households whose livelihoods are outside the formal labor market.

The business climate must also improve in Mexico, said the institution, since the private sector is a source of much-needed resources. “The pandemic highlighted how recent increases in poverty, inequalities and gender gaps exacerbate a long-standing challenge to increase inclusion. Raising the standard of living will require boosting productivity growth by improving the business climate, including by fighting corruption and improving the skills of the population, ”summarized the OECD.

In all the Latin American countries included in the report, the point of the skills of the economically active population is touched, which is deficient. To have access to better job opportunities, governments must invest in training and education programs that raise the skill level of their populations. The OECD recommended that Chile, for example, “strengthen active labor market policies and undertake a comprehensive review of training policies would help meet the challenges of digital transformation and ensure that all workers, particularly the most vulnerable, have access to the right opportunities to retrain and find good quality jobs ”.

In the six countries of the region, as well as in the United States, the quality of education varies greatly according to geography, ethnic groups, and income levels. The organization therefore recommended that governments invest in their systems in ways that level the quality of education. “The pandemic runs the risk of exacerbating existing inequalities between social, ethnic and racial groups,” write the OECD technicians about the North American giant, citing Latinos in that country among those affected.

“The Executive [estadounidense] it cushioned the impact on vulnerable households, especially by providing cash transfers and expanding unemployment benefits, ”says the report on the historic economic stimulus package that included checks for the entire population. “However, a key political priority should be to continue to improve opportunities for the most vulnerable. Going beyond immediate support, improving education, training and investment in green infrastructure would contribute to more sustainable, resilient and equitable growth ”.

The expense in itself is not a guarantee of efficient investment. As an example, the OECD talks about Costa Rica, a country that spends more on education compared to its peers but still has relatively low results on the PISA skills test. “To achieve a strong and inclusive recovery, the top policy priority must be to boost the creation of formal jobs, with reforms ranging from removing barriers to business entry and competition, to improving the quality of employment. education and training ”, reads the report.

From direct transfers to a “true social safety net”

Colombia faces a similar situation. The pandemic is likely to lead to greater informality, inequality and poverty, reversing years of improvement, the report says. “Low-quality basic and vocational education often disconnected from labor market needs, large connectivity gaps and large regional inequalities must be addressed to address informality and boost growth and employment in the medium term.”

Brazil and Chile reacted to the decline in their economies by implementing direct transfer programs to families and individuals who lost their jobs due to the confinements. Now, the challenge for these governments will be to target this spending well. “Well-targeted conditional cash transfers could be expanded and become a true social safety net by accelerating the provision of benefits in the event of dismissal and a more gradual retirement to strengthen incentives to seek employment,” OECD economists point out on Brazil. “This should be based on experiences gained with temporary pandemic-related emergency benefits for informal workers, who account for a third of employment and are not covered by unemployment insurance schemes.”

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