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The world and Latvia lag behind in structural reforms, but this is the only way to track growth recorded after the crisis. Although many countries opt for trade restrictions rather than reforms, this can be a drag on recovery. Anhel Gurja, Secretary General of the Organization for Economic Co-operation and Development (OECD), highlighted the exclusive interview given to Latvian television in Latvia.
Since the end of the crisis, the Latvian economy has developed very well. Growth rates have been positive, but economists warn us of a low-income trap. How to avoid it?
Continue the structural reforms! Good luck The growth of 4%, as it stands today, is very good since the average growth of the OECD is half of it. Even in the United States, it is smaller – 3%. But continue the reforms! Recently, countries can no longer stimulate growth with fiscal or monetary policy because there are no more resources. Therefore, continue to implement structural reforms!
Will structural reforms not disappear?
Of course, their implementation is tiring, but if the structural reforms are not continued, the recovery of the crisis will be weakened. Another problem is the intensification of trade relations between countries. They certainly slow down the growth and recovery of the crisis
One of the problems not only in Latvia, but elsewhere, is the decrease in the availability of labor as the society ages. In the case of Latvia, many experts believe that our pension system is effective, while others believe that it needs to be reformed, because the number of valid people will decline in the future and we will not be able to more we allow it. Is there any basis for serious reforms?
The availability of manpower in Europe is right for you. We have aging nations that are reaching demographic maturity. If there is no active migration policy able to compensate for it, there is nothing more than a more active inclusion in the labor market. In other words, if we live longer, the work will also last longer and people will have to extend their working lives by continuing to invest in the social security system.
The Latvian pension system is another problem. Yes, it works well because there is no shortage of money, but another question is whether it eliminates the poverty of older people. How to avoid it? Extend a person's life When you are 63 or 65, it will be the same as the age of 50 years ago several years ago.
In Latvia, one of the biggest problems is the underground economy. That's 22% of gross domestic product. Of course, the government is grappling with this problem, but if we look at the edge, is there room for new instruments in this arsenal?
Of course, you can use new tools! The question is how to create incentives to formalize processes? Namely, companies must pay employees by giving long-term contracts. This requires positive and negative incentives. In this case, penalties. As many businesses are punished, others will understand quickly. [..] Each country, including Latvia, is oriented towards the provision of services. People working in this industry are not always willing to join unions. The economy is characterized by "georgization", so the question is how to protect those who work in the digital economy
Does our government have the answer to these challenges?
I do not think that a government has a clear answer. However, we offer to learn from each other [..] Use the OECD to share experiences on this issue.
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