Economist Leader at OECD advocates for more precise design of financial aid packages
The Organisation for Economic Co-operation and Development (OECD) has urged governments to adjust their rescue strategies during the ongoing coronavirus pandemic, focusing on targeted support for short-time work schemes and key industries in the second phase of the crisis.
According to the OECD's Chief Economist, Laurence Boone, governments should implement strategies that reflect sectoral needs and labour market conditions, rather than broad, untargeted stimulus. This approach is designed to contain the fiscal cost of rescue measures while maximising their efficacy in maintaining employment and supporting industries critical for economic resilience.
In the Netherlands, the OECD recommends targeted support for the country's short-time work scheme (NOW scheme), which subsidises wages for reduced working hours, helping companies retain employees during lower demand periods. This strategy is complemented by focused help to vulnerable industrial sectors to prevent long-lasting damage and foster recovery.
Boone also emphasised the importance of supporting employees in transitioning from old jobs to future-proof jobs, a crucial aspect of the OECD's recovery framework. This includes improving workforce skills, easing finance access, and regulatory reforms that enable efficient resource allocation.
While Boone acknowledges the concerns about growing mountains of debt, he proposes a plan that does not cut debt-financed spending too early in 2021 and 2022. Instead, the plan describes a realistic multi-year path for the time after 2023. The economist suggests that the German government should follow the example of the Netherlands, allowing short-time workers to qualify and work part-time.
In the second phase of the crisis, Boone suggests supporting only companies with a future in the structural change towards more digitalization and climate protection. This approach aims to increase the trust of the people and foster a sustainable economic recovery. However, Boone does not advocate for keeping employees on short-time work for two years.
In conclusion, the OECD's recommendations for targeted rescue strategies in the second phase of the coronavirus crisis offer a coherent framework for post-pandemic recovery that balances immediate crisis management with longer-term economic transformation.
Other industries might find support in the second phase of the crisis, as governments are encouraged to focus their rescue strategies on key sectors. The OECD advises easing finance access and implementing regulatory reforms that enable efficient resource allocation to achieving this goal.
In the wake of the pandemic, businesses critical for economic resilience, including those embracing digitalization and climate protection, should receive continued support according to the OECD's recommendations for the second phase of the crisis.
