Growth in incomes and labour productivity has stagnated since the crisis. GDP per capita remains around 75% below the average of the upper half of OECD countries. Weak labour utilisation and total factor productivity have both weighed on growth since the crisis.
Inequality and poverty have remained very high and poor environmental quality negatively affects health outcomes. Greenhouse gas emissions per capita are below the OECD average, but population exposure to air pollution is high.
Progress on the priority to finalise the reform of the wage bargaining system has been made, as the national minimum wage became effective in January 2019. Although strengthening active labour market policies to tackle unemployment remains important, this priority has been dropped as investment in infrastructure and broadening access to markets are more pressing in order to support job creation and growth.
Removing barriers to competition and lifting regulatory restrictions in many sectors would boost growth. In particular, more competition in network industries would bring down prices, increase the accessibility of services, stimulate downstream firms’ competitiveness and raise productivity growth. Improving the management and governance of state owned enterprises and strengthening the regulation of network sectors is crucial to lift supply side bottlenecks. Improving infrastructure and reducing intra-regional trade barriers would facilitate the flow of goods and people, increase market access and support economic growth and well-being. Reducing red tape and barriers to entrepreneurship would bolster employment and productivity growth. Improving equity and quality of education would boost human capital accumulation and reduce the high levels of inequality.
