Germany and the Euro Area: Addressing the Competitiveness Challenge - OECD report presented to German Federal Chancellor Angela Merkel



Restoring competitiveness is one of the key challenges to bring European economies back on a path of strong, sustainable and balanced growth. Europe could improve its growth prospects by implementing a strategic reform agenda with a broad range of policy reforms to increase productivity, dynamism and employment.

This is the main message of the OECD ¨Better Policies Series Report “Addressing the Competiveness Challenges in Germany and the Euro Area” that OECD Secretary-General Angel Gurría presented to German Federal Chancellor Angela Merkel during her annual meeting with the leaders of international economic organisations, including the Managing Director of the International Monetary Fund, Ms. Christine Lagarde, the President of the World Bank Group, Mr. Jim Yong Kim, the Director-General of the World Trade Organization, Mr. Pascal Lamy, and the Director-General of the International Labour Organisation, Mr. Guy Ryder.

“Addressing the Competiveness Challenges in Germany and the Euro Area” describes how the euro area is faced with the double challenge of addressing diverging competitiveness patterns between its members while redressing it vis-à-vis the rest of world. Both developments call for strong and decisive policy actions to boost productivity in all European countries, and to create mechanisms allowing for a stronger link between productivity gains and wages. A comprehensive reform strategy would also include further product and labour market reforms, fostering innovation, service liberalisation, and investment in skills and education, which is also key to deal with the social impact of the crisis. The report is designed to support European countries and institutions in their efforts to formulate and implement an agenda for inclusive growth and competitiveness in Europe.

During their meeting in Berlin, Chancellor Merkel and the heads of international economic organisations also agreed that policy action needs to maximise synergies between macroeconomic and structural policies in order to support the recovery of the global economy. In a communiqué issued after their working session, they underlined that “to restore confidence and to improve growth and employment prospects, decisive action has to be taken to ensure fiscal consolidation at an appropriate pace coupled with structural reforms.” They also highlighted the need to tackle the social impact of the crisis, in particular by developing strategies to improve employment prospects of all citizens and by tackling the high youth unemployment. Participants underlined the need to redouble efforts in five key areas: (i) boosting innovation and education systems; (ii) reforming labour and product markets to increase employment; (iii) combating protectionism and supporting multilateral trade, (iv) protecting natural resources and combating climate change; and (v) ensuring food security for a growing global population through an increase in agricultural production and productivity in a sustainable manner.



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