The Organization for Economic Co-operation and Development is warning governments against complacency in pursuing reforms designed to boost long-term growth and productivity, as a new report highlights priorities for action.

With a number of the world’s most advanced countries finally shaking off the sluggish economic growth of recent years, now is the time to step up, not slacken, the pace of reform, according to the latest edition of the OECD’s annual Going for Growth report.

In a preface to the report, the OECD’s chief economist, Jean-Philippe Cotis, cautions that cyclical buoyancy in continental Europe and Asian OECD countries must not lead to complacency. “Governments should resist the temptation to ease up on reforms aimed at boosting productivity and creating more jobs”, said Cotis.

It is in part thanks to the progress already made in reforming labour and product markets that unemployment has begun to fall in Europe, claims the report. But more needs to be done to boost long-term growth. Removing obstacles to labour force participation and job creation would increase living standards. Opening up product and financial markets to greater competition should raise productivity and rebalance national income away from business profits and into higher salaries and job creation, it adds.

For Canada, it recommends: dismantling the remaining obstacles to inter-provincial trade and reducing the number of “regulated occupations”; eliminating ownership restrictions in telecommunications and transport and by allowing a majority of board members to be non-residents in sectors where this is currently not allowed; developing competitive retail markets for electricity in all provinces, allowing markets to set prices, and increasing integration across both provincial and North American electricity markets; reforming the Employment Insurance system by introducing firm-level employer experience rating or by imposing longer waiting periods for benefit entitlement so as to reduce cross-subsidies between businesses that have favoured those engaged in temporary or seasonal activities; and, improving the tax system by abolishing remaining provincial taxes on firms’ ownership of capital and by switching from provincial retail sales taxes to value-added taxes. The corporate tax base should also be broadened and the same effective tax rates be applied to all businesses, regardless of size or sector of activity.

The report recommends that for much of continental Europe the main focus should be on improving labour market performance to reduce unemployment and lift labour force participation. For lower-income countries, as well as in Japan and Switzerland, raising productivity is the main challenge, so it calls for more liberalisation of product markets, especially in network industries and in services. English-speaking countries generally display good labour market performance but need to raise skill levels, in particular through improvements in secondary education, it adds. And, many EU countries need to strengthen higher-education systems to improve graduation rates and, in some cases, the quality of teaching and research.

The report also looks at the political and economic impediments standing in the way of structural reforms and at how they can best be promoted and implemented.