“Colombia has made tremendous economic and social progress, driven by impressive reforms that have created a solid macroeconomic framework and set the basis for the future,” Mr Gurría said, writes the OECD.
“The challenge facing policymakers today is to put the economy on a path to stronger and more inclusive growth, with the benefits shared among more Colombians. Courageous structural reforms will help Colombia converge with OECD living standards, reach its potential and achieve a more inclusive economy.” (Read the speech)Colombia has seen some success in reducing its high levels of labour market informality, but more must be done to ensure that government policies promote both formal employment and inclusiveness.
Continuing the reduction of non-wage labour costs, which are among the highest in Latin America, will be key. Decreasing firms’ registration costs and simplifying the registration of workers to social security would facilitate formalisation of firms and jobs.
Reviewing the minimum wage could help achieve a more job-friendly wage level.Improving the quality and relevance of education and training will also be critical for Colombian efforts to prepare workers for high-quality formal employment. Colombia needs to prioritise early-childhood and basic education, particularly in rural areas, as well as the provision of quality teaching staff.
More can be done to ensure that the vocational training system provides adequate skills enabling workers to enter formal employment and break out of poverty, the Survey said.Further tax reforms should seek to improve redistribution, raise revenues and improve the tax mix. Broadening the bases of personal and value-added taxes, reducing the corporate tax rate and eliminating its numerous tax exemptions should be considered.
Further revenue could come from environmental taxes and from strengthening tax administrations to reduce tax evasion..
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