The International Monetary Fund (IMF) warned about the fact that living standards will fall around the world sooner if governments do not take urgent actions in order to increase. Christine Lagarde, the head of IMF, says governments must invest in education, cut red tape and encourage innovation to drive up growth. According to her, policymakers must not wait for innovation to drive up productivity growth and increase living standards; they must do something to accelerate growth.
She pointed out a poor global record on productivity growth in previous years and said IMF analysis suggested GDP in advanced economies would be about 5% higher today if the pre-crisis trend had continued for total factor productivity growth, a broad measure of what goes into production, such as research spending.
Legarde warned that the world could not afford to leave productivity growth in the doldrums. She stated that another decade of weak productivity growth would seriously undermine the rise in global living standards. Slower growth could also jeopardise the economic and social stability of under developed and developing countries by making it more difficult to reduce excessive inequality and sustain private debt and public obligations. Even some developed countries are seen not to deal with the consequences of slower economic growth.
Legarde also warned the countries that received large numbers of refugees planning to integrate them into labor force in order to create a younger and more dynamic workforce and accelerate growth and productivity.
It was also stated that rapid technologic changes had cost jobs in some sectors, in fact hitting lower skilled workers hardest. According to Legarde, governments are responsible to help such workers by targeting education programs. She also explained that education and training are the key policy actions to raise both productivity growth and reduce inequality.