The Organisation for Economic Cooperation and Development (OECD) on Thursday revised downwards its forecast for Italy's national gross domestic product in 2012 to -2.4% from -1.7% in May. OECD Chief Economist Pier Carlo Padoan also said that Italy had not done enough to be competitive.
"Some countries, such as Italy, that are making adjustments, have still not done enough to reestablish competitiveness," he said, adding that the lack of competitiveness accumulated over time is one of the main problems facing countries in the southern eurozone. One of the most crucial issues in this respect is the unit cost of work, which Padoan said included three elements: productivity, which "must be increased"; wages, which need to be "more closely linked to the productivity" of different companies; and the "tax burden, which remains among the highest in Europe". However, this can only be reduced when it is certain that tax cuts can be financed by cuts in spending, the economist said.
For this reason, "the spending review currently underway must quickly translate into a source of usable resources," he concluded.