OECD secretary general Mathias Cormann has warned political parties against copying populist policies in response to rising living costs. He argued that restrictions on migration and other popular but simple proposals would not solve the deeper problems behind weak productivity, high prices and pressure on household budgets.
Cormann’s comments come as voters in many countries express concern about the cost of housing, food, energy and other essentials. Political parties face pressure to show that they understand these concerns and can offer quick answers. However, Cormann said policies designed mainly to win support may fail to address the causes of economic hardship.
Migration has become a major issue in several political debates. Some parties argue that limiting the number of migrants would reduce competition for jobs and public services. Cormann pointed to economic research suggesting that migration has not generally reduced employment or wages for people born in the country. He also noted that many industries depend on skilled workers from abroad.
The OECD chief said long-term improvements in productivity were more important for raising living standards. Productivity increases when workers and businesses can produce more value with the time, skills and resources available to them. Better training, stronger infrastructure, innovation and efficient public services can all contribute.
Housing supply is another part of the debate. If population growth continues while the number of homes remains limited, prices and rents can rise. Cormann argued that governments should address the supply of housing and supporting infrastructure rather than relying only on restrictions that may create new economic problems.
The warning also applies to tariffs and other policies that promise to protect domestic industries. Such measures may benefit some businesses in the short term, but they can make imported goods more expensive and invite retaliation from trading partners. That can hurt consumers and firms that rely on international supply chains.
Governments must still respond to the immediate difficulties facing households. Targeted support can help people struggling with bills, but long-term progress depends on stronger growth and better economic planning. Cormann’s argument is that political leaders should explain these choices honestly instead of promising that one dramatic policy will solve every problem.
The debate highlights the challenge facing mainstream parties. They need to show voters that economic concerns are being taken seriously while avoiding measures that could make those concerns worse. Sustainable improvements in wages and living standards are more likely to come from stronger productivity, housing and skills policies than from simple slogans.
