Executive summary

The COVID-19 pandemic has underscored the role of regulation and shed light on the urgent need for a transformation of the way rules are made and implemented. COVID-19 has exposed gaps in domestic and international rule-making that have cost lives and livelihoods. While regulating in times of crisis requires major adjustments to processes, in some settings shortcomings – in evidence, in impact and risk analysis, in stakeholder consultation, or in co-operation with other governments – have carried a heavy price for societies. To a certain extent, the crisis has also shown growing mistrust between parts of societies and their governments. Correcting course now is critical for addressing current and future challenges where regulations have a significant bearing on the success of the responses, including climate change and other environmental threats.

COVID-19 highlights that global solutions are required to tackle global problems. Governments have been forced to recognise that they cannot regulate in isolation – their decisions have an impact on other countries and are ineffective to varying degrees if not co-ordinated with other countries. International regulatory co-operation has been central throughout the pandemic response, helping to maintain trade in essential goods such as food and medical products. The collective response to the emergency also sheds light on how countries need to proactively manage the global commons. However, while there might be consensus that domestic rule-making should take international considerations into account, this is not often put into practice. Less than one-fifth of OECD members systematically reflect international dimensions in domestic rule-making.

Moreover, to be most effective, regulations need to weigh potential risks and trade-offs; this is all the more important during a crisis. However, only seven OECD member countries and the European Union report having an overall risk-and-regulation strategy including requirements for systematically considering risk when developing rules. As demonstrated during the crisis, however, even these countries did not always effectively base their regulatory decisions on evidence-based risk analysis.

Governments need to consider more holistically all societal impacts of proposed rules. While they have improved the range of impacts assessed, gaps remain, particularly in areas of gender inequality, poverty, and innovation. Enhanced oversight will be critical to ensure that decisions are based on the best available evidence, consider all relevant impacts and contribute to greater societal resilience. Governments also need to work in partnership with society to gain a more complete understanding of potential impacts on all segments of the population. Yet, less than one-quarter of OECD members systematically inform the public about potential forthcoming rules.

Embracing new technologies is critical for promoting social justice, tackling inequalities and restoring trust in government action. The pandemic has also demonstrated the importance of allowing regulatory flexibility in emergencies, and the need to make the most of new technologies. Innovation has played a crucial role in combatting the current crisis and will continue to do so. Yet, only half of OECD member countries oversee new policies’ impact on innovation. Governments need to establish more agile, flexible and resilient regulatory practices to foster the innovation that will help address the world’s most pressing social and environmental challenges while protecting health, safety, privacy and individual freedoms.

Regulators have played a central role in providing essential services throughout the pandemic, often within compressed timeframes. As risks are heightened when decisions need to be taken quickly, monitoring and evaluation become all the more important. Yet, only half of regulators publish information on the quality of their regulatory processes. Further investment in improving performance assessment and reporting will be crucial to ensure that they can adequately address future challenges.

Governments spend far too little time checking whether rules work in practice, not just on paper. Less than one-quarter of OECD members systematically assess whether regulations achieve their objectives. Incentives for improvement are currently weak: less than one-third of OECD member countries have a body in charge of checking the quality of reviews of existing regulation. Governments need to move past the traditional “set and forget” rule-making mindset and develop “adapt and learn” approaches. The pandemic has also made a general lack of foresight painfully clear. Governments must invest in skills and capacities to better anticipate future crises and mitigate their impacts, which tend to disproportionality fall on the less fortunate. They must also improve how they assess, communicate, and manage risks – including by more systematically reviewing regulations to ensure they correspond to the latest evidence and science.

People are more likely to view regulations as fair if they are engaged in the deliberative process and the outcomes of consultations are clearly explained. One of the lessons of the COVID-19 pandemic is that when people feel their voice is heard, they are more likely to comply with and less likely to complain about any resulting regulation. Open discussion about a society’s rules is fundamental to finding the right balance among differing interests across society. Moreover, it underpins trust and transparency in the actions of government. Citizens, businesses and civil society can provide valuable information on how potential rules might actually work on the ground. Consultation on draft laws is now relatively well established across OECD countries, but citizens and businesses are systematically consulted in less than one-quarter of OECD member countries at early stages of the process to identify alternative policy options. Yet, this is exactly when their input can make the biggest difference in identifying the appropriate policy options and ensuring rules work in practice. Furthermore, around three-fifths of policy makers do not provide public responses to comments received during consultations.