The Growth of Inequality: A Breeding Ground for Populism Conference of Montreal

Delivered 14-06-2017, Montreal

Thank you Michel, Ladies and Gentlemen,

It is an honour to join you here to speak about inclusive growth.

Even though in our last economic outlook the world economy seems to be picking up with a broader basis, we should not forget that it has been almost a decade when the financial crisis erupted causing a strong economic and social impact.

This financial crisis transformed into an economic  one and finally turned into a political backlash. People expressed their frustration at a ballot box, and democratic processes give rise to protectionism, populism and a rejection of the globalization process. It caused a decline in trust in our societies, that is the glue what bind us together.

Why this reaction, why this backlash? Because people believe that the growth model that we have followed for the last decades has delivered very unfair outcomes.

According to our  analysis, and to the Inclusive Growth initiative that I lead at the OECD,  they are right.

Even before the crisis, inequalities of income, wealth and opportunities were increasing, but the crisis exacerbated them, with the bottom 40% of the income distribution seeing their standard of living stagnant or falling in the last decades.  This is not only the poorest of the poor. This is the squeezed middle classes.

In OECD countries, which have the most advanced social safety nets, the richest 10% of the population own around half of all household assets, whilst the bottom 40% owns barely 3%. The top 1% holds a staggering 19% of total wealth!

Between 2010 and 2014, the income of the top 10% grew five times faster than for the bottom 10%.

The problem is that rising income inequalities leads to inequalities of opportunities (including access to quality education, quality jobs or health services), and have now impacted socio-economic mobility as some groups accumulate disadvantages.

Indeed, if you are born into a family whose parents did not reach secondary education, you have almost 5 times less chances to reach high school compared to more affluent kids.

For business people, and we have many in this room, you should know that inequality hinders growth. It does by the lack of enough investment in human capital and it does by the skills mist-matches that you face, all along with low quality jobs.

It also does by government budgets needing to palliate the problems instead of building a more solid basis for growth.

The current context is then aggravated by slow -down of productivity growth.

This is a paradox given the rapid technological change, the Next Production revolution and the internet of things. But again, the leading technologies and the most advanced processes seems to have a differentiated impact.

The decline in productivity growth is not even. Frontier firms, the most advanced technologically are enjoying rates of growth of 3 to 5% of their productivity while the rest of the firms are flat.

We call it the breakdown of the diffusion machine, as the trickle down of technological change is not working, and “winner takes all” dynamics in the platform economy are emerging.

Rapid technological change is also fuelling fear and uncertainty. Over the past century, the rate of uptake of technology has increased exponentially:  it took 45 years for 25% of the US population to use electricity, the telephone took 35 years, TV took 26 years, and smartphones took just 4 years for the same percentage of the US population to be using them.

And now we have Uber, Netflix, that provide endless possibilities. I always say that my daughter studies in Mcgill, and I thank the iphone for allowing me to see her happy face!

But the downsides are that estimates put 9% of jobs at a high risk of automation, with another 25% of jobs undergoing significant change, and people and institutions are not prepared.

Together with the impact of international trade particularly in heavy manufacturing, this is leading to many displaced workers, who are often concentrated regionally.

IMG_6635

So what do we do about it?  The answer is not to retreat from international economic integration and the benefits it brings.

But we definitely need to change the growth model. We need to change the metrics and the conventional wisdom that led us to think that equity considerations were secondary to the efficiency of markets. Get rid of the growth first and distribute later axiom.

We need to get away from averages and develop better metrics to capture the distributional impact of the policies we take.

Above all, we need to put people at the centre of our economic policies. This means people’s well-being with its multi-dimentional character. Income and material well-being is important, but there are other dimensions that matter for people. Social capital, clean environments, quality jobs, quality institutions, good working conditions, etc.

Above all, we need to recover trust and here the private sector has a very important role to play, and I invite you to join the OECD platform for inclusive businesses.

In a context of finite public resources, governments will need to prioritize those investments that deliver for everyone, but that have higher impact on the conditions of the bottom 40% of the population. We call it the Inclusive Growth test.

Education is key. But let’s get more specific. For example investment in child hood education and care, particularly before age 5 is one of the best tools we have, as it levels the playing field for disadvantaged children, and boost their socio-emotional skills that are so important to succeed in life.

Investment in laggard regions and laggard firms is also important to improve their growth potential, via quality infrastructure, and access to finance and managerial skills.

More than anything, we also need a change in paradigm. In the 30ths after the great recession, we saw the emergence of the welfare state. It played a very important role to support the advancement of the whole population.

We now need something different. Yes, to improve the tax and benefit systems that have somewhat lost its effectiveness.

Yes, ensure that everybody pays their fair share of taxes (and the OECD is leading here with the BEPS and the Automatic Exchange of Information), yes, to increase the progressivity of tax systems and avoid excessive concentration of income, wealth and productive capacities. But this will not be enough.

We need what Denis Snower from Kiehl institute calls the empowering state. One that invest in capacity enhancing assets for people to draw on throughout their lives.

Allow people to fulfil their full potential. People want a meaningful life, not to live on transfers.

With this framing, you can also build more productive and competitive economies. At the OECD we call it the inclusiveness-productivity nexus. It means that by being inclusive, you can also become more productive, and this is also important for the private sector.

But it also means understanding better the complexity and interconnectedness of the world economy,  and improve our analytical frameworks.

At a global scale, and to save the open regimes of trade and investment, we should deliver on implementing international standards, regarding labour and migration, regarding the environment, regarding RBCs.

In this sense, It is really encouraging to see how the business sector, the cities and regions, and many countries have backed up the climate agreement now that the US has decided to quite. We should lead by example.

Being in Canada, one of the  countries that remain open and that cares for inclusive growth is a perfect setting to have this discussion and we produce a brochure that you have in front of you and left some homework particularly on gender and indigenous people.

I want to thank the Montreal Forum of the Americas for the opportunity to have this important reflection. We hope to continue it in Paris, in the Forum edition that we will host at the OECD.

Bridging the Gap: OECD Inclusive Growth Initiative and Report

Bridging the Gap: OECD Inclusive Growth Report and Initiative from Gabriela Ramos

[Slide 1]

Ministers, Esteemed Colleagues, Ladies and Gentlemen,

I’m very pleased to be here to present you with an update of our inclusive growth initiative and the report Bridging the Gap.

This initiative was launched in 2014, but the work to document the increased inequalities of income and opportunities at the OECD started more than a decade ago. 

Beyond this, the inclusive growth, along with our New Approaches to Economic Challenges is an effort to re-think the growth model that we have been following and get better results.

Why, before this growth model failed us three times. First by not avoiding the financial crisis. Second by not avoiding the increased inequalities, and third because of its impact in the environment.

So it is time to re-think, and move from growth first redistribute or clean later, to include equity considerations in our economic policies. It is also about to put people at the center, and not to rely on aggregate outcomes.

And why is it so urgent to do it now?

[Slide 2]

Because on top of the economic and social challenges, we are seeing a decrease in trust in governments, which is the glue that keep our societies together. Indeed, last year trust in governments in the OECD stood at just 42% and – as you can see from this chart – public confidence is even lower.

This is what is created the backlash against globalization in Advance economies, as 40% of the population has not seen their standards of living improved.

[Slide 3]

What do we know: In terms of income, as you can see from this chart, the top 10% of have captured the bulk of the gains from growth in recent years, leaving everyone else floundering in their wake. Today in the OECD, this group take home around 10 times the income of the bottom 10% up from just 7 times 30 years ago.

The squeezed middle class have lost out comparatively to the richer peers, as you can see from this chart.

[Slide 4]

The picture is even more troubling in terms of wealth. The richest 10% in the OECD come to own around half of all household assets, whilst the bottom 40% owns barely 3%. At the very top of the distribution, the Top 1%, holds a staggering 19% of total wealth! And this is the OECD average! Wealth concentration is much larger is some countries.

As we note in the report that we are releasing today “Bridging the Gap”: income inequality produce inequality of opportunities and inequality of outcomes.

 Inequalities stand in a symbiotic relationship with the intangible social trappings of success, such as cultural capital and access to parental networks, dragging down on social mobility and impairing opportunities of the neediest individuals.

In some countries, this means 40% of the population.

[Slide 5]

Nowhere is this clearer than with education.

Children born into poorer families find difficult to overcome their socio-economic background, which is reflected in their learning outcomes as shown in this graph. In very unequal countries this impact can be double on that of children in low income households.

Besides, in the OECD, children whose parents did not attain upper secondary education have just a 15% chance of making it into tertiary education – against a 60% chance for those with at least one parent who went to university.  This also impacts social mobility that is the next frontier in our analysis.

This is feeding social discontent.  But it also harms growth as low income families do not invest enough in the skills of their children.

This may have also an impact on productivity that follows the same pattern between highly productive frontier firms and the rest that face stagnant growth of productivity.

Our ongoing work on the Productivity-Inclusiveness Nexus underlined that when the poorest are unable to fulfil their potential, we all lose out on the visionary leaders, the innovators, and the economic growth that could have come to pass.

On the other hand, frontier firms accumulate advantages, some sorting out.

[Slide 6]

So, we need to put people first.

The OECD’s work on Inclusive Growth aims to do just that.

Our latest report “Bridging the Gap”, sets out to promote a new socio-economic model that puts people at its centre.

It highlights that the overarching goal of policy making must be to furnish people with capacity enhancing assets that they can draw on throughout their lives. It also underlines the essential role of the State in enabling individuals, firms and regions to flourish by doing the right investments, prioritising and targeting the needs of low income groups and getting the framework right to level the playing field. reducing excessive concentrations of income, wealth and productive capacity. It is not only about redistribution, but should be about opportunities and investments. It is about ensuring that people succeed by their own merits and not by their initial endowments. 

Increasing progressvity of tax system is an area we should look at.  Capital and income taxes need to become more progressive, for instance through accrued taxes on inheritance and gift or on residential property.

Tax transparency, and broadening the tax base provide other oportunity. Tax systems for gender is also important, and for low income individuals.

But we also need targeted investments in people, firms and regions, s that offer the biggest “bang for the buck” in terms of inclusive growth.

From this perspective, one of the most effective interventions is early childhood education and care for children from low income families, and more specifically support to foster socio-emotional skills of their children.

The report also recognises that the success of our societies rests, in part, on the success of business.

It emphasises that the State has a role to play to ‘crowd in’ financing in young and innovative sectors and in investing in basic R&D that will see positive spill-overs into countless other domains, particularly to support young and small-medium enterprises that constitute the large majority of firms in most OECD countries and the largest source of job creation.

The report also stresses the importance of ensuring a level playing field for incumbents and challenger firms, that fights against market concentration and ensures that small companies can harvest the opportunities of digitalisation and the next production revolution.

The advent of new technologies, platform economies and non-standard jobs raise a number of challenges for workers as well. This is another area wake-up call to governments and the business sector to ensure that technological disruptions help bridge economic and social divides rather than the opposite.

Ladies and Gentlemen,

Seizing this moment will not be straightforward. Vested interests and the push to go business as usual will be strong.

But continuing on our current trajectory is not an option, if we want to ensure a sustainable future.

At the beginning of this session we asked you whether the Nordic model was a key way to ensure growth benefits all, rather than the few?

Doubtless the Nordic model has very been successful, and it relies on the nexus of the ex-ante equity considerations I mentioned, but also in efforts to ensuring a thriving business environment.

The Nordic Model is a role model for economic opportunity and equality as well as of social cohesion: it has the strongest social mobility in the OECD area and breeds a record-high level of trust in institutions. It is the living proof that inclusive growth is key to underpin vibrant societies and successful economies. Of course it has high taxes as well, but citizens actually find a lot of value in paying those taxes.

All of us can learn from this model in our efforts to promote inclusive growth.

[Slide 7]

Thank you.

Inclusive Growth in a Globalized World: T20 Summit

Remarks delivered 29-05-2017, Paris 

I am delighted to be here today in the T20 addressing inclusive growth in the G20 economies. I commend the T20 for having included this important topic, in which the OECD has been working for decades.  My message today is that the goal is not only about addressing inequalities. It is about changing a growth model that has failed us on three counts.

First by not preventing the crisis. Second by not preventing the increased inequalities of income and opportunities, and third by not addressing fully the impact of our actions in the environment.

Indeed, in the OECD income of the bottom 40% has been stagnated in the last decade, and the richest 10% of the population earn 10 times more than the poorest 10%. 30 years ago, it was 7 times. In developing economies, even though there may be progress, they still suffer from high level of poverty and informality, and the income distribution is even worst.

Inequality is not just about income. Wealth is much more highly concentrated than income. The richest 10% in the OECD possess half of total wealth, while the bottom 40% own little over 3%.[1]  

The problem here is that income inequality produces inequality of opportunities, and inequalities of outcomes. Low income groups accumulate disadvantages in terms of low quality education, lower life expectancy, and less access to quality jobs.   

The digital revolution may bring additional challenges, with a fast pace of change, and demanding high level skills and investments.  In fact, at the OECD we have documented that, in the age of technology, there is a wide dispersion of productivity growth, with the frontier firms growing at 3 or 5 percent, while the rest seeing their productivity stagnant.  We call it the break- up of the diffusion machine.  Productivity dispersion brings wage dispersion, and increased gaps between people, firms and regions.  

This without considering the fears that automation and redundancy. On average across OECD countries since 9% of jobs are at high risk of automation, and another 25% will likely experience a major retooling because of automation. The ownership and management of big data is also another source of concern in terms of concentration of market power.

Inequalities also hinder growth. We call the “nexus” productivity and inclusiveness.

For instance, more unequal countries show larger skills mismatches than more cohesive ones, with significant negative effects on productivity. Large inequalities jeopardise future growth and productivity potential through low labour force participation, low employability and marginal attachment to the labour market.  But it also prevents investment in human capital of low income groups.

No wonder about the backlash against globalization and technological progress, which are closely interlinked, are blamed for all the ills of our economies and societies and for leaving many behind.

People’s trust in governments has declined markedly across the OECD, hitting the lowest record of just 42% in 2016[2], thus making it more difficult for governments to pursue and sustain the reforms required to make society and economy inclusive.  

What are the policy priorities in this context?

We need to change the growth model I referred before. Get away from the mantra of growing first and distributing later,  to include the equality considerations ex- ante. We should avoid informing our policies just by looking at aggregate figures, and look at the distributional impact of the policies we take.

We need a multi-dimentional approach of well being to avoid the silo approach, to develop comprehensive policy packages.

Given that 40 percent of the population  is being left behind, the goal is to “level the playing field” for the bottom deciles so they can fulfil their full potential.

Education is key, but we need to go granular, and not only ensure quality provision of education, but to target low income groups needs. We need to break the link between socio-economic background and school attainment and performance.

If you are born in a family whose parents do not have high school diploma, you have only 15% chances to make it to that level, compare with 63% of the children with parents with higher education. Early childhood education and care is key in this domain.

For this, we need to strengthen the overall progressivity of the tax structure, broadening tax bases, and lowering taxes for low-skilled workers (for example). We have made progress with AEOI and BEPS, but more need to be done regarding tax on wealth.

On the spending side, the OECD identifies a series of innovative interventions – on social protection, education, preventive health, active labour market policies, etc. – that offer the biggest “bang for the buck” in terms of growth and inclusiveness.

Another key component of inclusive growth is women’s empowerment. 

G20 countries’ progress in closing the gender gap in labour force participation is still very slow: on average, the gap has only narrowed from 20.3% in 2012 down to 19.6% in 2015, notewitstanding the fact that 130 million more women could join the labour force across G20 countries, with an expected increase of annual growth by 0.68 % point in a number of countries.[3] Here again, tax system could play an important role.

Getting women and girls into STEM will also prevent opening another door for a digital divide. (through initiatives just like the one I launched with Mexico, matchmaking female STEM-related professionals and aspiring female students).

Have countries made any significant action to make growth more inclusive?

I must say we had too many talks and probably to focused on reignited growth as we know it. Now, we need action for real inclusive growth! The OECD will develop a Framework for Policy Action to help guide the G20 on the available options.

I hope this discussion will continue in this year’s OECD MCM under the theme of “Making Globalisation Work: Better Lives for All”.

 

[1] OECD Statistical Database

[2] Percentage of the population reporting confidence in the national government, 2006-2016, Gallup World Poll (2017)

[3] Women at Work

11th OECD- ICGLR -UN GoE Forum on Responsible Mineral Supply Chains

Remarks delivered on 02-05-2017, OECD, Paris

European Commissioner for Trade Cecilia Malmström, Vice-Minister of Mines for Colombia, Executive Secretary of the ICGLR, Ambassadors, distinguished guests, members of the press, good morning and welcome to the 11th Forum on Responsible Mineral Supply Chains.

We usually start this Forum that we launched with th the Great Lakes Region, OECD and UN Group of Experts on the Democratic Republic of Congo since 2011  with great enthusiasm given the accomplishments and the commitments from all of you to build a rules based and human global economy.

This time is different. I will ask you to stand, and to observe a minute of silence in the memory of our co-hosts, UN experts Michael Sharp and Zaida Catalan, who were murdered in the Democratic Republic of the Congo last month.

On behalf of the OECD, I wish to convey our condolences to their families and colleagues from the UN and beyond.

I also take the opportunity of this remembrance to extend our thoughts to all victims of the ongoing conflicts in Central Africa.

Thank you.

Now let me move to the Forum, and in their memory, increased our resolve to address the problems on this issue. I am very please to see that over time, this unique global multi-stakeholder forum has managed to attract an ever-increasing number of participants, with an unexpected growth both last year and this year.  We have 850 participants!

This demonstrates the increasing awareness on the need for responsible business conduct in supply chains of minerals worldwide.

But there is no other way. We are now confronting a stong backlash against globalization fuelled by the financial crisis, by the increased income inequalities, and by the suboptimal outcomes of our economic model on the environment. But it is also link to the uneven application of international standards and the respect of human right and dignity in so many international economic operations.

So this exercise aquires more meaning, and making our standards strong will help us build a more balanced global economy, and rebuild our social capital that seems to be plagued by extremisms.

 

11th OECD_ ICGLR _UN GoE Forum on Responsible Mineral Supply Chains_GR
Europe Commissioner for Trade, Cecilia Malmström

I am glad to report, nevertheless, that the global agenda to promote responsible production and trade of minerals has progressed.

This progression has become possible notably through the implementation of the OECD Guidance on Responsible Mineral Supply Chains and other efforts over the last 5 years.

There now seems to be a solid understanding that due diligence in mineral supply chains is expected by the market, and responsible sourcing is a way to help business grow and prosper.

Due diligence is the means for business to cut out the most harmful practices that undermine our collective security and development in a way that seeks to raise volumes of responsible exports, rather than embargoing entire producing regions from global markets.

We are proud to be hosting this year parallel sessions on the implementation of our instrument in a variety of mineral supply chains, including mica, cobalt, coal and precious stones.

The OECD Guidance as you all know is a framework applicable to all minerals.

In addition, this year we will begin conversations on responsible minerals trade in Myanmar, while also advancing our existing work in Africa’s Great Lakes Region, China, India, West Africa and Colombia.

The relevance and applicability of the OECD standard across the globe is further underscored by the adoption of the European Union Regulation setting supply chain due diligence obligations for importers of tin, tantalum, tungsten.

We are proud to see that this regulation, which has a global scope, is based on the recommendations set out in the OECD Guidance.

I look forward to learning more in the key note address from Commissioner Malmström and the regulatory update session later in the day today, and I commend her for her effort.

This year, we will also be delving deeper into the ways that company risk management measures can have positive impacts on the ground.

We are pleased today to launch a set of practical actions to help companies address the worst forms of child labour in their mineral supply chain. The International Labour Organisation has reported that almost 1 million children are working in mines worldwide.

I was in Dehli last December in the march against child slavery with Kailash Satyarty and it was enlightening. But there is so much to do!

Our tool was developed and launched by the Secretariat, with input from many of you and builds off the OECD Guidance.

I hope it will be used as an urgent call to action to avoid mining that undermines children’s rights.

This year we will also be hosting together with the World Bank on 5 May a half-day workshop on global support to responsible artisanal and small-scale mining.

As you may know, the implementation of the OECD Guidance pays specific attention to the inclusion of informal miners, to ensure that responsible mineral supply chains also translates into inclusive supply chains.

We are delighted to be able to move this agenda forward with the World Bank.

**************

Ladies and Gentlemen,

Before I conclude my introductory remarks I would like to take this opportunity to emphasise two important messages.

First, I would like to call on all countries that have committed to OECD Recommendation of Council on Due Diligence Guidance to continue do more.

In the end, responsible sourcing efforts by companies must be complemented by Governments living up to their own duties.

We have seen some very proactive efforts by a small handful of countries, many of you are here today, but there is still room for improvement.

I hope to return in 2018 to this Forum and hear how governments have strengthened their efforts to promote the OECD Guidance.

Second, I wish to emphasize how important it is that all stakeholders respect each other and engage in a constructive and open manner. I am proud that our work here is carried out in close cooperation with the private sector as well as civil society organizations.

Civil society contributes in varied ways that often complement the roles and functions of governments and the private sector. Their efforts should be supported and their voices protected, in particular by governments. The OECD is committed to protecting and promoting an inclusive and enabling environment for civil society in policy and in practice.

Thank you all again and I wish you successful dialogues over the coming days.

OECD PISA Results Global Launch: Student Well-Being

Remarks given in London, United Kingdom on 19 April 2017

(Slide 1)

Ladies and Gentlemen

I am delighted to come to London to launch the third volume of global results from the 2015 Programme for International Student Assessment (PISA).

PISA illustrates the extent to which education systems are providing quality education, and how capable 15-year-old students are at applying what they learn in school to solve real life problems.

At the OECD, we have been working hard to ensure that we go beyond growth and put people’s well-being at the centre. This is why we launched initiatives on New Approaches to Economic Challenges (NAEC), on “inclusive growth”. This is why we launched the Better Life Index, which measures subjective well-being across the world according to 11 essential dimensions.

And we are doing the same with PISA. We have to go beyond testing and performance and look at well-being. being.

(Slide 2)

This volume of results from PISA 2015 focuses on how education systems can promote not only cognitive capabilities, but also the psychological, social and physical capabilities that students need to live a happy life today, and be equipped with 21st century skills.

(Slide 3)

Happy students, but challenges remain

The good news is that PISA data shows the majority of 15-year-old students are happy: on average they rate their satisfaction with life at 7.3 on a scale from 0 to 10.

But about 12% of students are not satisfied with their lives. In some countries, it’s over 20%. This is not about grades. There is little difference in reported life satisfaction between top-achieving and low-achieving students.

But gender and disadvantage do make a difference. Girls and disadvantaged students are less likely than boys and advantaged students to report high levels of life satisfaction.

(Slide 4)

On average across OECD countries, around 29% of girls but 39% of boys reported that they are very satisfied with their life. This is a 10 percentage point difference !  Disadvantaged students report themselves around 0.4 points lower than advantaged students on the 10-point life satisfaction scale.

Self-evaluation in comparison to more advantaged students, and obstacles to achieving material, education, health and leisure goals are likely behind this difference.

But the lower life satisfaction reported by 15-year-old girls in PISA is possibly a reflection of girls’ harsh self-criticism, particularly related to their image of their own bodies at a time when they are undergoing major physical changes. PISA 2015 does not collect data on students’ body image, but the results on eating habits reveal that girls were much more likely than boys to skip breakfast and more likely to skip dinner. In the UK the percentage point difference between girls and boys skipping breakfast was particularly high at 14 percentage points, almost double the OECD average (8 percentage points).

Research suggests that exposure to images of overly thin girls and women in traditional media and social media has a negative impact on girls’ satisfaction with themselves. I was shocked to hear from UK Minister of Health, Jeremy Hunt, when he visited the OECD in January for the Health Ministerial, that the number of girls treated as inpatients in the National Health Service after cutting themselves has almost quadrupled in the last 10 years. This is a shocking wake-up call.

The causes of this are complex and multi-faceted, but the role of the media in promoting gender stereotypes seems to be undermining girls’ well-being and the OECD is starting to look at this issue intensively.

Motivation without anxiety is key for well-being

However, anxiety about schoolwork is one of the sources of stress most often cited by all school-age children and adolescents. In fact, it is strongly correlated to life satisfaction.

(Slide 5)

On average across OECD countries, students who reported the highest levels of anxiety also reported a level of life satisfaction that is 1.2 points lower than students who reported the lowest levels of text anxiety. In the UK it was even more pronounced, at 2 points lower.

Schoolwork-related anxiety is complex and variable, but common sources of anxiety are a highly competitive learning environment, and long study hours. For example, in Belgium and Israel, students in schools with long study time are at least 11 percentage points more likely to report that they feel anxious for a test even if well prepared than students in school with short study time.

The key is to reduce anxiety, while promoting motivation. Across all countries and economies that participated in PISA 2015, students with greater overall motivation to achieve reported higher satisfaction with life.

So who is getting it right?

(Slide 6)

This slide highlights three key countries that I would like to focus on. The Netherlands, Finland and Switzerland.

Not only do students in these countries have relatively high levels of life satisfaction, but they also perform above average in science on PISA.

(Slide 7)

Here we see that students in these countries are less likely than their peers to report feeling anxious for tests. Across OECD countries, 56% of students reported they feel anxious for a test even if they are well prepared; but this was 49% in Finland, 39% in the Netherlands, and only 34% in Switzerland.

On average 37% of students reported they feel very tense when they study, but only 21% of students in Switzerland, 18% of students in Finland and a mere 14% of students in the Netherlands did.

(Slide 8)

The key therefore is to foster motivation, without excessive external pressure to be the best or fear failure, because this causes anxiety.

In this slide, we see that students in the Netherlands, Finland and Switzerland feel much less the pressure to be the best in their class. Given they still achieve high scores in PISA, their motivation to perform seems more positive, more intrinsic, more confident.

To increase well-being and raise performance, teachers and parents need to find ways to encourage students’ motivation to learn and achieve without generating an excessive fear of failure. Indeed teachers have a vital role to play.

(Slide 9)

Teachers are key for student well-being

PISA tells us that schools where students are happy (they report a higher life satisfaction than the country average) are also schools in which students report higher levels of learning support from their teachers. After accounting for students’ performance, gender and socio-economic status, students who reported that their science teachers adapt the lesson to the class’s needs and knowledge were less likely to report feeling anxious even if they are well prepared for a test, or to report that they get very tense when they study.

This is important. Teenagers are looking for strong social ties, acceptance, care and support from others. When students feel supported by their teachers and that they are part of a caring school community, they are more likely to perform better academically and be more motivated in school.

(Slide 10)

On the other hand, negative student-teacher relationships are strongly linked to a low sense of belonging and psychological distress. On average across the OECD, students who reported that their teacher grades them harder than other students are 44% more likely to get very tense when studying. And students who feel their teacher does not think they are as smart as they really are, are 60% more likely to get very tense when studying.

Another worrying association is that in most countries, schools where students felt offended or treated unfairly by their teachers are also schools with a higher frequency of bullying.

(Slide 11)

This suggests that teachers are important role models of fair behaviour and respect, and should be trained in basic methods of observation, listening and intercultural communication to help them better support students.

Unfortunately, PISA 2015 data show that an alarmingly large proportion of students reported being victims of bullying at school.

(Slide 12)

On average across OECD countries, around 11% of students reported that they are frequently made fun of, 7% reported that they are frequently left out of things, and 8% reported that they are frequently the object of nasty rumours in school. Around 4% of students – roughly one per class – reported that they are hit or pushed at least a few times per month. Here in the UK, bullying in all its forms is above the OECD average.

While there is no one-size-fits-all approach to prevent bullying, effective anti-bullying programmes involve a whole-of-school approach, with co-ordinated engagement among teachers, students and parents.

For example, in the Castile Leon in Spain, only 1.7% of students reported feeling threated by other students, compared to the OECD average of 3.7%. The region’s anti-bullying plan incorporates measures like supporting victims, re-educating offenders, updating bullying protocol and co-ordinating actions to help fight against bullying.

Other countries can learn from these best practices to ensure schools remain safe and supportive environments for learning and socialising.

Well-being outside school and the role of parents

But well-being is a dynamic and fragile balance to be achieved. If it’s undermined in one part of our lives, this harm can spill over into other parts. So what happens outside school, affects how children feel inside of school, and vice versa.  

Parents, family and carers have a critical role to play.

(Slide 13)

Students whose parents reported “spending time just talking to my child”, “eating the main meal with my child around a table” or “discussing how well my child is doing at school” as little as once a week were between 22% and 39% more likely to report high levels of life satisfaction than students whose parents reported engaging in these activities less frequently.

And other activities outside school are also related to science performance and well-being.

(Slide 14)

On average across OECD countries, students who reported taking part in some moderate or vigorous physical activity are 2.9 percentage points less likely to feel very anxious about tests, 6.7 percentage points less likely to feel like an outsider at school. Yet on average across OECD countries, about 5.7% of boys and 7.5% of girls reported that they do not participate in any form of physical activity outside of school, with disadvantaged students being most affected.

And while many don’t do any exercise, students are spending a lot of time watching television, playing video games and increasingly, going online.

(Slide 15)

Between 2012 and 2015, the time spent on line outside of school increased by 40 minutes per day on both weekdays and weekends. Across OECD countries, 90% of students enjoy using digital devices, but PISA 2015 results show that, in most participating countries and economies, extreme Internet use – more than six hours per day – has a negative relationship with students’ life satisfaction and performance.

(Slide 16)

After accounting for students’ socio-economic status, “extreme Internet users” score around 30 points lower in all subjects PISA assesses than students who use the Internet less.

What are the implications for policy?

The good news is that there are policies and practices that are effective in fostering the healthy psychological, social, cognitive and physical development of students.

(Slide 17)

Countries can design interventions to promote psychological health, motivation and confidence at school. For example, in Korea, the Free Semester Initiative, offers a students a semester free of exams and formal assessment, in which they split their time between academic subjects, extracurricular activities and careers training.

It’s also important to train teachers to recognise and anxiety. For example, here in the UK, the Preservice Health Education Programme includes applied health and well-being elements within teacher training.

Another key policy implication of these results is identifying and sharing good practices to raise intrinsic motivation to achieve. Finland’s “Schools on the Move” national action strategy takes students into their local environment, getting them moving, setting goals, designing activites and evaluating results.

The report also recommends fostering a caring school environment, characterised by positive peer and teacher-student relationships. For example, the “Chimale emozioni” (Call them emotions) programme in Switzerland, focuses teacher skills on fostering socio-emotional learning.

Finally, it’s also important to design education policies that promote positive synergies between the school and home environments. Programmes like the Australian Student Wellbeing Hub involves the whole school community, including parents, providing information, resources and training on issues as diverse as cyberbullying, gender identity, and healthy habits.

Ladies and Gentlemen,

The great English novelist Graham Greene once said that “there is always a moment in childhood when the door opens and lets the future in”. PISA is a powerful tool to seize that opportunity.

These results will be key to designing polices that can foster student well-being in the future, and better prepare our young people to thrive in the jobs and societies of tomorrow.

I look forward to hearing your views.

(Slide 18)

Women in Parliament G20 Roundtable “Digitalisation: Policies for a Digital Future”

Delivered 06-04- 2017 Dusseldorf, Germany

Minister Zypries, Members of the Women in Parliament, Distinguished Guests, Ladies and Gentlemen,

I am very pleased to be here, and to see that the gender agenda is alive and kicking in every single G20 Presidency, thanks to you, thanks to your commitment, and thanks the W20. I still remember when we managed to approve the Gender target in the Brisbain Summit (that we actually crafted at the OECD), and when some male Sherpas did not consider this was for leaders. But we proved them wrong, and your presence here is a testament that this is a very important agenda.

And you know what? Dealing with gender issues in the context of the broader growth agenda of the G20 is the right way to do it. We will not make enough progress if we only consider women’s issues in a silo approach. We need to embed a gender angle in each one of the important debates in the G20, and the digital transformation is quite a relevant one.

If we do not get it right, the rapid pace of technological progress may open another divide that will add to the list of obstacles that women face, and in a sector which that is key for building our future. We cannot afford it.

 

Digital economy

Indeed, the progress made by the digital economy in the last years is amazing. The internet of things is everywhere, and it is changing the way we work, the way we live and the way we interact among each other.

The OECD prepared the report on “Key issues for a digital transformation in the G20” for the German Presidency, and the conclusion is clear. We need to take the right policies to ensure that we get the best of the ICT diffusion, while controlling the downside risks.

On the positives:  The pace of change is spectacular. Take digital access, for example. 20 years ago, only 4% of the world population was connected to internet. Now, it’s at 40%. Take mobile phone usage: while gaps persist, nearly 70% of the bottom fifth of the population in developing countries own a mobile phone.[1] This is opening real promises to the most disadvantaged population.

It is bringing enormous opportunities.

In manufacturing, in services, in health, in education, in innovative ventures, and in so many other activities. Governments can become also more effective, if they rely on solid IT systems for service delivery.

But digitalisation also brings challenges which governments must tackle now. The digital world can produce “winner takes all” dynamics, with a polarisation between a few very productive firms at the technological frontier, while the other firms are lagging behind – with, in turn, an impact on wage inequalities. We also have more than half of the world population without access. So we need a solid package of comprehensive policies to deal with it, and we present som of them in our report.

First of all, we need to ensure competition in the ICT sector and in the broader economy, as the dynamics of the digital transformation may be challenging traditional competition policies particularly if we consider the platforms that we know.

Second, a fundamental pre-condition for the digital transformation is establishing sufficient trust in the reliability and security of networks, including the respect of privacy, consumer’s rights and interoperability of standards. Trust is particularly relevant for SMEs, for children, for women.

Third, we need to boost investment in digital infrastructure, both to help bridge digital divides and to meet future demand, even in countries that have relatively high penetration rates. In the context of increased inequalities, emphasis should be placed in low income groups, and low income regions to boost productivity and growth.

We must make sure that all citizens and firms of all size have access to digital technology and have the skills to take advantage of it.  High level skills, and adaptive skills will be key for a rapidly changing world of work.

Finally, we need to develop a gender ICT agenda, and we support the G20 Presidency proposal for ICT skills for girls.

Let’s be frank. With the current context, the outlook is not so positive regarding participation of women in the digital economy. To start with, in our world of stereotyping, anything related to technology or mathematics (the famous STEM), is not defined as a default option for girls.

No surprising, globally, women make up fewer than 20 % of the ICT workforce and 9 % of ICT sector CEOs.

So we need to develop the skills and the self-confidence! Our PISA study shows that despite the fact that girls tend to outperform boys in STEM subject areas, boys are twice as likely to expect to work as engineers.

In 2012, only 14% of young women who entered university for the first time chose science-related fields of study.

The story here is not about abilities, but more about the attitudes and inherent biases of parents, teachers, the media, and our societies that affect children’s perception of what they should be good at. We have measured this in the PISA report. The families, the school, the girls, do not aspire, do not dream, and are not encouraged to go for STEM or to digital. They can even be dis-encouraged as these are not female occupation!

There is an additional angle. If we think the media reproduces demeaning models for women and girl, waits until you deal with social networks. They promote images of women and girls that are a real problem. OECD countries have confirmed that, the banalization and objectification of women bodies, and the pressure slim and perfect models put on them, is  totally inacceptable. It is creating a problem of mental health, and suffering that should be addressed. Not to talk about direct aggression cyberbullying, that is shared by girls and boys all the same, and should be stop.

So where do we start? I would say strengthening protection on line is a must.

We should also target policies on girls and women underrepresented in STEM. I just launched an initiative in Mexico, gathering the most powerful women in science, for them to mentor and encourage school girls to go for it.

But we also need to eliminate stereotypes, everywhere and particularly in the media. We can also do so in the textbooks of our schools, and training teachers to recognize those biases. Germany has done so, to avoid gender defined occupations. Girls should also be put to do coding, and to get acquainted with these technologies early.

At the level of IT firms, we should ensure that  a share of senior posts are dedicated to women. I know that quotas are never the first option, but given the slow progress, there is nothing like quotas.

If, as they say, some incompetent women may get the job because of quotas, I would say  that too many incompetent men has also gotten a job, even without a quota! And maybe we can get rid of violent video games!

So let’s get on with the task, and let’s support a meaningful agenda. Again, I commend this Round Table, the W20 and the German Presidency to move on. I am delighted to hear that the outcomes of our discussion in this Roundtable will be presented to the Digital Ministers today. The world will be listening, and you must be proud of carrying this important message.

Many thanks,

 

 

[1] The World Bank (2016), World Development Report 2016: Digital Dividends, International Bank of Reconstruction and Development / The World Bank, Washington DC.

 

Achieving Women’s Economic Empowerment by 2030: From Global Commitments to Policy Action

Delivered 08- 03- 2017, OECD, Paris France

Happy International Women’s Day! I am delighted to welcome you all to the first OECD’s Development Cluster panel on women’s economic empowerment in developing countries; it’s about women as an engine of Inclusive Growth, a topic very close to my heart.

And we know how badly we need that. Today, our countries are still dealing with the consequences of the worst economic crisis of our lifetime. High unemployment, sluggish growth and low productivity are indeed putting strong pressure on our economies to maximise the use of available talent.

It is high time to ensure gender equality in order to achieve a stronger, more sustainable and inclusive growth – one that benefits all and creates opportunities for all. The Sustainable Development Goals explicitly recognise the universality of gender challenges – and that we cannot achieve “the future we want” if 50% of our population is not empowered.

We need everybody on the deck to boost productivity and spur inclusive growth.

Social and economic returns from addressing the gender gap are high: if labour force participation rates among women reached those of men, we could boost annual global GDP by 12% in OECD countries over the next 20 years.[1] This is true also for developing countries. We all win when we make economies work for women.

The cost of inaction cannot be overlooked either. Last year, the Development Centre estimated that discrimination in laws, attitudes and practices costs the global economy close to USD 12 trillion. More recently, a new study by the Centre found that gender-based discrimination in social institutions impedes well-being beyond its negative impact on economic growth and GDP.

The OECD and Gender Equality

The OECD has been very active on this issue for years, championing gender equality in all areas of its work through the Gender Initiative and Inclusive Growth Agenda. We have also set high standards for our Members – and some partner countries too – through two important Recommendations on Employment, Education and Entrepreneurship, and on Women in Public Life.

Beyond generating benchmarks and policy tools, the OECD’s contribution is to shape the public policy debate. For example, we have been instrumental in the adoption by the G20 of a target of reducing the gender gap in labour participation by 25% by 2025.

We are making great strides in areas such as women on corporate boards or reduced gender gaps in PISA results, and innovative initiatives to reduce the wage gap, such as the new proposal underway in Iceland.

Yet, we still see stagnation in other critical areas, notably labour force participation rates of women. It is for this reason that the SDGs are so timely. They remind us that the challenge to achieve women’s economic empowerment applies to us all, and that we all have a role to play in supporting this agenda by 2030.

Gender equality in developing countries

Of course, our commitment to gender equality goes far beyond our membership. The OECD is proud to have built a comprehensive toolbox of policy solutions, networks and new ideas to advance the gender agenda in both developed and developing countries, namely through the work of the OECD’s Development Cluster, represented here by the Chairs of the Development Assistance Committee (DAC) and the Governing Board of the Development Centre.

For example, the DAC Network on Gender Equality (GENDERNET) has been supporting Member countries make strong commitments and impacts on the ground, channelling aid where it is most needed. Similarly, the Development Centre’s research, data and analysis on the Social Institutions and Gender Index (SIGI) provide policy makers with the know-how to design targeted policies in favour of women and girls.

Women’s economic empowerment in the changing world of work

As we take stock of the achievements made thus far, we also have our eyes set on 2030. We need to step up the use of our tools, expertise and experience to better support our partner countries in promoting women’s economic empowerment in the changing world of work – the main theme of next week’s meeting of the 61st Commission for the Status of Women at the UN Headquarters.

The picture for women’s economic empowerment is sobering. While we know that every additional year of education for a girl opens more doors to empowerment, millions of girls do not have the chance to finish high school. In Uganda, for example, only one in four girls completes high school.

The reasons are many. Poverty is one. Social norms are another. In many countries, adolescent pregnancy and early marriage also prevent girls from finishing high school. Among girls with incomplete secondary education in the Dominican Republic, for example, 50% give marriage or pregnancy as a reason to leave school.

Improving norms around the value of educating girls is critical. In a recent SIGI survey on social norms in Uganda, parents were asked whether they preferred their sons or daughters to go to school – one-third opted for their sons. When asked whether they thought it was appropriate for girls to get married before the age of 18, almost half of them agreed. Analysing the social norm barriers to empowerment is important for targeted and effective policies.

Another critical pillar on the path to women’s economic empowerment is labour force participation. Women continue to face both sticky floors and glass ceilings.

  • Since 1990, the global rate of female labour force participation has decreased by 2 percentage points (from 57% to 55%).
  • Women tend to be concentrated in informal and vulnerable employment. This is the case for up to 60% of female workers in Latin America. In sub-Saharan Africa, where almost 90% of the labour force works in the informal sector, the majority are women.
  • The wage gap between women and men remains stuck at a world average of slightly less than 20%.
  • Despite these challenges, development financing for women’s empowerment is a drop in the ocean. Recent GENDERNET data suggests that only 2% of the aid targeting gender is going to the economic and productive sectors. We need to match our commitments with action if we are to deliver the SDG promise to empower women and girls everywhere by 2030.

We must ensure that the resources that we use are well-targeted and achieve their intended impact and promote a ‘whole-of-society’ approach to gender equality. The OECD is proud to have contributed to cracking, at least, a part of the glass ceiling through our data and analysis. Our evidence-based advocacy and standard setting have contributed:

  • to reforms ensuring that women can enjoy greater legal equality with men in land, productive and financial resources through making reference to the SIGI;
  • to greater donor co-operation on gender equality and women’s empowerment through the GENDERNET; and,
  • to better working standards through newly published guidance aimed at improving business conduct and protecting workers in the garment and footwear sector. It will be important to keep up these efforts the future. That’s why I am pleased to announce today a new OECD initiative to support women’s empowerment in developing countries, tapping into our know-how, data and tools. The Development Centre and the Development Co-operation Directorate, along with the Statistics Directorate, are jointly launching a “Policy Dialogue on Women’s Economic Empowerment”. The Policy Dialogue will be geared to help implement SDG-5 on gender equality and women’s empowerment, with a specific focus on unpaid care work. This perpetuates the inequalities in education and in the labour force. Ironically, whether they are living in an OECD or developing country, women always work more than men when their unpaid and paid work hours are combined.
  • This Policy Dialogue will partner with developing countries as well as with the GENDERNET to design gender-responsive policy solutions and to create an enabling environment for women to enjoy better economic rights.
  • Unpaid care work is a barrier to women’s economic empowerment, due to the unequal share that women must shoulder – their “double work burden”. The time that women spend on unpaid care activities – caring for children, looking after the elderly, fetching water – is time they cannot spend pursuing empowerment opportunities.
  • Through this initiative, the Development Cluster will provide practical guidance to decision makers for better policies and development co-operation towards women’s economic empowerment in developing countries.
  • The way forward: Policy Dialogue on Women’s Economic Empowerment

I am convinced that today’s discussion on “what works” will give new depth and breadth to the policy debates, building on lessons learned from both OECD and non-OECD countries. Together we can reduce the gender gap for good and drive a truly inclusive economic growth.

[1] OECD (2012), Closing the Gender Gap: Act Now, OECD Publishing.

Launch of the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector

Delivered 08-02-2017

I am very pleased to join you to open this important meeting, and to launch the OECD Due Diligence Guidance in Supply Chains for the Garment and Footware sectors.

I am also glad to be accompanied by all the stakeholders that made the Due Diligence Guidance possible.  This shows that, working together, with all of you (and I understand that we have 200 representatives from many sectors) we can continue to develop a rules based global economy that delivers for people.

The Guidance was important to redress the damage made by the tragedy of the Rana Plaza and many other abuses, and was also something that the G7 in Schloss Elmau encouraged us to pursue.  

But now, ensuring that Supply Chains are free of forced labour, human rights violations, or many other negative aspects has become essential, in a context where there is a strong backlash against global economic integration.

Indeed, globalization is perceived now as the source of all the problems, and protectionism actions are on the rise. So yes, we need to do better, and build the rules based international economy, including with the Guidance, that will recover the trust of people, and help us build responsible globalization.

Adequate due diligence is urgently needed in the garment and footwear sector

The sector, which provides approximately 75 million jobs globally,[i] has contributed to global growth and provides a first port of entry into the formal economy for many women in producing economies.

But let’s face it. The challenges we face in this sector are immense.  Wages largely remain below the level that is needed to sustain workers and their families, locking them into poverty and deprivation.

Many garment and footwear sector workers are exposed to great risks: water pollution, the use of hazardous chemicals, child labour, forced labour, and restrictions on freedom of association. Fire and electrical safety remains a great challenge.

Less than four years after the Rana Plaza collapse, many companies have not taken enough action to protect workers. Only three months ago we read about a tragic fire at a subcontracted factory outside of New Delhi.[ii]

So, to avoid more tragedies, we have to define responsibility at each stage of the supply chain.

This is challenging for an industry that is global in its reach but also fragmented and highly interconnected. The garment and footwear sector is characterised by many separate processes from growing, and spinning to manufacturing. Specialisation and subcontracting are also common practice. This can make room for abusive practices and terrible working conditions.

This is not just morally unacceptable, it’s bad for growth and it’s a harmful obstacle to development, standing in the way to delivering on the Sustainable Development Goals (SDGs) which all countries agreed to in 2015. In particular Goal 12, which is “to ensure sustainable consumption and production patterns”.

The OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector provides just that – a common understanding of how companies can carry out due diligence to identify, prevent and mitigate challenges in their supply chains in-line with the OECD Guidelines for Multinational Enterprises.

Policy coherence, particularly at the international level, reduces the risk of conflicting requirements, gaps in policies and government expectations.

The strength of this Guidance derives from its multi-stakeholder, consensus-based design process. It drew on input from both OECD and non-OECD countries, businesses at different levels of the supply chain, civil society, trade unions, and other experts. This Guidance is not just for you, it is by you.

As such, it recognises both the diversity of the sector as well as the complexity of the challenges faced. It recommends that companies take a collaborative risk-based approach to identify and mitigate harm, while as far as possible maintaining key business relationships.

By addressing risks in this way, companies have the potential to remain competitive, while addressing human rights, labour and environmental risks in their supply chain. The Guidance promotes an approach that is systematic, involving on-going, proactive and reactive processes with a strong focus on progressive improvement.

For example, the Guidance recognises the interconnectedness of business activities. Risks related to wages, forced labour, and health and safety are sometimes increased by short-term and inefficient purchasing practices.

To tackle this, the Guidance is the first international instrument that applies due diligence to a company’s purchasing practices. It also highlights the importance of engaging with workers themselves, who are so often left out of the discussion, but who bear the full brunt of its effects.

We are providing a powerful tool to improve working lives and make growth and globalisation more inclusive in a key sector for the global economy. But the launch is only the beginning: the real change will come with effective implementation.

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Photo credit: OECD

Implementation will be vital to deliver a global industry that works for all

The OECD will support implementation every step of the way. Just as we have with our Due Diligence Guidance on Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the OECD-FAO Guidance for Responsible Agricultural Supply Chains. As our Secretary-General likes to say “Agreements make the headlines, but implementation changes lives”.

This afternoon you will have a special session on implementation, and tomorrow you will experience applying the Guidance in a real-world garment and footwear context through a scenario workshop. This is a valuable opportunity to exchange experiences, and anticipate practical challenges at the implementation stage.

You will also look in detail at supporting implementation for specific groups at high risk, including due diligence on sexual harassment and gender-based violence, and due diligence for the responsible employment of migrant workers.

Also tomorrow, you will hear garment and footwear sector perspectives on the OECD National Contact Point mechanism, which has proven highly effective in promoting the broader Guidelines for Multinational Enterprises and supporting implementation and handling grievances.

The OECD will also continue to increase the reach and impact of our responsible business conduct tools by working closely with the G20 and G7.  After Schloss Elmau, the German G20 Presidency has already emphasised its commitment to make sustainable global supply chains a priority, and we will be there to provide the best policy expertise and data analysis to promote and measure progress.

And we will continue through our OECD Global Forum on Responsible Business Conduct and through our close and growing engagement with China, and with India as two of our Key Partners, to promote adherence to and implementation of our standards, guidelines and guidance.

Ladies and Gentlemen,

We have come a long way. But now is the time to make this Guidance a reality, to make it count for people, for people who work in some of the worst conditions imaginable. Agreements made the headlines, implementation changes lives. So I invite you to focus on implementation.  

This is really important to save lives. But it is also essential to build a more inclusive and human world. Let’s continue joining forces to ensure that they make the impact that you are all looking for.

Thank you.

[i] https://cleanclothes.org/resources/publications/factsheets/general-factsheet-garment-industry-february-2015.pdf/view

[ii] On 11 November 2016, 13 workers will killed in a garment factory fire on the outskirts of New Delhi. http://www.aljazeera.com/news/2016/11/fire-kills-factory-workers-india-sahibabad-161111072912321.html