Interview with Xinhua News Agency on China’s G20 Presidency

Source: Xinhua | 2016-05-30 02:43:03 | Editor: huaxia

PARIS, May 29 (Xinhua) — OECD Chief of Staff and Sherpa to the G20, Gabriela Ramos, has hailed Chinese G20 presidency’s efforts in seeking to integrate efforts of G20 countries to reboost global growth as “encouraging” and “ambitious.”

Ramos made the remarks during a recent interview on the upcoming G20 summit, set for September in Hangzhou, east China, with Xinhua.

She said the Chinese G20 presidency has brought three messages that are “very welcome” to international community.

Ramos said the first message is innovation. In her opinion, the world economy, hit by a low-growth scenario, is still in a “challenging” time though “we have been for eight years, trying everything to re-boost the growth ” since the 2008 international financial crisis.

“And that’s where I think that the narrative of the Chinese G20 Presidency, which is to boost for an innovation-based growth, has a good meaning. Because this is where countries are going to build their growth potential going forward,” Ramos said.

The second meaningful message is green development. Ramos noted that China’s strong support to the Climate Change Agreement reached last December in Paris is “refreshing” and is helpful to the signature of the Agreement in G20 member countries.

It is noted that in April this year, under China’s leadership, the G20 issued its first Presidency Statement on Climate Change, committing to signing the Paris Agreement and bringing the Agreement into force as soon as possible.

The third message brought by China is to promote practical exchanges. Citing an example, Ramos said Chinese G20 presidency plans to put together in Hangzhou Summit agenda the subjects of trade and investment for discussion. In her eyes, this plan is favorable for finding solutions to real problems.

“We always seem to compartmentalize these two things, but it is really well integrated. China is actually trying to advance that agenda,” Ramos said.

On assisting in preparing for the Hangzhou summit, Ramos said she found China “is really trying to look at the issues and trying to find solutions.”

Ramos noted that it’s not easy to reach consensus in G20 because every country has its own agenda, interests and its ways to do things.

But Chinese G20 presidency, assisted by OECD and other partners, has been trying to find the most possible consensus, the OECD official said. “The cooperation with China is very encouraging and China is ambitious in trying to find solutions,” she added.

Moreover, she expressed hope that G20 members would reach a strong commitment about innovating growth pattern during the Hangzhou Summit.

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Watch the video interview (in Chinese only) here.

Link to the article (in English) here.

Link to the article (in French) here.

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The 4th Global Forum on Responsible Business Conduct

Opening address at The 4th Global Forum on Responsible Business Conduct by Gabriela Ramos OECD Chief of Staff, G20 Sherpa and Special Counsellor to the Secretary-General

Wednesday, 8 June 2016

Let me also join the Secretary-General in extending a warm welcome to you to the 4th Global Forum on Responsible Business Conduct and to the celebrations of the 40th anniversary of the OECD MNE Guidelines. As I mentioned yesterday in the High Level Round Table, 40 years is midlife celebration, but for many, it is where the real fun begins.

Over the past decades, the Guidelines have evolved to represent the world’s leading instrument on responsible business conduct. The scope of the Guidelines has been broadened and provisions to promote their enforcement have been strengthened. I can confidently say that they are the gold standard on this field, and that, focusing on implementation, is the way to continue strengthening them.

They are the gold standard because their comprehensive scope, dealing with human rights, environmental issues, labour and anticorruption. But they are also the gold standard due to their innovative grievance mechanism based on National Contact Points. These are the only governmental, non-judicial mechanism, providing access to remedy to anyone wishing to raise an issue related to non-observance of the Guidelines.

Stakeholder engagement is another key element that contributes to their strengths.

We know more on where they are being effective. Specific instances (the 360 cases mentioned by the Secretary-General) covered all the chapters in the Guidelines, with the majority dealing with employment, human rights and environmental issues. 25% of the cases have dealt with supply chains. Since 2011, about half of all specific instances brought to the NCP mechanisms deal with issues of non-adhering host countries.

What is more significant is the impact that these specific cases are having. Between 2011 and 2015, approximately half of all specific instances which were accepted to further examination by NCPs resulted in an agreement between the parties. And the Guidelines are better known and explained.

And we are continuing to improve the system. As Secretary-General mentioned, we were proud last year, during the Chairmanship of the G7 Presidency of Germany that the attention of leaders was brought to improve implementation, and for these countries to undertake peer reviews, and establish clear benchmarks. By 2018 all G7 countries would have taken a peer review.

This is important because NCP have very uneven track record. While some are real champions that have avoided important abuses, some others are completely lost in their role. So a raise to the top is welcome.

We also need to widen the geographical coverage and invite additional emerging economies to join, and again we are counting on the upcoming G20 Presidency, that will be again Germany, to bring this issue to the table.

Progress is being made, as 15 G20 countries have adhered to the Guidelines, but many more are party to the ILO conventions. Recent innovative legislations in G20 countries –like the Antislavery act in the UK- is changing the supply chain landscape.

The OECD Working Party on RBC also adopted in 2015 an Action Plan to strengthen NCPs which includes also peer reviews, capacity building and peer learning. Denmark and Belgium carried out their reviews and 12 more countries will be doing it in the next two years.  

They are also a living instrument with continuous improvement. The 2011 revision of the Guidelines also introduced the so called “proactive agenda”, which is the basis for our sectoral work. With this, and in the context of GVC, enterprises are expected to carry out risk-based due diligence on their own operations and across business relationships, extending their scope down the supply chain. Stakeholders are deeply engaged in our work.

The Guidance is also referenced in domestic regulations on mineral supply chain due diligence in the United States, in several countries of Central Africa, and in an EU Regulation currently being prepared. Chinese industry has also recently adopted it in order to promote responsible mineral supply chains in over 6000 Chinese companies.

On-the ground implementation of this Guidance is by far most advanced in the tin, tantalum, and tungsten (3T) sector. By May 2015, the programme reported to cover the mineral output of over 80 000 miners at over 1,300 mining sites in the DRC, Rwanda and Burundi, and to have 272 participating companies in 35 countries. This is great news.

We also recently adopted guidances for responsible agricultural supply chains and for meaningful stakeholder engagement in the extractives sector at the end of 2015. Guidance on garment and footwear supply chains and good practices in the financial sector should be adopted by the end of the year.

Think about the fact that agriculture accounts for up to a third of global employment. Among child labourers aged 5-17, over half work in agriculture, and two thirds of these as unpaid family workers. With these numbers, we cannot but recognize the importance of the OECD-FAO Guidance for Responsible Agricultural Supply Chains.

Large multinationals have recognised the risk of forced labour in their supply chains. For instance, last November, Nestlé publicly announced that it had found forced labour in its supply chains in Thailand, marking an important turning point in company disclosures on non-financial risk.

We should also build the business case of RBC. Figures show that irresponsible business conduct has a huge cost: In one study, nearly 20% of companies in a sample of over 2,500 were found to be subject to sanctions related to their social or environmental performance over the course of one year, amounting to penalties upwards of 95.5 billion euro. On the flipside, responsible business conduct can offer enterprises a competitive advantage.

A broadly cross-sector study by Harvard tracking performance of companies over 18 years, found that ‘high sustainability’ companies, those with strong ESG systems and practices in place, outperformed ‘low sustainability’ companies as measured by stock performance and in real accounting terms.

In our upcoming Development Cooperation Report we conclude that RBC can help mobilise the resources that will be necessary for financing the SDGs, while improving access to markets and participation in value chains for developing country industries. It can also promote accountability and inclusiveness, particularly important for marginalised or vulnerable segments of the population.

The international economy is at a complex juncture. Our Chief Economist recently warned against the persistent “low growth trap”. Due to the increased inequalities and the major scandals derived from the dark side of globalization (like the Panama papers, or the Rana plaza), citizens have lost confidence in public institutions, in business or in international organizations. We need to turn this around. And we can do it by increasing the level of commitment and effectiveness of our standards.

We need to build on the inspiring stories of success, and to continue pushing for more ambitious implementation of the right policies. We need to make it real.

Last week, during the OECD Forum, Secretary General joined forces with Nobel laureate Kailash Satyarthi, who has fought child labour for decades.

During the bilateral discussion, Kailash said that, with the OECD support, he was confident that during his lifespan he would see the end of slavery. This is a very encouraging statement.

Well, let me turn it around. We are sure that, with your support, and commitment, the OECD Guidelines will deliver on this and on many other urgent goals. So keep up the good work, and keep counting on us to deliver. I wish you the best of Forums, and the best of celebrations of our dear middle age instrument.

Productivity and Inclusive Growth

Opening address at the OECD Week’s 2016 Forum by Gabriela Ramos OECD Chief of Staff, G20 Sherpa and Special Counsellor to the Secretary-General

Tuesday, 31 May 2016

To the challenges of the global economy, we should add the worrisome trends of declining productivity growth in advanced and emerging economies, and of increased inequalities and opportunities. Both of them constitute a major risk for people’s living standards and well-being, and the OECD has been long documenting them. But we have taken a step forward, and that is to look at their interactions and common foundations, and at ways to address them together. And this is the object of the Productivity and Inclusiveness Nexus report that I am asked to present.

Slowing productivity

Building on our longstanding analysis, the report confirms deeply worrying slowdown in productivity growth.

In all OECD countries and emerging economies, we have seen a decline in productivity growth since the 90s. But the slowdown affects firms differently: leading firms – the so-called ‘global frontier’ firms – have continued to register strong productivity gains, of around 3.5% versus the laggard firms of 0.5%.

A number of factors lie behind this worrying trend, amongst them weak global demand in the aftermath of the crisis, a persistent fall in investment in physical capital, and the decline in business dynamism. The differential is also be the breakdown of the diffusion machine, and the prevalence of skills mist-matches in many sectors. In a broader perspective, Ricardo Hausmann, from Harvard, was right when he said that the main inequality across countries today is the inequality of productivity. 

Rising Inequality

But the productivity slowdown is only one part of the story. The report also highlights that income inequality in several OECD countries has increased to levels unprecedented in the post-war era. Today, the average income of the richest 10% in the OECD is around 9.5 times that of poorest 10%, up from just 7 times 25 years ago.[i] In terms of wealth, the situation is markedly worse. In 2012 the top 10% controlled almost half of wealth. Inequality of income and wealth brings inequality of opportunities, access to quality education, health or quality jobs. And we now, and have confirmed that certain groups of people and regions accumulate disadvantages that looks them in low productive activities.

The Nexus report underlines several areas where these two issues are linked.

First, inequalities of income, education, training opportunities, health, and access to quality jobs or new technologies, likely reduce aggregate productivity and growth because they prevent people and firms and regions from realizing their full potential.

Our work on inequalities proved that, by the lack of investment in skills of the bottom 40 percent of the population, inequality harms growth. We even have worrying evidence of worsening academic outcomes across generations: in 2012 one in six young adults (aged 25-34) attained a lower level of education than their parents.[ii] This is bad for inequality, but also for productivity.

Second, growing productivity dispersion across firms is likely to have contributed to widening of the wage differentials, besides the fact, wages did not keep up with gains in productivity in many countries.

Third, the so-called ‘skill-biased technological change’ hypothesis may also have led to job polarisation. Standard routine work has declined as share of employment by over 20 percent during the 90’s, while high skilled, high wage increased.

Fourth, competition settings, in general in the context of the digital economy, may lead to winner take all dynamics, or rent or regulatory capture by frontier firms. Badly framed regulatory and competition settings framework (both to allow for entry and exit), may have trapped workers and firms in unproductive activities and preventing the reallocation of resources.

Finally, we have some evidence of cases where the financialisation of the economy has harmed but productivity growth and inclusiveness. And there are many other examples.

Policy packages

Looking at the evidence, and advancing a better understanding of the reasons behind these two trends and their linkages is important, but more important is to understand the policy interventions that can produce a double positive effect in both trends. But more than anything avoid policies that by addressing one area harms the other. The OECD proposes a multi-dimensional approach that includes:

First, to help individuals, we need strong education and social policies (to provide not only with quality education and health, but ensure that we are developing the right skills those that are demanding by the labour market. We need better matching, but also a focus on entrepreneurship, tailored skills building, vocational education and lifelong learning. 

For people to succeed, we need a thriving business sector and strong competition, and bankruptcy legislation and regulatory frameworks that allow for better allocation of resources. Competition in the digital world will also ensure a level playing field for incumbents and challenger firms. We should also enable small companies to access finance, technology and high quality skills.

Next, policy prescriptions must take regional and local circumstances into account. Regions and cities have a key role to play by promoting local policies that reduce or remove the barriers limiting access to opportunities. Here I am thinking for instance of housing and transport policies which can play a key role in helping disadvantaged groups avail themselves of training or labour-market opportunities.

More than anything, the productivity-inclusiveness nexus is therefore a major call for policy makers to invest in those at the bottom of the income distribution, not only for moral reasons, but also on economic grounds.

By investing in disadvantage people and regions, and laggard firms, economies will be unlocking higher levels of potential growth and productivity. So this is the invitation, and this is the call that will be emerging from the works of the 2016 Ministerial Meeting led by Chile, and that the OECD will continue advancing in the context of our Inclusive Growth Initiative and we want to thank the Chair for their efforts.

Thank you.

Watch the presentation of the OECD Productivity and Inclusiveness Nexus here.

Learn more about the OECD  2016 Global Forum on Productivity.

[i] OECD Income Distribution Database – http://www.oecd.org/social/income-distribution-database.htm

[ii] OECD (2014), Education at Glance 2014, OECD Indicators, OECD Publishing, Paris, http://dx.doi.org/10.1787/eag-2014-en.