WHY WOMEN MATTER: Promoting Gender Balance in Public Life and Economic Strategies

 The economic case for addressing the gender gap

We are facing a global context of slow growth and weak recovery — with low productivity growth, half-performing engines of trade and investment, and slowing growth in the EMEs.

The long-term impact of the crisis is low levels of investment, long-term unemployment, and reduced labour market participation, resulting in reduced potential output, i.e. the ability of our economies to grow over the long-term.

We need a bold policy response. We must harness all sources of growth, including raising women’s participation in the labour  market.

These factors have motivated the OECD to push very hard for gender equality and call vigorously for concrete commitments (such as the G20 25×25 target) in this area.

Women are less likely to study engineering, manufacturing, and construction

Let’s start with an overview of the various dimensions of this gender gap, beginning with education.

  • In most OECD countries, including Italy, young women now obtain a higher level of educational attainment than young men. In fact, in many OECD countries there are serious concerns about boys dropping out of school and not reaching the baseline level of performance in reading science and maths, while in other (typically developing) economies, keeping adolescent girls in school remains a challenge.
  • Men and women also tend to make different choices in field of study. Across the OECD on average, only 24% of graduates in engineering, manufacturing and construction are women. OECD research finds that these outcomes are not linked to ability as much as to attitudes: young girls, even when they are good at math, have less self-confidence than boys in their own math problem solving ability. Girls often express strong feeling of anxiety towards mathematics.
  • Italy is doing better than the OECD average in the female share of graduates in engineering, manufacturing and construction, but Italy is still far from reaching equality: only 34% of graduates in these fields are women.

With evidence from OECD PISA work and OECD Education at a Glance in hand, the OECD continues to raise this issue on the international leadership agenda: The OECD contributed to the G7 Ise-Shima Summit, and the Leadership declaration includes a commitment to empowering women and girls – including through capacity-building (such as education and training) and by promoting the active role of women in Science, Technology, Engineering and Mathematics (STEM) fields.

Female labour force participation rates and gender gaps differ across the OECD

Although young women are doing very well in years of schooling, and often exceed the educational attainment of young men, we still see women lagging behind men in the labour market. This represents a lot of lost potential.

Female labour force participation (FLFP) rates differ enormously across OECD countries.

  • The lowest FLFP rates are in Turkey, Italy and Mexico. Italy has significant room for improvement with a prime-age FLFP rate of 55%. The gender gap in LFP is also relatively large in these countries. In Italy, the gender gap is nearly 20 percentage points, compared to an OECD average gap of 12 percentage points.
  • In contrast, in countries such as Denmark, Norway, Switzerland, Sweden, and Iceland, more than three-quarters of women are in the labour force. Women’s rates in these countries are comparable to men’s.
  • If we consider the intensity of participation, gender gaps would be even larger because women are more likely than men to work part-time, especially in some European countries. For example almost 4 out of 10 employed women in Germany work on a part-time basis.

Gender pay gaps are substantial across countries

Gender gaps also persist in pay. Across countries, women still earn less than men. The median hourly gender pay gap in OECD countries in 2014 was is 12.5% on average.

  • Gender pay gaps are relatively low in Italy, Mexico and Turkey, but remember that pay gaps only concern those women who are in paid work: in these countries, many women with childcare responsibilities are not in employment, and women who do work may have relatively high earning potential.
  • Many factors drive the gender pay gap, including:
    • high rates of workforce withdrawal and career interruption among young and childrearing-age women;
    • low-paying jobs;
    • gender segregation in occupation and sectors;
    • the under-representation of women in senior management and on company boards;
    • high levels of informality; attitudes and social institutions;
    • and discrimination in hiring, pay, and promotions.

The 2013 OECD Gender Recommendation on Education, Employment, and Entrepreneurship

To help close gender gaps, in 2013 OECD countries agreed to a set of policy measures to promote gender equality in the “3 Es”: Education, Employment, and Entrepreneurship. Let me mention a few noteworthy examples:   

In education, public policies should:

  • Help ensure more gender-equal representation across fields of study, by reviewing teaching material and practices against stereotyped representations;
  • Help teachers become aware of unconscious gender bias, and provide better information to boys and girls about educational pathways and potential pay;
  • Raise the profile of career opportunities and role models. For example, in the United States, the Department of Education’s “Race to the Top” programme prioritizes improving STEM achievement overall and within under-represented groups – including women and girls – in awarding grants to states.

To reduce gender gaps in employment:

  • Family-friendly policies, particularly access to childcare and paternity leave, are important policy levers to support working parents and help close gender gaps in labour markets.
  • More and more countries are introducing paid leave for fathers to incentivize them to contribute to childcare for babies and very young children. About 3/4 of OECD countries now offer paid leave reserved for fathers. On average across the OECD, fathers are entitled to eight weeks of leave, measured as the total weeks of paid paternity and parental leave that can only be taken by the father.

In entrepreneurship:

  • Gender gaps persist in entrepreneurship, especially when it comes time to grow the business and hire employees. Policy actions to promote female entrepreneurship include ensuring equal access to finance; reducing barriers and administrative burden on firms; and support for training programs, awareness campaigns and networks for female entrepreneurs

Promoting equality at the highest levels of the private sector

One example of “policies in action” are gender targets, quotas and disclosure requirements to get more women into senior management and executive levels. These measures have been helping to close gender gaps at the upper levels.

As the chart shows, only about one in five board seats on listed companies across OECD countries are occupied by women. Finland, France, Norway, and Iceland perform the best, with over 30% of board seats held by women. Italy also does relatively well, at 26%, in part due to the 2011 introduction of quotas for women on boards.

  • Norway was the first to introduce board quotas in 2005.
  • Italy also introduced a temporary and gradual quota[1]. A team of researchers recently published a paper showing that the reform was associated with more female board directors and higher levels of education on the board. On the other hand, they found no effect on firm performance[2].

Note: The 2013 Gender Recommendation does not call for quotas, but calls for more research on the effects of quotas. The Recommendation calls to increase the representation of women in decision-making positions by:

  • Encouraging measures such as voluntary targets, disclosure requirements and private initiatives that enhance gender diversity on boards and in senior management of listed companies;
  • Complementing such efforts with other measures to support effective board participation by women and expand the pool of qualified candidates;
  • Continuing to monitor and analyse the costs and benefits of different approaches – including voluntary targets, disclosure requirements, and boardroom quotas – to promote gender diversity in leadership positions in private companies.

Promote gender equality in public and private leadership

Women are also under-represented in public life. Women are still a minority in parliaments, ministerial positions and the judiciary. This means that women’s voices are missing where important decisions are being made.

On average, across OECD countries, women occupy around 28% of seats in parliaments, though this is an eight percentage point improvement compared to 2002.

2015 OECD Recommendation on Gender Equality in Public Life

Because it is so important to ensure gender equality in governance and public leadership, in 2015 OECD countries agreed to a set of policy measures to promote gender equality in public life.

Affirmative action measures such as gender quotas and parity principles are being used to accelerate women’s representation in all levels of government or as political candidates in various OECD countries and beyond. In Mexico, for example, quotas and the subsequent introduction of the parity principle in the Constitution have strongly influenced increasing women’s access to elected bodies, both at the federal and state level.

However, quota requirements in the electoral law are not sufficient to increase women’s representation in politics. Other measures laid out in the 2015 OECD  Recommendation on Gender Equality in Public Life public life include:

 

  • Ensuring that women have leadership opportunities (e.g., participate in committee work as chairs);
  • Ensuring a gender-sensitive work environment; and
  • Fixing holes in the “leaky pipeline”. In getting more women into any type of public or private leadership role, it is important to ensure that all well-qualified women can make it to the top – for example by providing childcare supports, flexible workplace practices, and reasonable work hours.

Ongoing work on Gender

The OECD has a broad portfolio on gender. The cost of gender inequality is too high – we cannot afford to ignore this issue.

We are currently preparing a “progress report” which will evaluate how countries are doing in implementing the policy measures put forth in the 2013 Gender Recommendation. This progress report will launch in 2017.

Other OECD work includes the Gender Data Portal, Gendernet, the Index of Social Institutions and Gender (SIGI), and a series of country gender reviews. We have completed our gender review of the United States, and will soon launch our gender reviews of Germany and Mexico.

Ending violence against women

The OECD is strongly committed to drawing attention to, preventing, and ultimately ending violence against women.

Violence against women is not only a violation of basic human rights, but it has a high financial cost: OECD estimates suggest that discriminatory social institutions – including violence against women – cost the global economy approximately 12 trillion US dollars a year.

To end gender-based violence, we must target root causes. The OECD is addressing gender-based violence as part of a holistic and ambitious gender equality agenda to empower women and girls in all spheres of their lives. As part of this Call to Action:

  1. First, we will focus on data. Data on the prevalence and incidence of gender-based violence remain scarce. Statistics on how much money is going to combatting violence against women are also inadequate. The OECD is working to fill these data gaps.
  1. Second, we will focus on policies to tackle the root causes of violence against women. The OECD Social Institutions and Gender Index, or SIGI, looks at the laws, attitudes, social norms and practices that drive violence against women. Across the 160 countries included in the SIGI, one in three women agree that domestic violence is justified; in some countries, this climbs close to 90%. Our research reveals that such discriminatory social institutions cost the global economy approximately 12 trillion U.S. dollars.
  2. Third, we will drive collective action to improve the response to gender-based violence on the ground. The OECD supports countries and UN agencies to address the risks and threats that fuel crises around the world. We will work with members to put gender front and center in these efforts.

The G20 Gender Target

In the context of 1) slow growth and reduced potential growth and 2) a lingering under-utilization of women’s skills and competences in the labour market, the OECD worked hard, along with the G20 membership, to build a powerful agenda aimed at reducing gender gaps in labour markets. This work culminated in the “25 by 25” target.

  • The US Sherpa asked the OECD, with other institutions, to document how much gender participation would add to growth. We patiently built the case. The issue was transferred to the WG on Employment of the G20 where our Director for Employment, Stefano Scarpetta, led the charge for the analytical substance and definitions, and convincing experts that it was not only necessary but possible. We had to show how achieving this target would contribute to reaching the Brisbane “2 in 5” objective which was the sort of cornerstone of the Australian Presidency in 2014.
  • These efforts were supported by the US and the Australian G20 Presidency, but also by Japanese Prime Minister Shinzo Abe, who unveiled domestic policies to encourage more women to return to work after the birth of their first child.

In the end, we brought it to the leaders’ table when discussing the Communiqué in Brisbane. G20 members agreed to implement measures across a range of key policy areas, subject to national circumstances, including to (G20 LEMM Declaration, 2014):

 

Gender in the G7

Gender equality is also a key component of the G7 agenda. In 2015, under the German presidency, G7 countries adopted principles to improve female entrepreneurship, and in 2016 the Japanese presidency has focused on improving women’s representation in STEM.

The OECD supports these efforts, and we stand ready to support the Italian presidency as well.

 

OECD joins the Call to Action to prevent and respond to Gender-based violence in Emergencies

Speech delivered today on the occassion of the GENDERNET reception at OECD Headquarters

Distinguished guests,

It is a pleasure to join you at the end of what I hear has been a productive day of discussions.

It is a special honour to be here alongside two fellow gender equality champions:

  • Ambassador Bernes who represents the first feminist government in the world; and
  • Charlotte Petri Gornitzka who joins us here on her first official day in the office as the new Chair of the OECD Development Assistance Committee.

 

I would like to express my gratitude to Ambassador Bernes for bringing to our attention the Call to Action to Combat Gender-Based Violence in Emergencies, and for your efforts in mobilising partners around this critical initiative.

Gender-based violence is the most brutal form of discrimination against women. It destroys lives and devastates societies and economies. It is one of the most widespread human rights abuses and a grave threat to lasting peace and development.

We know that conflict and crisis can intensify the violence that women face, and that impunity for such violence increases with the breakdown of law and order. We know too that the consequences of gender-based violence persist long after conflicts have ended – from unwanted pregnancies, to physical and mental trauma, to stigmatisation that devastates women’s health and lives.

It is intolerable that one in three women worldwide still suffers from this preventable pandemic. We must urgently move beyond words to action.

This is why I am delighted to announce that the OECD is joining the Call to Action to Combat Gender-Based Violence in Emergencies.

We commit to mobilising all our tools, research and resources to combat gender-based violence for individuals and societies everywhere.

We know that for gender-based violence to end, we must target its root causes. Gender-based violence persists because we live in societies that diminish and devalue women and girls. It persists because women are still denied basic rights in all spheres of their lives – social, economic and political. This increases their exposure to abuse and exploitation, and reduces their ability to escape situations of violence and harm.

At the OECD, we are therefore addressing gender-based violence as part of a holistic and ambitious gender equality agenda to empower women and girls in all spheres of their lives.

First, we will focus on data. Data on the prevalence and incidence of gender-based violence remain scarce. Statistics on how much money is going to combatting violence against women are also inadequate. The OECD is working to fill these data gaps. With your support, we introduced a new code in the OECD’s statistical system that will track – for the first time ever – aid in support of ending violence against women. In 2017, we will publish the first data on this.

Second, we will focus on policies to tackle the root causes of gender-based violence. The OECD Social Institutions and Gender Index, or SIGI, looks at the laws, attitudes, social norms and practices that drive violence against women. Across the 160 countries included in the SIGI, one in three women agree that domestic violence is justified; in some countries, this climbs close to 90%. Our research reveals that such discriminatory social institutions cost the global economy approximately 12 trillion U.S. dollars.

Over the next two years, SIGI country profiles will deepen the focus on gender-based violence in conflict and fragile states, with new analysis on gender-based violence, social norms and laws in fragile and conflict-affected settings.

Third, we will drive collective action to improve the response to gender-based violence on the ground. The OECD supports DAC members and UN agencies to address the risks and threats that fuel crises around the world using tools and agreements such as the OECD resilience systems analysis framework[1] and the New Deal for Engagement in Fragile States. We will work with members to put gender front and centre of these efforts to build resilience. We will also produce new OECD guidance to galvanise more effective action by the donor community to address gender inequality in the most challenging fragile settings.

But we will not stop there. Gender-based violence will only end when gender inequality ends – when women and girls have the agency, resources and assets to enjoy equal status in society.

To this end, we will continue to focus on three key ingredients of women’s empowerment: education, employment and entrepreneurship.

In 2013, the OECD Council of Ministers adopted a recommendation which sets out measures that all OECD countries should take to address gender inequalities in these three foundational areas.

Building women’s social and economic power not only raises women’s status in society. It can also reduce their risk of abuse, increase their ability to leave situations of violence, and build their self-confidence and respect.

Yet more than a third of young women in developing countries are jobless—out of school and out of the labour market. In G20 countries, gender gaps in labour market outcomes persist despite the fact that young women are more educated than young men.  

Turning this around is a priority for the OECD. We pushed hard for a commitment to be agreed at the G20 summit in Brisbane in 2014 to reduce the gender gap in labour force participation by 25 percent by 2025 – known as the “25×25” gender target. The OECD has been tasked with monitoring progress in meeting this target in G20 countries.  

We are also stepping up our attention to women’s economic empowerment in developing economies. In 2017, the OECD will launch a Global Policy Dialogue on Women’s Economic Empowerment based on a new horizontal collaboration between our two development directorates (DCD, DEV) and our statistical directorate (STD). This Dialogue will bring together governments from the North and South to identify policies and practices that can help accelerate women’s economic empowerment.

Ladies and gentlemen, ending gender-based violence requires an all-encompassing agenda that works at every level – educating women to know and claim their rights; shifting values and norms so that violence becomes unacceptable; and building women’s power and resources to exercise agency and autonomy over their bodies and lives.

With this package of actions announced today, I am convinced that the OECD will make a crucial contribution towards delivering the Call to Action. Never before has the need been so self-evident and the commitment so impressive. Let us join forces here today and in the years ahead to turn this commitment into action.

Thank you.

[1] The OECD resilience systems analysis framework is a multi-dimensional planning and programming tool designed to strengthen programming outcomes for vulnerable people by ensuring that analysis is risk-informed. The framework also facilitates greater coherence between humanitarian, development and peace and statebuilding actors, by highlighting respective actors’ comparative advantage in meeting people’s immediate needs, while also working toward addressing the longer term drivers of crises and vulnerability at all levels.

 

Launch Of the Greece-OECD Project: Technical Support On Anti-Corruption

Speech today at the General Secretariat for Media and Communication, Athens, Greece

Follow the rest of the event live here.

Deputy Prime Minister, Ministers, General Secretary Against Corruption, Representative of the European Commission’s Structural Reform Support Service (SRSS), Ladies and Gentlemen:

It is a great pleasure to launch in Athens the Greece-OECD Project for Technical Support on Anti-Corruption.

I am very glad to be here. Since the very beginning of Prime Minister Tsipras’ Government, the OECD has been a partner and this partnership is confirmed today. But I am also glad as I could not imagine a better area to have impact and improve the outcomes in Greece as the fight against corruption.

I want to thank the European Commission SRSS for their support and the General Secretariat for Anti-Corruption for their excellent collaboration, both are key parts of this equation. The OECD is committed to help Greece, as always.

Corruption is the cancer of our nations: it weakens our economies, sickens our societies and cripples our governments, eroding the most important ingredient in our social contracts: TRUST.

It is very difficult to calculate the exact cost of corruption, but some international agencies have estimated that every year close to $1 trillion dollars pollute our systems and go to waste only in bribes, while our research suggests that the probability of foreign direct investment is 15 percentage points lower in countries with a strong presence of corruption than in countries that are relatively free of corruption.[i]

The levels of corruption in Greece have been high for the past decades. In 2015, Greece was the second country with the highest perception of corruption in the OECD, after my own country, Mexico.

This has become a drag for the Greek economy but it also has an enormous social cost. Combating corruption is necessary in every country, but it is essential, I would say even strategic, in a context where the people, the elderly, the youth, have gone through one of the deepest social crises ever registered in an OECD country.

We know what we are confronting. The Greek anticorruption effort is addressing challenges that are probably shared around the world, a badly structured and fragmented system, with institutions working on silos, with weak implementation assessment mechanisms, lack of transparency and ineffective enforcement.

This is why it is very encouraging to see that the Government of Prime Minister Tsipras is committed to tackling this challenge up-front with the establishment of a General Secretariat Against Corruption and the implementation of a National Anti-Corruption Action Plan with the help of OECD.

The National Anti-Corruption Action Plan provides a clear path for strengthening trust in government and public institutions by building resistance to corruption. It identifies key areas of reform and provides detailed actions towards strengthening integrity and fighting corruption, in both the public and private sectors. Its effective implementation will require better integrating anti-corruption measures in the whole of the government’s policy agenda and in the business models of the private sector. It will also require raising public awareness on anti-corruption efforts. And it will demand strengthening the anti-corruption legislative framework, and enhancing the capacity of key players in the law enforcement community.

The Greece-OECD Project that we are officially starting today, is dedicated to developing the know-how for the effective implementation of the work done across outcome areas of the Action Plan, as well as advancing the evidence base of what works and why. The project will reach out to the actors from civil society and the private sector.

The programme of work includes 10 outcome areas, each of them contributing to the objectives of the Action Plan. For example: strengthening internal control and audit; developing dedicated corruption risk management frameworks; improving asset declaration, political financing and whistle-blower mechanisms; enhancing detection and reporting of corruption in the private sector; and improving capacity of law enforcement authorities; to mention a few.

Our technical support will help the Greek Anti-Corruption authorities, and the Government as a whole, to: focus on enhancing and formalising  coordination and exchange of good practices; harmonise procedures and share annual planning; spread practical standards and tools that have been proven effective; prioritise and better target existing resources; mainstream anticorruption tools and policies within managements systems and daily operations; and allocate concrete roles and responsibilities across all levels of public organisations

And we will be as concrete and practical as possible. For example, if we deal with control auditing institutions we should have a comprehensive view, including risk based audit planning, audit manuals, dedicated corruption risk management framework, forensic audits. The purpose is not only to identify and sanction individuals. The focus is to identify the control gaps, put in place cost-effective controls, effectively mitigate corruption risks, improve professionalism and expertise among control and audit practitioners, and take a holistic and practical approach to effectively prevent, detect and respond to corruption.

We will mobilise the insights and first-hand experience of anti-corruption experts from the OECD, some of which are here today, with extensive knowledge in many countries. We will also rely on practitioners from many OECD countries, benefiting from well-established institutions and recent successful reforms in places like Australia, Korea, Estonia, Latvia. But we are also conscious that the approach needs to be tailor-made, especially for specific high risk sectors in Greece, such as defence, health, and local government entities.

If we manage to implement all this Action Plan properly, we are sure that corruption will decrease while the levels of public sector efficiency and public trust will grow

Ladies and gentlemen:

The fight against corruption is one of the most effective ways to promote a more resilient, inclusive and sustainable growth. It is one of the most efficient ways of recovering public trust in governments, parliaments, corporations, banks. It is crucial to recover confidence in democracy and market economies. It is crucial to recover trust in our countries!

The implementation of the National Anti-Corruption Action Plan can be a landmark in the history of Greece. It can become a catalyst of shared progress after years of huge efforts by the Greek people. Let’s help the Government of Greece implement this Plan effectively. Let’s make the most of this opportunity. Not for global rankings or Memoranda of Understanding, but for the Greek people, the Greek youth, the Greek children, who deserve and can have a brighter future and a better life!

Thank you.

 

[i] OECD, Anti-Corruption Brochure, May 2016

It’s not just the economy; society is a complex system too

Income and wealth inequality is not a new phenomenon. On the contrary, it seems that it is a permanent feature in human history, and over the years, its causes and consequences have become more numerous and more interconnected. The same is true for many social phenomena, and even though the world looks more complicated today, it is not. What is different is the increased number of domains where public policy is expected to play a role. Regarding inequalities of income and wealth, governments have to make decisions on several interlinked areas such as taxes, education or health.

Unfortunately, the tools at the disposal of policymakers have not always been updated fast enough to cope with these challenges and with their inter-linkages. Moreover, policies are often designed within the narrow confines of one issue, without taking into account their consequences elsewhere.

Economists have tried to simplify and abstract from reality with limiting assumptions like the representative agent and general equilibrium. They have also given primacy to  the goal of effectiveness, in detriment to other important considerations such as fairness. Yet, the use of aggregate data obscures the distributional consequences of policies: an economy as a whole may be doing well, but – as we have seen in recent years – there are severe consequences for social cohesion, and ultimately growth itself, if large groups are excluded from the benefits of economic prosperity. In defining growth policies that aimed only at increasing GDP per capita, inadequate attention was paid to institutions, human behaviour, and culture. These approaches failed to adequately account for the realities of markets, consumer decisions, and the interconnectedness of economic, communications and societal networks.

In stark contrast to the assumptions of neo-classical economics, socio-economic systems are not stable, but in constant flux. Complexity science generates new insights and furnishes us with the analytical tools and instruments to help us, as individuals and societies, to navigate this new understanding of the economy. It addresses some of the limitations which constrain conventional economics and ultimately it is helping us to do a better job in advising governments and public institutions.

For example, taking a complexity-based approach we can begin to recognise that the causes and consequences of inequalities and major economic and societal problems are intertwined. Besides contributing substantially to the increase of wealth inequality, the financialisation of the economy also led to increased systemic risks where a problem in the subprime markets led to a major economic crisis that has set additional hurdles in the way of the most vulnerable groups all over the world.

Just like the financial system and its major risks, our social systems are complex and vulnerable. Considering the increased fragmentation and divisions in our societies (and adding the challenge of integration of migrants and marginalized groups) more attention should be paid to social stability. In this vein, policies to address societal problems, should not only rely on traditional economic tools and measures, but broaden them to bring insights of useful disciplines.

This more realistic approach to how people and the economy actually work is needed – an integrated inclusive growth agenda which also considers unintended consequences, trade-offs and complementarities between policy objectives.

Indeed, I believe that economists – and the policy makers they advise – can do better by listening to and learning from others. It’s not easy for an organisation that has “Economic” in it is name, but we need to break the monopoly of economics over policy – looking to other disciplines such as physics, biology, psychology, sociology, philosophy and history. Societies and economies are not static features that can be predicted, but evolutionary systems with breakpoints and changes that need to be better characterized.

At the OECD, we recognise the potential of new economic thinking, drawing on complexity theory, and evolutionary and behavioural economics. Technological and analytical innovations are driving a revolution in the physical sciences, biological sciences, and social sciences, breaking down the barriers between disciplines and stimulating new, integrated approaches to pressing and complex challenges. Advances in computing power are opening up new possibilities for integrating systems models, agent-based modelling and network analysis. It is only by properly utilising these new approaches that we can strive to create social and economic models that provide a more accurate representation of the world around us. These tools also allow us to get away from average representations, or to look at stocks and not only at flows in the economy (income vs wealth inequality).

And indeed, economics is starting to incorporate insights from other disciplines. For example, expectations may be admirably rational in traditional models, but by combining psychology and economics we are designing policies based on how real people actually behave, not on limited assumptions about how some fictional average person should behave. Taking a problem-based approach, we can design policies to influence people and nudge them in the right direction in areas such as consumer policy, regulation, and environmental protection.

The OECD is part of this revolution and we are already transforming our policy thinking and acting. With the New Approaches to Economic Challenges (NAEC) initiative, we are taking a hard look at our analytical methods, our data and policy advice.

Many articles in this series have argued that the economy is a complex adaptive system. Society is a complex system too. It is formed by the interaction and mutual dependence of individuals, and is pursuant to their spontaneous, natural behaviour. Since the emergence of hunter-gather societies inequalities have threatened to undermine and weaken the fabric of the social system. If we are to overcome the pernicious effects of these inequalities, we need to think about the interactions between our social and economic systems – which follow their own logics – and design policies which help our economies to grow. But growth isn’t an end in itself. It has to be inclusive to ensure that all segments of our societies prosper.

Systems thinking can lend us a hand to fight inequalities and develop an agenda for inclusive growth. As we draw out the inter-linkages between different policy areas, we begin to understand how the economic system interacts with other systems, as well as with the history, politics, and ambitions of countries. Our task now is to put this growing comprehension to good use, in order to make the economy work better for all people.

Useful links

The OECD is organised a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

Please consult the draft Agenda for more information, and a preliminary background paper “Insights into Complexity and Policy” regrouping articles from the insights blog and other sources.