Quizá podríamos comenzar con ¿qué es la OCDE y cuáles son los beneficios de pertenecer a dicha Organización para un país como Argentina?
La OCDE es un organismo internacional fundado en 1961 que tiene como objetivo promover mejores políticas que mejoren la calidad de vida de las personas en todo el mundo.
La OCDE se distingue de otros organismos internacionales por su forma de trabajo, estructurada en más de 250 comités y grupos de trabajo en los que funcionarios de los países miembros y socios comparten experiencias y buscan soluciones a problemas comunes.
Ser parte de la OCDE le permitirá a Argentina aprovechar el conocimiento adquirido a través de más de 50 años en la puesta en marcha de reformas estructurales, asesorando a gobiernos en el diseño e implementación de políticas públicas. Argentina podrá aprender de las experiencias y mejores prácticas de los países miembros de la OCDE para identificar las mejores opciones para alcanzar sus objetivos de política.
Al mismo tiempo, al ser parte de esta red mundial de políticas públicas, Argentina, podrá participar en el establecimiento de nuevas normas mundiales, influir en los debates de política pública a nivel mundial, y compartir su visión y experiencia en los procesos de reforma, llevando sus prioridades y las de la región a la mesa de discusiones. Esto es particularmente cierto en el contexto de la Presidencia del G20 que va a iniciar en unos días, tema que podemos abordar más adelante.
¿Cuál es el estado de la relación entre la OCDE y Argentina?
La relación entre la Argentina y la OCDE se ha venido construyendo desde hace casi cuatro décadas. Comenzó en los ochentas con su participación en los Esquemas Agrícolas. Argentina fue también uno de los primeros países de América Latina en adherirse a la Convención de la OCDE para Combatir el Soborno de Funcionarios Públicos Extranjeros y a la Declaración de la OCDE sobre Inversión Internacional. Argentina es también miembro del Centro de Desarrollo de la OCDE y del Foro Global sobre Transparencia e Intercambio de Información con Propósitos Tributarios.
Con el tiempo, Argentina ha ampliado su cooperación con la OCDE a otras áreas, participando en Comités y / o adhiriendo a instrumentos legales en áreas como desarrollo, ciencia y tecnología, químicos, gobierno corporativo, transporte, asuntos fiscales y transparencia e intercambio de información.
En los últimos dos años, desde el inicio del Gobierno del Presidente Macri, la relación se ha consolidado y crecido exponencialmente. Además ha tomado otra dimensión desde que Argentina solicitó formalmente ser considerada en una nueva ronda de procesos de acceso que se encuentra actualmente en discusión en el Consejo de la OCDE.
Como toda decisión mayor en el marco de un organismo multilateral, toma tiempo generar un consenso entre 35 países. La discusión actual no es tanto sobre la candidatura de Argentina, que es muy sólida y cuenta con el apoyo generalizado de los países miembros, sino sobre el tamaño y los detalles de una nueva ronda de acceso, que comprenderá, como suele ser, un grupo de países.
¿Como está la OCDE apoyando la agenda de reformas de Argentina?
Estamos muy honrados de apoyar la ambiciosa agenda de reformas de Argentina. Hace un año juntos definimos un Plan de Acción estructurado en 16 áreas de políticas públicas para apoyar reformas prioritarias que promuevan el crecimiento incluyente, fortalezcan los ingresos fiscales, aumenten la inversión, consoliden al Instituto Nacional de Estadísticas, fortalezcan la competencia, refuercen la gobernanza pública en todos sus niveles de gobierno, impulsen el desarrollo regional, ayuden a combatir la corrupción y promuevan más y mejores inversiones en educación y desarrollo de competencias, entre otras.
En el área de crecimiento económico, tuve el honor de presentar junto al Ministro Dujovne el Estudio Económico Multidimensional de Argentina en julio de este año. Este estudio reconoce las ambiciosas reformas que el Gobierno actual ha puesto en marcha y que han permitido que Argentina vuelva a la senda del crecimiento.
Asimismo, identifica algunos de los principales desafíos de Argentina en términos de productividad y equidad para lograr un crecimiento más incluyente y sostenible. Existen fuertes nexos entre las políticas públicas para mejorar la productividad y la inclusión que el país puede explotar en un diseño de un paquete de políticas públicas. En este sentido, el estudio identifica tres grandes desafíos que Argentina debe afrontar para apuntalar su crecimiento y hacerlo más inclusivo y ofrece una serie de recomendaciones.
El primer reto es seguir construyendo una economía sólida y estable, con más estabilidad macroeconómica, menor déficit y menos inflación.
El segundo desafío es adoptar reformas estructurales e institucionales para mejorar la productividad y la calidad de vida de los argentinos, en especial fomentando la competencia y la apertura comercial.
El tercer reto se manifiesta en la necesidad de favorecer un crecimiento más inclusivo, reduciendo las desigualdades de ingreso, de género y de acceso a servicios públicos de calidad, en especial de educación.
Como se discutió en el panel anterior, este enfoque tiene una gran coherencia con los planes del Gobierno, que ha privilegiado la puesta en marcha de reformas de manera gradual y el apoyo y la protección de los sectores más vulnerables de la población durante ese proceso.
Como parte de estos esfuerzos, la OCDE también esté llevando a cabo un Estudio de Integridad que sin duda será un elemento clave para fortalecer la lucha contra la corrupción e impulse la labor de la Oficina Anti Corrupción. La aprobación de la ley sobre responsabilidad de las personas jurídicas por corrupción es un avance clave en este ámbito.
Hay estudios similares en áreas como agricultura y gobernanza de las empresas públicas. Asimismo, me complace anunciar que un estudio sobre política regulatoria empezará en diciembre, el cual evaluará las políticas, instituciones y herramientas empleadas por el gobierno para diseñar, implementar y aplicar regulaciones de alta calidad.
El trabajo que hemos venido realizando con el INDEC en la restructuración del Instituto es un claro ejemplo del impacto concreto de la colaboración con la OCDE. Recientemente la OCDE emitió una Recomendación sobre Buenas Prácticas en materia de Estadísticas, a la que se han adherido todos sus países miembros.
Argentina ha sido el primer país no miembro en solicitar su adhesión a este instrumento y ser evaluada por el comité. Esto le permite a Argentina tener una hoja de ruta clara para contar con una agencia de estadísticas independiente con un marco institucional y legal claro, que cuente con los recursos financieros y humanos adecuados.
Es claro que nuestra colaboración avanza por muy buen camino.
The OECD has been spearheading the effort on inclusive growth, and we have helped to frame the global debate: we have influenced the policy recommendations of multi-lateral fora, such as the G7’s Bari Policy Agenda, as well as the G20 and APEC, whilst also influencing the inclusive growth agendas of national governments, such as Canada, Italy and Scotland. Guy Ryder, the head of the International Labour Organisation, told me that when the OECD concluded that inequality harmed growth the conversation changed.
But progress is too slow!
We are seeing the emergence of large segments of our societies that feel disenfranchised and alienated. They are showing their anger at the ballot box. The more we analyse the distribution of wealth and income, the more we find it unsustainable. Just today, we released our Ageing Unequally report that confirms that poor children are prone to becoming poor old people, incapable of building the basis for a pension with dignity.
And we now know that even though our growth model benefited many, those benefits have not been widely distributed all groups and countries. We are now facing a strong backlash against international economic integration, giving rise to protectionist, isolationist and populist forces.
This is the result of a growth model that did not deliver for all, and one in which those that were left behind are calling for something better.
How has this come about?
While focusing on GDP and GDP per capita, we did not analyse the skewed distribution of inequalities. Inequalities have been rising or remained stubbornly high over the past three decades. Since 2009 when the OECD published Growing Unequal to the Inclusive Growth Initiative that I lead today, the OECD has charted how those at the top have systematically pulled away from the rest of society.
Take a look at the numbers. The average disposable income of the richest 10% of the population is now around 10 times that of the poorest 10% across the OECD, up from seven times 25 years ago.
What’s remarkable is the concentration at the very top of the income distribution: over the past three decades, the top 1% captured 47% of total growth in pre-tax incomes in the US, 37% in Canada and 20% in the UK.[i]
And inequality actually worsened during the crisis and the supposed recovery as the majority of income gains went to the rich and redistribution weakened or stagnated in most OECD countries.
The picture is even more troubling in terms of wealth. OECD data indicates that wealth inequality has grown over recent decades, with the richest 10% in the OECD owning 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.
Inclusive growth, or the lack of it, is a cross-cutting problem, and many different groups have been left behind. For example, gender wage gaps, shown on this slide, have changed little since 2010 and remain substantial, averaging at 15% across the OECD in terms of the median monthly pay gap for full-time employees.
There is also a strong regional component to the growing divide. Many OECD countries see large regional income splits, with big differences between urban and rural areas and even between metropolitan areas.
Such regional divides also extend to well-being. You can see that compared to other British and OECD areas, Scotland performs highly on some well-being dimensions, such as community, but could improve on others, such as health.
What has caused this increase in inequalities?
Globalisation and new technologies are changing the nature of work and the demand for skills. Ever-increasing computing power, Big Data, the Internet of Things, and A.I. are combining to codify and automate a growing range of cognitive and non-cognitive skills traditionally carried out by humans.
The end result is a pattern of job polarisation across most OECD countries: the erosion of middle-skills jobs and growth of low and high skill jobs, thus increasing market income inequality.
The OECD’s work on The Productivity-Inclusiveness Nexus has shown that aggregate productivity growth in the OECD remains sluggish. Yes, some global superstars have continued to see huge productivity successes – but this also shows that the economic system that doesn’t work for everyone.
We are seeing the biggest firms – we call them frontier firms – becoming the biggest winners of globalisation. They have locked-in their success through better access to financial leverage and the patent system, the ability to operate globally and conduct arbitrage when it comes to tax competition and regulation, and their ability to attract the best talent.
This gives them a permanent competitive advantage over their lagging counterparts – like SMEs – meaning that they can enhance productivity and pay higher wages to their employees, which partly accounts for the growth of market income inequality.
These dynamics are particularly strong in sectors with high concentrations of knowledge-based capital (KBC) and ICTs, in which global frontier firms benefit from ‘winner-take-all’ network externalities.
Connected to this is the increased tax competition brought about by globalisation. Rapidly growing capital mobility worldwide has been accompanied by the increased use of tax havens. Estimates of the size of offshore assets range from 6.1trillion dollars (USD) to 7.6 trillion!
This has led countries to not only engage in tax competition with respect to the corporate income tax system, but also to the personal income tax system. Such tax competition may well have driven down top rates of taxation, reducing the progressivity of tax systems and thus contributing to rising inequalities.
Also part of the globalisation and inequality story is the increasing financialisation of our economies. Finance is a critical ingredient of stronger growth but negative effects can kick in at certain levels of development.
OECD research highlights three key mechanisms through which finance contributes to inequalities:
finance workers are concentrated at the very top of the income distribution and earn premiums unlinked to their productivity compared with their peers in other sectors;
high earners can and do borrow more so the majority of credit goes to high earners;
and most of the benefits of stock market expansion goes to affluent households.
Finally, the role of fiscal redistribution – a vital tool of the welfare state to reduce market inequalities – has weakened over the past decades, particularly during the 1990s. The main reasons for this decline are found on the benefit side: cuts to benefit levels, tightening of eligibility rules and the failure of transfers to the lowest income groups to keep pace with earnings growth.
What has been the impact of rising inequalities on societies?
Inequalities place a large toll on our societies and span many areas. First, there is a large economic cost.
OECD research shows how the rise in inequality may have knocked 6 to 10 percentage points of GDP growth between 1990 and 2010 across a range of OECD countries including the UK, Mexico, Finland, Italy, and the US, by reducing the skills of the bottom 40% and causing them to underinvest in their human capital.[ii]
Second, rising inequalities put further pressure on public social budgets, which are already overwhelmed due to population ageing and rising healthcare and pension costs.
Third, inequalities accumulate and the outcomes of one generation frame the potential of the next. Social mobility is already quite low in many OECD countries and is exacerbated by rising inequalities.
The report I mentioned earlier, Ageing Unequally, shows that inequalities in education, health, employment and income build up from early ages and extend in old age.
Children whose parents did not complete secondary school have only a 15% chance of making it to university – compared to a 60% chance for peers with at least one parent who had attained tertiary education.
More troubling still is the fact that the very same children at a disadvantage in the education system typically go on to receive smaller salaries and, most worryingly of all, to leave shorter lives. A 25-year old university-educated man can expect to live almost 8 years longer than his lower-educated peer, on average across OECD countries; the difference is 4.6 years for women.
At all ages, people in bad health work less and earn less. Over a career, bad health reduces lifetime earnings of low-educated men by 33%, while the loss is only 17% for highly-educated men.
Even in old age the disparities are large. Alicia Munnell of Boston College found that the households in the 20% in retirement savings had a median of $780,000 saved away whilst the bottom 20% had only $26,700.
Finally, high inequalities are also eroding trust in governments and further reducing their capacity to act. Trust in government institutions across the OECD has plumbed new lows during the crisis and its aftermath, standing at just 42% in OECD countries 2016 – it is even lower in the UK at 41%.
What is to be done?
To redress the relentless rise in inequalities, and place people and their well-being at the heart of policy-making, we need to advocate for a strong inclusive growth agenda implemented by all levels of governments. This means pursuing integrated policy packages that benefit all people, firms and places and coordination of those packages by national and local governments.
Investing in early childhood care and education is key!
We need an empowering state that starts with those left behind, fosters socio-emotional skills and supports education for life and throughout people’s lives.
We need to overhaul our tax systems to better reduce inequalities and promote inclusive growth. This means altering the bias in favour of capital, increasing the progressivity of property taxation and improving global tax governance to ensure that every company and individual pays their fair share, building on OECD-led initiatives to tackle Base-Erosion and Profit Shifting and to promote Automatic Exchange of Tax Information.
We need to update our social protection systems to take into account the effects of globalisation, digitalisation and the changing nature of work – benefits should be linked to individuals rather than jobs.
We need to harness the potential of digital technologies; access to cheap, reliable broadband and related internet applications can open up access to a whole array of digital goods and services to previously marginalised groups, and greatly reduce their cost.
It also means ensuring people in remote areas have access to this, and directly reaching out to those communities. I’m pleased to see that here in Scotland, the Government’s Community Broadband Scotland initiative is doing just that to build the infrastructure needed in remote areas. Superfast broadband coverage in Scotland is worse than in other parts of the UK, at just 65% in 2015 compared to 90% in North West England and in Greater London.
Promoting gender equality in access to employment and job quality is a key component of any inclusive growth strategy. We must remove discriminatory barriers against women in the workplace and work to reduce the gender pay gap through measures such as universal and affordable childcare and equal paternity leave. To put it into global context, it is estimated that raising women’s labour force participation rates to that of men could add $12 trillion, or 26% to global GDP by 2025. And when women are active economic participants, societies, families and economies benefit.
In terms of the UK, OECD data show that the gender pay gap is at 17.1%, higher than the OECD average (14.3%), although it has narrowed in recent years.
This said, the UK ranks above the OECD average when it comes to women in management positions, women in parliament, and women in leadership in central government. And I know that Holyrood [Scottish Parliament] doesn’t do too badly, with 35% female representation, better than in Westminster, which is at 32%, and I’m very pleased to see a female leader here in Scotland.
Investment in inclusive growth policies such as these and investment in early childhood, primary and tertiary education deliver greater returns to the state in the long run. Scotland has a well-educated workforce, with roughly 46% of the labour force having tertiary education, compared to approximately 32% in North East England.
This also means encouraging business dynamism and levelling the playing field so that all firms, including new firms and SMEs, have the opportunity to thrive.
As the barriers to inclusive growth cut across borders, we need to pursue inclusive growth strategies at the global, as well as at the national and local levels, requiring coordination and leadership across multiple layers of government.
We need to change the narrative. The crisis of the Second World War helped produce the Welfare State. From the financial crisis and its ongoing aftermath we need an Empowering State that delivers Inclusive Growth for everyone. Let’s build it together.
Achieving gender equality is a global challenge. No country in the world can declare victory.
It remains an uphill battle, which is the title of the major gender report I launched a few days ago, which I mentioned earlier.
But you know just as I do, that it’s a battle worth fighting both in terms of economic and social benefits. It is estimated that raising women’s labour force participation rates to that of men could add $12 trillion, or 26% to global GDP by 2025. And when women are active economic participants, societies, families and economies benefit.
This is a shared goal for all of us, and we will only make progress by working together and sharing our knowledge about what can deliver results for women’s economic empowerment. Which is why I’m so pleased to be here with you.
The report I am here to launch today [hold up publication]Women’s Economic Empowerment in Selected MENA Countries: The Impact of Legal Frameworks in Algeria, Egypt, Jordan, Libya, Morocco and Tunisia builds on almost a decade of work with the MENA region to support gender equality in public and private life.
And it is also the MENA-OECD Women’s Economic Empowerment Forum’s first major output.
Many of you here today have taken part in this important work, and I would like to thank you for your dedication and commitment.
Our earlier work on women’s employment and entrepreneurship has focused on helping governments boost women’s access to economic opportunities.
However, the persistently lagging labour force participation rates of women in the region – the lowest in the world at 24% compared to over 60% in OECD countries – would indicate that a piece of the puzzle has been missing from our analysis.
And that piece is the impact that different legal frameworks are having on women’s economic outcomes.
The 2014 OECD report on Women in Public Life: Gender, Law and Policy in the Middle East and North Africa, highlighted the importance of links between legal frameworks, women’s participation in public life and the broader gender equality agenda.
This new publication has brought together stakeholders and government experts from Algeria, Egypt, Jordan, Libya, Morocco and Tunisia with the OECD’s experts and extensive research. The result is a comparative overview of countries’ international commitments towards gender equality and non-discrimination and of the related provisions set out in constitutions and national laws.
And, it provides an analysis of how inconsistencies between different levels of law and hidden implementation gaps can prevent countries from effectively fostering women’s economic empowerment.
At this point, I want to emphasise the considerable progress made in the six countries covered by the report.
First, impressive progress has been made on education, which has generated a skilled talent pool of potential women employees.
Second, countries have ratified key international conventions that promote women’s rights.
And third, all of the countries have either adopted new constitutions or amended them to incorporate the principle of equality and prohibit discrimination.
Governments are increasingly realising that in a such a young and dynamic region – where over half of the population is under 25 – leveraging the energy and talent of all of its potential workforce will be key for building a prosperous future.
However to have a real impact in strengthening women’s status, these principles need to be embedded in each of the national legal systems. And they need to be enforced, through effective access to justice mechanisms.
Governance is also major element. The MENA-OECD Governance Programme has led ground-breaking programmes to support women in the public sector, boost women’s wider political participation, reinforce inclusive legislative processes and foster gender-sensitive public institutions.
The report’s findings show that personal status laws and the regulations of relations within the family strongly influence social values and norms, and have a powerful impact on economic outcomes.
I would like to pick up a few specific points from the report that should be highlighted:
In general, women do not share the same rights as men to autonomously make decisions, pursue a profession, travel, marry or divorce, head or lead a family, receive an inheritance or access wealth. For example in Egypt, Jordan and Libya women must still obtain authorisation from their husbands or fathers to work.
Unequal access to family assets and ownership seriously limits women’s economic development and economic security. The separation of assets rather than community property is the default marriage regime in the six countries, and property is usually in the man’s name.
When it comes to family responsibilities, women in the MENA region share the same issues as women in OECD countries, that’s to say that the burden of care – for children and the elderly – mainly rests on women’s shoulders. This impacts not only employers’ decisions to hire and promote women but also women’s choice of jobs and the amount of available time to devote to work.
OECD consultations revealed that the legacy of gender roles in family laws shapes social norms, which leads to gender stereotyping and engrained culture barriers. These in turn impact the implementation of other economic laws and public policies affecting women’s autonomy, social roles and confidence.
We know how profoundly the public debate across the region is addressing this fundamental issue and the sensitivity of it.
We encourage governments and societies to accompany arguments with data, to base the discussions on evidence – such as the one provided by our report – and to consider that the significant level of differentiation among countries of the region shows that there is ample space for the personal status laws to evolve in a progressive manner. Let’s be inspired by the front runners!
The labour codes in the six countries all provide for non-discrimination on the basis of gender and for equal pay for men and women.
Yet equal treatment and opportunities between men and women remain challenging in relation to hiring, wages or career development both in the public and the private sector.
Provisions enabling more flexible or part-time work arrangements and actions to increase women’s security in transport to the work place could expand the talent pool and spur wider private sector development.
Legislation for establishing and managing businesses are gender neutral, but women’s entrepreneurship lags significantly behind men’s in the six countries.
We know that a number of approaches can support women entrepreneurs: dedicated training and mentoring to boost skills; guarantee programmes in support of access to finance; business incubators and accelerators; as well as awareness campaigns.
I am proud of the important contribution of the MENA Competitiveness programme in this regard and are committed with all of you to redouble our efforts in this area.
Excellencies, ladies and gentlemen,
Gender equality is a key pillar of promoting stronger and more inclusive growth. I know that governments represented here today have enacted further policies since the data in this publication was assembled.
The OECD is already working with parliaments in Egypt, Morocco, Tunisia and Jordan within the framework of the G7 Deauville Partnership to support legal reforms that will enhance women’s legal status.
We also work with MENA countries to boost women’s political participation.
However, governments both in the region and in OECD countries could make quicker progress. We need to implement and strengthen our legal frameworks and policies – including taking affirmative action such as targets and quotas – together to accelerate change.
I just want to finish with this thought: achieving gender economic empowerment is only one important part of the equation.
I’m sure we’d all agree that the end goal is to build more human, family friendly societies, that allow women and men to enjoy successful professional lives, without sacrificing their own personal and family development.
This requires policy changes and the right regulatory and legal frameworks, but more than anything, it requires a change in our mindset and a societal and cultural revolution to change the way we understand women’s roles and contributions.
We need to pass on a strong message to all men and women that gender equality is not only good for women, but it’s good for businesses, it’s good for sound economies and it’s good for happier societies.
The OECD stands ready to lend support the countries of the region in their efforts to furthering women’s economic empowerment. As I said, it isn’t just a matter of justice, it’s a matter of good business.
It is an honor to speak about the need to make globalization work for everyone. We are actually at a context where there is a strong backlash against international economic integration, giving rise to protectionism trends, isolationism and populism.
This is the result of a growth model that did not deliver for all, and where those that were left behind are calling for something better.
The global economic context over the past ten years explains a lot of this trends, that resulted in Brexit among others, and that is also fuelling independentism movements such as the one we are seeing in Spain.
There is a paradox as this is happening when the outlook of the global economy starts to look better. there has been a gradual return to growth, with a broad based recovery. Global GDP growth is projected to increase to around 3.5% in 2017 and 3.7% in 2018 from 3% in 2016.
Trade is also picking up, with world trade growth predicted to be 2.4% this year, up from a weak 1.3% last year. Business and consumer confidence have strengthened. The momentum in the global tech cycle has increased, as firms upgrade their capital stock and switch to new technologies that could support future productivity growth.
The US and the EU are projected to grow both by 2.1% this year, up from 1.5% and 1.8% respectively last year. G20 countries as a collective are expected to grow by 3.7% this year and 3.8% in 2018, up from 3.2% last year.
However this growth remains precarious, and many global downside risks remain. For example, there is a significant lack in investment to sustain momentum. The recovery of business investment and trade still remains weaker than needed to sustain healthy productivity growth or to recover the output lost.
Wage growth has also been disappointing, keeping inflation at low levels. Productivity growth continues to be weak in advanced economies and has slowed in many emerging market economies. And high debt public and private debt, particularly in emerging economies is a sign of concern.
Demographic trends will add to this economic woe, as they change the face of society in many countries. Already in 2015, Japan was the demographically oldest OECD country with 47 individuals aged 65 and over for 100 persons of working age, compared to an OECD average of 28. And this ageing process is projected to accelerate.
By 2075 old age dependency ratios in China (66), Korea (79) and Japan (76) will all be above the OECD average (58).
But more than anything, 10 years of strong social and economic impact of the crisis is hard to overcome. Indeed, the increased inequalities of income, wealth and opportunities are still creating a difficult environment that is reflected in shaky political outcomes. This has lead to the greatest casualty that is trust.
Looking at the UK’s economy specifically, the picture is mixed. The OECD has projected slowing growth, with 1.6% projected in 2017 and 1% in 2018, down from 1.8% last year. There has been an easing of consumption and investment growth, and although the unemployment rate here has fallen to below 4.5%, weak productivity and real wage growth remain.
Although household disposable income has been growing slightly since 2014, due to improvements in real wage growth until recently and increases in the minimum wage, income inequality in the UK is above the OECD average. Also, labour productivity has remained largely flat.
Although there are these signs of recovery in the OECD area, the great impact of the crisis, and This economic hardship created many casualties, but chief among them has been trust. Trust between different groups of people, and trust in institutions has plunged to record lows, with public belief in governments in the OECD standing at just 42% in 2016 – it is even lower in the UK at 41%.
This has now spilled over into the social realm, provoking the rejection of global interconnectedness, trade, migration and technological progress.
We saw this in the recent UK referendum. Indeed, the UK has some of the largest regional disparities among OECD countries, especially when it comes to employment, where South East England ranks in the top 15% of OECD regions and North East England in the bottom half. In terms of labour productivity, Greater London is 56% more productive than the country average. And disposable household income in Greater London is 63% higher than in the North East of England. This correlates with regions’ voting for or against the EU, from which we could infer for or against globalisation.
So it is no wonder that people have voted for outcomes that surprised the pollsters, politicians and international organisations; people are angry about stagnation in their economic and social well-being.
Globalisation hasn’t worked for the vast majority of people. The benefits have not been fairly shared out across different income groups, and international elites have categorically failed to deal with this.
Since its inception in 2012, the Inclusive Growth Initiative I lead at the OECD has charted how those at the top have systematically pulled away from the rest of society.
In terms of income, the top 10% have captured the bulk of the gains from growth in recent years Tax data indicate that the richest 10% in OECD countries owning 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!
On top, this has an economic cost. OECD work shows how the rise in inequality knocked 6 to 10 percentage points of GDP growth between 1990 and 2010 across a range of OECD countries including the UK, Mexico, Finland, Italy, and the US, by causing the bottom 40% to underinvest in their human capital.[i] Actually, I was happy to listen to Guy Rider who said that when the OECD framed the inequality debate as a growth debate the conversation changed.
And I don’t need to tell you that rises in migration flows to OECD countries have exacerbated things – last year 5 million people migrated permanently to OECD countries.
So it is wrong to blame people for voting this way, for being annoyed or for rejecting globalisation and retreating to protect national interests. It is not them, but us – the policy makers, the experts, the politicians – who failed to read the situation as it was.
We were too stuck to our outdated growth models, and in focusing on growth of GDP above everything else. We got confused by pursuing open trade and investment as an end, and not as a mean to improve the well being of people.
The OECD’s primary mission is to promote better policies for better lives. To do this, we need to change the growth model and focus on people’s outcomes.
In order to address the current situation, we can’t attempt to “fix”: globalisation as some are saying. We need to break from the past.
So at the OECD we’re trying to do things differently, and take a fresh approach. Our initiative on New Approaches to Economic Challenges is integrating the insights of other disciplines to feed a richer more nuanced policy discussion. And we are glad to see that one of the partners in our NAEC initiative is winning the nobel price today with behavioral economics.
We actually believe that, to arrive to better policy recommendations, we need to break the monopoly of quantitative economics to bring some other sciences that are as useful as this. Sociology, history, psychology, and the good all wisdom and good judgement that we used to rely on.
To address these mounting challenges, we cannot use the same old approaches.
For a start, we need to move away from simplistic models and assumptions, and growth metrics that only cover one dimension (material well being), and not all the aspects that matter for people’s well being, including education, health, employment, but also subjective wellbeing, trust, security, and healthy social networks.
We need to move from treasuring what we measure to measure what we treasure. In our neo classical economic models we used to say that things we cannot measure cannot be handled. We better come with a better answer, as important issues for people like fairness, trust and security have to be delivered independently of how you measure them. We have to listen more to people’s perspectives.
We also need to move away from simplifying and quantitative economic models that heralds equilibrium, representative agents and average outcomes and rely on more reliable analytics, like complexity systems thinking, behavioural economics, and distributional impact. This is what we neglected in the models, and what we got wrong. We need also a better balance on what the State can do, and what the private sector is supposed to drive.
When designing economic policies, we’re advocating putting equity and environmental considerations ex-ante, rather than continuing the “grow first and distribute later” model.
We need policies that help people, regions and firms to fulfil their potential and become granular.
And this will be compounded with the advancement of the digital economy, artificial intelligence and the internet of things. For example, we can no longer afford to have a risk-only approach to welfare. Safety nets are no longer enough.
We need to provide people with capacity enhancing assets that can serve as a launch pad in their lives and with education systems that allow individuals to change courses during the length of their lives.
And according to our Inclusive Growth Agenda, we need to tackle the growth and productivity challenges (as productivity growth has remain flat in almost OECD countries, and the UK not being the exception), with policies that also promote inclusiveness. We call this the inclusiveness-productivity nexus. The idea is to invest in the bottom 40 percent with the aim for them to become more productive and have a more self-fulfilling lives. This includes laggard regions, or groups that accumulates disadvantages.
It also includes creating a business environment that favours competition, innovation, and that prevents a winner takes all approach that is emerging in the platform economy in the digital transformation.
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. Policies which support the diffusion of innovation through the economy, ensure a level playing field, enable small companies to access finance, technology and high-quality skills will also be essential.
Indeed, the rapid spread of digital technologies has the potential to profoundly enhance inclusive growth if harnessed correctly.
Access to cheap, reliable broadband and related internet applications can open up access to a whole array of digital goods and services to previously marginalsed groups, and greatly reduce their cost.
Bridging digital divides that persist amongst urban-rural areas and different social groups is vital.
For example, in 2014, only 71.8% of British 65-74 year-olds used the internet in comparison to 98.8% of 16-24 year-olds.
For the UK specifically, priorities to increase inclusive growth might include reducing the gender pay gap, which at 17.1%, is larger than the OECD average (14.3%), although it has narrowed in recent years.
This said, the UK ranks above the OECD average when it comes to women in management positions, women in parliament, and women in leadership in central government.
Elsewhere, the UK needs reform to unleash productivity. In 2014, the youth employment rate in the UK stood close to 50% and exceeded the OECD average by nearly 10 percentage points, but the UK slightly lags behind the rest of the G7 in terms of education and skills.
Reducing labour market mismatches of youth in employment would improve labour efficiency. Policy focus should be placed on supporting requalification and lifelong learning.
More generally, in OECD countries we need targeted policies to support those who have been left behind, helping them to access early childhood education and care services, ensuring the tax system is fair and progressive. Internationally, stronger global tax governance, building on OECD-led initiative like BEPS and AEoI, is also essential to ensuring that every company and individual pay their fair share.
Crucially, we also need to face up to a number of significant cross-border challenges concerning migration as I mentioned, international competition issues, in areas relating to the mobility of tax bases, labour rights and regulatory standards.
The world is highly interconnected with the growth of GVC and cross border investment, so more and more we need global agreements and standards to address these challenges together. We need a rules based global economy, that prevents episodes such as the Rana plaza to occur.
Indeed, we mustn’t shy away from international cooperation and globalisation; the same dynamics that arouse feelings of vulnerability and uncertainty can provide answers to global challenges; for example fighting tax havens or climate change. We have a roadmap with the SDG, but we need to strengthen up our efforts.
There is no question that we have to do away with globalisation, but rather choose the type we want, one that puts people at the centre. And we need to perfect the rules of the game and ensure that globalisation is based on international rules that are respected.
It’s clear that patching things up or partial solutions isn’t going to work, we need to take a hard look at the way we do things. The moment is daunting, and therefore we need bold solutions. And we need to remain humble and learning from each other if we are to succeed. And we need daring, innovative solutions to ensure we can save all that is good about globalisation and we can make it work for everyone.
Let me start by saying that the name is about right. Since 2010, when we launched the gender strategy (although we joined the gender agenda many years before), there has been more awareness and more policy action to close gender gaps across the OECD and G20 countries. Therefore, we have registered interesting progress.
But this has been quite slow and good measures clash with discriminatory norms and culture and gender stereotyping – in families and society but also in the media.
We sometimes hear as a sound of success that for the first time a woman is heading the US Federal Reserve, or we have a first female Chancellor in Germany.
I would quote my friend Rocio Ruiz, who is the first women Deputy-Minister of the Economy in Mexico, who always asks when it will stop being the “first” and become the second, third, or a number when people stop noticing it. This is where we should get to!
As the Secretary-General said, the OECD has long championed gender equality. Our work on gender spans issues such as access to justice for women; supporting women’s entrepreneurship in the MENA region (and I will be in Cairo this weekend to launch the OECD-MENA Women’s Economic Empowerment Forum); or looking at initiatives on gender and digitalisation.
Countries have used our analysis and evidence to take action to close gender gaps.
In particular, OECD members and some partner countries adhered to our 2013 and 2015 Recommendations on Gender Equality, while G20 countries in Brisbane committed to closing gender gaps in labour force participation by 25% by 2025, a target that the OECD helped define and we help track.
Although the average gender gap for countries declined from 20.3% in 2012 to 19.6% in 2015,
progress has been far too slow. Vast and unacceptable disparities between men and women remain. Countries need bolder policies! And to boost their effort, I wanted to share with you some of the key findings from our report and what to do about them:
A first important finding is that most OECD countries have ramped up efforts to prevent violence against women. An estimated 35% of all women have experienced sexual violence; over half of the countries surveyed for this report identified violence against women as one of their most urgent gender inequality issues.
Indeed, Italy made fighting violence against women a priority for this its G7 presidency this year. To fight violence we need laws, enforcement and awareness campaign. But more than anything we need to educate boys to treat women with respect!
Second, progress has been made in tackling gender-stereotyping in schools. Several countries initiated programmes aimed at getting young women into STEM, and encouraging more young men to work in health or education.
And yet, women only make up only 20% of graduates in engineering. When you look at where this all comes from, it starts very early indeed.
It is often a question of confidence or attitude: young girls are less confident about their ability to do mathematics and experience more anxiety towards it, even when they are good performers as shown by OECD PISA data. Gender disparities in performance do not stem from innate differences in ability but from students’ attitudes towards learning and behaviour in school and at home.
The OECD’s Social Institutions and Gender Index shows that many social norms and institutions contribute to gender stereotypes. In order to tackle unconscious gender bias, girls need to find the real role models – just like you!
In January this year, I launched a programme in Mexico with the Secretary-General and the Mexican Government called NiñaSTEM Pueden, or “Girls, you can do STEM”, which involves women in successful STEM careers mentoring and encouraging young girls to take up those subjects, and to break down stereotypes.
Some countries, such as Sweden, Mexico or Germany have begun a systematic review to dislodge unconscious bias, for example by meticulously reviewing school textbooks.
Third, the OECD report also looks at equal pay, where it finds little progress over the past decade.
The median full-time female worker earns 15% less than her male counterpart, on average, across the OECD – a gap that has barely changed over the past decade. This gap persists even though two thirds of OECD countries introduced specific policies to close the gender pay gap, notably with companies stepping up and adopting pay transparency measures.
The OECD is also active in pushing the equal pay agenda in the Sustainable Development Goals through the recent launch of the Equal Pay International Coalition, an international coalition with the ILO, UN Women and many countries and stakeholders.
Fourth, this Uphill Battle report looks at policies helping more women reach positions in senior management, public leadership and entrepreneurship. In 2016, across OECD countries, women held only 28.7% of seats in lower houses of Parliament(though up from 27.5% in 2013), and were only 4.8% of CEOs (2.4% in 2013).
But countries are promoting gender balance on boards within companies, and affirmative action within public office. And it works! Mexico achieved gender equity in the Parliament in a short time because of quotas.
Many countries are also supporting better access to bank financing and beginning mentoring programs, to help close gender gaps in entrepreneurship.
I mentioned quotas just now, and although controversial in some countries, gender quotas and other targets are helping to increase the number of women in political and private sector leadership. To be honest, they are the most effective tool to achieve progress.
Changing stereotypes requires a broad, societal understanding that women are capable of achieving as much as men in business and in public life.
In this context, I was delighted to see that G20 Leaders endorsed the new G20 Business Women’s Leaders’ Taskforce as well as the new Women’s Entrepreneurship Financing initiatives at the Hamburg Summit. These are high profile and comprehensive policy commitments that will seek to support women in business to drive change all over the world, and I am particularly honoured that the OECD is to support both initiatives.
Lastly, the report analyses efforts that facilitate mothers’ re-entry into the labour market. In an effort to get parents to share caregiving more equally, many countries now reserve part of parental leave for the exclusive use of fathers.
This also requires financial incentives and rules for men not to be discriminated against!
Access to early childhood education and care is also crucial for gender equality, empowering both parents to work when children are young. Several countries, including Canada, Japan, Korea and Poland, have increased subsidies or benefits for childcare and others, including Norway and the UK, have introduced or expanded free childcare.
Since 2007 in Germany, if both parents use at least two months of paid leave each, the household is granted an additional two months of paid leave, which has seen an increase of 14% in the proportion of children with a father that took parental leave.
Not only does this help in the early stages of raising a child, but it also breaks many stereotypes around women taking maternity leave and therefore being discriminated against in the world of work.
Fighting gender inequality is deeply anchored within the OECD’s vision for sustainable and inclusive growth.
Gender equality is a top OECD priority – it is not just a moral imperative but it is clearly smart economics!
On the other hand, the cost of inaction is high: achieving the G20 target of increasing female labour force participation by 25% by 2025 could add 1% to GDP growth across the OECD.
There is no reason for women to trail men in social, economic, or political outcomes. We have no more time to wait! I look forward to continuing this important discussion with many of you.