Opening Remarks at the OECD-Trade Union Advisory Council Liaison Committee Meeting

Remarks delivered on 10-12-2018 in Paris, France.

Dear Pierre, Ambassadors, Ladies and Gentlemen,

It is my pleasure to welcome you to the OECD, and to exchange on the very timely topic “Growth and accountability today, just transition tomorrow”.

This is a time for dialogue. At the OECD, we are proud to have such strong links with Trade Unions. We share the same values, and reading your paper reinforced this for me. We both put people at the core of what is important.

Since we last met, the Council at the ministerial level adopted the OECD Framework for Policy Action on Inclusive Growth to look for ways in which growth can deliver for all. This does not look easy.

As your discussion paper highlights, the global economy is losing steam. Global GDP growth is projected to ease from 3.7% in 2018 to 3.5% by 2020, according to our latest Economic Outlook.

Tariff hikes and uncertainty about further protectionist actions are contributing to a slowdown in trade growth and are affecting investment plans. I just came back from the G20 Summit, and I can tell you that discussions were tough, but there was also confidence that agreements are possible.

Wages have not kept up with productivity growth in several countries and we see rising market concentration. Real wage growth has been a meagre 1.2% in recent years.

The digitalisation of our economies is also providing both opportunities and risks that we must fully understand and be prepared for, particularly regarding the future of work.

I am glad to see all these issues on today’s agenda. Before we begin, let me set the scene on two of these issues: ensuring business accountability; and the impact of digitalisation on our economies and workers.

Ensuring accountability and a level-playing field for business operating internationally is a priority for the OECD and we are working to extend the reach and impact of our legal and policy instruments.

For example, the fundamental objective of our ground-breaking efforts on Base Erosion and Profit Shifting is to ensure that profits are taxed where value is created. This gets more complicated with the implications that digitalisation has on tax. So we are working to seek a long-term solution, which can benefit all countries, and provide certainty to businesses.

The OECD Anti-Bribery Convention is now ratified by 44 countries including Argentina, Brazil and South Africa, and covers over 70% of world exports[1].  Since ratification, over 600 individuals and entities have been sanctioned for foreign bribery, facilitating a “clean up” of the practices of many companies.

Much progress has been made on Responsible Business Conduct as today 48 countries adhere to OECD Guidelines for Multinational Enterprises, representing 80% of global outward FDI[2]. To help companies implement the Guidelines, we have developed Due Diligence Guidance for a number of specific sectors. And at the MCM in May, Ministers endorsed the general Due Diligence Guidance which can be used by any company in any sector.

In addition, we have put in place a unique peer review mechanism to strengthen the National Contact Point system and a new Action Plan has been developed for 2019-2021.

The OECD/G20 Principles of Corporate Governance were also reviewed and 60 non-members have subsequently joined.

But I agree with the reflections in your paper, that besides strengthening implementation, we should create more synergies between these instruments for more impact on the ground. We are moving in this direction, for example, the DAF/NAEC event on Corporate Governance for Sustainable Prosperity held in April aligned well with your suggestions.

The digital transformation is having significant implications for the labour market. As your paper mentions, we estimate that around 14% of jobs are likely to be automated in the near future. Another 32% will be change significantly. The way we work is already changing too: almost 1 in 3 workers has a non-standard job, with great variance in terms of pay, job security, access to social protection, and collective bargaining coverage.

There is also a growing concern about market concentration as indicated by increasing mark-ups. We are working to better understand the nature of changes in business dynamics, and analysing whether competition tools designed for traditional markets need to be adapted to the digital economy.

Besides ensuring that the digital revolution continues to deliver for productivity and growth, ensuring connectivity and affordable access for all; strengthening skills, fostering new jobs and ensuring social protection; ensuring sound competition and market openness as well as the protection of individual’s privacy and consumer rights, are all key elements of a people-centred approach to digitalisation. It’s essential to close the digital divides, for instance between rural and urban areas, and men and women. Gender divide is staggering, but all in all it is important to enhance policies for people to participate.

Our new Jobs Strategy launched last week puts an increased focus on social dialogue and the need for collective bargaining systems that are inclusive and flexible enough to deliver good jobs and adapt to changing economic conditions. We have also recently taken on the secretariat function for the Global Deal, which will help us supporting workers in the future of work and in the platform economy.

All this does not happen in a vacuum. We should continue to address the increased inequalities of income and opportunities all across the board.

Finally, to promote future welfare and prosperity, we need to transition to a low-carbon economy.  OECD research shows that climate-compatible policies can increase economic growth up to 2.8% on average across the G20 countries by 2050. But, while the net effects are likely to be positive, some communities will be negatively affected. We need to make sure that workers receive the support they need through a just transition.

The transition can also be done through the tax system. The OECD publications on Effective Carbon Rates and Taxing Energy Use provide useful data in this regard. It is not easy, as we have seen for France, so the policy packages to move in this direction are really important.

And of course we continue to support the G20 because all of this needs multilateral cooperation. Indeed, I am going to Tokyo next week for a series of discussions on Japan’s presidency. The recommendations and the views that you bring through the L20 are also important to ensure G20 commitments are fit for purpose.

In all these efforts, TUAC is a valued and trusted institutional partner of the OECD. You have been proactive partners in providing a constant reminder that decent jobs and wages need to be part of our compass for the recovery, and stressing that only through addressing inequalities we can rebuild trust.

I look forward to a stimulating and interactive discussion today.

Thank you

[1] DAF calculations

[2] DAF calculations

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