Dialogue of Civilisations: Rhodes Forum 2019

Opening Plenary: 30 Years After the Fall of the Berlin Wall: In search of a roadmap and a compass

Remarks given on the Opening Plenary of the Dialogue of Civilisations on October 11 in Rhodes, Greece. Gabriela Ramos intervened alongside Martin Schulz, former President of the European Parliament; Vyachslav Nikonov, political analyst; Dr. Huiyao Wang, Founder and President of the Center for China and Globalization; Shada Islam, Director for Europe & Geopolitics at Friends of Europe; Alphons Kannantham, Member of the Indian Parliament and former Union Minister.

Ladies and Gentlemen,

In this beautiful island, the challenges and divisions fragmenting our world seem very far away.

And yet, we are reminded everywhere here of the reality that civilisations collapse (NAEC conference).

The reality is that politically, economically, environmentally, the systems that govern our lives are under enormous strain.

Deglobalisation is bringing huge costs

The fall of the Berlin Wall was an event that signalled the dawn of global integration.

Between 1991 and 2017 global trade volume quadrupled. The growth of global exports in business services and financial services grew by five times, and manufacturing tripled.

Emergence of global value chains: the OECD has estimated that 40% of jobs in the OECD area are dependent on foreign trade. Almost 5 million jobs in the US are dependent on trade with Mexico.

40% of the content of US imports of goods from Mexico consists of US value added content.

OECD has been key in mapping this w/TiVA.

What we are seeing now is an attempted deglobalising and protectionist trends.

According to OECD Economic Outlook global growth will slow to 2.9% in 2019 and 3% in 2020: weakest annual growth rates since the crisis.

Labour productivity growth has not risen above 1% since the crisis.

Trade tensions and protectionist policies are bringing terrible consequences:

  • Trade growth has collapsed below 1%.
  • New trade restrictions in G20 countries in 2nd half of 2018 affected almost 500 billion US dollars of imported products.
  • In G20 countries aggregate investment growth has dropped from 5% at the start of 2018 to only 1% in the first half of 2019.
  • Global industrial production has fallen below 2%. In Germany it has dropped almost 10 percentage points to around -5% in 2019!
  • The OECD estimates that the impact of US-China trade restrictions could lower global GDP by 0.7 percentage point per year in the first two years of the shock and global trade growth by close to 1½ per cent per year, with the effects felt all over the world.

Economic trends combined with inequalities are eroding trust and fuelling anger

Over the last 30 years, despite deepening global integration, inequality has risen in many countries, meaning the benefits of global growth have not been shared fairly.

  • The richest 10% used to earn seven times more than the poorest 10% in the OECD, this ratio is now around nine and a half times.
  • In the United States, for example, the share of the top 1% has almost doubled from about 11% to 20% and almost half of all income growth accrued to this group.
  • Median incomes have not followed suit. Over the last 30 years median incomes in the OECD increased a third less than the average income of the richest 10%.
  • Inequality of wealth is even more pronounced: the top 10% holds half of total wealth while the bottom 40% holds only 3%.
  • Economic inequalities translate into social divides, with compounded effects: by the age of 15 disadvantaged pupils in the OECD have fallen on average two-and-a-half years behind their more affluent peers.

All these factors have driven down trust: In the OECD only 43% of citizens trust their government.

There is also not enough progress tackling gender divides: pay gap is still 14% in OECD, and women spend double the amount of time in unpaid work.

The ILO estimates that globally 606 million women, or 41% of those currently inactive, are outside the labour market because of their unpaid care responsibilities.

Our growth model has left people behind but also created an environmental emergency

Emissions have started to rise again, reaching unprecedented levels in 2018. We are not on track to reduce warming to below 1.5 degrees, our kids are striking, the Amazon is burning, our oceans are being suffocated by plastics.

By the middle of the century, there will be more plastic than fish in the oceans, by weight.

Scientists warn that a million plant and animal species face extinction while the health and security of billions of people are at risk.

By 2025 half of the world’s population will be living in water-stressed areas.

The OECD has estimated that outdoor air pollution could cause 6 to 9 million premature deaths a year by 2060.

There is also anxiety around megatrends like digitalisation, which could deepen inequalities

The OECD estimates that around 14% of jobs are at high risk of automation, and another 32% will be changed significantly, with the low-skilled and low-paid most at risk.

Yet low skills workers are, on average, 40 percentage points less likely than high-skilled adults to participate in training.

Middle-skill occupations are disappearing fast.  On average in 21 OECD countries with data, the years between 1990 and 2010 saw middle-skill occupations losing 8% employment share.

We are also seeing emergence of non- standard jobs, particularly in the platform economy. These workers are up to 50% less likely to get income support when out of work.

It’s not just about social costs, there are also anxieties around concentration at the top: only 250 firms globally generate 70% of R&D and patents, and 44% of trademarks. All too often, they are also not paying their fair share of tax.

We need to reshape the foundations of multilateralism and put people at the centre

The OECD is advocating people-centred growth (we have the Policy Framework for Action on IG, Gender Strategy, PISA, Well-Being Framework, SDG Action Plan & Governance Hub) and we have NAEC.

We have the Going Digital Project & AI Principles.

We are also creating synergies between climate action and well-being (quality jobs, health, skills)

We are tackling tax evasion and avoidance, with BEPS and Automatic Exchange of Information (95 billion euros in additional revenues).

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