Public Affairs

It’s all about reform and trust!

 

Remarks by Angel Gurría, OECD Secretary-General, delivered at the OECD Debate at the Parliamentary Assembly of the Council of Europe

Strasbourg, Wednesday 3 October 2012

(As prepared for delivery)

President Mignon (or Vice-President), Members of Parliament, Ladies and Gentlemen:

It is a great pleasure to be here again and to address the Parliamentary Assembly of the Council of Europe. Thank you for the invitation. And thank you, Mr. Bockel and the Committee on Political Affairs and Democracy, for your commitment and engagement in preparing the report on the activities of the OECD. We very much welcome this report, and its more political perspective.

This year, I want to use most of my time with you for an open and interactive debate. I thus look forward to your questions and I hope that you have plenty in store.

But first, allow me a few words to reflect on some of the issues you addressed in your report.
  Council of Europe: Parliamentary Assembly Session
Angel Gurría, speaking at the Council of Europe, Strasbourg, 

Are we out of the woods? Not yet I’m afraid….

We are now into the fifth year of the crisis. As we reported in our September Interim Economic Outlook, continued developments in the euro area have led to a weakening of the global economy over the summer. We expect activity to be particularly weak in the euro area in the near term and to pick up somewhat on the United States and Canada.

Some 48 million people remain unemployed in the OECD area, meaning that 14 million jobs would need to be created to bring the employment ratio back to pre-crisis levels. The length and depth of the crisis is now being felt in the streets of our countries where social stress is high.

Important steps are being taken to deal with the euro area banking and sovereign debt crises, including the new ECB’s OMT programme, the banking union, and the fiscal compact. But important challenges remain to put Europe back on a sustainable growth path, to restore its public finances, to put its people back to work and to rejuvenate the global economy.

Structural reforms remain key…

To do so, we need to keep on working on structural reforms and on implementing them firmly. They are indeed fundamental to restore lasting prosperity. All our countries have much to gain from reforms to improve education attainment and performance, encourage innovation and entrepreneurship, enhance competition in product markets and services, and make labour markets more adaptable.

And, believe me, this is not just a long-term solution. Structural reforms can deliver results faster and more efficiently than generally expected. We have now clear evidence of this.

Meanwhile, we must also and urgently address the social crisis and rising inequality…

Income inequality in OECD countries is at its highest level for the past half century, and it continues to rise. This is an unsustainable path. We called for action with our publication “Divided We Stand”, and we continue to do so. Social cohesion is the glue that holds society together, and it is at risk worldwide. Addressing inequality is thus critical. It is also critical to improve competitiveness and productivity.

We are advancing powerful proposals for a more inclusive growth agenda. One decisive dimension in this regard is to improve education and upgrade skills. We have launched in May this year the OECD Skills Strategy, which provide specific recommendations for improving the quality of education, facilitating the portability and transferability of skills, and facilitating access to the skills markets. This Skills Strategy is a powerful instrument for policy makers, and I invite you to look at it closely.

Promoting an inclusive growth is also an underlying principle of our newly adopted Development Strategy.

And we are about to launch our report on Gender Equality in Education, Employment and Entrepreneurship. We will also develop specific recommendations to our Member countries in this regard for our next Ministerial Meeting.

Last but not least, the ground-breaking work we do on Global Value Chains and measuring trade in value-added chains will have powerful implications in terms of job creation. It shows that trade and market openness have become very potent tools for generating better quality jobs. Once again, this requires adequate supporting policies, inter alia in terms of education, skills training and safety nets to ensure that all segments of the population benefit from it.

But we also need to revisit the economic paradigm that prevailed before the crisis…

You have asked us to reflect on our own policy advice in the lead-up to the crisis. We have done so. And we are doing more: we have now launched a strategic initiative, called “New Approaches to Economic Challenges”. We want to promote a serious reflection on what lessons can be learned from the crisis and how we can produce effective policy recommendations. The objective is to build a more solid path for inclusive and green growth.

This is indeed a very challenging exercise. It requires a good understanding of the relationships and trade-offs, and the likely side-effects and spill-overs of different policy options. For example, we need to examine closely how growth-enhancing policy reforms impact on income inequality. We also need to identify new sources of growth and competitiveness, including innovation, green growth, knowledge based capital and skills.

However, all of this will not be enough if we can not rebuild trust.

Let me conclude by focusing on the confidence crisis. With this protracted recession, citizens have lost faith and trust in their institutions and their governments. Without this confidence, there will be no growth.

This is why we need to maintain a focus on sound policies that can put an end to this crisis, restore growth and create jobs. We also need to vigorously fight corruption, tax evasion and bribery. This is our duty: to design and put in place better policies for better lives. And this is why, at the OECD, we are developing and deepening our work in these areas.

Ladies and gentlemen,

On many of these issues we have a lot to share with our key partners (Brazil, China, India, Indonesia and South-Africa) as well as our partner countries in the MENA region, which are in transition towards democracy. I see significant scope for further cooperation with the Council of Europe in the area of governance, including with these important partners.

I very much look forward to your questions. Thank you very much!

 

 

 

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