Secretary-General

Inclusive Growth in Cities: From Ambition to Implementation

 

Remarks by Angel Gurría

Secretary-General, OECD

16 June 2016

Washington, DC, United States

 

 


Ladies and gentlemen,


Thank you, Amy Liu. It’s a pleasure to be back at Brookings.


This afternoon, I will launch the 2016 Economic Survey of the United States, so I can start with some good news! Seven years after the depths of the financial crisis, the US is making a comeback, registering one of the strongest economic recoveries in the OECD. Our Survey charts increased output, reduced unemployment, and improved fiscal sustainability. Certain regions and sectors in particular have experienced stronger growth: California, and the Northeast corridor, for example.


However, the revival in economic fortunes has not prevailed evenly across the country, or across different parts of the population. Just over a year ago, when I was here last, I spoke to you about the state of inequalities in the United States and across the OECD. Sadly, despite the US’s steady recovery, trends in income inequality have continued to worsen even after the crisis.

  • In 2013, the average income of the top 10% was 19 times higher than that of the bottom 10%, in comparison with an OECD average of 9.6 to 1. Double the inequality of the OECD!

Large segments of the population continue to face significant obstacles in the labour market, and aren’t sharing in the gains of a strengthening US economy:

  • The share of women in the labour force has continued to decline, reaching levels below Germany and Japan. And a considerable wage gap persists, with women earning around 18% less than men.

  • Minority groups also earn less and have lower rates of labour market participation: in particular, African American and Hispanic men earn slightly less than three-quarters the income of white men – a gap that has hardly budged in over a decade.

  • Employment rates have also fallen among people with disabilities, with the number of people receiving disability benefits now larger than those receiving unemployment benefits. 


Clearly, the US can and must do better to ensure the gains from the stronger economy are shared by all. A more inclusive economy and a more inclusive labour market are also key to boosting growth and productivity! We now have mounting evidence that rising inequalities harm growth because the poorest 40% of the population find it too onerous to invest in their skills and education.


Inequality is a Global, National and Local Concern – Particularly in the US


Fighting inequality is not only a global and national concern ─ it is also a very local one. We have been reminded in recent months just how small and connected our troubled world has become: the refugee crisis, climate change, international terrorism, the heavy legacy of the economic crisis on growth and jobs, and rising inequality. But even as the effects of globalisation spread, its impacts are always bound to play out locally.


Our work on inequalities has shown that the gap between the rich and the poor is higher ─ and often rising faster ─ in large cities, including in the wealthiest, primarily due to skills’ distribution and the capturing of top earners. In those cities, rich and poor people often live segregated in different neighbourhoods.


A forthcoming OECD report, Making Inclusive Growth Happen in Cities, suggests that the most income segregated cities in the Netherlands and France are at comparable levels to the least segregated cities in the US.


And inequality is not just about money. It is also felt in labour market exclusion, lower social mobility, and greater polarisation in educational and health outcomes. And here, too, we have reason to be worried about the state of our cities.


Today, in Brussels, we are launching the 2016 edition of our Regions at a Glance publication. The report shows that when income, jobs and health outcomes are considered together, disparities across cities and regions are consistently starker than those in income only.

  • For instance, recent findings from Baltimore suggest that life expectancy can differ by almost 20 years across neighbourhoods in a single city!

  • Or take the case of education, where the OECD Review of the Chicago Region reports that high school graduation rates range from 57% in the city of Chicago to over 95% in suburban areas! 

These inequalities not only take an economic toll, they also come at a great humanitarian cost! These are lives cut short, children stopped in their tracks from fulfilling their potential.


Inclusive Growth in Cities Campaign


The good news is that good policies can make a big difference! And no one knows this better than Mayors. Sub-national governments control many policy levers for promoting prosperity, well-being and inclusive growth, as they carry out around 40% of total public spending in the OECD and 60% of public investment.


This is precisely why ─ just a few months ago in New York with Mayor Bill de Blasio and 20 other mayors from around the world ─ in collaboration with the Ford Foundation, the OECD launched the


Inclusive Growth in Cities Campaign, a global coalition of Champion Mayors for Inclusive Growth


To date, 47 Champion Mayors have answered the call – from New York to Paris, Minneapolis to Medellin, Atlanta to Cape Town, and beyond.


Champion Mayors have signed on to the New York Proposal for Inclusive Growth in Cities, setting out a common commitment to a policy agenda that aims to ensure that cities work for all of us. Concretely, this means:

  • Providing education and training systems that enable people of all ages and backgrounds to develop skills and improve their life chances. For instance, for new immigrants, cities can build bridges to employment, support recognition of skills gained overseas, and provide training to adapt existing skills to new contexts. Let me just mention one programme in New York City, which offers free courses to help small business owners launch and expand operations, with training provided in English, Spanish, Russian and Mandarin.

  • Promoting labour markets that make the most of women, youth, those with disabilities, and foreign-born populations. This includes family-friendly policies that make it easier for women to remain in the workforce. The latest US Economic Survey reports that states that have implemented such policies record higher levels of women in the workforce, including in management positions.

  • Investing in high quality and universally accessible infrastructure and public services, which can open up new employment and training opportunities for the most disadvantaged, promoting both growth and equity objectives.

  • It also means changing the way we build and move around in our cities. Mayors tell us that affordable housing is one of the biggest challenges they face in their city, and the topic remains at the top of the global urban agenda. But, too often, housing policies are divorced from a broader strategy for urban development, transport and access to services. We need housing policies that aim to build cities, not just houses. And here I would like to praise the joint efforts of the Department of Housing and Urban Development, the Department of Transportation and the Environmental Protection Agency in creating the Partnership for Sustainable Communities. This initiative aims to promote integrated urban planning to help local authorities meet housing, transport and environmental objectives. 

What’s Next?


In the coming months, we will work with our coalition of Champion Mayors to elevate their voices, their visions and their ambitions on the global stage. Their efforts and insights must inform national priorities and advance global agendas.


We will continue to refine measurement tools, identify policies that work, and help governments in the implementation process.


We will also develop a platform to enable cities to exchange best practices in the policy domains that matter for Inclusive Growth.


In just a few months, Mayor Anne Hidalgo will host the second meeting of Champion Mayors in Paris. Building on the New York Proposal, we will deliver the Paris Action Plan, with specific policy proposals to transform our shared ambition for inclusive cities into implementation on the ground.


As we chart the road ahead, we know that we can’t go at it alone. This Campaign aims to bring key stakeholders around the table ─ like our friends from Brookings ─ and serve as a global platform for the debate on inequalities. We are working hand in hand with our Supporting Institutions, like the National League of Cities (NLC), as well as Cities Alliance, the C40, ICLEI, United Cities and Local Governments (UCLG), and United Way Worldwide, to try to make the aspiration of Inclusive Cities worldwide a reality.


We are delighted that the Mayors of Atlanta, Birmingham, Los Angeles, Portland (Oregon), New York, Santa Fe and Santa Monica are among the first US cities to have joined the Campaign, and we hope that many others will follow!


Ladies and Gentlemen:


The OECD’s mission is to promote better policies for better lives. And if we want economies and societies in which everyone has a shot at success, we must ensure that cities are at the heart of that fight.


Thank you.

 

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