Keynote Address delivered by Angel Gurría, OECD Secretary-General, at the New World Forum
7 October 2014, Paris, France
(As prepared for delivery)
Monsieur Fitoussi, Monsieur Mestrallet, Mesdames et Messieurs,
Je vous souhaite la bienvenue à l’OCDE. C’est pour nous un grand plaisir d’accueillir pour la deuxième fois en nos murs le Forum Nouveau Monde. Notre partenariat gagne en solidité.
Le Forum Nouveau Monde est un lieu de débat propice aux échanges sur les défis urgents de notre époque ainsi qu’à la diffusion d’idées et de solutions nouvelles pour un monde meilleur.
|We live in difficult times. Six years into the crisis, many economies are still struggling to find a path to a confident recovery and stronger growth. And they are doing this in unchartered territory. Governments are now facing a very complex scenario, where they have to deal simultaneously with a series of short-term, medium-term and long-term challenges.
Low growth and high unemployment stand out as the most pressing challenges. As reported in our September Interim Economic Assessment, the global economy continues to expand at a moderate pace, with an annual rate of around 3% in the first half of 2014, the same pace as in the past 2 years. How far from target is this? Well, in the years leading to the crisis, global average growth was above 5%.
The United States and the United Kingdom are expected to continue growing at a sustained pace between 2 and 3% this year and next. However, growth in the euro area and Japan is barely getting off the ground, while growth in emerging economies keeps slowing down.
This weak and uneven global recovery, reflected in still hesitant trade and investment flows, has diminished our capacity to address the jobs crisis, another urgent challenge for many countries. Globally, an estimated 202 million people remain unemployed, with many more in low-paid and precarious jobs.
At the OECD, almost 45 million people are still out of work, 12 million more than before the crisis. More worryingly, youth unemployment rates have reached alarming levels: the OECD rate currently stands at 14.7%, but it is still over 50% in countries like Greece and Spain. This is a social tragedy!
The insecurity of labour markets in many countries is fuelling another short and medium term challenge: increasing inequality. Income inequality in OECD countries is at its highest level for the past half century: the average income of the richest 10% is now more than nine times that of the poorest 10%, up from seven times 25 years ago.
Some of the most vulnerable, such as youth and the poor, continue to fall behind. Thomas Piketty stood at this same lectern twice to warn us that “the top wealth holders are rising three times faster than the global economy”. This is a serious warning!
The prolonged combination of slow growth, high unemployment and rising inequality has resulted in a dramatic erosion of public trust. Many countries are now experiencing a decline of citizens’ trust in many of the central pillars of our democracies and our economies: trust in governments; political parties; international organisations; but also trust in banks and corporations; businessmen; economists and faculties of economics.
According to a World Gallup poll, on average, six out of every ten citizens do not have confidence in their government. This is a major cause for concern!
These short and medium-term challenges are combining with growing long-term challenges that demand immediate but also long term solutions. Climate change, biodiversity loss and water scarcity are threatening the viability of life in our planet. The accelerating aging process in our societies can result in vast ripple effects for economic growth, employment, finance, and welfare.
Add to this scenario the challenges of energy and food security, strategic infrastructure or the digital divide, in a context of growing geopolitical tensions, and you will understand the complexity of governance and public policy in the 21st Century; but also the need for more effective multilateral cooperation and for new economic thinking.
At the OECD we are making a big effort to help countries address these simultaneous and multidimensional challenges.
We are taking advantage of our unique capacity to address horizontal issues to help governments achieve a new type of growth: more resilient, more inclusive and more sustainable.
This is why we launched the OECD New Approaches to Economic Challenges initiative, the NAEC. Through NAEC, we embarked on an organisation-wide reflection process on the roots and lessons from the crisis with the aim of improving the OECD’s analytical framework and policy advice.
One of the most important outcomes of NAEC has been the OECD’s Inclusive Growth Initiative, through which we look beyond traditional economic indicators like GDP to better measure progress.
We are including new elements in macro-economic analysis: like education; job quality; health status; environment; civic participation; and social connections, to achieve a more accurate reflection of the multi-dimensional nature of well-being.
Well-being has to be built with relevant skills. In a global economy, competitiveness and job opportunities depend on what people can do with what they know. High quality education and training allow us to be creative, to innovate, and to improve the way we live.
Thus, we are helping countries measure the quality and level of skills through a First Survey of Adult Skills (PIAAC) and by implementing national skills strategies in light of other countries’ best practices.
We are also making a huge effort to adapt our economics to the imperative of saving this planet. We launched a Green Growth Strategy to help countries transit to low carbon economies and address growth with the perspective that Johan Rockstrom calls our “Planetary Boundaries”.
We are helping countries move towards zero net emissions in the second half of this century, promoting measures like the elimination of subsidies to fossil fuels, the introduction of an appropriate price on carbon and the removal of barriers to investment in green technologies.
To move forward, our countries need all the resources available, so we are helping them improve both their fiscal systems and the quality of public spending.
One of our most important contributions to a more accountable and transparent globalised economy is taking place on two parallel tracks: in the Automatic Exchange of Information on Tax Matters, and in what everyone knows as BEPS (Base Erosion and Profit Shifting).
The OECD-G20 BEPS Project is a joint multilateral effort to tackle aggressive practices which erode the tax base of companies and artificially shift profits to low or no-tax jurisdictions.
The 2014 BEPS Package, which I presented to the G20 Finance Ministers at their meeting in Cairns a few days ago, is designed to help our governments combat BEPS practices by reducing tax treaty abuse, dealing with the fiscal implications of the Internet Economy, and neutralising hybrid mismatches and harmful tax practices.
We also continue our traditional work to promote open government and better public services; to fight corruption; to enhance gender equality; to tackle aging challenges; to ensure that trade and investment remain open; among many other issues. But we need to work together to succeed.
Monsieur Fitoussi, Monsieur Mestrallet, Ladies and Gentlemen:
These are indeed difficult times, but they are also exciting times that present us with a unique opportunity to build a new and better world, based on more resilient, inclusive and sustainable economies. Thus the status quo has to change, in favour of the real economy, the real working men and women, and the real vulnerable and unemployed. In a nutshell we need “better policies for better lives”.
Welcome to the New World Forum!