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OECD Secretary-General

Spanish Congress of Deputies: Session on inclusive growth

 

Speech by Ángel Gurría

OECD Secretary-General 

22 November 2018 - Madrid, Spain

(As prepared for delivery)

 

 


Ladies and gentlemen:


It is an honour to take part in this session on inclusive growth. I should like to begin by thanking you very much for your presence here today and for the invitation to join you in addressing a subject that is of such importance to us at the OECD. A topic that is fundamental to citizens’ well-being. A problem that has, in turn, formed the backbone of the OECD’s agenda since 2012, when we established the Inclusive Growth Initiative as a response to the increases in inequality that we had been witnessing in the economies of our countries.

 

Inequality is not a new phenomenon, but what is new are the levels of inequality that have increased rapidly in recent years. This is something that we have been documenting for a long time in the OECD. This work is unknown to a large proportion of the general public, but it is work that we are very proud of because it has helped to push inequality to the forefront of political debate.

 

Inclusive growth has always been a necessity, but it has become essential since the Great Recession, which destroyed millions of jobs and increased economic insecurity for many households, especially among the most vulnerable in our society. Few countries are more acutely aware of this than Spain.

 

Inclusive growth is still unfinished business

But even as economic recovery is under way, inclusive growth is still unfinished business. In many countries, growth in real wages will not be enough to offset the increase in inequality that has been taking place in the course of a single generation. In the OECD countries, the wealthiest 10% earn seven times more than seven years ago. And the picture is worse when we talk about stocks rather than flows: wealth generates more wealth; poverty generates more poverty. In the OECD, the wealthiest 10% of households own 52% of the wealth, whereas 60% hold just 12%. And these figures come from OECD economies, which in general are more “egalitarian”. It is estimated that, worldwide, 1% of the population accounts for 47% of wealth, and 85% holds only 10%.

 

As these inequalities take root, inequality of opportunities is also on the rise, and social mobility, the rate of what we in the OECD have dubbed the “social elevator”, is reduced. In our countries, it will take a child born to a low-income family between four and five generations to achieve the average income level. That equals 150 years!

 

And these inequalities are even more pronounced in the case of women, who still face numerous disadvantages, not least in access to work. This is not only unfair but it is also bad for the economy. Evidence shows, for instance, that if the female employment rate were doubled in OECD countries, GDP would go up by 6% by the year 2030. This is just a further pointer that we must carry on working to reduce inequalities and move towards more inclusive growth.

 

In this regard, recent worldwide trends, such as the rise in new technologies, bring opportunities but also challenges and uncertainties that need to be managed in the right way.

 

One in seven jobs in OECD economies is at risk of automation, while a further third could undergo significant changes in the next 20 years. And these trends weigh heaviest on the most vulnerable. We need to adapt in the face of these challenges and ensure that our government policies focus on empowering individuals.


Key recommendations to offer people more and better opportunities

To bring this about, at the annual OECD Ministerial Meeting last May, we presented the “Framework for Policy Action on Inclusive Growth”, which contains three key recommendations:

  • Recommendation 1: create more inclusive goods and labour markets to reduce disadvantages in access to education, health care and work. Spain has taken huge strides in the area of job creation but needs to focus more on improving job quality, redoubling its efforts to cut down on temporary employment and involuntary part-time work. What is more, there is a need to exploit the opportunities provided by the digital era and minimise its risks.

  • Recommendation 2: Invest in people and places that have been left behind. This morning, together with Minister Calviño, I presented the Economic Survey of Spain, in which we place special emphasis on the need to narrow the gaps between regions, and also between rural and urban environments. It is essential to improve co ordination among administrations in key areas, such as active labour market policies and employment services, and to improve training for the most vulnerable workers. It is also of fundamental importance to provide childcare services and promote measures to integrate immigrants, but also to make a commitment to young people, who are the country’s future. Much remains to be done along these lines: in Spain, almost one-quarter of young people are not in education, employment or training.

  • The third recommendation is that we must restore trust in institutions through effective governance and public policies that empower the individual. We must ensure that our institutions function well and do so at the service of the citizen, with taxation and transfer policies providing support for the most vulnerable groups and helping to boost the growth of real income in the poorest households.

 

Spain is giving priority to inclusive growth in its programme

Spain is pioneering inclusive growth and, along with countries like Canada, France and Germany, is placing it among the priorities of its programme. It must continue along this track, doing more and doing it better.

 

Doing away with child poverty and gender disparity are the cross-cutting elements of the new Spanish strategy. I am delighted to see that there is a majority of women among the ministers in the Spanish Government. What is more, 39% of members of the Congress of Deputies are women, placing Spain among the top 15 parliaments in the world for gender equality.

 

However, Spain needs to take a closer look at its economic model to make it more human and ensure that greater productivity, increased competitiveness and higher growth benefit all citizens, not just a few. This means promoting social justice and dialogue. That is the objective of the Global Deal initiative, which Spain joined this morning: promoting social dialogue involving all stakeholders. It is also that of the Business for Inclusive Growth initiative, which seeks to encourage businesses to share this ambition.

 

As you know, the OECD has a Parliamentary Network, and I invite you to participate actively in its meetings. The next one will be held in Paris from 21 to 22 February. But I should also like to encourage you to follow the example of the UK Parliament, which convened a special meeting last April with members of parliament from around the world to discuss how the inclusive growth agenda could be translated into the legislative process in a tangible way. They have set up an All-Party Parliamentary Group on Inclusive Growth, and perhaps something similar could be done here in Spain. You can, of course, count on the OECD’s support.

 

My friends:


The OECD’s motto is none other than “better policies for better lives”. This is what motivates us, day after day, to work with the governments of our member countries. We from the OECD have worked with governments of different political persuasions, and we shall continue to do so, providing the data and the evidence that can help Spain, its Government, its Parliament, to take the decisions it deems most appropriate, but always with citizens’ well-being in mind. Spain and all of you can rely on us in seeking to achieve the common objective of promoting inclusive growth that leaves no one behind.  Thank you very much.

 

 

See also:

OECD work on Inclusive Growth

OECD work with Spain

 

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