OECD calls for active employment, social measures to accompany trade liberalisation

26/04/2005 - Lower barriers to trade are needed for both goods and services to encourage innovation and stimulate economic growth, but governments need to accompany trade liberalisation by active policies to support employment and social welfare, according to new OECD analysis.

Studies to be presented to the OECD’s annual ministerial meeting in Paris on May 3-4 2005 underline the importance of services for future job creation and improved prosperity in both developed and developing nations. Swedish Prime Minister Göran Persson, who will chair the meeting, and OECD Secretary General Donald J. Johnston outlined the main themes of the meeting at a press conference in Stockholm on Wednesday 27 April 2005.
(web cast of the press conference in Sweden)

The OECD studies are designed as a contribution to ongoing negotiations for a new multilateral agreement on trade and services. Trade and development will also be discussed at the OECD Forum in Paris on May 2-3 (see www.oecd.org/forum2005).

The removal of barriers to trade in services, in particular, is key to successful adjustment to globalisation, according to the OECD. In many countries, restrictions affecting services inputs into manufacturing -- by preventing manufacturing firms from accessing the best-value financial or engineering services, for example -- impose additional costs which compound the distortions arising from protectionist barriers on trade in manufactured goods.(power point presentation)

But trade is not an isolated panacea. To reap the full benefits of increased trade, OECD analysis shows, countries also need flexible labour markets, welfare systems that stimulate rather than dampen personal initiative, regulatory systems that are efficient without being over-burdensome, and economic policies that promote stability and growth while allowing labour and capital to move from declining to expanding areas.

That’s where active employment and social policies come in. Globalisation can bring losers as well as winners and the pursuit of efficiency needs to be matched by considerations of equity. This calls for active labour market policies - for example in job-search or training – linked to the actual needs of the people concerned.

For access to the new OECD studies and for further information about the OECD’s forthcoming ministerial meeting, please see the Background Reading section on www.oecd.org/mcm2005.