Remarks by Angel Gurría, OECD Secretary-General, delivered during the OECD Debate at the Parliamentary Assembly of the Council of Europe
Strasbourg, 1 October 2013
President Mignon, Members of Parliament, Ladies and Gentlemen:
As always, it is a great pleasure to address the Parliamentary Assembly of the Council of Europe. Thank you President Mignon, for the invitation. Allow me to also express our sincere appreciation to Mr Van der Maelen, for the excellent report he has put together on the activities of the OECD. I want to use most of my time today to exchange ideas with you, so I will limit my remarks to a few key points.
…After nearly six years of the crisis, where do we stand?
The economic outlook is a little brighter. In our September Interim Economic Assessment, we announced a moderate recovery in the major advanced economies such North America, Japan and the UK. The euro area as a whole is out of recession, although output remains weak in a number of countries.
The social wounds of the crisis, however, are far from being healed. Unemployment remains our biggest challenge, the uneven and weak recovery is not helping employment. In OECD countries the average jobless rate has dropped to slightly below 8 per cent, this still translates to 48 million unemployed – almost 15 million more than in 2007.
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Young people and the low-skilled have been hit the hardest. Youth unemployment has reached dramatic levels in many countries, with rates exceeding 60 per cent in Greece, 55 per cent in Spain and around 40 per cent in Italy and Portugal.
An additional looming challenge is tackling the rise in inequalities. Today, in OECD countries, the average income of the richest 10% of the population is approximately nine times that of the poorest, up from seven to one 25 years ago. Even in traditionally egalitarian countries – such as Germany, Denmark and Sweden – the income gap between rich and poor is expanding – from 5 to 1 in the 1980s to about 6 or 7 to 1 today , while in Chile and Mexico it stands at around 27 to 1.
The factors of inequality stretch beyond income. Health and education are additional dimensions. We know that the less educated and lower income individuals live shorter lives, are less active in political activities, and have children with lower school performance.
To tackle these challenges, we need to work on several fronts simultaneously, we must focus on growth-enhancing policies which place jobs and inclusive growth under the microscope.
Towards inclusive growth...
One of the most obvious, most visible, and most productive results of the dialogue between the Council of Europe and the OECD is our New Approaches to Economic Challenges, or NAEC initiative which we launched in 2012. Through this initiative we aim not only to promote an OECD wide reflection on how to improve our analytical frameworks and policy advice, but also to focus upon a more inclusive and resilient model of economic growth.
It was in this session of 2011, during our 50th Anniversary, that you asked us to take a hard look at the sources of the crisis, at the lessons learned, how to avoid such accidents and how to set the stage for stronger, more balanced and more sustainable and inclusive growth.
In this respect, NAEC is more than just a project. It is also a roadmap and a state of mind to transform the OECD so that it helps governments and policy makers to understand better the linkages between policies, and identifying the trade-offs that exist between policy drivers and well-being outcomes.
Combating Tax Evasion and Tax Avoidance...
Efforts to achieve a fair and equitable economy will also require sound public finances. Thus, governments must co-operate to put an end to tax evasion and aggressive tax avoidance by multinational companies.
National tax laws have not kept pace with the globalisation of business and the rise of the digital economy. As a result, we have witnessed in recent years that multinational corporations increasingly exploit gaps to artificially reduce their fair share of taxes. These practices undermine the integrity of tax systems across the world and profoundly distort economic competition.
In July 2013 we presented to G20 Finance Ministers our Action Plan on Base Erosion and Profit Shifting, or BEPS, which sets forth 15 actions that will dramatically change the landscape of international tax rules. The Action Plan is a roadmap to help governments strengthen their tax collection and recover much needed revenues to meet citizens’ and business demands.
We expect to deliver concrete results on the Action Plan in the coming 18 to 24 months. And in the same spirit, we are also developing a standardised, secure and cost effective model of bilateral automatic exchange of information on tax matters, which will serve in a multilateral context. We will use the power of concerted action to help our Members and Partner countries review the nuts-and-bolts of their tax–reporting arrangements in order to make information exchange automatic and effective.
It’s all about regaining the trust of people…
As Mr. Van der Maelen rightly notes in his report, the global financial and economic crisis has had a terrible impact on public trust in governments. According to the Gallup World Poll, the average confidence in national government in OECD countries stood at 40% in 2012, down from 45% in 2007.
Angel GURRIA, OECD Secretary-General and Thorbjørn Jagland, Secretary-General of the Council of Europe
These figures reflect a deep trend that threatens the social contract. We see both the NAEC and our BEPS initiatives as key to regaining this lost trust. To complement them, we will also develop a full-fledged strategy, precisely targeting the trust deficit, and placing this issue once again in the centre of policy-making.
Ladies and Gentlemen:
The crisis has imposed an enormous social cost. In many countries whole generations have been scarred for life. This pain has eroded the people’s confidence on their governments’ capacities. This, in turn, is raising questions of legitimacy. This is not just one more crisis. The foundations of our social contract need to be repaired. And this has to be done soon. Let us review, and, if we so conclude, revise together, at the OECD and the Council of Europe, our concepts, our theories, our procedures, our policy recommendations.
This is a great challenge, but also a unique opportunity. How can we take this partnership between these two “houses” to a higher level to help governments design better policies for better lives? This is a question that I hope we can start answering here today.
I want to particularly thank the Committee on Political Affairs and Democracy for its hard work and interest in the OECD’s activities and I very much look forward to your questions and to an interesting and fruitful debate.
Thank you very much!