Remarks by Angel Gurría, OECD Secretary-General
Paris, 9 July 2014 – 10h00
Your Majesty Queen Maxima, Mr González,
Ambassadors, distinguished guests, colleagues, ladies and gentlemen, good morning,
We are especially honoured to be joined on this special day by Her Majesty Queen Maxima of the Netherlands who is participating in her capacity as UN Secretary General’s Special Advocate for Inclusive Finance for Development and Honorary Patron of the Global Partnership on Financial Inclusion (which the OECD is happy to have joined as implementing partner last year).
I would also like to welcome Mr Francisco González, Chairman and CEO of BBVA, and thank him for his institution’s support to this initiative.
This morning we are launching the first ever international assessment on 15-year old’s financial knowledge and skills, carried out across 18 countries and economies using an internationally agreed framework. This is a major addition to our PISA toolkit.
I wholeheartedly thank all those that for the last two years have participated in this exercise. You will hear more from some of them later this morning. I also wish to thank Italy, Spain and the United States for taking the initiative to organise national launches of the publication today.
Financial literacy empowers citizens
Financial literacy empowers citizens by supporting their successful participation in modern societies while strengthening their financial wellbeing. By doing so, it also promotes inclusive growth and more resilient financial systems and economies, two key themes of our May Ministerial meeting.
Citizens need to be informed and educated about financial matters from an early age: PISA data show that almost 60% of 15-year-olds in participating OECD countries and economies already have a bank account, and 20% have a prepaid debit card.
Individuals are also becoming increasingly responsible for a vast array of financial risks, from their mortgage to their retirement savings. They are increasingly being asked to make complicated financial decisions.
Governments are responding. More than 50 countries have a national strategy for financial education (compared to only 10 in 2008) and many are collecting evidence on levels of financial literacy of the adult population.
The G20 has also recognised the importance of financial literacy as part of a policy trilogy that includes also financial Inclusion and financial consumer protection.
Yet until today, very limited national data and certainly no comparable international evidence were available on the financial literacy of students about to finish compulsory schooling. These latest PISA results are therefore filling a major gap in our knowledge about financial literacy.
Overview of the PISA financial literacy results
My OECD colleagues will provide you the details of the PISA financial literacy assessment, but let me give you a flavour of the main findings.
The assessment was administered in 2012 to 29 000 students in 18 participating countries and economies, representing 40% of world GDP, following a tailored and robust process.
The results contained in this (rather thick) publication provide, first of all, an assessment of what it means for students to be financially literate at different levels of competency, using the first-ever international benchmark.
The report paints a highly worrying picture of the level of financial literacy among students in all countries and economies which participated in the assessment:
- 15% of students, on average, score below the baseline level of performance in PISA. At best, these students can make simple decisions about everyday spending. They cannot for instance understand the benefit of drawing up a simple budget.
- The share of students with the lowest score is over 20% in Italy, Israel and the Slovak republic (55% in Colombia!), close to 19% in France and 17% in the United States. Even top performing countries such as Australia and New Zealand have sizeable portions of their students with financial literacy skills below the baseline (10% and 16%, respectively). Only Shanghai-China stands out, with less than 2% of its students scoring at the lowest level.
- On the other hand, students with high levels of financial literacy are a rare breed! Only one in ten students across participating OECD countries and economies is able to tackle the hardest financial literacy tasks, such as understanding the implications of income tax brackets for take-home salaries or the impact of inflation on savings.
- Again, Shanghai-China stands out. More than four in ten students achieve the top level of financial literacy.
As you have probably guessed by now, among all the 18 countries and economies studied, Shanghai-China achieves the highest overall score in financial literacy, followed – by quite a distance! - by the Flemish Community of Belgium, Estonia, Australia, and New Zealand.
We also found a wide difference in average performance between the highest- and lowest-performing countries and economies: more than 75 score points, a full PISA proficiency level.
The second main finding of the report is that financial literacy competencies are strongly related to students’ socio-economic background (while only weakly related to a country’s level of development or extent of financial inclusion). Students with parents with lower levels of education, lower household wealth or immigrant status tend to have lower financial competencies.
Estonia is the only participating country that combines above-average performance with a weaker-than-average association between financial literacy performance and socio-economic status.
A third main conclusion of the study – and one of the few good news! - is that gender gaps in financial literacy among 15-year-olds are small, unlike those found in adult populations. In general, there are more top-performing boys than girls in financial literacy, but there are also more low-performing boys than girls.
Developing financial education programmes for youth
The results of this first-ever assessment are a true call for action. We need to step up our global and common efforts to better identify the financial literacy needs of 15-year-olds and explore ways to improve this essential life skill.
We also need adequate policies to reduce the impact of socio-economic inequality and ensure that students from vulnerable households are sufficiently equipped to participate in the economy, including the financial system.
The next PISA financial literacy exercise in 2015 - to which a number of countries have already agreed to participate – will provide an opportunity to monitor improvements and assess policy impact.
Many countries are already striving to reach out to their young population through a variety of programmes, including school initiatives. The Netherlands is one good example, so let me commend Her Majesty for her commitment to the money week programme in schools in the Netherlands. But more is needed to broaden access to financial education within and across countries. The future of millions of households is at stake!
And now allow me to turn to Her Majesty for her remarks.