OECD Forum 2016: “Productive Economies, Inclusive Societies” - opening remarks
Opening remarks by Angel Gurría
31 May 2016
(As prepared for delivery)
Dear Ministers, Ambassadors, Ladies and Gentlemen:
Welcome to the 2016 OECD Forum. Welcome to OECD Week. Welcome to the “do” tank that is the OECD. It is very encouraging to feel this energy once again. The energy that radiates from the combination of so many sharp minds from different backgrounds and cultures, from the collective commitment to create a better world, and the certainty that new ideas and better policies will result in better lives. That is the magic of this event.
31 May 2016 - OECD Secretary-General Angel Gurría opening the 2016 OECD Forum: "Productive Economies, Inclusive Societies". OECD, Paris.
Photo: Julien Daniel/OECD
This year we focus on the ultimate economic and social challenge: how to improve the productivity of our economies while also creating more inclusive societies.
This is the policy riddle of our times. If we address this challenge successfully our countries will embark on a new growth trajectory, in which efficiency, competitiveness and productivity are powered by inclusion and equal access to opportunities.
The timing is critical. Eight years have passed since the outbreak of the crisis and we are still facing its terrible legacy. Growth in advanced economies remains weak, while key emerging economies continue to slow down or are facing recession. Global GDP will grow by 3% in 2016 and will only see a modest improvement in 2017. The ILO just reported that global unemployment is growing again, reaching 197 million in 2015, 1 million more than in 2014. At the OECD we still have close to 40 million unemployed, 7 million more than before the crisis, while youth unemployment is still above pre-crisis levels in almost all our countries.
This weakness results from the combination of two simultaneous trends: the slowdown in productivity growth and the rise of inequalities.
Productivity growth in OECD countries is losing steam. Almost all of our member countries experienced a decline in productivity growth after the turn of the millennium, which accelerated after the crisis. This slowdown of productivity has spread to emerging market economies, despite their efforts to catch up. In the OECD, productivity growth was around 2% between 2000 and 2007 and fell to below 1% since then.
This decline in productivity growth has happened at a time of rising inequalities of income, wealth, well-being and opportunities.
Our most recent studies reveal that the average income of the top 10% of earners in the OECD is 10 times that of the bottom 10%, up from around 7 times in the mid-1980s. Wealth is also concentrated in a few hands: the top 10% own 87% of global wealth.
The combination of slowing productivity growth and rising inequalities is having an “atrophic effect” on the global economy. The shared chemistry of these two mega-trends is creating a vicious cycle where individuals with fewer skills and poorer access to opportunities tend to operate in precarious jobs, often in the informal economy. This reduces aggregate productivity, widens inequality, and in turn undermines efforts to enhance growth.
This is a symptom of a deeper malfunction in our economic systems. Our analysis reveals two important “tectonic fault-lines” in the economics of productivity: First, we can no longer take it for granted that technological advances, and the related innovations in processes and business models, will automatically spread throughout the economy, leading to better economic performance and stronger productivity growth overall. Second, there is no guarantee that the benefits of higher levels of growth will be broadly shared across the population. These are game-changers!
Thus, it is time to develop new concepts, new approaches, based on a broader understanding of productivity. Crucially, we need to analyse the complex inter-relations between productivity and inequality: what we call THE NEXUS.
We need to gather evidence on the linkages that will make both trends mutually reinforcing. We need to know their common roots, while setting out the “homework” for future research on the best policy packages to achieve inclusive productivity. Our aim is to help governments detonate a virtuous cycle of higher productivity growth, where the gains are broadly shared.
In the coming hours, we will present our new report on “The Productivity-Inclusiveness Nexus”. The central message is a call for policy makers to adopt a broader, more inclusive approach to productivity growth; one that considers how to expand the productive assets of an economy by investing in the skills of its people; one that provides an environment where all firms have a fair chance to succeed, including in lagging regions.
This is part of a broader effort that we started ten years ago, with our analysis of inequalities followed by our New Approaches to Economic Challenges - OLD (NAEC), our Inclusive Growth Initiative, our work on measuring well-being, the Better Life Index and Productivity and long term growth. These questions are all present in my “21X21” Proposal for the Consolidation and Further Transformation of the OECD. They are top concerns for all our Member and Partner countries, and today we want to pick your brains and discuss them with you.
Over the coming days, we will be discussing the relationship between productivity and inclusive growth, the implications of inequality for Generation Y, how to “disrupt ageing”, the circular economy, migration and integration, skills for the future, women and STEM. But also the implications of innovation and the digital economy on jobs and inclusion, and their potential to help address global challenges. All of this enriched with the “vitamins” of idea factories and meet the author sessions.
We will present our Economic Outlook and ask for our Ministers’ views on how best to enhance productivity, trade and investment, as well as a Universal Agenda for Inclusive and Sustainable Development. We will also discuss my Strategic Orientations and ask Ministers for their strategic orientations for the OECD in the coming years, and will make this Organisation more inclusive, with the launch of the OECD Latin America and the Caribbean Regional Programme and the signature of the Accession Agreement with Latvia. Thank you to our Members, our Ambassadors, our staff and our friends, gathered here today. Your support, your enthusiasm and your collective wisdom are the wind beneath our wings.
Dear Ministers, Ambassadors, dear friends:
But let me share a secret with you. Please don’t tell anybody. Keep it to yourselves. We already decoded the genome of the NEXUS and we are already hard at work on it. It’s happening as we speak. What is our work in education, if not a way to enhance productivity and generate inclusiveness? What is our work on the right skills’ policies, if not a way to enhance productivity and generate inclusiveness? What is our work on the proper innovation and digital policies, if not a way to enhance productivity and use their full potential to generate inclusiveness? What is a work on health, if not a way to enhance productivity and generate inclusiveness? What is the work on gender, if not a way to enhance productivity and generate inclusiveness? What is our work on children, youth and the elderly, if not a way to enhance productivity and generate inclusiveness? What is our work on migration and integration, if not a way to enhance productivity and generate inclusiveness? What is our work on competition, if not a way to enhance productivity and generate inclusiveness? What is our work on taxes, if not a way to enhance productivity and generate inclusiveness? What is our work on anti-corruption, if not a way to enhance productivity and generate inclusiveness? What is our work on development, the SDGs and COP21, if not a way to enhance productivity while generating inclusiveness in emerging and developing countries? What is our work on better and smart regulations, if not a way to enhance productivity and generate inclusiveness? What is the work on the systems of justice, if not a way to enhance productivity and generate inclusiveness?
I could go on, but I believe I have made my point. This NEXUS ― the Nexus between productivity and inclusiveness― is not the holy grail; it is not rocket science; it is not Mount Everest. As the saying goes, it is 10% inspiration and 90% perspiration. It takes a vision, ambition and a profound sense of mission. A deep commitment to achieve it. But dear friends, at the OECD, every day we are chipping away at it; every day we get a little closer. Every day we make progress towards this “inclusive productivity” we seek to achieve.
Help us get there; support our work; spread our ideas and our research; disseminate the best practices. Adopt the standards. You are the Nexus. We are the Nexus.
We can design, develop and deliver better policies for better lives.
Thank you very much.