Closing Remarks by Angel Gurría, OECD Secretary-General, delivered at 2011 East Forum organised by UniCredit in Partnership with the OECD
Rome, 4 July 2011
(As prepared for delivery)
Ladies and gentlemen,
Thank you for giving me the opportunity to close a very productive East Forum.
It is a pleasure to celebrate with you the 50th anniversary of the OECD, which coincides with Italy’s own anniversary. Yet of course, you are three times older than we are.
Italy is an important part of the OECD story. It was one of the founding members of the Organisation back in 1961. It has since been an active member, shaping many of the major policy accomplishments of the organisation. For instance, Italy chaired our annual ministerial meeting in 1974, at the height of the oil crisis, when ministers took a key action – they adopted what became known as the “Trade Pledge” where OECD countries agreed not to adopt trade restrictions as a response to the oil shock.
One illustrative examples of Italy’s leadership is the story of work on industrial clusters, innovation and local development. It starts in the 1960s, in the early days of the OECD, when Italian economist Giorgio Fuà helped launch a very pioneering work. This work is still bearing fruits today. By 2000, Italy was hosting in Bologna the first OECD ministerial meeting on SMEs, showcasing Italian industrial districts and the importance of SMES as engines of job creation and innovation. Last year, we organised the Bologna+10 meeting as part of a peer learning process that involves more than 80 countries.
Italy presided again over our Ministerial Council meeting in 2010, when I had the pleasure of seeing Giulio Tremonti and Silvio Berlusconi taking turns at the Chair. One of the main outcomes of that meeting was the adoption of the Declaration on Propriety, Integrity and Transparency in the Conduct of International Business and Finance (the PIT Declaration). These principles are the keystone of an economy that needs to command the support and confidence of the people and serve their needs and aspirations. I am glad that two main deliverables at our 50th Anniversary Ministerial just a few weeks ago are fruits of the seeds planted by the Italian Presidency last year: the adoption of the revised OECD Multinational Guidelines, which encourage corporations to behave responsibly, and the accession of Russia to the OECD Anti-Bribery Convention, which fights bribery in international business transactions. I am also pleased that, in the spirit of maintaining the momentum of this fruitful engagement to achieve clean and efficient markets, we have designed together with Italy a plan to meet the goals of the PIT Declaration and step up its implementation.
As you can see, Italian leadership continues to play a key role in making the OECD what it is today.
But beyond the celebrations, this is a difficult moment, as the global economy is facing serious challenges.
Our recent Economic Outlook argues that the global recovery is firmly under way. But it is taking place at different speeds across countries and regions. The world economy is projected to grow by 4.5% this year and next, with the emerging market economies growing at close to 7% and the OECD economy at 2.5%. With private consumption and investment acting as its engines, growth is becoming self-sustained, that is, less driven by government spending.
That said there is no room for complacency. The economic crisis is not over yet and downside risks predominate. The sovereign debt crisis in Europe, the possibility of further increases in oil and other commodity prices, an unsettled fiscal situation in the United States and Japan, a possible slowdown in China turning out sharper than expected, overheating in some emerging economies, and renewed fragility in housing markets in many OECD countries, all cast their shadow.
But, most importantly, the crisis cannot be over until our economies start creating enough jobs. The unemployment rate in the OECD area is still close to the peak reached during the crisis, and about 15 million jobs are still missing to bring the employment rate back to where it was in 2007. Many of those who have lost their job during the crisis remain unemployed and at risk of becoming discouraged and losing contact with the labour market. One of the most worrisome dimensions of the jobs crisis we are still confronting is the high youth unemployment: one in five young people in the labour market is without a job in the OECD and many more are no longer even looking.
The room for fiscal and monetary policies to address these complex challenges is largely exhausted; therefore we have to “go structural”. I have been saying this since the G 20 in Pittsburgh. Structural reforms can boost growth and jobs, and also generate higher fiscal revenue and thus fiscal consolidation. Pro-competition reforms in product markets may also unleash opportunities for investment and reduce current account balances in surplus countries, ultimately contributing to global rebalancing while supporting growth. Reforms of the social security systems, particularly in emerging countries, could lead to reduced current account imbalances as well. On Italy, more specifically, about a year ago I unveiled with Minister Tremonti the results of the OECD Review of Regulatory Reforms of Italy, followed in May of this year by the OECD Economic Survey of Italy. I am delighted that now Italy is taking steps to follow up on the recommendations of these works and we stand ready to lend our hand to this process.
Labour market policies have a key role to play to prevent unemployment from becoming entrenched. Governments must ensure that employment services and training programmes are effective in matching people to existing jobs. They should also rebalance employment protection towards temporary workers; consider reducing taxes on labour; and promote work-sharing arrangements that can minimise employment losses during downturns.
We also need to better tap into new sources of growth. This is where innovation plays a key role. Innovation is fundamental to creating the industries and jobs of the future. Public policies and structural reforms can foster an environment conducive to innovation and entrepreneurship, which stimulates productivity and growth. We need to rethink, for example, the role that universities play in our economies. We need to promote entrepreneurship and support the creativity of young innovative firms – the so call “gazelles”. These are two among the important conclusion of our Innovation Strategy.
Going green in our structural policies is also another way to foster higher rates of growth while taking care of the environment. In the OECD 50 Anniversary Ministerial, which we celebrated just a few weeks ago, we presented our Green Growth Strategy, to provide policy options and tools for countries to build on. Ministers agreed that green growth tools and indicators can help expand economic growth and job creation through sustainable use of natural resources, efficiencies in the use of energy, and valuation of ecosystem services. We need wider application of price signals, for example, to reflect the true value of natural resources, the costs of pollution, and provide the right incentives to change behaviour and encourage innovation. At the same time, we need to scale-up green innovation and make it shared and diffused across national borders.
But going structural is not enough: we also have to go social. The gap between the rich and the poor has increased in most OECD countries in the decade prior to the crisis. And income inequality has widened further during the crisis, as low paid workers, often on precarious jobs, have been hit the hardest by unemployment.
Under the theme “Building a fairer future”, OECD Social Policy Ministers met in Paris in early May to discuss the main social policy challenges that we are all facing and how best to address them. One very fundamental principle they affirmed is that fiscal consolidation should not mean we renege on our obligations towards the most vulnerable.
These are all difficult global challenges that require coordinated policy actions. As we face these challenges, our relevance and effectiveness will be increasingly coordinated with our inclusiveness, our global nature.
Last year we welcomed four new members, Chile, Estonia, Israel and Slovenia. The Russian Federation is negotiating its accession.
We are working closely with Brazil, China, India, Indonesia and South Africa. These countries adhere to an increasing number of our policy instruments, they participate in our work and they share their policy experiences and perspectives.
We also cover them in the OECD Economic Outlook, the Going for Growth series, the Employment Outlook, Pensions at a Glance, the country surveys, and our statistical databases, such as the Main Economic Indicators and the OECD Factbook.
Beyond these large emerging economies, around 100 non-member countries participate regularly in OECD bodies and we have a number of regional programmes, including with Latin America and the Middle East and North Africa. We also work increasingly with social partners in business and in trade unions, as well as with civil society, so they can help our analysis and policy perspective.
As a result, the role we play in the Global Governance Architecture is increasingly important. We are a regular partner in efforts to strengthen inclusive multilateral cooperation, working intensively with the G 20, in areas like taxes, balanced growth, investment, protectionism, anti-corruption and employment.
Ladies and gentlemen,
“OECD at 50” is a dynamic organisation that keeps adapting itself to a fast changing world; to upgrade its capacities; to renew its thinking. We are uniquely positioned to help build a stronger, cleaner and fairer global economy.
Our 50 years of experience are a public good. We look forward to working with Italy and Italians to produce “better policies for better lives”.