Remarks (Virtual) by Angel Gurría
9 September, 2020
(As prepared for delivery)
Earlier this year, as the spread of Covid-19 turned rapidly into a global health emergency, countries across the G20 – and the world – were forced to implement deep and wide ranging measures to contain the pandemic. Large parts of the economy ground to a halt, triggering the deepest recession in peacetime.
Since we met in April, we now have a clearer view on the magnitude of the crisis. In the second quarter of 2020, G20 economies excluding China shrank at an annualised rate of around 40% on average. China experienced a similar decline in the first quarter. For 2020 as a whole, many countries will experience falls of greater than 5% of GDP, while the hardest hit countries are expected to see declines of around 10% of GDP.
Millions of workers have lost their jobs and have seen their incomes decline. Working hours across the G20 are estimated to have declined by 14% between December 2019 and April 2020; this is more than 10 times what happened in the aftermath of the global financial crisis. In some countries we are seeing a partial recovery, athough indicators of business confidence and retail mobility suggest the recovery had begun to slow in July and August. Itt will take considerable time in most G20 countries before pre-crisis employment levels are reached again.
Your countries have responded rapidly to the crisis by adopting a vast range of emergency measures to mitigate these impacts, support households, protect jobs and keep companies afloat.
To cite just one example, job retention schemes have been used in many countries, contributing to saving jobs and protecting livelihoods of millions of workers. In April support had been requested for 55% of private sector employees in France and 45% in Italy.
In these circumstances, we must adjust support packages to support viable jobs and help create new ones, encouraging a safe return to work where possible and targeting support where it is needed most.
We must also think beyond the recovery and build a future of work that is safer, fairer, greener and more resilient in the face of future crises. “Building back better” calls for increased policy coherence, in particular between economic, employment and social policies and a whole-of-society approach.
The paper we prepared with the ILO, at the request of G20 Leaders, on ‘The impact of the COVID-19 pandemic’ identifies clear policy orientations, which can be tailored to national circumstances:
First, we need to strengthen the resilience of the labour market, through a mix of counter-cyclical macroeconomic policies, adequate income support for all workers, and the capacity to rapidly expand job-retention schemes. Resilience also requires improving working conditions, especially in essential sectors; modernising employment services; and reinforcing the role of reciprocal and responsible dialogue with social partners, which is key in the design, development and implementation of policies.
Second, we should seek to strengthen employment and social protection systems to improve effective coverage. The OECD welcomes the focus of the Saudi Presidency on adapting social protection to changing patterns of work. As part of this effort, we should also seek to reduce the incidence of informal work by making work in the formal economy more attractive through tax and regulatory reforms as well as labour market policies.
Third, we must promote lifelong learning opportunities to match changing skills needs and to accompany a reallocation of activities and production factors, including the workforce, that is likely to be induced and even required by this crisis. A particular focus should be put on strengthening digital skills, especially for people with low digital literacy to enhance opportunities to work and learn online. One of the few silver linings in this crisis is the rapid scaling up and delivery of online education unthinkable only a few months ago.
As we build back better, it will also be important to address the deep-rooted the structural inequalities that were exposed by the pandemic, including those based on age, gender, employment contract or migrant status. In this respect, it is time to honour the commitments made to by G20 countries towards youth and women.
In 2015, G20 Leaders committed to reducing the share of young people who are most at risk of being permanently left behind by 15% by 2025. Our joint report with the ILO shows the significant progress made by many G20 countries in reducing the share of people aged 15 to 29 who are neither in employment, education or training, the so called NEET. But, even before the COVID crisis hit, more needed to be done.
Reaching the youth target will now be even more challenging. Young people have been disproportionally affected by the crisis: between February and May , youth unemployment increased from 14.3% to 18.8% across G20 countries with available data, edging down to 18.7% in June. The so-called “Class of Corona” are also entering the labour market with fewer career prospects.
The G20 Youth Roadmap 2025, which you are about to endorse, lays out three pillars for action.. First, strengthen support during economic downturns; second, improve successful labour market entry; and third, tackle barriers to quality employment, particularly for young women. The OECD stands ready to support countries in these efforts and we remain committed to reporting with the ILO on the progress towards achieving this goal.
As Guy Ryder, has underlined, further progress is also needed toward the Brisbane target. As shown in our latest report on Women at Work, only around half of the G20 countries are on track to reach the goal set in 2014 to reduce the gender gap in labour force participation by 25% by 2025.
Here too COVID-19 threatens to slow and even to reverse progress. Women are bearing a disproportionate share of the burden of paid and unpaid care work and they tend to be overrepresented in sectors that have been most affected by the crisis. Together with the ILO, we will continue to monitor progress towards the Brisbane goal.
We also have to address the unprecedented challenges in migration and integration policy, as cross border flows have ground to a halt during the past months due to extraordinary boarder management measures, while going forward we can expect an increasing discrepancy between reduced demand-driven migration and stronger migration pressure from origin countries - because of the impact of the crisis on the latter.
Ministers, Ambassadors, Colleagues, we are facing tough times ahead. Many of these vulnerabilities existed before COVID-19. But this virus – and the ensuing economic crisis that is sweeping the globe – have exposed the consequences of leaving vulnerabilities unaddressed. It is time for a whole-of-government and whole-of-society plan that cuts across policy domains and across institutions. Together, now, we must build back better.