Dear Minister, Friends,
I am delighted to launch the 2021 edition of our Going for Growth report alongside the Minister of Economy and Finance of Italy, Daniele Franco. Ministro, grazie per aver ospitato questo evento con noi.
Today’s launch comes as our economies are beginning to recover from the COVID-19 crisis, and the time is ripe to discuss how policies can shape a strong, resilient, inclusive and green recovery.
This Going for Growth report advises on how to re-orient growth, once we look past the unprecedented emergency measures countries took to deal with the pandemic. For each country, we have identified top policy priorities for shaping a vibrant recovery – to “build back better” as the well-known phrase has it, or to “build forward better” as I prefer to say.
Let’s acknowledge that all was not well before the pandemic. Our past growth was unsustainable and left many people behind. It was also, at least in the advanced economies, increasingly tepid. Many of our economies have been struggling for more than a decade with slow productivity growth, declining business dynamism, persistent long-term unemployment and very unequal opportunities.
The recovery is an opportunity to set our policies right, to achieve growth that is stronger, equitable and more resilient. And for this, governments have to act now and be bold.
There is no one-size-fits-all strategy, but the policy advice set out in this report builds on three overarching themes:
First, building resilience and sustainability – by improving the coverage of the healthcare and social systems and by pricing harmful practices that yield carbon emissions and biodiversity losses. We need a big fat price on carbon! And this price has to get bigger and fatter over time to address the environmental crises we are facing. Most emissions are currently under-priced: in the countries of the OECD and G20 – which are responsible for 80% of global emissions – 81% of emissions are priced below 60 euros per tonne of CO2, the level that would have had to be reached in 2020 for the world to be broadly on track to deliver the goals of the Paris Agreement. In fact, most emissions in these countries are priced below 30 euros per tonne! That gives an idea of how far off-track we are.
I will be focusing more on these issues during my final biennial climate lecture as Secretary-General of the OECD, which will be on 21st April, in the format of a discussion with Lord Stern and Laurence Tubiana.
The second theme is removing impediments to reallocation in order to oil the wheels of economic change. This means helping workers to switch jobs, entrepreneurs to launch innovative ventures and winding-down unproductive and polluting activities. For Italy, for example, this means improving the effectiveness of public administration and of regulation – including reforming the insolvency regime – to promote the growth of productive firms.
And third, supporting people in those transitions. Whether they need to upskill to find a new job, when they look after their children or the elderly and cannot work, or when they fall sick. In advanced countries, during the lockdowns many people were on job retention schemes, but self-employed and gig economy workers were not always covered, while those working in the informal economy have no social safety net to fall onto at all. The high incidence of informality in emerging and low-income economies means that this problem is particularly acute in those countries.
This year’s Going for Growth report also for the first time presents structural policy priorities in a number of areas where international co-operation is key. These areas include the immediate priority of COVID-19 vaccinations, as well as the taxation of multinationals in the digital economy, where the OECD is working to reach a global solution soon.
The recovery from the pandemic offers a unique opportunity to reinvent and improve our economic systems. We hope this latest edition of Going for Growth will offer valuable food for thought to policymakers as we set our sights on achieving fairer, greener and more resilient growth for future generations. Count on the OECD to achieve it!
Minister Franco, the floor is yours.