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OECD Secretary-General

The Economy of Well-Being

 

Remarks by Angel Gurría

OECD Secretary-General

16 September 2019 - Reykjavik, Iceland

(As prepared for delivery) 

 

 

 

Dear Prime Minister, Ministers, Distinguished Guests, Ladies and Gentlemen,


I am delighted to be at this Inclusive Growth and Well-Being Symposium, organised under the sponsorship of the Well-Being Economy Governments Network – an initiative launched by Iceland, New Zealand and Scotland that the OECD warmly welcomes.


The importance of the Economy of Well-Being

The Economy of Well-Being is defined as the ‘capacity to create a virtuous circle in which citizens’ well-being drives economic prosperity, stability and resilience, and vice-versa, that those good macroeconomic outcomes allow to sustain well-being investments over time’. It specifically highlights the need for putting people at the centre of policy and moving away from an attitude of “grow first, redistribute and clean up later”, towards a growth model that is equitable and sustainable from the outset.


Recognising its importance, the OECD has been working on the measurement of well-being beyond GDP since the 1970s. Over the past 50 years, we have seen the concept of well-being develop from an interesting side-note into a well-established agenda for policy.


The OECD’s Well-Being Framework has further developed the concept by providing us with a clear definition and a rigorous analytical basis. More than half of all OECD countries have now developed dashboards of well-being indicators, and I know that in Iceland – a leader in well-being policy – you are hard at work creating your own as we speak.


Since publishing our first How’s Life? report in 2011, we have been systematically looking beyond the average, to document inequalities – from gender differences in work-life balance, to age differences in unemployment, regional differences in air pollution, to educational differences in health outcomes. And we are also monitoring the sustainability of well-being over time, to know if actions taken today are putting the well-being of future generations at risk.


Moreover, the SDGs have given an important push to measuring progress “beyond GDP”, although there is significant room for improvement here. For example, it is shocking that we can’t measure about 40% of the 169 SDG targets for OECD countries – meaning we can’t tell whether we are on track to meet them by 2030 or not.

 

Significant challenges persist

As much as we strive to promote more economic growth, our efforts do not automatically translate into higher and more sustainable well-being for all. What we are witnessing today are some of the deepest fault lines ever that divide our societies. Let me provide some stark examples:
Since the mid-1980s, the rate of income growth for households in the top 10% has been nearly four times greater than for those in the bottom 10%. Nearly 50% of middle-income households reported experiencing difficulties making ends meet in 2016. In EU countries, this ranges from under 10% to over 70% . And since 2005, average life satisfaction in OECD countries has fallen by 3%.


We are also in dire straits when it comes to our planet. July was the hottest month ever on record. We are staring down the barrel at the earth’s sixth mass extinction of biodiversity.


Take air pollution: we calculated that the burden of ambient air pollution stood at around 3.2 million deaths in 2015. Yes, this is huge. The economic cost is also mind-blowing! USD 5.1 trillion. Combatting air pollution is win-win: we can save lives, while also combatting climate change.

 

Policies to build an economy of well-being

The OECD is taking action to help tackle these challenges, and to help countries build “economies of well-being” through its new Framework for Policy Action on Inclusive Growth. Using a dashboard of indicators, our Framework helps countries achieve sustainable economic growth, employment and raise living standards while addressing inequalities.


The Inclusive Growth Framework casts an economy of well-being around health, education and skills, gender equality, social protection and redistribution. It specifically focuses on expanding opportunities and ensuring they translate into well-being outcomes for all, including those at the bottom of the distribution.


Our work suggests that governments can achieve these goals by: improving childcare provision and parental leave for both parents; ensuring equal access to quality education and health for all; building tax and transfer systems that make work pay, especially for low wage earners and couples; and improving access to training and skills development are emblematic examples of policies needed for an economy of well-being.


Turning to the environment, later this month, at the UN Climate Action Summit in New York, I will launch our report on Accelerating Climate Action: Refocusing Policies through a Well-Being Lens. Limiting climate risk is fundamental to our collective well-being. More importantly, climate action can also translate into action on other well-being goals such as jobs, income, health, education and broader environmental quality.


Cities around the world are already leading the way in these efforts. Oslo, for example, removed the remaining 700 parking places in the city centre at the end of last year, prioritising pedestrians, cyclists, and public transport instead. Similar shifts are taking place in Madrid, Paris, London, Mexico City and Athens. This means more people can afford transport, cities become more accessible, air quality increases, citizens can be more physically active – and we might even waste less time stuck in traffic! All the while, our carbon footprint shrinks.


And here in Iceland, Prime Minister I am delighted to see that you are focusing your efforts on promoting an Economy of Well-Being. Indeed, there is a strong sense of community and high levels of civic participation in Iceland, where 98% of people believe that they know someone they could rely on in time of need, the highest rate in the OECD, where the average is 89%. In general, Icelanders are more satisfied with their lives than the OECD average. When asked to rate their general satisfaction with life on a scale from “0 to 10”, Icelanders gave it a “7.5” grade on average, much higher than the OECD average of “6.5”.

 

Finally, we need to get business on board

Let me conclude on a particularly important point. The inclusive growth and well-being agendas require the efforts of all actors. In this respect, a few years ago we created Champion Mayors for Inclusive Growth, and more recently the Business for Inclusive Growth (B4IG) Platform, these initiatives unite governments and businesses behind a broad-based, sustainable growth agenda that places social and environmental returns at the same level as financial returns.


At the G7 Summit in Biarritz, in the context of the B4IG and under the aegis of President Macron, 34 leading global firms, who employ more than 3 million people and with sales over one trillion US dollars, pledged to fight against inequalities.

 

Ladies and Gentlemen:


We need to build a more intelligent economic system, a new economy focused on human health and happiness. In the words of Lorenzo Fioramonti, author of ‘Wellbeing Economy’ who has recently been appointed as Minister of Education of Italy: “In this new economy, people will be productive by performing activities that enhance the quality of life of their peers and the natural ecosystems in which they live. If not for moral reasons, they should do so for genuine self-interest: there is nothing more rewarding than creating well-being for oneself and society.”


The pursuit of greater well-being for all must become second nature in policymaking. You can continue to count on the OECD to put our data, our evidence and our rigour at the service of countries around the globe. Together we can design, develop and deliver better well-being policies for better lives. Thank you.

 

 

See also:

OECD work on Economy

OECD work on Inclusive Growth

OECD work with Iceland

 

 

 

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