G20 Labour and Employment Ministers’ Meeting (27/09/2011)


G20 Labour and Employment Ministers’ Meeting

Remarks by Angel Gurría, OECD Secretary-General

Paris, 27 September, 2011
(As prepared for delivery)
Minister Bertrand,
Director General Somavia,
Ladies and gentlemen,

I am delighted to be given the opportunity to make some introductory remarks on the policy challenges under discussion today.

Improving social protection for all will be central to the first part of your discussions.

Let me stress that no G20 economy is immune from the need to confront significant social challenges today. The OECD will launch in December a new flagship publication on income inequality. The main message of this report is that inequality is on the rise in most advanced and emerging G20 countries. Inequality was rising before the global financial crisis, and it has further increased in some countries during the crisis, especially those where long-term unemployment has risen sharply. The report highlights the key role of the tax and social protection systems in reducing inequalities, but also draws attention to the worrying fact that the redistributive effect of the tax and benefit system has weakened in many countries over the past 10-15 years.

The challenge is how to redesign our tax and benefit systems, and labour market policy and education and training systems in ways that will help reduce inequality and poverty but at the same time, sustain growth and employment. This task is made more difficult in today’s environment of tough fiscal constraints.

We know that the need for fiscal consolidation has led many G20 countries to tighten their belts, thus making social challenges more difficult to tackle. This should not be the case! Be selective: good-quality social policies, particularly those addressed to the most vulnerable, should be seen as sound social investments for tackling the large human cost of unemployment and under-employment, and thus promoting sustainable improvements in economic growth and well-being. During past recessions, across-the-board social cuts inevitably increased inequality as low-income groups are those who depend most on social benefits. Tax cuts which have often tended to favour the rich have exacerbated this trend.

Expanding the coverage of basic social protection programmes is also a challenge for many emerging economies in order to reduce the risk of poverty and exclusion. My friend Juan Somavia has already highlighted the key messages of the important work conducted by the Bachelet Commission on the social protection floors. Let me just add that careful design of social protection programmes is required in order to improve their cost-effectiveness and to avoid harming work incentives. Conditional cash transfers that combine income support with the requirement to maintain investment in human capital and health of children have proven effective in this respect. We also encourage promoting self-insurance based on individual savings accounts among those who can afford it. To be fully effective, these measures will need to be part of a broader strategy to improve organisational administration and tackle problems of high informality.

The case for better targeted equity measures is one step. Another is to enhance the respect for labour rights -- the topic of your second discussion today. 

Firms have a strong role to play in promoting respect for labour and human rights.  This is especially important in the case of multinational enterprises which often operate in countries with very different traditions, levels of development and legal systems. At the OECD’s 50th Anniversary Ministerial Meeting, the 42 governments adhering to the OECD Guidelines for Multinational Enterprises committed to new, higher standards of corporate behaviour by adopting extensive revisions to these Guidelines. The OECD Guidelines are the only multilaterally agreed code of conduct for companies covering all major areas of business ethics and they are supported by unique implementation mechanisms.

The Guidelines now include a new chapter on human rights consistent with the recently adopted UN Guiding Principles on Business and Human Rights.  The revised chapter of the OECD Guidelines on employment and industrial relations is aligned to the ILO provisions on the protection of the rights of workers and the decent work agenda, and with the ILO tripartite MNE Declaration. These are critical contributions to the social management of the globalisation process.

The Update reinforces the Guidelines’ unique facility for the mediation and conciliation of complaints, which most frequently arise in the labor field. Eight non-OECD countries, including two G20 members, have so far adhered to the Guidelines and several more countries are in the process of adherence. I would like to encourage these countries to take the necessary steps to strengthen political support to the Guidelines with a view to accelerate their adoption and ensure effective implementation.

Last but not least, your final session today will discuss the coherence of G20 efforts on employment and social issues. Providing advice on how to achieve better policy coherence lies at the core of the OECD’s work, drawing on its wide coverage of the key policy areas of concern to G20 countries and through its considerable experience in carrying out multi-disciplinary studies.

In particular, we have been supporting the G20 efforts to develop a shared structural reform agenda since the beginning of the financial and economic crisis. Further to the labour and social sphere, our contribution spans a wide range of substantive policy issues. These include taxes, bribery and corruption, environment, commodity and price volatility and trade. We are also actively engaged with the IMF in supporting the Framework for Strong, Sustainable and Balanced Growth.

Policy coherence is central to our efforts. We assist by making the case for reforms. For years, through our regular country economic reports and flagship publications such as the Employment Outlook and Going for Growth, we have assessed the impact of structural reforms in G20 economies. Such work fully underpins the Framework’s approach by showing that well-designed and well-implemented structural reforms yield a triple dividend:

1. They lift output and employment;
2. They strengthen public budgets; and,
3. They rebalance global demand.

The areas of your ministerial responsibilities are an integral part of the Framework. Yet, the links between employment and social policies and growth should be made stronger. This could take the form of a collective public commitment to build better connections between Finance and Employment Ministers. By improving the coherence between employment and social policy measures and the linkages with macroeconomic policies, such an empowered Framework would enhance the prospects to achieve the common goals of G20 members.

Ladies and gentlemen,
The OECD is proud to have been a partner in the G20 process since the beginning. Our collaboration with other international organisations, notably the ILO, is a key factor in this process.  Going forward, we stand ready to continue to provide assistance, including our help to consolidate the “bricks” of social cohesion that you will identify today.

Thank you.