Inclusive growth, jobs and trust


The economic recovery may finally be gathering some steam in the OECD area, but the world economy is still not firing on all cylinders. High unemployment and widespread underemployment hold back demand, and investment and international trade are sluggish, while credit to the private sector remains tight in several countries. Though growth in China may be holding up, it is below trend in some large emerging economies, such as Brazil and India.

In short, the longest crisis of our lifetimes is not over yet. It is said that a crisis is too important to waste, and for more than six years now the OECD has worked with member and partner countries, international organisations, the G20 and the public to draw lessons and devise policies for a more inclusive, resilient world.

In this fourth OECD Yearbook, OECD experts and high-level guests explore these lessons from three main perspectives: inclusive growth, jobs and trust.

Take inclusive growth first. One of the chief lessons of the crisis has been the extent to which inequality breeds exclusion, weakens our structures and undermines economic activity. Moreover, these inequalities had already widened before the crisis.

Today, in OECD countries, the average income of the richest 10% of the population is over nine and a half times that of the poorest, up from seven times 25 years ago. Even in traditionally egalitarian Nordic countries, the income gap has widened.

But inequality goes beyond income. It stifles opportunity and social mobility, and discriminates in areas of health and education. Inequality saps the public’s trust in institutions and democracy.

Clearly, OECD countries must not only go for growth, but they must “go inclusive” to turn this vicious circle into a virtuous one. The OECD’s Inclusive Growth Initiative highlights a way forward. It reflects our vision of win-win policies that combine strong economic growth with improvements in people’s well-being–good health, jobs and skills, and a clean environment. It is multi-dimensional and actionable, and involves all countries, regions and citizens working together to improve these outcomes.

Inclusive growth is about being able to contribute to and share in the fruits of society. Being out of work denies this opportunity, and reducing unemployment is therefore crucial. This is why this Yearbook also looks in detail at the employment dimension of the recovery, calling attention to the need to create more and better jobs.

OECD-wide unemployment should decrease slightly this year, but there are still over 13 million more people unemployed than at the end of 2007. It is a social tragedy, and young people have been particularly hard hit: unemployment among under-25s is unacceptably high at over 16% across the OECD–exceeding 55% in Greece and Spain. Providing support, training and opportunities for youths is therefore vital.

But older workers also matter; the employment rate for 55 to 64-year-olds in the OECD area stood at 56.5% in the third quarter of 2013, compared with some 76% for those aged 25-54. They also suffered during the crisis, and many older people are no longer in the job market, having been pushed into early (often involuntary) retirement.

Society cannot afford this waste of human capital and experience, let alone the additional retirement costs. As the OECD Yearbook argues, more elderly people are in good health, and are willing and able to contribute to society through work. Making it happen means introducing flexible workplace and wage systems, softening (or abolishing) mandatory retirement ages, and changing attitudes and culture. Including the elderly in our strategies will make our economies more productive and smarter, and improve well-being too.

Inclusive growth policies can help restore the trust that the crisis has so badly damaged. This is the third key element that this OECD Yearbook focuses on. According to the OECD report How’s Life?, only 40% of citizens in the OECD area trust their national governments. This is the lowest level since 2006: banks, companies, parliaments and international organisations have all suffered declines in public confidence. People have also lost trust in each other.

Rebuilding trust is essential for long-term growth and resilience. Nothing destroys this trust more than corruption. It undermines public services, damages investment and locks in inequality. To fight corruption the OECD has developed a powerful array of instruments to help governments, such as the OECD Principles for Enhancing Integrity in Public Procurement. We are also helping to reduce the risk of political capture by interest groups by taking a hard look at more stringent, transparent rules for financing political campaigns. Our CleanGovBiz initiative draws together the OECD’s anti-corruption tools, reinforces their implementation and monitors progress. It includes the OECD Anti-Bribery Convention, which has been described by Transparency International as the “gold standard” in the fight against corruption.

Trust is also about ensuring fair levels of tax and fighting tax evasion, and the OECD Base Erosion and Profit Shifting (BEPS) initiative and Automatic Exchange of Information contribute by getting governments and businesses working together in a cleaner, more transparent framework.

Finally, building a more inclusive, resilient future demands more effective environmental policies, too. Indeed, our progress in going inclusive, creating more and better jobs, and restoring trust is dependent on a safe, healthy environment. Climate change affects all countries, rich and poor, though populations in poor countries have borne a high cost. At the outset of the economic crisis, policymakers everywhere gave lip-service to greener growth, both to make the world cleaner and to tap new sources of growth. But much more progress can and must be made on this front. The cost of inaction is already mounting. It is estimated that US$43 billion worth of economic losses were caused by extreme weather events in 2013 alone.

The OECD has called for achieving zero net emissions during the second half of the century to help countries limit global temperature rises from human activity to 2° Celsius. Tackling climate change is no easy task, but as the UN Intergovernmental Panel on Climate Change reported this April, it can be done without sacrificing living standards. Governments know what they must do to avoid a collision course with nature: remove subsidies that encourage fossil fuels, and make sure price signals encourage businesses to “invest green” wherever they operate.

The crisis has been a wake-up call for us all, reminding us that today’s development challenges are global challenges. The OECD has not shirked from reassessing its analytical frameworks and policy assumptions. Its ongoing reflection is embodied in the New Approaches to Economic Challenges (NAEC) initiative, which will help light a path to a more resilient future. With the OECD Better Life Index, the organisation is developing indicators that go beyond growth to help policymakers and the public better understand well-being.

This year we celebrate the 50th anniversary of Japan’s accession to the OECD. Japan’s journey to becoming one of the largest economies in the world holds lessons that will no doubt nourish debate at OECD Week on 5-7 May, starting at the OECD Forum and feeding into the annual OECD Ministerial Council Meeting. I am delighted that Japan is chairing the 2014 ministerial meeting, thereby adding another chapter to our long history of co-operation.

We are at a critical juncture on the road to recovery. The lessons and challenges before us are all too clear, but so are many of the solutions. Co-operation will be needed, and not just among policymakers. Building an inclusive, resilient world relies mostly on the input of all citizens.

Celebrating Japan’s 50th Anniversary

The climate challenge: Achieving zero emissions

Base Erosion and Profit Shifting (BEPS)

OECD Anti-Bribery Convention

OECD Principles for Enhancing Integrity in Public Procurement

New Approaches to Economic Challenges (NAEC)

OECD Better Life Index

Better Life Initiative: Measuring Well-Being and Progress

OECD Forum 2014 Issues

Ministerial Council Meeting



Angel Gurría, Secretary-General of the OECD 


© OECD Yearbook 2014


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