Keynote address by President of Chile Michelle Bachelet at opening of 2016 OECD Ministerial Council Meeting
It is a great honor for me to chair this Ministerial Council Meeting (MCM) of the OECD for the first time, since Chile joined the Organization in May 2010. Over these six years as a member country, we have been strongly benefited from the policy guidance provided by this organization, and assimilated key lessons from many of the member countries and partners on how to address our common economic and social challenges in the best way. I am confident that we have also contributed to the enrichment of the policy debate within this organization.
We thank the Secretariat and you in particular, Angel, for all the support through this rich and intense journey. My sincere congratulations and good wishes to you on your third term, which has just begun.
I also would like to thank our Vice-Chairs: Japan, Finland and Hungary, for their enthusiastic and constructive engagement in the preparations of this Ministerial meeting.
Global economic recovery around the world remains fragile, and there are important downside risks. Trade and investment flows are weak, and unemployment remains at high levels in many countries. On top of that, income inequality and the lack of opportunities for many, including the most vulnerable, have increased in several countries, while remaining high in others. These economic and social challenges demand decisive policy actions.
The slowdown of the economy is the result of cyclical factors affecting global demand, as well as an important deterioration of our growth capacity. In countries where low growth is the result of weak demand, an appropriate mix of monetary and fiscal stimulus is required.
In parallel, we must accelerate the pace of structural reforms to expand our growth potential. In particular, boosting productivity is the key determinant of growth over the medium and long term. Higher productivity means more and better job opportunities, higher wages and better living standards for our people.
Given this context, this year´s Ministerial Council Meeting theme “Enhancing Productivity for Inclusive Growth” is very appropriate. While raising productivity is a key challenge for all our countries, it is also true that the world has changed.
The increasing complexity of social challenges and the need for policies to adapt to these changes, place the inclusiveness dimension at the core of policy making. Within a framework of increasing inequalities, enhancing productivity for inclusive growth becomes, in our view, an imperative.
All of us must not only contribute to make our economies more productive, but also promote inclusion which allows everyone to reap the benefits of better economic outcomes. Our societies aspire to and deserve more cohesion and wellbeing and its our responsibility to respond to this challenge with creative and innovative solutions.
I would like to highlight three areas, where increasing productivity plays a key role in achieving a more inclusive society.
The first one is preparing our people for work in the future.
A new production revolution is currently taking place, with the ensuing impacts on the economy and society. Technological advancements such as the internet, big data, artificial intelligence and biotechnology are reshaping the concept of work. While some traditional jobs are in danger of being automatized, new forms of flexible work are emerging, creating new opportunities and challenges.
As in the past, technological change will create new sectors and new jobs, providing new opportunities and better living standards for all. Nevertheless, we must anticipate such scenarios and be prepared to deal with the resulting disruptions in the short and medium term.
In order to confront such challenges, we underscore the importance of policies aimed at building the necessary skills, particularly digital ones, that are required to adopt new technologies and adapt to an evolving labor market. Education and training systems must be improved and lifelong learning and training encouraged.
We need to ensure that specific groups, such as women and less skilled-workers, are given the same opportunities as others to participate and succeed in the labor market. We also need to adapt our safety nets to ensure a smooth transition to the new sectors and to preserve the quality of jobs in the case of increasing non-standard work contracts.
Last but not least, collaboration between social partners and social dialogue as a means to enhance productivity while promoting social inclusion is a fundamental piece in this policy response.
The second area is ensuring a level playing field.
Increases in productivity are the result of improved technology, better production processes and more efficient forms of organization at the firm level and within society. For this to happen, it is essential to have strong market competition, which in turn promotes productivity and ensures that more consumers have access to better goods.
Therefore, the best way to take advantage of markets is by enhancing competition.
We must ensure that the regulatory framework allows an efficient allocation of resources across the economy, promotes the adoption of new technologies and new business models, guaranteeing a positive creative destruction.
At the same time, firms with potential should be provided with the opportunity to grow and innovate. To level the playing-field we need to promote access to finance for SMEs (small and medium-sized enterprises), entrepreneurs and young and innovative firms.
Finally, we cannot ensure a level playing-field without due consideration of policies to foster integrity and transparency, in order to curb rent seeking, and avoid corruption.
The third and final area is building cities as a platform of innovation and social inclusion.
Most interactions between consumers, firms, universities and public institutions occur in cities. It is there where most of the exchange of ideas and the innovation process take place. Thus, we need smart cities to promote effective cooperation and creativity. This is a call for our countries to create policies to make our cities attractive places to live and collaborate, and to promote creativity and culture.
To reinforce this process of collaborative creation, we must avoid segregation and provide equal access to quality public services. Efficient transport systems, health services and housing policies, as well as to update digital infrastructure and access to information, just to name a few, can make a crucial difference in the creation and improvement of opportunities for all, contributing to productivity and enhancing inclusiveness.
In this context, we cannot forget that local communities can present different demands and potentialities for boosting productivity. In addition, the success of investment projects that have an impact in local areas can benefit from the participation of local communities.
This challenge requires adapting our policies to local necessities when needed. Skills demand and infrastructure are two good examples. Labor market requirements may vary depending on the local context, while infrastructure development allows local economies to attract investment and to contribute to productivity.
What has Chile recently done to address some of these issues? These challenges are precisely at the core of the government program we have implemented in the last two years. Our goal is to build an inclusive social model, sustained and sustainable growth, and a dynamic and participatory democracy; all pillars that will contribute to make Chile a developed country.
First and foremost, education is at the heart of our changes. We have promoted reforms to strengthen public education and teachers’ skills. Along with ensuring non-discrimination in the school system -until now arbitrarily segregated- we are gradually providing free education for primary, secondary and higher education.
We have adopted a tax reform with a twofold objective: to finance this new way of thinking about education and to make our taxation burden more equitable.
We have also approved a new electoral system to improve competition and representative democracy. Along with it, we have introduced substantive changes in the functioning of political parties and campaign funding mechanisms for politics as a way to tackle our transparency and probity deficits.
As a general framework for this process, we have launched a debate to develop a new Constitution, one that will be legitimate and updated through the broadest citizen participation possible.
These are the most important transformations, but not the only ones. Throughtout this process, we have continually sought the technical support and know-how of the OECD and of our fellow members, many of whom have previously gone through these transformations. They have pointed out the pitfalls, but have also been an example of how equitable and sustainable economic growth can be achieved.
I would like to stress some global challenges that are closely related to the theme of this meeting.
I will start with gender. I am aware of the work the OECD is doing under the umbrella of the Gender Initiative and the role played by this institution to give priority to the gender issue within the G20. Even though these initiatives are remarkable, they are not enough.
We all know that, despite the efforts made, gender gaps still remain. Thus, I encourage all of you to reflect on concrete actions and initiatives, both within your countries and at an international level, so in that way to complement the work already done and bring us closer to meeting SDG 5, to achieve gender equality and empower all women and girls.
I would also like to note the importance of trade for development. Chile is a strong supporter of free markets and trade openness. As a small country, we are convinced that promoting international trade and investment is one of the best ways to stimulate economic growth and thus, provide more opportunities for our people.
We welcome the work done by the OCDE on trade in value added, services and regional trade agreements. We acknowledge the fact that participation of firms in global value chains are key drivers to technology diffusion and look forward to further research and recommendations in this area.
Finally, our work should actively include our communities. People demand more participation and accountability from our governments. This is fundamental to foster confidence in our political system, which also affects investment and economic dynamics. We require strong institutions to promote trust and transparency.
These global challenges - and emerging ones, such as the refugee crisis - require a multidimensional and coordinated response from the international community; a common response that takes into account diverse national contexts.
For achieving this goal, a well coordinated system of multilateral institutions and international cooperation, with broad representation, clear mandates and effective tools is needed. In this context, the OECD plays a very important role as a standard setter of policies based in empirical evidence and reliable comparative data.
Chile welcomes the outreach efforts of the OECD and its objective of bringing global standards and best practices to non-members countries. We welcome the efforts made in this organization to encourage a broader exchange of views to tackle new challenges and to promote multidimensional and horizontal analysis and work.
The results allow us to grasp our complex world and shed light and identify solutions for the problems that hinder prosperity in our countries through the use of new and innovative tools.
We congratulate Latvia on its successful conclusion of its accession process, and hope to welcome Colombia and Costa Rica as the next new members. We are also pleased to be launching the LAC program this evening, aimed at promoting the OECD’s good practices in Latin America and the Caribbean.
Productivity is a multidimensional concept, as it involves doing more and better, being more creative and flexible, and having the capacity to anticipate and lead. This calls for innovation, talent, adaptability, participation, leadership and cooperation.
We are convinced that the productivity challenge can be better addressed by ensuring more and better opportunities for all. By reducing inequalities in areas like access to quality education, training opportunities, healthcare, gender, quality jobs or new technologies, we will bring all on board and benefit from their combined potential and contribution, thus increasing productivity, inclusiveness and growth.
These two days of intensive dialogue will give us an excellent opportunity to reflect on these challenges and strengthen our relationships. We see this MCM (Ministerial Council Meeting) as an invitation to work, cooperate and look for decisive policy responses for today´s challenges and those in the foreseeable future. It’s up to all of us to succeed in promoting better policies for better lives.
Thank you very much.