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15-16 November 2010

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PARIS COUNCIL: global economy - climate change - resolution of conflicts

15-16 November 2010

Speech by Angel Gurría, Secretary General of the OECD
at the Council meeting of the Socialist International, Paris, 15 November 2010

Ladies and Gentlemen:

It is a great pleasure to welcome you to the OECD for the Socialist International council meeting. You have gathered here today to map out strategies for sustainable recovery, to discuss climate change, and address issues related to conflict and fragility. Achieving international consensus on these major issues is no easy task, especially given the current economic situation, which tends to limit resources available for action.

There were many reasons that brought about the crisis of our lifetimes, including regulatory, supervisory, corporate governance and risk management failures. Today, the pace of global economic recovery is slow. Public debt in many countries is set to reach all-time highs, and unemployment remains at unacceptable levels.

Going forward, we cannot rely on the growth paradigm that prevailed before the crisis. To re-boot the economy, we need new sources of growth, driven by innovation and green patterns of consumption and production. A new growth model for the 21st Century requires a strong social dimension. The crisis revealed, in particular, the need for more innovative social policymaking. But in practice, many government responses relied on existing social programmes and approaches, which were simply modified or extended. Unsurprisingly, citizens are concerned and their trust in institutions is shaken. Faced with such challenges, political leaders and the Socialist International in particular, have a mandate for change and a duty to rebuild confidence.

Your meeting comes at an important time. We need to step up our efforts towards a job-rich growth. Leaders at the G20 Summit in Seoul last week expressed their determination to “put jobs at the heart of the recovery, to provide social protection, decent work and also to ensure accelerated growth in low income countries”. They are looking at all of us to provide concrete responses to the many who have lost their jobs and those who are at risk of sliding into poverty and exclusion.

Unemployment is the human dimension of the crisis. Even though labour market conditions have started to improve in most OECD countries, the unemployment rate peaked at 8.5 % at the end of 2009 and is set to fall only slowly, reaching 7.25 % by the end of 2012. The crisis has cost many people their livelihood, especially in emerging and developing economies, where many workers and their families are at risk to slide into extreme poverty.

Although the job losses have affected all social groups, as ever, it is the disadvantaged people in the labour market – youth, low-skilled, immigrants, ethnic minorities and those on temporary contracts – who have borne the brunt. Youth unemployment has increased at a much faster pace than adult unemployment: In many OECD countries one in five youth in the labour market is jobless. We need to take credible and effective measures in order to avoid the risk of a lost generation.

The policy choices are difficult and there is no silver bullet, but first and foremost, governments need targeted programmes for the most vulnerable. OECD analysis and the conclusions of our 2009 Labour Ministerial meeting suggest some key policy measures to help advance towards a job-rich recovery. Support for labour demand should shift from preserving jobs to jumpstarting job creation. Activation strategies, such as training and job-search assistance, should ensure effective support to a large and growing pool of job-seekers, with a special attention to long-term unemployed.

Reducing high youth unemployment should be a centrepiece of such policies. Improving women employment outcomes should be another priority. Wasting their potential is not an option, especially in the context of an ageing workforce. The OECD focuses on gender in many areas of its work, and is now looking at ways to reduce the gender gap with a focus on education, employment and entrepreneurship.

Improving skills and qualifications should be an important part of our efforts to foster a job-rich recovery.

Building on our Innovation and Jobs Strategies, the OECD will develop a Skills Strategy, to help policymakers identify and assess essential skills for the future and ensure “lifelong employability and lifelong learning”. We will also draw on our rich experience in education policies and on-going initiatives, such as the PISA surveys of 15-years-old; the Programme for the International Assessment of Adult Competencies (PIAAC); the New Skills for New Jobs projects. Last but not least, our Green Growth Strategy project will devote a significant attention to the role that labour market and social policies can and should play in assisting workers over the transition to a low-carbon economy.

For those who have lost their jobs, the first line of defence is to secure adequate social safety nets. The OECD has provided useful advice to governments during the crisis recommending expanding benefits where their coverage was weak. We are also working with emerging economies, in which many job losers and low income families are outside the reach of traditional safety nets. There is an urgent need to scale up transfer programmes to needy families, in particular, to low-income households with children, which can be made conditional on school attendance.

The crisis should not be allowed to erode the hard-won achievements, nor diminish people’s attachment to the availability of good healthcare. The clear lesson emerging from our evidence-based analysis and the discussions of the OECD Health Ministerial last October is that safeguarding and improving healthcare is vital for economic growth. Ministers recommended to focus on two fronts, as a matter of priority. Policy should shift the emphasis from volume to quality, by realigning pay incentives for hospitals, doctors and nurses, for instance. Secondly, greater emphasis must be placed on prevention.

The challenges of the crisis have also underlined how important it is to rely on the right set of measures in order to design policies that make a difference. In the task ahead, promoting growth will also depend on our capability to measure progress and well-being. Therefore, the OECD is working on a new generation of statistics, taking into account the social and environmental dimensions of economic development. We will continue our work in this field and will ensure the follow-up to the recommendations of the so called “Stiglitz-Fitoussi-Sen Commission”, convened by President Sarkozy of France.

Before concluding, I would like to commend the resolution of some countries led by members of the Socialist International to address the problems their economies are facing. These are governments that put social policies at the forefront, but that have done what needs to be done to avoid a clash with markets that put their people at a worth situation. Such is the case of Greece, under the leadership of the President of the Socialist International, Mr. Papandreou. Together with Greece, countries like Spain or Portugal took decisive actions which helped them mitigate the worst effects of the crisis. It was not easy, but markets have responded positively to their brave policies.

Ladies and Gentlemen:

Fostering a job-rich recovery, supporting effective labour and social policies, and restoring confidence must be the top priority of governments and political leaders. You can count on our 50-year experience and knowledge to support your efforts to improve the well-being of people by designing better policies for better lives.

As we prepare to launch the celebrations of our 50th anniversary, we are stepping up our efforts to become more relevant in a changing world. We are welcoming new members, developing a more effective and closer relationship with major emerging economies and are working with dozens of other countries in the world in the spirit of co-operation and knowledge sharing. We are contributing to the works by the G20 through our experience in areas such as development promotion, the elimination of fossil fuels subsidies, taxation, anti-corruption, climate change and green growth. On the way back from Seoul, I was also in Venice, where the OECD Public Governance Ministerial meeting is discussing how governments can work to improve public sector efficiency and how they can interact more effectively with markets and citizens to contribute to a stronger, cleaner and fairer economy.

More inclusiveness and greater co-operation are key to avoid another crisis and find new paths towards a job-rich, sustainable recovery for all. This is one of the many reasons why I am so glad to be addressing you here today. We are ready to work with you and all reform-minded constituencies in OECD countries, and beyond.

Thank you for coming to Paris and welcome to the OECD

Thank you.