OECD Observer No 315 Q3 2018

Automation: Policy roundtable on how local firms are adapting p19 Can social mobility be unblocked? p27 A closer OECD-EU relationship? p36 Welcome to the OECD, Lithuania! p38 No 315 Q3 2018

No 269 October 2008

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Crossword p48

Cover story of a crisis

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Immigrants face the crisis Part-time work The income taxes you really pay Economic outlook No 280 July 2010

Confidence

Ministerial roundtable Green collar jobs?

Poverty in work Down to business Myths and migrants Renminbi or dollar?

No 274 October 2009

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The missing factor

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No 272 April 2009

Jobs crisis Policies that work

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Euro spotlight Occupy: Main lessons Huffington on the squeezed middle Generations together?

No 290-291 Q1-Q2 2012

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Gender: Pushing for a change

Ministerial Council and Forum Special 2012

OECD Skills Strategy Tax and inequality Long-term investment

No bonus: Publicis takes a lead Brazil reaches new heights: Special focus No 287 Q4 2011

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Spotlight: Higher education and globalisation Guest minister: UK’s David Willetts Databank: The state’s anti-poverty effect

Inequality

Why the struggle matters

Central banks: False beliefs and unhappy endings Information jobs: Databank Missing entrepreneurs No 305 Q1 2016

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OECD Economic Outlook

Can youth entrepreneurship work?

Spotlight: Ireland’s economy at the cutting edge

Can China’s economy avoid the doldrums?

Banking ethics still in question Trade in Value-Added: A minister’s view No 294 Q1 2013

The future of work

Policies for youth

No time to waste Governments and markets: Time to get serious Bank crisis: Funding the gap Microcredit’s big future No 284 Q1 2011

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Africa’s tax system Greening the OECD Ireland’s economy Special focus: Canada and the OECD

©Serprix.com

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Beyond GDP Your Better Life Index

Development aid’s defining moment

CONTENTS No 315 Q3 2018 www.oecdobserver.org

YOUR VIEWS

ENVIRONMENT

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30 Data vs deforestation: A breakthrough in supply-chain transparency Thomas Sembres, European Forest Institute 32 Protecting our water Gabriella Elanbeck

Defining moments; Teachers’ pay?; Twitterings

EDITORIAL 3

Ten years on: Lessons from a crisis Angel Gurría, Secretary-General of the OECD

NEWS BRIEF 4

Employment surges but wages stagnate; Labour market integration of refugees urged; Boosting future growth today; Soundbites; Economy; Country roundup; Other stories; Plus ça change

BLOGS 6 BlogServer

ECONOMY 7

What have we learned from the 2008 financial crisis?

11 High uncertainty is weighing on global growth Laurence Boone 12 Bubbles in our future? Certainly!

Donald J. Johnston, former Secretary-General of the OECD

TRADE 16 Simpler, clearer, faster, easier: Lower trade costs by cutting red tape Clara Young

SOCIETY & TECHNOLOGY 19 Roundtable: Local firms and automation Lamia Kamal-Chaoui, José António Vieira da Silva, Paola Pisano, Nicolas Hazard, Iris Arbel, Sally Sinclair, Sunil Johal 24 Where are all the women in tech?

Ileana Epsztajn 26 Trappes: A visit to the heart of a community leana Epsztajn 27 No longer burning down the house Lyndon Thompson

www.oecdobserver.org www.oecdinsights.org ©OECD September 2018 ISSN 0029-7054 Tel.: +33 (0) 1 45 24 9112 Fax: +33 (0) 1 45 24 82 10 sales@oecd.org Founded in 1962. The magazine of the Organisation for Economic Co-operation and Development OECD Publications 2 rue André Pascal 75775 Paris cedex 16, France observer@oecd.org www.oecd.org

GOVERNANCE 34 Tunisia’s integrity challenge Amira Tlili

OECD.ORG 36 The EU and the OECD: How a closer relationship could be a winner Philip Pierros, Minister-Counsellor, EU Delegation to the OECD and UNESCO 38 Sveikiname Lietuva˛–Lithuania becomes the OECD’s 36th member country Balázs Gyimesi 39 Recent speeches by Angel Gurría; List of OECD Ambassadors 40 Calendar; Frankie

What have we learned from the 2008 financial crisis, p7

BOOKS 41 Reviews: Migration: Old phenomenon, new policies; Nudging us forward 42 New publications 43 Focus on economics 44 Review: Dealing with dementia

Where are all the women in tech?, p24

DATABANK 45 Employment is back up, but salaries aren’t; Taking inequality out of growth 46 Main economic indicators 48 The low-growth trap; Crossword

On the cover: Poster available on request at observer@oecd.org

Published in English and French by the OECD EDITOR-IN-CHIEF: Rory J. Clarke EDITORS: Ileana Epsztajn, Kate Lancaster, Janine Treves EDITOR, WRITER: Clara Young EDITORIAL ASSISTANT: Cara Yakush EDITORIAL ASSISTANT, WRITER: Balázs Gyimesi WRITERS: Robin Allison Davis, Tomer Michelzon, Anne-Lise Prigent EDITORIAL INTERNS: Gabriella Elanbeck, Murillo Salvador LAYOUT: Design Factory, Ireland ILLUSTRATIONS: David Rooney, Charlotte Moreau ADVERTISING MANAGER: Aleksandra Sawicka

The EU and the OECD: How a closer relationship could be a winner, p36

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Your views

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Defining moments I sometimes wonder why it is not more central in current debate. To my mind, the financial crisis is the defining moment of our time, the beginning of a new period.

Robert Grimm, https://www.linkedin.com/feed/update/urn: li:activity:6445680536093544448 ____ Small enterprises will need reliable and affordable power, internet, capital and know-how (training) to begin this journey.

Larger companies should play a B2B mentoring and financing role.

Steve Rynecki, https://www.linkedin.com/feed/update/urn: li:activity:6440182027395436544

Teachers’ pay?

Dear OECD, I don’t know where you got your data from. I have been working for 29 years and for the last 12 I’ve been paid the same salary (around €1,300 monthly). As you see,

this is a lot less than the values that appear in this study. Best regards,

those institutions do right and what they do wrong–unflinchingly.

Paula Rodrigues, teacher, commenting on Facebook, September 2018

https://twitter.com/inthefloodzone/ status/1031351310665363463

____

Miriam Brett @MiriamBrett In case anyone was under the impression that UK workers are getting a fair deal, here’s a snapshot of OECD wages–or lack thereof, in our case–from 2008 to 2017.

You’ve been lied to, dear OECD. Your report (Education at a Glance) was based on data sent to you probably by our Ministry of Education.

The data you were given nearly doubled what we are in fact paid. I will be happy to provide you my salary sheet.

Pete Ramos, commenting on Facebook, September 2018

Twitterings Ihsan Daemon@daemon_ihsan Never be afraid and bored to convey the truth, so that democracy does not end in vain. 15 September is #DemocracyDay. https://twitter.com/UNESCO/ status/1040850263257567232 JDP @inthefloodzone Are public institutions in fact trustworthy?

That’s their job, not ours. Keep reporting what

Follow us on Twitter @OECDObserver Comments and letters may be edited for publishing. Send your letters to observer@oecd.org

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https://twitter.com/MiriamBrett/ status/1042365668891525120 Ilona Kickbusch @IlonaKickbusch Great to be informed that @OECD is now also working on #HealthLiteracy–great chances for collaboration beyond skill development–especially to spur systems change #RC68Rome. https://twitter.com/IlonaKickbusch/ status/1041662522716241921 Talia Calnek-Sugin @TCS130 New #carbonpricing report from the @OECD finds that few are pricing it high enough to meet #ParisAgreement targets. @ndcpartnership https://buff.ly/2DcSIpp

or post your comments at these portals: www.oecdobserver.org, www.oecdinsights.org, or at the other OECD portals on this page.

EDITORIAL

Ten years on: Lessons from a crisis Only by listening to people can we effectively tackle challenges

Angel Gurría Secretary-General of the OECD

When I was appointed Secretary-General of the OECD in the summer of 2006, it was a pleasant time to be an economist.

The Great Moderation had already solved the problem of having continuous growth while keeping inflation under control.

Deregulation had unleashed the creative energy of the financial system, ensuring that the economy would always have the funds it needed. And the science of economics had finally solved the problem of depressions, according to Nobel laureate Robert Lucas.

At the end of my first year in office, in June 2007, the OECD Economic Outlook stated that: “the current economic situation is in many ways better than what we have experienced in years.”

We were equally optimistic regarding the growing concern about the US mortgage industry. In July 2007, our Update on Financial Market Developments stated that: “While institutions focusing on sub-prime lending have been facing severe difficulties, larger financial institutions–and the financial sector as a whole–seem to have weathered the sub-prime crisis relatively well.”

Well, we all know what happened next: a crisis and a recession with impacts that we are still feeling. A rejection by large numbers of our fellow citizens of the globalisation process, that they see benefiting only the lucky few. And cynicism about the advice of experts. The crisis taught us that mainstream economic thinking, and the models it was based on, did not reflect the reality either of the economy or of people’s lives, and this is why we did not see it coming. We got it wrong!

The traditional school of economic thought essentially sees the economy as a totally understandable machine which almost always operates in a predictable, linear way, guided by policy levers.

The economy is far from a machine. It is a complex adaptive system, with massive interdependencies among its parts and the potential for highly nonlinear outcomes. In such systems, there is no equilibrium to return to.

Our approaches neither anticipated the crisis nor how it would cause an economic recession and how the pain of that recession would provoke social and political crises in its wake. The results,

as we all know, are rising inequalities, a massive erosion of trust in governments and institutions, and growing populism, which is influencing politics and economic policy.

So how might we tilt the odds from disaster to reform? We can begin by not turning a blind eye to the sentiments of people that feel left behind. We must listen to what people have to say. The many people who fell through the cracks of society and who were inadequately protected by the system. People who have seen their living standards stagnate, who live precarious lives, one pay cheque at a time, and whose children do not have equal opportunities to reach their full potential.

They feel that they played by the rules, while others in society didn’t, and that those others have been rewarded. They also feel at the mercy of big impersonal forces–globalisation, technological change, large corporations and financial institutions. They want to regain control.

Only by listening to people can we effectively tackle these challenges, make our societies and economies more inclusive and regain trust. That is why we launched our New Approaches to Economic Challenges Initiative.

We have made some progress. We now systematically consider inclusiveness and green growth in economic policy recommendations and examine the distributional impacts of structural reforms and international trade. We are a global champion of the movement to go beyond GDP, developing measurement tools to capture key dimensions of material conditions and quality of life, focusing on outcomes, opportunities and inequalities, and on resources for future well-being. Our work is helping to improve the lives of workers through the promotion of responsible business conduct. And I could give many other examples.

In his book, The End of Normal, James K. Galbraith states that “the Great Crisis should be seen as a turning point, a barometer of the rise of unstable economic conditions”. Are we missing this opportunity? We cannot afford to!

We are indeed at a turning point. As countries are gradually leaving the crisis behind, we have an unprecedented opportunity to promote profound change which can lead to more inclusive economies and societies. We count on you to work with us and help us in this endeavour by telling us what lessons you have learned from the crisis. You can count on the OECD to continue designing, developing and delivering better policies for better lives.

Adapted from remarks by Angel Gurría, “10 Years After the Failure of Lehman Brothers”, 14 September 2018. Read the full version here: https://oe.cd/2rH @A_Gurria www.oecd.org/about/secretary-general/ www.oecdobserver.org/angelgurria

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News brief Employment surges but wages stagnate Economic growth is picking up and unemployment has reached record lows in some OECD countries, but wages continue to stagnate. Unless countries can break this cycle, public belief in the recovery will be undermined and labour market inequality will widen, according to the OECD Employment Outlook 2018. For the first time, there are more people with a job

today than before the crisis, with some of the strongest improvements having occurred among disadvantaged groups such as older workers, mothers with young children, youth and immigrants.

However, stagnating wages affect low-paid workers much more than those at the top.

See www.oecd.org/employment/

Labour market integration of refugees urged

Soundbites A world that despises the law and a rules-based system as weak and idealistic nonsense becomes an arena where it is everyone for themselves–an arena in which the large achieve what they want, while the small suffer what they must.

German Federal President Frank-Walter Steinmeier at the award ceremony of the Peace of Westphalia Prize, Münster, Germany, 14 July 2018

[…] Nothing is more important than truly effective multilateralism.[…] International law should be the primary yardstick of national interest. Those not so powerful understand it well.

Estonian President Kersti Kaljulaid speaking at the 73rd United Nations General Assembly, 26 September 2018

Tax havens did not provoke the financial crisis of 2008, but the bright light that the crisis shed on them is quite remarkable.

And that’s a good thing!

©Ina Fassbender/Reuters

Joseph Stiglitz, interview with the French news outlet Médiapart, 5 September 2018 (our translation)

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Boosting future growth today Eritrean apprentice (right) in Dortmund, Germany.

Structural reforms could give a sharp boost to living standards, improving GDP per head by as much as 8% under certain conditions, according to The Long View: Scenarios for the World Economy to 2060.

Furthermore, the world’s economic centre of gravity will continue to shift toward Asia, the report says.

Putting in place effective measures to promote labour market integration among the most vulnerable refugees should be accompanied by strengthening policies to support these groups, particularly in terms of training and skills development, the International

Migration Outlook 2018 says. Migration flows to OECD countries have dropped slightly for the first time since 2011, with around 5 million new permanent migrants in 2017, down from 5.3 million in 2016.

See www.oecd.org/migration/

See www.oecd.org/economy/

Economy

quarter of 2018, compared with 2.6% in the previous quarter.

Real GDP growth in the OECD area picked up marginally to 0.6% in the second quarter of 2018, compared with 0.5% in the previous quarter, according to provisional estimates. GDP growth accelerated strongly in the US, to 1%, compared with 0.5% in the previous quarter, and in Japan, rebounding to 0.5%. GDP growth accelerated to a lesser extent in Germany, to 0.5%, and in the UK, to 0.4%. In France, growth was stable at 0.2%, while it slowed marginally in Italy, to 0.2%. Year-on-year GDP growth for the OECD area continued to slow marginally, to 2.5% in the second

The OECD’s composite leading indicators point to easing growth momentum in the OECD area as a whole. By using data from the likes of order books, building permits and long-term interest rates, these leading indicators help anticipate trends and turning points in the economic cycle.

Easing growth momentum is anticipated in large European economies including France, Germany, Italy and the euro area as a whole, as well as in the UK.

Energy prices rose by 11.1% in July, compared with 10.4% in the year to June, while food price inflation was stable at 1.8%. Excluding food and energy, OECD annual inflation increased to 2.1% in July, compared with 2.0% in June 2018.

OECD-area inflation increased to 2.9% in July 2018, compared with 2.8% in June.

The OECD unemployment rate was stable at 5.3% in July 2018.

Across the OECD, 33.5 million people were unemployed, 0.8 million more than in April 2008. In the euro area, the unemployment rate remained stable at 8.2% in July. Outside Europe, the unemployment rate fell by 0.2 percentage point in Canada, to 5.8%, and by 0.1 percentage point in Mexico, to 3.3%,

NEWS BRIEF

Country roundup

Short-term prospects for the Korean economy are good, but productivity remains relatively low, and the country faces the most rapid population ageing in the OECD area. www.oecd.org/korea/ Norway’s law enforcement institutions have demonstrated commitment and ability in combating foreign bribery.

Its new Penal Code, however, could create obstacles to enforcement. www.oecd.org/norway/ Germany continues to demonstrate a high level of anti-bribery enforcement.

However, there are concerns that there is insufficient enforcement against companies. www.oecd.org/germany/ The European economy is growing robustly. The current economic expansion should be used to speed up implementation of reforms to the euro area architecture. www.oecd.org/eu/ Hungary has made progress in greening its economy and cutting emissions, but it needs to speed up efforts to replace fossil fuels with renewable energy sources and promote sustainable transport. www.oecd.org/hungary/ Lithuania’s economy has grown faster than most other OECD economies over the past decade, unemployment continues and the US, to 3.9%. It increased by 0.1 percentage point in Japan, to 2.5%, and Korea, to 3.6%.

International merchandise trade among G20 countries, seasonally adjusted and expressed in current US dollars, contracted in the second quarter of 2018 following eight consecutive quarters of growth. G20 exports declined by 0.6% and imports by 0.9%.

Laurence Boone has taken up her duties as new Chief Economist of the OECD at the end of July, replacing Catherine Mann.

©OECD

Sweden’s efforts to embrace the shift to digital have been a key driver of economic growth, yet more needs to be done to get remote areas of the country online, and meet security and privacy challenges. www.oecd.org/sweden/

to fall and public finances have stabilised after a long period of deficits. www.oecd.org/countries/lithuania/ With the Czech economy thriving, efforts should now focus on boosting workforce skills and innovation to improve labour supply and productivity, further reduce poverty and inequality, and green the economy. www.oecd.org/czech/ Canada scores highly in all dimensions of the OECD’s Better Life Index, especially in regards to self-reported well-being, personal security and health status. www.oecd.org/canada/ Armenia has continued to reform its anti-corruption legislation and institutions over the past four years. However, a lack of enforcement remains a serious concern. www.oecd.org/countries/armenia/ Finland should offer labour-marketoriented integration support to all migrants, strengthen efforts to identify and address early vulnerabilities, and work more closely with employers. www.oecd.org/finland/ The OECD welcomes France’s recently announced plans to increase its foreign aid flows, particularly in the form of grants, and prioritise the most fragile countries. www.oecd.org/france/

Consumer prices, selected areas July 2018, % change on the same month of the previous year % OECD total 12.0 10.0 8.0

All items

6.0

Food

4.0

Energy

2.0 0.0

All items non-food, non-energy

Other stories Global agricultural production is growing steadily across most commodities, reaching record levels in 2017, according to the OECD-FAO Agricultural Outlook 2018-2027. But an enabling trade policy environment is still needed, particularly in light of farming’s role in promoting food security, the report says. See www.oecd.org/agriculture/ The normalisation of monetary policy in a context of growing debt will test the safety of the financial system, notably in regard to the Basel III reforms, the OECD Business and Finance Outlook 2018 says. The report focuses on China’s Belt and Road Initiative, and calls on cross-border investment projects to be viable and cost effective.

See www.oecd.org/finance/ Countries have used recent tax reforms to lower taxes on businesses and individuals, with a view to boosting investment, consumption and labour market participation, continuing a trend that started a couple of years ago, according to OECD Tax Policy Reforms 2018. The average corporate income tax rate across the OECD has dropped from 32.5% in 2000 to 23.9% in 2018. See www.oecd.org/tax/

Plus ça change…

In future, it will be difficult to even understand the problems faced by developed societies without taking account of the interaction between changing values […], the conditions for macro-economic growth and structural adaptability. Structural adaptability is meant to include all questions having to do with the redistribution of people between different geographical areas and activities, the expansion of certain economic sectors and the decline of others, changes of use of a nation’s territory, etc.

“Interview with Jacques Lesourne, Director of Interfutures Project”, in Issue No 100, September 1979

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BLOGS

BlogServer Rising financial integration amplifies the global impact of financial market shocks Nigel Pain and Véronique Salins, OECD Economics Department

Stronger cross-border economic and financial integration implies that macroeconomic shocks in one country are increasingly likely to spill over into other economies. This is particularly true in national financial markets, where developments increasingly reflect common underlying factors, as shown in the special chapter of the latest OECD Economic Outlook. Thus, a change in risk sentiment in a major market, such as the US, may spread quickly to other markets, with implications for activity and economic policy.

From OECD Ecoscope. More here: https://bit.ly/2Qoe5JT

Special needs students still struggle to access quality education Aakriti Kalra, OECD Directorate for Education and Skills

Does public spending foster inclusive growth in your country?

Debbie Bloch, OECD Economics Department

Governments today need to balance the policy goals of boosting economic growth and improving equity when making budget decisions. How can public spending choices promote inclusive growth? What can be learned from previous spending decisions in times of crisis?

From OECD Ecoscope. More here: https://bit.ly/2KGdRZb

Ten years after the failure of Lehman Brothers: A wasted crisis?

Diane Coyle, Bennett Professor of Public Policy, University of Cambridge

A familiar cliché tells us that a crisis is too good to waste, but a decade on from the collapse of Lehman Brothers, and subsequent multi-billion dollar taxpayer bailouts of banks around the world, it seems that is exactly what happened. The opportunities for reform offered by the 2008 financial crisis have largely been wasted.

From OECD Forum Network. More here: https://oe.cd/2qx

Why apprenticeships are a “win-win” for companies and employees Amar Toor, OECD Directorate for Education and Skills

As the founder and executive director of the Global Apprenticeship Network (GAN), Shea Gopaul spends a lot of her time thinking about the future of work. Artificial intelligence (AI), machine learning and emerging technologies have dramatically altered the skill sets that employers seek today, and the career paths for young adults today look increasingly unclear. But Gopaul thinks apprenticeships can help–both for recent graduates who may be unsure of their next steps, as well as for older adults looking to adapt their skill sets to a fast-changing market.

From OECD Education & Skills Today. More here: https://bit.ly/2P7o6ri

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It is a shared international understanding that access to education is a human right that must be guaranteed for all children. Yet barriers to access and quality have made education elusive for the world’s 93 million students with special needs.

From OECD Education & Skills Today.

More here: https://bit.ly/2QTDhoY

Ten years after the failure of Lehman Brothers: Things are better–unless you are young Anna Widegren, Secretary General, European Youth Forum

Ten years after the financial crisis, it is true that youth unemployment is decreasing: in July 2018, the EU rate for youth unemployment was at only 15.8%. Though lower than it has been in years, it is still double what it was before the financial crisis, and in many countries it is still at least one fifth of the youth population. It is clear that young people are still suffering the adverse impact of the global financial crisis and the subsequent policies of austerity put in place to mitigate its effects.

From OECD On the Level. More here: https://bit.ly/2A3MpB6

Why do some countries reduce poverty faster than others?

Antonio Savoia, Global Development Institute and Effective States and Inclusive Development Centre, University of Manchester, and M. Niaz Asadullah, Faculty of Economics and Administration, University of Malaya; Global Development Institute, University of Manchester

Can poverty be eradicated is the biggest question for development.

Progress in poverty reduction was a central success with the Millennium Development Goals (MDGs): estimates suggest that as many as one billion people were lifted out of poverty.

From OECD Development Matters. More here: https://oe.cd/2qy

These extracts from blogs appeared in Q3 2018 and courtesy of OECD Forum Network, OECD Insights, OECD Education & Skills Today, OECD Ecoscope, OECD On the Level, Wikigender, Wikiprogress and other content and social media platforms managed by the OECD.

ECONOMY

Infostory

What have we learned from

View videos and other content online. https://oe.cd/2m5

the 2008 financial crisis? rver.org

ober 2008

No 269 Oct

bse www.oecdo

OECD Observer cover October 2008, issued just after the fall of Lehman Brothers

OECD Observer No 315 Q3 2018

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10 YEARS AFTER THE CRISIS

The 2008 financial crisis damaged people’s lives, the economy and economics itself 2008 was a shock to the system and a wake-up call…

Showing us that that conventional economic analyses and models were insufficient to address the complexity of the modern global economy.

Economists didn’t see it coming…

And those who did couldn’t prevent it. Although many economists–including at the OECD–realised that the crisis was the worst since the Great Depression, few expected the costs to be so great or the scarring effects to last quite this long. A return to “business as usual” would not be an option.

What we said then: ©Eduardo Munoz/Reuters

Angel Gurría, Secretary-General of the OECD, “From the financial crisis to the economic downturn”, in OECD Observer No 269, October 2008, http://oe.cd/obs/2sp

The crisis changed our lives Inequality has widened…

The social safety net has frayed as government budgets came under pressure. Even the skilled middle classes have felt the squeeze, whereas the very top earners have become wealthier.

Meanwhile the crisis has stripped away at the savings of older generations.

What are people worried about? Watch our video, www.youtube.com/watch?v=Sv3qCvzBArQ&feature=youtu.be Compare your income at www.compareyourincome.org Learn more at https://data.oecd.org/chart/5hnb How’s Life? 2017: Measuring Well-being, OECD Publishing 2017, Paris, http://oe.cd/il/2sp Wealth inequalities: measurement and policies, OECD Publishing 2018, Paris, http://oe.cd/2sp

Angel Gurría, “The confidence factor”, in OECD Observer No 280, July 2010, http://oe.cd/obs/2sq Alice Pittini, “A home truth: We need better quality and more affordable housing”, OECD Insights blog 2017, http://oe.cd/2sr “Inequality rising in wake of crisis”, OECD Insights blog, 2013, http://oe.cd/2ss

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©Brendan McDermid/Reuters

What we said then:

ECONOMY

Who can we trust?

People are losing confidence Our system failed to protect people from the crisis.

Both traditional national political institutions and the international bodies such as ours, which make up the multilateral system, are being questioned, while voters are resorting to nationalism and isolationism. Yet, today’s global challenges demand collaboration among our countries and our people.

Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust, OECD Publishing 2017, Paris, http://oe.cd/il/2st What we said then: Angel Gurría, “Building our future together”, in OECD Observer No 284, Q1 2011, http://oe.cd/obs/2su

©Issei Kato/Reuters

Anthony Gooch, “Bridging divides in a post-truth world”, in OECD Yearbook 2017, http://oe.cd/2sv

The economy has profoundly changed Jobs are different and may pay less While employment is historically high in most OECD countries and the average unemployment rate is back to where it was before the crisis, wage growth remains sluggish and the quality of jobs shows little sign of improvement.

Self-employment, part-time and temporary work are all on the rise.

Claire Keane, “From crisis to recovery: Overcoming scars and social costs”, in OECD Observer No 305, January 2016, http://oe.cd/obs/2sw

Technology influences everything Technology is changing how we work as well, including automation, which is predicted to replace as many as 14% of jobs and to significantly change another 32%.

©Foxy Burrow/Shutterstock

“Putting faces to jobs at risk of automation”, Policy brief on the future of work, OECD Publishing 2018, Paris, http://oe.cd/2sx Andy Wyckoff, Director, “Digital economy: Why a brighter future could be in our pocket”, in OECD Yearbook 2016, http://oe.cd/obs/2sy Vincenzo Spiezia, “Jobs and skills in the digital economy”, in OECD Observer No 307, Q3 2016, http://oe.cd/obs/2sz

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10 YEARS AFTER THE CRISIS

How the crisis changed the OECD People and planet at the heart From early on in the crisis, the OECD began changing its mission by putting people at the centre of its work. By 2011, “better policies for better lives” became our leitmotiv, shifting from promoting growth to focus on well-being. We began placing more emphasis on addressing inequality in income, wealth and opportunity, and the goal of a sustainable, healthy environment for better lives.

Visit the OECD Better Life Index: www.oecdbetterlifeindex.org Learn more about the OECD Inclusive Growth initiative: www.oecd.org/inclusive-growth Learn more about the OECD and the Sustainable Development Goals: www.oecd.org/dac/sustainable-development-goals.htm Visit the Green Growth Knowledge Platform: www.greengrowthknowledge.org What we said then: Justin Dupré-Harbord, “The Happy Country”, in OECD Observer No 300, Q3 2014, http://oe.cd/obs/2sA Anthony Gooch, “Is there more to life than football?, OECD Insights blog, 2014, http://oe.cd/2sB

New models and approaches A centrepiece in our efforts was the launch of our New Approaches to Economic Challenges (NAEC) initiative in 2012, to reflect on the lessons of the crisis, challenge old paradigms and update our analysis and mindsets, to promote inclusive growth, and to adapt our thinking on policy and data, so as to reduce the risk of another crisis.

Learn more about the OECD New Approaches to Economic Challenges initiative at www.oecd.org/naec

©Salome Suarez

New Approaches to Economic Challenges: Towards a new narrative, OECD Publishing 2017, Paris, http://oe.cd/il/2sC What we said then: Gabriela Ramos, “We need an empowering narrative”, OECD Insights blog, 2017, http://oe.cd/24u

Engaging with the global community Anticipating challenges, building resilience The OECD is playing a leading role in pushing the debate forward in the economic policy community, both among academics and in international institutions and think tanks.

Dialogue and engagement: People matter As a forum in which governments and partners work together, we are stepping up our collaboration with civil society, business and trade unions, and reaching out to a wide range of citizens in more and more regions and countries. Only through international co-operation can we achieve real, sustainable progress.

Learn more about the OECD and the G20, visit www.oecd.org/g20 Visit www.oecd.org/forum Read the full online version, including video and data visualisation, at https://oe.cd/2mk

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©Francois Guillot/AFP

Raising the bar Our global economies need to be shaped to ensure that prosperity is more evenly shared and that economic and technological progress benefit all.

ECONOMY

High uncertainty is weighing on global growth Laurence Boone, OECD Chief Economist

corporate debt. Less regulated shadow banking has expanded rapidly. In some countries, equity prices and housing markets are further cause for concern

Less than 6 months ago, the global economy enjoyed healthy synchronised growth. Now, the landscape has changed. Global growth is hitting a plateau, uncertainties over the path forward abound, and risks from trade restrictions and tighter financial conditions have already started to materialise in some countries.

In light of the many risks, what should policymakers do?

The immediate priority is to preserve business confidence and investment by reducing policy uncertainty–including by restoring international dialogue. Enhancing resilience is also key in the financial sector as well as, in the case of Europe, by completing the banking union launched in 2012.

Global growth is projected to be at 3.7% in 2018 and 2019 in our latest Interim Economic Outlook, which remains an elevated pace.

At the same time, it also reflects weaker prospects than anticipated just a few months ago, and some fragilities. Growth performance has become less synchronised across the world: while it remains strong in the US, India and China, it has faltered in many other economies. Unemployment has continued to decline and is now below its pre-crisis level in the OECD, but wage growth remains persistently weak, raising uncertainties about how much spare capacity remains in the labour market.

In other words, many workers would like to work more hours in Europe, or have left the labour force in the US, fueling poor well-being perceptions.

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At the same time, to foster thriving societies and provide a durable response to political tensions, structural policies should focus on ensuring all people have access to better opportunities.

In the long term, the keys to healthy productivity gains and growth that benefits all lie in quality education, from early childhood to lifelong learning, and in offering better support for all workers to find good and fulfilling jobs. This is vital to reduce political uncertainty in a sustainable manner.

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This article was originally posted on 20 September 2018 by OECD Ecoscope.

70 Read the full version here: 60 https://oecdecoscope.blog/2018/09/20/high-uncertainty-is-weighing-on-global-growth/

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The consequences of rising trade restrictions are already visible.

World trade in goods has markedly slowed in recent months, with acute impacts in the sectors directly targeted. Down the line, higher tariffs mean higher prices for consumers, less investment and fewer jobs for workers, and ultimately losses in productivity and standards of living.

Arrivals in 2016, in millions

More worryingly, risks–trade, emerging economies’ sensitivity to tightening financial conditions, politics, finance–are intensifying, casting shadows over the outlook for the coming months and years.

In case risks materialise further, there is little space left for monetary policy to react in advanced economies. This makes it all the more important for countries currently enjoying strong growth not to widen fiscal deficits, but instead to rebuild room for manoeuvre and expand public investment to shore up the foundations for sustained growth for all.

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As we mark the tenth anniversary of the financial crisis, there is no denying that some lessons have been learned: banks are now better capitalised, and financial regulation has been stepped up thanks to a large extent to international coordination. But in other areas, financial risks have built up again. Debt has reached unprecedented highs, particularly in the public sector and for

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In Europe, political risks could harm growth and social cohesion.

Brexit is an obvious source of uncertainty. As for Italy, public finances need to respect EU rules and ensure debt sustainability while privileging productive investments badly needed to raise growth. More largely, the EMU policy framework needs to be strengthened to enhance confidence, growth and ensure the euro area thrives as it should.

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Another risk that has started to dent growth is, in emerging market economies (EMEs), the effect of rising interest rates and US dollar appreciation. Floating exchange rates have played their cushioning role which has limited contagion so far, but measures to ensure persistent macroeconomic policy credibility and resilience in more vulnerable economies are essential to safeguard financial stability.

Note: Estimates based on data for 2014 or 2015 Source: OECD Science, Technology and Industry Scoreboard 2017: The Digital Transformation

OECD Observer No 315 Q3 2018

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Bubbles in our future? Certainly!

©Gwion Moore/Reuters

Donald J. Johnston, former Secretary-General of the OECD, 1996-2006

Last stand: this photograph became an icon of the crisis, and shows bankers attending an emergency meeting at the London office of Lehman Brothers as the firm slid towards collapse, 11 September 2008.

Have we learned the lessons of the 2008 crisis? Could a new bubble form and burst? This chapter from Donald Johnston’s 2017 book, Missing the Tide: Global Governments in Retreat, provides food for thought.

In October 2008, Alan Greenspan called the credit crisis caused by a housing bubble a tsunami that would only occur once a century. Not long ago he could have made a similar comment about asset bubbles, which historically were decades and even a century apart.

The derivative fiasco Yet we have witnessed two bubbles within a decade: the dot-com bubble at the turn of the century and then the American housing price bubble, which had global economic consequences because of the international marketing of derivatives secured on overvalued assets, notably the subprime mortgages of American homeowners. The credit crisis Greenspan spoke about was not a direct product of an

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asset bubble but rather the impact on lenders who had bet on such derivatives for better rates of return during a period of very low interest yields on conservative debt instruments. Japanese banks suffered in the same way in the 1990s after they loaned massive amounts of capital secured on highly inflated real estate values. Fortunately, those Japanese debt instruments were not engineered into derivatives and marketed around the world. When lenders are faced with writing off massive amounts of such bad debts, their capacity to meet obligatory reserve requirements and the borrowing demands of others, such as small- and medium-sized businesses, dries up. Economic activity is stifled and jobs quickly disappear. All enterprises dependent on credit suffer, so the economy-wide knock-on effect is dramatic.

The more recent economic downturn in Spain was similar to that in Japan, with the accumulation of non-performing bank

loans in the real estate sector. The capacity to lend disappeared and the lack of credit facilities carried economywide consequences. The tsunami to which Greenspan referred was of a different order of magnitude because it was rooted in sophisticated financial engineering that created derivative instruments secured largely on overvalued subprime mortgages of American homeowners and widely marketed both domestically and internationally.

Globalisation of financial markets carries serious risks because the seamless integration of these markets enables contagion to find a convenient path across continents and the globe. Some economies, such as the Korean one, escaped much of the damage from the subprime crisis because their financial markets were not as integrated internationally as many others. Greenspan resisted the regulation of financial derivatives and considered that they had made the banking system more resilient as evidenced in part by the fact that they remained robust despite the collapse of the dot.com bubble. In remarks to the Futures Industry Association on 19 March 1999, he commented on derivatives in the mid-1990s: “The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it.” He believed that the burden of regulating these instruments would reduce their attractiveness.

However, in 2008, as the economic consequences of these widely held derivatives became evident, he had this to say to the House Committee on Oversight and Government Reform, as I noted in Chapter 6 [see reference]: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”

ECONOMY

Is an unintended result of the derivative market the creation of more and more risk by those who sell such instruments knowing they will not be holding the risk themselves? Would they have had more incentive to confirm the creditworthiness and asset values of the original borrowers had at least some of that risk remained on their balance sheets? Is that not an important element of what we witnessed with the subprime crisis? Creators and sellers of such derivative instruments should continue as guarantors, jointly and severally, of the underlying value, just as endorsers of a cheque or bill of exchange do.

Ottoman tulips and historical precedents Returning to the question of bubbles, how does one foresee that there is a bubble destined to collapse? And is there some commonality between historical bubbles from which lessons can be drawn that raise red flags for investors?

Consider the tulip bubble of the 17th century. The Ottoman Empire supplied the first exotic tulip bulbs to the Netherlands at the end of the 16th century. The Dutch appetite for exotic tulips was the foundation for economic history’s first infamous bubble. At the height of the bubble, we are told that an Amsterdam man was offered, but refused, 3,000 guilders–the annual income of a wealthy merchant–for a remarkable tulip bulb called Semper Augustus. To put it into perspective, shortly thereafter Rembrandt received about one half as much for painting “The Night Watch”, which remains a highlight of the Rijksmuseum in Amsterdam.

It was reported in The Economist of 4 October 2013 that in the 1630s a sailor was thrown in a Dutch jail for eating what he thought was an onion. It was in fact a tulip bulb. Apparently the value of that supposed onion equalled the cost of feeding an entire ship’s crew for a year. This craze ended–the bubble burst–with the collapse of the tulip market in 1636–37.

The next major bubbles, John Law’s Mississippi Bubble in France and the South Sea Bubble, occurred almost a century later.

Beware greater fools We have witnessed how the theory of the “greater fool” plays out in bubble creation, with each investor trapped between the emotions of greed and fear, and thinking there will always be a greater fool to take his or her position. For example, the great Sir Isaac Newton was caught in the South Sea bubble. An early investor, he sensed that a crash was ahead and became fearful; he bailed out, allegedly realising a then-handsome profit of 7,000 pounds.

As he watched the stock continue to rise, greed apparently overtook Newton and he repurchased stock, ultimately losing some 20,000 pounds as the bubble collapsed. I cite the example of Newton to illustrate how irrational exuberance can take over the most rational of minds.

Identifying bubbles: art or science?

There are strong analogies between the dot-com bubble of recent years and the South Sea bubble, and for that matter the stock market crash of 1929 where in two months the market lost 40% of its value and by the end of the crash, three years later, was down nearly 90% from its 1929 high.

Some economists say that a bubble occurs when the price of an asset, such as shares, exceeds the intrinsic underlying value of the company. Some define intrinsic as the value of an object, good, or service contained in the item itself. I find this an area of considerable difficulty when one talks, for example, of fundamentals such as the price-earning ratios in a particular sector as a yardstick of values. But often the shares rise far beyond that in anticipation of future earnings, which may never be realised.

Look at the situation with the dot-com phenomenon. In many cases there were no earnings at all, just irrational expectations. In some instances those anticipations may turn out to have been

a great investment opportunity. Think back to the initial scepticism about the price of Google shares, which were issued in 2004 at $85 and hit $700 in late 2007.

As a contemporary example, gold prices have been very volatile since 2000, rising to about $1,900 per ounce and then falling back to less than $1,100 before achieving a modest recovery. In 2001 gold was less than $300 per ounce. Is this not a bubble in line with the tulip craze of the 1600s?

What is the intrinsic value of gold today, beyond its use in commercial metal applications? At least a tulip bulb is edible, as the imprisoned Dutch sailor proved.

Many American workers and their families who had not seen meaningful income increases for many years probably relied on “bubble equity” in then-current home values to finance their children’s education or purchase consumer products that they could otherwise not afford. There was certainly a strong incentive to do so.

I conclude that most bubbles are identifiable only with hindsight. Most economists failed to predict the collapse of the housing market in the United States that began in the summer of 2006. I referred in chapter 6 to Larry Summers’ assertion in January of 2006 that there was no housing bubble in the United States. Because greed is a basic component of human nature, I believe there will always be irrational bubbles chased by investors trying to catch them as they inflate, knowing full well that collapse may lie ahead but hoping it comes after they have made a profitable and safe retreat by benefiting from the greed of the greater fool.

Excerpt adapted especially for the OECD Observer from Donald J. Johnston’s 2017 book, Missing the Tide: Global Governments in Retreat, published by McGill-Queen’s University Press. Readers can order their copy at www.mqup.ca/missing-the-tideproducts-9780773549715.php?page_id=73& Mr Johnston was secretary-general of the OECD from 1996-2006. Prior to that he was a lawyer and politician, spent 10 years in the Canadian parliament and served as a cabinet minister. Read his bio here: https://oe.cd/djj.

For OECD Observer articles by Mr Johnston, see www.oecdobserver.org/donaldjjohnston Share article at https://oe.cd/obs/2rh

OECD Observer No 315 Q3 2018

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How do you measure

a Better Life?

For nearly a decade, the OECD has been working to identify societal progress – ways that move us beyond GDP to examine the issues that impact people’s lives. The OECD’s Better Life Index is an interactive tool that invites the public to share their thoughts on what factors contribute to a better life and to compare well-being across different countries on a range of topics such as clean air, education, income and health.

Over five million visitors from around the world have used the Better Life Index and more than 90 000 people have created and shared their personal Better Life Index with the OECD. This feedback has allowed us to identify life satisfaction, education and health as top well-being priorities. What is most important to you?

Create and share your Better Life Index with us at: www.oecdbetterlifeindex.org

The OECD Better Life Index enables you to rate countries according to the importance you give 11 topics. Each petal of the flower represents one topic and the size of the petal the country’s rating for that topic.

Find out more about how life compares in OECD countries by ordering the book How’s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop

Simpler, clearer, faster, easier: Lower trade costs by cutting red tape

©London News Pictures/ZUMA/REA

Clara Young, OECD Observer

Several years ago at an informal gathering, a colleague of mine asked a senior representative of a major tractor manufacturer why she valued a particular OECD testing standard so much. Her response cut to the point: “Heck, your OECD standard stamped on our tractors gets our product through customs faster, and saves us weeks and dollars.”

The standard in question concerns tractor safety guidelines which for half a century have reassured buyers and farmers. And being a harmonised technical standard that people

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recognised, it had the extra advantage of oiling the flow of those goods through the border, saving everyone time and money. This is what common standards do: they help build trust and facilitate smoother trade. Beyond technical standards, there are many other ways of facilitating trade too, such as by removing red tape and simplifying bureaucracy in customs, and these are increasingly being addressed by bodies such as the World Trade Organization (WTO), with the prospect of gains for everyone. Indeed, if there is a bright light still shining over today’s stormy seas of international commerce, it is the WTO’s

trade facilitation agreement (TFA), which came into force in February 2017. Its logic is simple: by cutting red tape, and harmonising and automating border processes, goods will move in and out of countries faster, and trade costs will fall. How much? By between 14 and 18%, the OECD estimates, especially for middle and low-income countries.

This means that “Made in the World” goods like your smartphone become easier and cheaper to produce. After all, when the circuitry in your phone depends on rare earth minerals from the Congo, the touchscreen is engineered

TRADE

in Korea, the glass is manufactured in Chinese Taipei, the semiconductor chip and processor is made in the US, the gyroscope in Switzerland, and the whole thing is put together in China before being shipped out across the globe, the last thing anyone needs is for something to be held up at customs because someone, somewhere along the supply chain, provided an authenticated copy of a document instead of the original. Over half of goods transiting across borders

This is what common standards do: they help build trust and facilitate smoother trade are not shelf-ready products but partiallyfinished goods that move from one country to another on a round-the-world conveyor belt, often within multinational firms. Making cross-border movement smoother would increase these valueadded trade movements by up to 3.5%, especially in the tech sector.

With potential gains like this, most of the WTO’s 164 countries have ratified the Trade Facilitation Agreement, which was hailed as the organisation’s “most significant multilateral trade deal” since its creation in 1995.

But will it actually work and lead to more trade? To help answer this, the OECD has been accumulating data to monitor progress and identify problem areas to address.

The good news is that some of the most impactful trade facilitating measures are relatively inexpensive to implement, with set-up costs between €3.5 million and €19 million, and annual operating costs of no more than €2.5 million. The not-so-good news is that the co-operation required to put most measures in place still has a long way to go both domestically and internationally.

Take the different agencies operating within a country. One of them processes the movement of goods through its

borders and collects government revenues on imported goods, another protects national security, and yet another public health. Co-operation among different countries is also tough, not least, in today’s charged atmosphere.

And yet, more co-operation is needed to simplify and harmonise trade documents, automate border procedures, and make information widely available to traders.

Is there a single portal, a “Single Window” IT system, for instance, through which traders can submit all their documents and which all agencies share? Can papers be processed before goods arrive at the border? If there is a problem, can employees at all the agencies involved co-ordinate so they can resolve the problem right away? The stumbling blocks may seem mundane but are hard to budge, perhaps reflecting old habits, or fear of relinquishing control, or simple skills and logistical challenges in merging priorities, intelligence and risk management with other agencies. One important step the OECD urges is to set up a legal and regulatory framework that lays out the responsibilities and tasks of each agency, or, perhaps, to establish a new agency that centralises domestic border management. Such a framework should also clarify how information and control functions should be shared.

Personnel training is important; so is creating a culture of agencies working together to bolster trust and confidence.

Exchanging liaison officers and setting up joint task forces help. So can collaborating on, say, developing one-stop border posts like those between Norway and Sweden or Zambia and Zimbabwe. Even though extremely challenging, combining border management between two countries and physically carrying it out in one place is more efficient than doing it twice, and it brings people together too.

Co-operation is key but so is predictability and transparency. Traders want to know what customs duties, transit fees and charges are ahead of time, and whether they will change. The same goes for

advance rulings, which boost trade expediency and lower costs enormously.

These decisions–valid for a set time period–establish which category a particular item will fall under, thus determining, for example, what kind of tariff it is subject to or even if it can be exported. For example, if you are exporting petroleum gas, you might want to seek an advance ruling on whether the authorities consider it a dual-use product, in which case, it would not be allowed out of the country.

The important thing is to know how the good you are bringing into or out of the country will be treated and processed well before it’s at the border.

Global trade, while vital for economic and social progress, is a controversial subject, as heated debates about jobs, protectionism and fairness show. The one thing everyone does agree on is that people benefit from goods crossing borders faster and more easily. Procedures that are simple, harmonised, predictable and transparent bring down costs the most dramatically. The OECD has calculated that a 1% reduction in trade costs worldwide would save US$40 billion for businesses. To repeat: fully-implemented trade facilitation brings down costs by up to 18%. You do the maths.

References and links OECD (2018), Trade Facilitation and the Global Economy, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264277571-en.

World Bank (2018), “WTO’s Trade Facilitation Agreement and Doing Business reforms: Are they related and how?”, blog dated March, at http://blogs.worldbank.org/ developmenttalk/wto-s-trade-facilitation-agreement-anddoing-business-reforms-are-they-related-and-how EC (2017), “EU welcomes entry into force of the WTO Trade Facilitation Agreement,” European Commission communiqué, at http://europa.eu/rapid/press-release_IP17-188_en.htm WTO (2017), “Trade facilitation” at https://www.wto.org/ english/tratop_e/tradfa_e/tradfa_e.htm Moïsé, Evdokia and Silvia Sorescu (2016), “Trade Facilitation and Integrity Go Hand in Hand? More than you think”. OECD Insights blog, 8 April, https://oe.cd/2ji Share this article at https://oe.cd/2kq

OECD Observer No 315 Q3 2018

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SOCIETY & TECHNOLOGY OECD Observer Roundtable

OECD Observer Roundtable on local firms and automation

©Milan Bures/The New York Times-REDUX-REA

Roughly 14% of jobs in OECD countries are highly automatable, while another 32% will be transformed by automation. By 2019, it is estimated that 1.4 million new industrial robots will be installed in factories around the world. How can local firms and their workers adapt to this?

How can policy help? As policymakers and experts gather to discuss such issues at the 14th OECD Forum for Local Development Practitioners, Entrepreneurs, and Social Innovators in Porto, Portugal, 18-19 September 2018, we ask our panel: How have local firms and their workers been adapting to automation? How can policy help?

A worker in a state-of-the art factory, in Slany, Czech Republic, March 2018.

Left behind or leapfrogging ahead?

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Lamia Kamal-Chaoui, Director, Centre for Entrepreneurship, SMEs, Regions and Cities

Many people are worried about their job security today and their job prospects for tomorrow. Some live in places that have experienced long-term decline, and they are looking for answers. Often they think the culprit is globalisation. We have seen this view play out at the ballot box.

However, many of the changes people are experiencing are really about technology.

It has considerably altered the nature of some jobs and made others entirely obsolete. Such processes have been taking place for decades, even centuries.

Technological innovations such as automation and digitalisation generate new jobs and can contribute to better

living standards. But will this new future of work bridge or increase divides among people? Which workers will be replaced by robots and artificial intelligence? How can we adapt to and take advantage of technological change in such a way as to take on quality jobs? And how will these changes play out in different places? The political challenge today is to narrow the gap between those being left behind and those leapfrogging ahead. And there’s a geographical dimension to that disparity too: many leapfroggers tend to live in urban centres.

A new OECD report, Job Creation and Local Development 2018: Preparing the Future of Work, shows that automation will have an uneven impact across regions. The share of jobs at high risk surpasses 30% in some OECD regions such as West Slovakia and East Slovenia but is only around 4-5% in other regions, such as around Helsinki in Finland and Oslo in Norway. Wide regional differences can also exist within countries. While the gap between the most and least at-risk region in Canada is just one percentage point, it reaches 12 percentage points in Spain.

The good news is that over the last five years, more than 60% of OECD regions have increased employment by adding more jobs at lower risk of automation than losing jobs because of automation.

However, several regions, from the state of

Tennessee in the US to Andalusia in Spain and Brittany in France, rely on jobs that are likely to be automated in the medium term. They will have a harder time managing the transition.

How should policy respond?

Regional differences in the impact of automation call for a place-specific approach to policy. Skills training, for example, benefits from this approach.

There are many examples of successful local partnerships between training institutions and employers that have produced apprenticeship programmes and better designed curricula. These not only properly prepare future workers, but also identify new skills that workers need to develop now.

Upgrading the performance of small and medium-sized companies, which account for about 70% of total employment, is another critical step. Automation and digitalisation can definitely create opportunities for smaller firms but they need to have the right skills, organisational practices and innovations to take full advantage of them. Our public policies can help.

OECD work has shown that innovative solutions from social entrepreneurs can help people in the labour market who are vulnerable to the disruption digitalisation and automation bring. For example,

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To face the challenges of automation head on, we need to “go local”. The OECD’s Centre for Entrepreneurship, SMEs, Regions and Cities can help national and local governments take action so that all communities, no matter where they are, can prosper in the new world of work.

On September 18-19, the OECD’s Forum for Local Development Practitioners, Entrepreneurs, and Social Innovators will bring together over 300 participants from the local, national and international level to discuss how automation and other megatrends are impacting jobs, workplaces, and local economic development opportunities.

See more at http://www.oecd.org/leed-forum/ OECD (2018), Job Creation and Local Economic Development 2018, OECD Publishing, Paris, https://doi.org/10.1787/9789264305342-en

Governments are key enablers of an equitable digital transition José António Vieira da Silva, Minister of Labour, Solidarity and Social Security, Portugal

Even so, much more needs to be done to adapt policies to the needs of knowledgebased and technology-based societies.

Governments have an important role to play and a unique ability to mobilise multiple stakeholders–by connecting them and helping to match the needs and interests of workers, large and small businesses, as well as other relevant actors and institutions. Local actors also gain in engaging with the policy process since they are a valuable source of knowledge and expertise, and can help to anticipate future challenges that can be addressed in a more timely and effective manner.

Building on social dialogue, governments therefore have an important role as both facilitators and enhancers of change, by prioritising investments in education and lifelong learning, while modernising and adapting education and training programmes to current and emerging needs. Creating flexible pathways for reskilling and upskilling throughout people’s lives is particularly important.

Governments also have key roles as regulators. These changes require us to look closely at our national legal frameworks: do they address the new realities that are emerging? What changes are needed? Is better enforcement of existing laws required? The costs of inertia in this field may include increasing inequalities and gaps in social protection, unfair competition, privacy issues relating to data protection, unaddressed health and safety risks and new forms of social exclusion.

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Visit www.portugal.gov.pt/en/gc21/ministries/ labour-solidarity-and-social-security

Turin: A city laboratory for innovation Interestingly, when it comes to disruptive transformations like automation, digitalisation and artificial intelligence, countries like Portugal, which have prioritised investment in education, skills, the development of digital infrastructures, and university-business interfaces for

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knowledge transfer and the like, are catching the wave of these new trends and reaping the benefits.

Paola Pisano, Deputy Mayor for Innovation, Smart City, Demographic and Statistical Services and Information Systems, City of Torino, Italy The advent of automation will inevitably lead to a radical change in cities and society. We must develop a new model

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Simplon.co in France is a network of learning centres that has been offering free coding classes to the unemployed since 2013. Today, it is in 40 cities in France and around the world. But not all social entrepreneurs have been as successful as Simplon.co in scaling up. To do so, social entrepreneurs need clear and tailored legal frameworks and access to finance.

Paola Pisano and organisation for work, and public administrations must take into account the social impact of automation.

The City of Torino is particularly focused on autonomous cars and artificial intelligence. This has translated into the development of new skills in our region, new job opportunities and new inclusive services for children, people with disabilities, and the elderly.

Our goal? A shared public mobility that will eventually supplant privately owned cars.

And with it, zero congestion, zero crashes and zero pollution.

We are in a crucial moment in history: administrations that do not understand innovation will be held responsible for any technological gap.

We have to work with citizens to prepare them for these new technologies and improve their expertise. In the future, this may need to start in schools as the workplace will continually require new skills, new innovative platforms and new technologies.

This innovation project is part of the Torino City Lab: Turin aims to be an openair laboratory where experiments in every area of the city with products and services based on new, unprecedented technologies will improve our lives.

The basic idea is simple: innovative products and services prove their value when used in a real environment. New products and services not only attract

SOCIETY & TECHNOLOGY OECD Observer Roundtable

will significantly change, with between 50% to 70% of tasks becoming automated.*

funding, create jobs, and develop skills, but improve our cities and consequently our lives.

How do we prepare for this? Many people will need new skills and this kind of training should begin early, in schools.

Our education, training programmes and public policies must adapt to the new realities of automation. In the workplace, employees will need to beef up their training as many of the skills of workers today will become obsolete tomorrow.

Companies will need to function as academies, teaching their employees how to work hand-in-hand with algorithms, artificial intelligence and robotics. Public authorities such as metropoles, regions, states, and national and international institutions; economic stakeholders like firms and entrepreneurs; and civil society must encourage this dynamic in order to create a new economic paradigm that is inclusive and sustainable.

Will cutting-edge innovation in cities help relaunch the economy and inclusiveness?

We believe so, but only if both technology and social impact are the distinctive features of every tested innovation.

Visit www.comune.torino.it

Our responsibility is to make the future inclusive and sustainable

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Nicolas Hazard, Founder and President, INCO

*OECD (2018), Putting Faces to the Jobs at Risk of Automation, March, Policy Brief on the Future of Work, http://www.oecd.org/employment/Automation-policybrief-2018.pdf Will all workers be displaced by machines?

As history has shown, when jobs are destroyed, many others are created. The future lies in a closer collaboration between humans and machines.

Visit www.inco.co.com

Agriculture, for instance, is a sector in which automation and other forms of technology have brought considerable advances. But much farming still requires back-breaking work to prepare soil, pull weeds, harvest crops and transport heavy loads.

Iris Arbel, Innovation Management Expert, Innovation Consultant for SMEs and Lecturer, Technion and Bar-Ilan universities, Israel

Toutiterre is not the only company seeking to supplement human workers with automation. OECD estimates show that while 14% of jobs overall are at high risk of automation, around a third of jobs today

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To help fruit and vegetable farmers, a local French firm, Toutiterre, invented the Toutilo. It is a robot or, better yet, a “cobot”, for collaboration between robots and humans. It combines farm work, task automation and robotics into one technology, making the process faster, safer and more efficient.

It shows how robots can supplement, not supplant, humans.

Preparing the SME workforce for the fourth industrial revolution

The globalisation of the world’s economy, jointly with the digitalisation and automation of traditional production, has become both an opportunity and a challenge for smaller companies and nations–a particularly “human” challenge.

Employees in small and medium-sized enterprises (SMEs) must learn to operate in an innovative digital environment that is increasingly dependent on automation.

The very ability of these smaller firms to maintain a competitive advantage requires understanding this change in the rules of the game and adapting skills accordingly, many of which stem from computer science and require training.

For small countries like Israel, national regulation must continue to support the transition from traditional skills to more advanced, technology-based skills. They can accomplish that task by adopting and integrating five complementary strategic directions: first, establishing infrastructures and providing knowledge through consultations and training; second, assisting and supporting factories (“smart money”); third, supporting and funding the assimilation of technologies; fourth, developing skilled human capital such as converting the army’s technological units to the labour force; and finally, restoring the image of Israel’s productive industries as a growth engine, which will help SMEs break into new markets. An example of the latter is expanding exports through online trade.

As a start-up nation, Israel enjoys a high rate of entrepreneurship with 10.7% of the working-age population involved in relatively new businesses and 7.4% of the population in long-term entrepreneurial business ventures.

To keep SMEs globally competitive, it is particularly important to find and integrate a skilled and professional labour force with the required technological knowledge as well as providing employees with on-the-job training.

SMEs can successfully carry through a fourth industrial revolution. To achieve that goal, the government should provide the platform, the knowledge and the budget while companies develop appropriate procedures and management tools to adapt to the national programme.

Visit www.technion.ac.il and www1.biu.ac.il

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SOCIETY & TECHNOLOGY OECD Observer Roundtable

needed in an automated world are problem-solving, empathy and navigation.

Towards local job creation in an automated world Sally Sinclair, CEO, National Employment Services Association (NESA), Australia

Second, policy can provide locally tailored responses and transition support for people whose skills have been displaced and devaluated by automation. Entrepreneurial endeavours, no matter how small or remote, should be encouraged and showcased.

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Finally, the digital and global world of work requires mobile and digital mind-sets in smaller municipalities to be the same as those in cities. Policy should improve business and labour market dynamism in order to help people manage transitions between jobs and gigs more fluidly and with adequate social security. Skills education should be better and more quickly matched with real needs.

The three industrial revolutions that have so far shaped the world of work by introducing the steam engine, mass production and electronics each resulted in an average 9-10% increase in the labour demand for new jobs. It is likely that the current digital revolution, also called Industry 4.0, will not just automate jobs, but create new ones.

In Australia, one in five employers responding to digitisation expect to grow their staff within the next two years, and more than half plan to retain their staffing levels. Recent global perspectives are also starting to paint a less gloomy picture than that of “robots taking over everyone’s work”.

According to McKinsey, about half of paid activities worldwide can be automated, but these only form part of the job market; just 5% of professions can be fully digitalised. Work will change, not disappear.

First, policy can help frame and implement job retraining, and enable individuals to learn marketable new skills, not just the straightforward digital ones. Those that will be increasingly

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Visit the NESA website at https://nesa.com.au

Rethinking citizen-centred policy design and delivery Sunil Johal, Policy Director, Mowat Centre, University of Toronto

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However, this change requires immediate action to adjust the skills of workers, especially for small and medium-sized enterprises (SMEs).

Three points seem particularly relevant in the context of local businesses and their staff.

Targeted skills’ training, support of the most vulnerable, and flexible labour markets can form a stable bridge to the next generation of work.

Individuals, governments and businesses alike have a role to play in ensuring successful transitions through skills training. “Badging”, or focused skills upgrading, like learning how to install doors instead of a full apprenticeship, or an online coding tutorial, is one way

to bridge workers into new opportunities.

Government investments in infrastructure can be leveraged to boost skills training and development opportunities for local communities through the deployment of benefit agreements, the L.A. Live! neighbourhood revitalisation and Vancouver’s 2010 Olympic Village being good examples of this. Partnerships between government and business that include incentives or subsidies to ensure workers are getting appropriate skills training are worth exploring, as are initiatives to smooth out layoffs in sectors affected by automation, such as reduced hours or work-sharing agreements.

Policymakers also need to assess the adequacy of the social supports they provide for workers in a world where wages are stagnating, the nature of work for many is becoming more precarious and income inequality persists. Enhanced support for workers and families facing more temporary spells of unemployment, whether affordable housing supports, mental health services or better access to childcare, would help.

Most importantly, policymakers need to assess the effectiveness of various active labour market policies and other policy interventions with more rigour.

In a world of constrained resources, better data about which programmes are working well will become more important. The very nature of how we design and deliver policies and programmes needs a re-think for the age of automation. Services will be increasingly citizen-centred. Data will better target outcomes-based approaches to funding. We can’t predict which sectors will be affected by disruptive technologies or when, but we can design approaches that will be nimble, effective and durable for any future we face.

The Mowat Centre is an independent public policy think tank at the University of Toronto.

Visit www.mowatcentre.ca

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Who we are •Korea's only independent economic think-tank •Devoted to the principles of free markets, free competition, free enterprise

What we do •In-depth research on corporate policies •Analysis of macroeconomic policies •Promotion of free markets •Education for market capitalism

OECD FORUM 2018

Where are all the women in tech?

©AFP/New Science Photo Library

Ileana Epsztajn, OECD Observer

For proof that the tech industry is not particularly welcoming to women, one need look no further than Google, where women account for just 31% of headcount, falling to a mere 20% in pure tech roles. They are also paid less than their male counterparts, according to a class action lawsuit filed in 2017 by three former employees on behalf of “all women employed by Google in California” for discrimination and unequal pay for equal work. Which did nothing to stop another former employee, who had been laid off after circulating a sexist memo, lodging his

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own complaint against the Internet giant for “ostracising” conservative white men.

So can the fourth industrial revolution catalyse increased equality between the sexes, or should we be fearing instead that it will even further marginalise women in the workplace? One of the sessions of the 2018 OECD Forum took a closer look at “Women in Tech”.

As highlighted by a recently published OECD report–The Pursuit of Gender Equality. An Uphill Battle–by the time they reach higher education, women are

underrepresented in STEM subject areas (science, technology, engineering and mathematics), in which they currently account for just 19% of students in OECD countries. Those who do go into tech jobs are twice as likely as men to leave them.

This is why chairman Stefan de Vries, on opening the Forum session, commented wryly that a better title would have been “the lack of women in tech”.

How did we get here? The observations made by the mostly female panel could very easily have been made of other

SOCIETY & TECHNOLOGY OECD FORUM 2018

sectors. Susana Balbo, for example, the first female winemaker in Argentina, and Chair of the W20, an international network taking women’s voices to the G20, reminded the participants that for women working in male-dominated fields, the major difficulty is having to work twice as hard as the men and paying a very high price out of one’s personal life to reach the same professional level. Emmanuelle Quilès, CEO of Janssen France, added that female role models were rare and prejudices persistent. To appreciative laughter from the audience, she described how people’s conversation dries up when she tells them that her daughter is studying mechanical engineering.

The big problem with these prejudices is that they are a primary cause of one of the main obstacles preventing women from fully embracing the STEM sector, and others: a lack of confidence.

All members of the panel agreed on the importance of this problem. Tara Wheeler, entrepreneur and author of

Can the fourth industrial revolution catalyse increased equality between the sexes, or should we be fearing that it will further marginalise women in the workplace?

Women in Tech, spoke at some length about women’s reluctance to promote themselves and to believe in their abilities without the external validation of a man. Stefan de Vries took up the same theme, recounting the experience he had when looking to interview women who were acknowledged experts in their field: their first response was invariably “I’m not sure I’m the right person”– something he had never heard from any of their male counterparts.

Emmanuelle Quilès described how it had been shown that people who were used to living in a competitive environment

and to exaggerating their self-confidence and their abilities were also those most likely to successfully obtain a promotion or pass an exam, and she concluded that there was an urgent need to push women to achieve this self-belief too.

But how?

For Chiara Condi, President and founder of Led by Her, there are two answers to this question. First, women need to be more self-reliant, and this is what her association does, by helping them rebuild their lives through entrepreneurship.

Too many women have been robbed of their rights and their route to selfrealisation by their personal history or their environment; they need to be given the means to unlock their own lives in order to be able to become what they want to be, and entrepreneurship helps them to do this. IT can be a powerful force in this context: Aleph Molinari, President of the Fundación Proaccesso, which helps the underprivileged, in many cases women, to acquire computer skills, talked about research by the University of Pennsylvania which found that women who had completed a basic computing course had four times more chances of finding work. He pressed the point that encouraging girls to take coding courses, for example, would subsequently help them to do well in STEM careers.

The second answer is that our culture also needs to change if we are to really make room for women in the professional world. This will take a conscious effort by businesses, which can set up special training courses, for example, ensure that sexist behaviour is banned from the workplace and that the corporate culture is sufficiently diversified for women to feel comfortable–and, naturally, pay them as much as the men. Of course, for this change to really happen in the business world, it has to be embraced by men, who are largely in charge of it.

More generally, all of society has to change the way it views women in the workplace. Education needs to

encourage women to consider STEM careers and to aim for higher levels of responsibility. Both Béatrice Clicq, Confederal Secretary of the French trade union Force ouvrière, and Susana Balbo argued that women ought not to be the only parents juggling their responsibilities in the home and in the workplace, and mandatory paternity leave could be part of the solution to that problem. In her closing remarks, Monika Queisser, Head of Social Policy in the OECD’s Directorate for Employment, Labour and Social Affairs, made the very pertinent observation that we will never achieve equal pay for equal work if we don’t solve the problem of equality in unpaid work.

Against the backdrop of the fourth industrial revolution, this session highlighted the extent to which the digital transformation has intensified most social issues. Béatrice Clicq cited an American report which found that 47% of jobs would disappear in the digital revolution, and most of these jobs (65%) were currently held by women. The new jobs that would be created would be focused on the STEM sector, and STEM subjects are heavily dominated by male students. There therefore remains much work to be done to ensure that gender inequality does not worsen in the future, and that women, who represent 51% of the population and 60% of graduates, can finally claim equality in the workplace.

References See the session of the 2018 OECD Forum, Women in Tech: https://oecd.streamakaci.com/052018/vod/day/1/room/3/ hour/10:45/lang/fl OECD (2018), The Pursuit of Gender Equality.

An Uphill Battle, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264203426-fr Wheeler Van Vlack, Tara (2016), Women in Tech: Take your Career to the Next Level with Practical Advice and Inspiring Stories, Sasquatch Books, Seattle For more information about gender equality in OECD countries, see http://www.oecd.org/gender/

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OECD Observer No 315 Q3 2018

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OECD FORUM 2018

Trappes: A visit to the heart of a community Ileana Epsztajn, OECD Observer

1944, to fulfil its vision of an urban utopia made up of low-rise buildings and park areas that avoided the drawbacks of conventional suburbs. As the years went by, however, French families and those of Italian and Portuguese origin started to move out, and the proportion of new immigrants in the population rose by 325% between 1968 and 1975. During the 1980s, delinquency went up as social diversity declined. And the following twenty years were marked by events which resulted in the town’s retreat into itself and isolation. In the 1990s, the

It is a commune which lives in proud isolation: nothing gets out and nothing gets in large secondary school attended both by children from Trappes and by those from rich neighbouring communes was joined by a second school to which all the pupils from middle-class and wealthy backgrounds gravitated. Then, at the start of the 2000s, a new, socialist mayor was elected on the promise of building a large mosque in Trappes. After years of efforts by the Communist Party to knit a social fabric, religion was intruding in the form of an Islamism close to that of the Muslim Brotherhood.

©Glyn Kirk/AFP

As a result, the social, economic and geographic community created by the town slipped into religious communalism. These days, as Raphaëlle Bacqué relates, the inhabitants of Trappes say “it’s just us poor here”. It is a commune which lives in proud isolation: nothing gets out (the author told how, for an entire year, the subject of her book, which was confidential, remained a secret, safe behind the hermetic barrier of the ring road around Paris) and nothing gets in. And for those who did get out, like the film stars and sports stars who grew up at a time when integration and assimilation were more readily accepted, it is difficult to come back given local resentment.

Nicolas Anelka, French footballer from Trappes Some 25 kilometres from Paris lies Trappes, a town from which more people have left to fight in Syria than anywhere else in Europe. How did a town which has produced numerous French celebrities such as footballer Nicolas Anelka, comedian Jamel Debbouze, actor Omar Sy, and TV and radio presenter Sophia Aram, end up with this sad claim to fame?

This was one of the questions bothering Raphaëlle Bacqué, senior correspondent at Le Monde newspaper, and her colleague Ariane Chemin. So they decided to spend a year together in Trappes to try to understand the changes that had taken place within this community and to report their findings in a book*, which Raphaëlle Bacqué came to present at the OECD Forum.

The new residential areas built in Trappes in the 1960s were intended by the town council, run by the Communist Party since

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As Raphaëlle Bacqué says, “[Trappes] has been like a testing ground for all the experiments and failures of public policy in our suburbs”. Or, as a resident of Trappes present at the Forum put it more bitterly, “if large numbers of young people from Trappes have gone to Syria, it’s because public policies have forsaken the town”. *Raphaëlle Bacqué and Ariane Chemin (2018), La Communauté, Éditions Albin Michel, Paris.

References and links Visit www.oecd.org/forum Watch the OECD Forum: Meet the Author session with Raphaëlle Bacqué (in French): https://www.youtube.com/watch?v=Enkz61h3DY4 OECD work on regional, rural and urban development: www.oecd.org/regional/ Share article at https://oe.cd/obs/2rx

SOCIETY & TECHNOLOGY OECD FORUM 2018

No longer burning down the house

©Shutterstock

Lyndon Thompson, OECD Observer

In the early 1600s in North America, colonists ruined by a bad crop would often move on to new territory. In order to save on costs, they would burn down their homes to collect the nails, which would be used to build their next house.

The image is one of restlessness and ingenuity, and mobility, contributing to a myth that many people there still cherish.

Tyler Cowen, a US economist invited to speak the OECD Forum in May 2018, has exploded that myth. Americans, he warned, are sunk into a dangerous complacency, and although “opportunity is not dead”, “Americans are not rising to the occasion.” The spirit of enterprise, the historical wellspring of American character, is drying up. The number of US citizens under 30 who set up a business has fallen 65% percent since

the 1980s. Over the last 20 years, international patents from the US have fallen 25%. Complacency is not necessarily bad, said Mr Cowen, if you’re in Denmark, but if you have a national debt in the trillions, it’s unwise to lay down tools.

Mr Cowen’s findings support those of the American political economist, Nicholas Eberstadt, who in an essay last year, cited some disquieting figures.

While paid work hours in the US rose by 35% between 1985 and 2000, they crept up a meagre 4% from 2000 to 2015, and for every unemployed man between the ages of 25 and 55 seeking work in the US, three others have given up entirely.

Even people who have a job, albeit an unsatisfactory one, are less willing to pull up stakes and look elsewhere.

The rate at which people in the US

changed jobs has dropped a quarter since 1990.

Once, moving to a new city or state brought with it the hope of raising oneself and one’s family out of poverty. But now, Mr Cowen said, “poverty, rather than being a reason to move, has become a reason not to move.”

Many, it seems, are resigning themselves to poverty, or at best to a negligible upward mobility. The situation is not unique to the United States. In June, the OECD published a report highlighting the decline of social mobility–it takes generations for low-income earners to move up a notch. Figures show that the bottom 40% of the population in OECD countries hold only 3% of the total wealth, and the top 10% about half.

Over a four-year period, 60% of people

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SOCIETY & TECHNOLOGY OECD FORUM 2018

in the bottom 20% of income distribution were still stuck there. But how the mighty have not fallen: 70% of those at the top of the ladder stay there as well. Social mobility was greater in the US than, for example, in France, Germany or the UK, yet even in the US among the poorest 10% of earners, it would take five generations for someone to secure a decent living; in Denmark it would be two.

And there is that tenuous bridge–the middle class–which has held the richest and poorest together. It has collapsed in parts. Today, middle class earners in the bottom 40% of earnings face a greater risk of slipping into poverty than they were 20 years ago.

Opportunity is turning into a tough game of draughts, with black pieces restricted to black squares and red pieces to red squares–with only the very occasional jump. The present malaise has instilled a fierce distrust of political institutions, traditional news media and globalisation. People–not just the poor, but small business owners, students, working mothers–feel their needs are being ignored or simply do not see themselves in the promise of a world economy. Populist outsiders are chosen

cial Elevator A Broken So ote Social How to Prom Mobility

?

over career politicians, traditional news media are rejected in favour of politically biased “news” websites.

There is even more physical pain, especially among the unemployed. A survey published in 2017 by the Brookings Institution, a US think tank, found that nearly half of prime age unemployed men in the United States took pain medication

Poverty, rather than being a reason to move, has become a reason not to move on a daily basis, two thirds of which were on prescription. Some 40% of unemployed workers also said that pain prevented them from accepting jobs for which they were qualified.

Why are so many of the unemployed in pain? When asked whether this malaise was responsible for the current political climate, Tyler Cowen said it was too early to tell, but that it probably had played a part.

The increasing political and economic polarisation in OECD countries is clearly a threat to democracy and trust, and runs contrary to the spirit of co-operation in

References Cowen, Tyler (2017), “The Unseen Threat to America: We Don’t Leave Our Hometowns”, Real Clear Politics, 27 February, www.realclearpolitics.com/2017/02/27/ the_unseen_threat_to_america_we_don039t_leave_ our_hometowns_403689.html Eberstadt, Nicholas (2017), “Our Miserable 21st Century”, Commentary, 15 February, www.commentarymagazine.com/articles/our-miserable21st-century/ Krueger, Alan B. (2017), “Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Force”, Brookings Papers on Economic Activity, September 7-8, www.brookings.edu/ wp-content/uploads/2017/09/1_krueger.pdf OECD (2018), A Broken Social Elevator? How to Promote Social Mobility, OECD Publishing, https://doi.org/10.1787/9789264301085-en Visit the OECD Forum website at www.oecd.org/forum Share article at https://oe.cd/obs/2sF

Order this now! www.oecd.org/bookshop

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which the organisation was founded, and which has helped improve billions of people’s lives. Going back in time is not an option. To discourage colonial farmers from burning down their houses for the nails, the English Crown promised to provide the equivalent number of nails to the former tenants, leaving the houses standing for the next tenants.

For social mobility to succeed, policies must restore both opportunities and confidence. Burning down the house is not an option either.

OECD’s global knowledge base

www.oecd-ilibrary.org

Data vs deforestation: A breakthrough in supply-chain transparency Thomas Sembres, EU REDD* Facility, European Forest Institute (EFI)

deforestation-free trade by forming The Amsterdam Declarations.

How do we transform these aspirations into action?

©Rickey Rogers/Reuters

Until now, the complexity and opacity of global supply chains has made it difficult to tackle deforestation within mainstream markets. Much effort has been invested in traceability and certification but for the vast majority of commodities with deforestation risks, there is simply no information to support action and policy implementation. The data revolution underway may provide solutions.

Advancing deforestation in the Amazon Basin We are eating our way through tropical forests. Whether it’s a cappuccino for breakfast, a burger for lunch or a chocolate bar as an after-dinner treat, the things we consume in OECD countries are often linked to deforestation in the tropics, where trees are falling at alarming rates.

Agricultural expansion to produce commodities like beef, soy, coffee, palm oil and cocoa has driven over 70% of tropical deforestation in the last decade.

Deforestation has a significant impact on local livelihoods in developing countries.

It destroys the habitats and ecosystem services that underpin the security of our water, food, and energy resources.

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Deforestation damages climate stability, but also business reputations.

It is becoming increasingly difficult for companies to ignore the risks of environmental damage in their supply chains. In fact, several hundred companies with a multi-trillion-euro combined market value have made a commitment to eliminate even the possibility of deforestation from their supply chains.

In 2014, world leaders from 18 OECD countries and 22 other countries signed the New York Declaration on Forests, a global pledge to halve the loss of natural forests by 2020, and end it by 2030.

Since 2015, seven European countries have joined forces in shifting towards

A global, open-access initiative led by the Stockholm Environment Institute and Global Canopy, Transparency for Sustainable Economies, or Trase for short, reveals the detailed connections between internationally-traded commodities and the places where deforestation is happening. It does this by processing large and disconnected datasets of customs records, fiscal registries, production censuses, and transportation tracking systems that had been previously untapped. By tracking commodities from their local places of production to consumer countries through exporters and importers, Trase can systematically link the activities of supply-chain actors to specific production areas and better identify risks and opportunities. This has enabled Trase to map regions in Brazil where soy production is no longer encroaching on forested areas, for instance, and where companies have made commitments about the sustainability of their soy production (see map).

Trase’s director, Toby Gardner, explains: “As transparency improves, supply-chain actors have a greater incentive to work together to address environmental and societal problems in producer regions.”

At the European Forest Institute, we are working with Trase to develop applications tailored to the needs of governments on both ends of the

ENVIRONMENT

supply chain. They will be able to use this data to better monitor forestrelated risks and identify opportunities.

Reliable, comprehensive and up-to-date information is essential for effective partnerships between producer and consumer countries. It also informs policies that ease market access for legal and sustainable products while discouraging those linked with supply chains tainted with, in this case, deforestation.

soy is the most internationally traded, and Brazil is poised to overtake the US as the world’s leading exporter of soy. Global demand for this commodity is driving a significant loss of native vegetation in parts of Brazil’s ecologically crucial Cerrado region. While China is by far the biggest importer of soy grown in the area, and increasingly so in 2018, various OECD countries have also been importing large quantities of soy with a high risk of deforestation.

This enhanced transparency made possible by initiatives like Trase has become essential in national strategies to eliminate deforestation from supply chains. France, for instance, is currently drawing up its own strategy and Trase’s input was important early on in the process. Its data is contributing to a better understanding of whom to engage with and where to invest effectively to reduce the risk of deforestation being caused by French commodity imports.

According to industry and the Brazilian government´s own projections, some 10 million hectares of land will be converted to soy cultivation in the next decade in Brazil, much of it in the Cerrado. Trase data and analysis can help companies, countries, civil society and consumers work together to ensure that South America’s remaining forests are not lost in the process.

Going back to South American soy: of all the agricultural commodities linked to substantial forest clearing in the tropics,

Besides soy, Trase will be able to track over two-thirds of the total traded volume in forest-risk commodities by 2021, including beef, palm oil, pulp and paper, coffee, and cocoa.

% of soy in Brazil produced or purchased by companies committed to zero deforestation

This supply chain transparency can go a long way towards improving production practices, procurement and investment policies, and supporting independent monitoring schemes and public development planning. This is not just about deforestation, but about the social and environmental quality of the commodities we produce, trade and consume. It is essential to our sustainability agenda and reinforces the goals of the Global Partnership for Sustainable Development Data.

Governments can seize this opportunity and start deploying their own data to support sustainability. They could contribute their customs records to support rapid-response monitoring systems and improve market intelligence on global commodity markets. This will help shape a future in which commodity trade is not accompanied by widespread environmental destruction and social exploitation. And that should make our favourite foods taste even better. *REDD stands for Reducing Emissions from Deforestation and Forest Degradation THE VIEWS IN THIS ARTICLE ARE THE AUTHOR’S AND DO NOT NECESSARILY REFLECT THOSE OF THE OECD OR ITS MEMBER COUNTRIES.

References and links Transparency for Sustainable Economies (2018), Trase Yearbook 2018: Sustainability in forest-risk supply chains: Spotlight on Brazilian soy, Stockholm, at https://yearbook2018.trase.earth/ CDP (2017), “From risk to revenue: The investment opportunity in addressing corporate deforestation” at www.cdp.net/en/research/global-reports/global-forestsreport-2017

The blue colour key refers to areas in which more than 80% of the soy has been produced or purchased by companies that have committed to zero deforestation.

80 60 40 20 0

EU REDD Facility, European Forest Institute, “Unlocking supply-chain data to reduce deforestation” at www. euredd.efi.int/publications/unlocking-supply-chain-data-toreduce-deforestation Visit Trase at https://trase.earth/ Read more about the New York Declaration on Forests at https://nydfglobalplatform.org/ Read more about The Amsterdam Declarations at https:// partnershipsforforests.com/partnerships-projects/ the-amsterdam-declarations/ Find out about the Global Partnership for Sustainable Development Data at www.data4sdgs.org/

Source: Trase

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OECD Observer No 315 Q3 2018

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ENVIRONMENT

Protecting our water Gabriella Elanbeck, OECD Observer The celebrated marine scientist Jacques Cousteau once said that “all life is part of a complex relationship in which each is dependent upon the others, taking from, giving to and living with all the rest.” This is especially true of water.

Freshwater management, oceans and marine ecosystems are intimately linked to almost every other environmental and humanitarian issue.

Take a developing coastal city: the kind of dynamic and bustling urban centre where much of the world’s population will live in the future. In such a city, much of the population makes a living from fishing or from work at the city’s port, a trade hub where the circulation of ships disturbs underwater ecosystems. Tourists swarm the best beaches, and water must be efficiently managed to serve both tourists and, more crucially, the city’s own resident population. Efficient water management links together a series of sectors like construction, energy and sanitation, on which daily life depends. It also bears strong implications for social justice and stable governance of the city itself.

In short, water-related policy issues are everywhere, and the problems currently plaguing water systems and marine environments will have serious consequences for areas ranging from trade to agriculture to inclusive growth. If water, ocean and ecosystem management are crippled, then human development is hampered too.

The scale of our reliance on the marine environment is immense.

It supports 61% of the world’s gross national product (GNP) and about 500 million livelihoods which depend on ocean-related activities. Beyond ocean shores, effective water management on land is vital for ensuring that societies are stable, fair and resilient. Yet as many as 2.1 billion people worldwide still lack access to clean and safe drinking water at home.

The pressures on the water systems and marine environments we depend upon continue to mount. Oil and gas activity, deep-sea mining and pollution from plastics have wrought havoc on marine environments, damaging over 60% of the world’s major ecosystems. Water infrastructure is strained by skyrocketing populations and often unsustainable or environmentallyunfriendly construction. With climate change adding fuel to the fire, what kinds of policies can address these interrelated challenges and guide us towards a more sustainable equilibrium with the marine environment?

The first step for oceans would be to preserve once-flourishing ecosystems. Marine protected areas are one tool to combat further ecosystem decay and encourage regeneration. Biodiversity should be mainstreamed into other policy areas and the legal frameworks around it strengthened. And strong policies to limit pollution should be implemented and enforced, along with policies aimed at limiting consumption of non-recyclable plastics more generally.

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Beyond reducing pollution, significant investment should be directed towards building and improving infrastructure for freshwater supply and sanitation, with an eye to nature-based solutions. New technologies can be harnessed to build this sustainable, greener infrastructure and improve water treatment processes.

While working to achieve these advancements, policymakers must also stay mindful of their consequences for daily life the world over. Good water management is a key building block of resilient and stable societies with lower levels of conflict. It also strongly influences social justice due to its interlinkages with

If water, ocean and ecosystem management are crippled, then human development is hampered too poverty and gender equality. For example, African and Asian women travel an average of 6 kilometres daily–time that could’ve been spent at school, work or elsewhere.

Effective governance for all of these intersecting issues requires co-ordination between stakeholders across the public, private and non-profit sectors. As noted at World Water Week 2018, policymakers can push for corporate actors to set common standards. Action at all levels is especially necessary because water and ecosystems do not respect administrative and political boundaries. To address water-related problems with the urgency, care and co-ordination they require and deserve, stakeholders must work together towards shared solutions.

Given the enormity of their reach, water and ecosystem issues are more than just a drop in the policymaking ocean. As Deputy Secretary-General of the United Nations Amina J. Mohammed noted at World Water Week, the sixth Sustainable Development Goal (SDG), centred on water, is in fact “the docking station” of all other SDGs–the bedrock of human development.

References United Nations, Sustainable Development Goal 6, https://sustainabledevelopment.un.org/ sdg6 United Nations Conference on Sustainable Development (2012), Rio Ocean Declaration, www.unesco.org/new/fileadmin/MULTIMEDIA/HQ/SC/pdf/pdf_Rio_Ocean_ Declaration_2012.pdf OECD (2018), Implementing the OECD Principles on Water Governance, OECD Publishing, https://doi.org/10.1787/9789264292659-en OECD (2018), Mainstreaming Biodiversity for Sustainable Development, OECD Publishing, https://doi.org/10.1787/9789264303201-en OECD (2017), Marine Protected Areas: Economics, Management and Effective Policy Mixes, OECD Publishing, https://dx.doi.org/10.1787/9789264276208-en We Are Water Foundation (2018), “Water and sanitation for gender equality”, https://www. wearewater.org/en/water-and-sanitation-for-gender-equality_290351 World Health Organization (2017), News release, 12 July, www.who.int/news-room/ detail/12-07-2017-2-1-billion-people-lack-safe-drinking-water-at-home-more-than-twiceas-many-lack-safe-sanitation World Water Week: www.worldwaterweek.org/tag/2018/ Share article at https://oe.cd/obs/2te

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Tunisia’s integrity challenge

©Alamy.com

Amira Tlili, OECD Public Governance Directorate

More than seven years after the revolution that toppled President Zine el-Abidine Ben Ali, Tunisia is still beset with numerous tensions. These bubbled to the surface in January 2018 with protests against unpopular tax measures and corruption. As in 2001, Tunisia’s young people embody the revolt and fight against corruption that has become endemic in the country. Their angry slogans express the disappointed hopes of a nation that rose up against a dictator and his abusive regime.

After the 2011 revolution, Tunisia experienced renewed democratic momentum. A new constitution came into effect in 2014, that acknowledges the universal principles of freedom and parity, garantees individual rights and liberties and recognises the youth as the lifeblood

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of the nation-building process. In 2014, Tunisia’s nine leading political parties, as well as its trade unions and business organisations singled out the fight against corruption as one of the six pillars of the Carthage Declaration, which forms the basis for the national unity government that came to power in 2016.

Rooting out corruption is a priority.

In Transparency International’s 2017 Corruption Perceptions Index, Tunisia ranks 74th out of 180 countries, gaining only a single point since 2012. The nongovernmental organisation estimates that corruption costs Tunisia 2% of its GDP, equal to an annual loss of US$1.2 billion.

Young people are the most likely to encounter corruption in all its forms.

Transparency International’s Global

Corruption Barometer found that in 2013, 27% of people under 30 worldwide had paid a bribe in the previous twelve months. The OECD’s report Youth in the MENA Region: How to Bring Them In stresses that young people in the Middle East and North Africa (MENA) have less confidence in their governments’ ability to meet their needs than in previous generations.

The Tunisian authorities are not immune to this problem. This is notably due to massive unemployment, affecting nearly two out of five Tunisians, according to a 2015 OECD report on investing in youth (see references). Rising prices make social mobility even more difficult. Corruption exacerbates this: it prevents the optimal use of resources, reduces opportunities for growth and development, and impacts not only people’s relations with public

GOVERNANCE

institutions but also the quality of the services provided. Small-scale corruption, involving small sums of money, is widespread in the lower levels of the

To young people in the MENA region, corruption–and government responsibility–is the biggest issue facing their country administration, as reported in a survey by the Tunisian Association of Public Controllers. Some 70% of respondents interviewed by this association think that small-scale corruption aids everyday interactions. Among the youngest (18to 25-year-olds), 75% share this opinion.

To young people in the MENA region, corruption–and government responsibility–is the biggest issue facing their country, even bigger than the economy and jobs challenge.

The Tunisian government has taken steps to shore up integrity in the public sector by strengthening the institutional and legal framework. Legal measures include creating the National Office for Combating Corruption and the Truth and Dignity Office, whose remit was extended to include corruption cases in 2014.

The code of conduct for Tunisian public officials and law on whistleblowing and whistleblower protection, both prepared with the support of the OECD, are also helping to strengthen the culture of integrity. This creates a legal framework that is further bolstered by the freedom of information law. There is also a bill that is currently going through parliament on the declaration of assets and illicit gains.

Young people in Tunisia have taken to the networks and organisations of civil society to fight the scourge of corruption.

Movements and associations including Al Bawsala, I Watch Tunisia and Manich Msamah blaze with the passion of Tunisia’s young people who are denouncing corruption and promoting

transparency and accountability, in both theory and practice.

It is now time to go further and stamp out corruption. There needs to be greater public involvement, especially among the younger generation. The OECD Recommendation on Public Integrity stresses the importance of transparency and the engagement of all actors at every level in the governmental decision-making process. The young citizens of Tunisia should be informed, consulted, and encouraged to take part in formulating public policies and evaluating government action.

Many such initiatives have been taken.

In its report, Open Government in Tunisia, the OECD draws attention to the steps taken by the government and civil society in this field. These initiatives should be encouraged and embedded in a systematic approach with the aim of including young people in the design, monitoring and evaluation of public decisions. It is important to create mechanisms to encourage young people to report violations of integrity more systematically. As suggested in the regional report Youth Engagement and Empowerment in Jordan, Morocco and Tunisia, networks of schools, youth centres and cultural organisations can play a critical role in raising young people’s awareness, and helping them take a firm stand against corruption.

The OECD supports its member and countries from the MENA region in implementing public policies that consults with and involves citizens, notably young people, in this fight for integrity. The means are many and varied, from the promotion of measures supporting an open government, the citizen consultation and participation practices, to the implementation of the principles of freedom of information, the promotion of open data and the establishment of monitoring agencies (especially within local public organisations).

If it is to be successful, Tunisia’s democratic, pluralist experiment–the first in the MENA region–must be supported by sustained action against corruption, with young people driving this change. But young people must be empowered. The future of the country depends upon it.

References and links OECD (2018), Youth Engagement and Empowerment in Jordan, Morocco and Tunisia, OECD, Paris (forthcoming) OECD (2018), OECD Economic Surveys: Tunisia 2018, Economic Assessment, OECD Publishing, Paris http:// dx.doi.org/10.1787/eco_surveys-tun-2018-en OECD (2017), Youth in the MENA Region: How to Bring Them In, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264265721-en OECD (2017), Recommendation of the Council on Open Government, OECD, Paris, https://www.oecd.org/gov/ Recommendation-Open-Government-ApprovedCouncil-141217.pdf OECD (2017), OECD Recommendation on Public Integrity, OECD, Paris, http://www.oecd.org/gov/ethics/OECDRecommendation-Public-Integrity.pdf OECD (2016), Open Government in Tunisia, OECD Public Governance Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264227118-en.

OECD (2015), Investing in Youth: Tunisia– Strengthening the Employability of Youth during the Transition to a Green Economy, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264226470-en Transparency International (2018), https://www. transparency.org/whatwedo/publication/people_and_ corruption_citizens_voices_from_around_the_world (accessed on February 21 2018) Transparency International (2018), Corruption Perceptions Index 2017, https://www.transparency.org/news/feature/ corruption_perceptions_index_2017 Tunisian association of public controllers (2015), La petite corruption : Le danger banalisé - Étude exploratoire sur la perception de la petite corruption en Tunisie, Tunis, http://atcp.org.tn/wp-content/uploads/2017/07/ petite_Corruption_Danger_Banalise_ATC_-2015.pdf World Bank (2017), https://data.worldbank.org/indicator/ SL.UEM.1524.ZS?locations=TN World Economic Forum (2018), The New Economic Context for the Arab World (Briefing), Geneva, http:// www3.weforum.org/docs/WEF_The_New_Economic_ Context_Arab_World_flyers_2017.pdf Yerkes S. and M. Muasher (2017), Tunisia’s Corruption Contagion: A Transition at Risk, Carnegie Endowment for International Peace, Washington, D.C., http:// carnegieendowment.org/files/Tunisia_Corruption_Web_ final.pdf Share article at https://oe.cd/obs/2se

OECD Observer No 315 Q3 2018

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OECD.ORG

The EU and the OECD: How a closer relationship could be a winner

©Charlotte Moreau

Philip Pierros, Minister-Counsellor, EU Delegation to the OECD and UNESCO*

Hecate is one of Greek mythology’s many intriguing goddesses. A three-headed character, she is associated with sorcery, but also with boundaries and walls, as well as crossroads, entranceways, gates and doorways, and lights. She is depicted carrying torches and keys, so that while some historians see Hecate as a protector who bestows prosperity, others compare her to the Roman Janus, a symbol of openings and new beginnings, able to light the way ahead.

How Hecate’s torches and keys could help us now as we face today’s crisis in international co-operation! Never in our lifetimes has the global order, which was built painstakingly over half a century from the ashes of two brutal world wars, looked so fragile. Rising populism on all continents, recourse to nationalism across

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the Atlantic and rifts within the European Union (EU) have all fuelled a run from globalism and a rush for protection.

As a measure of how serious this is, French President Emmanuel Macron warned world leaders gathered in Paris on 11 November 2018 to mark the centenary of the end of the First World War, of the dangers of backsliding towards destructive nationalism. The president senses a chill wind. Indeed, a front page of the normally calm French daily, Le Monde, headlined: “US-Europe: The story of a divorce” (« États-Unis-Europe: histoire d’un divorce »). The editorial of the same edition appealed for action to save world governance (see references).

We are all at a crossroads, with a national, inward looking path beckoning in one

direction, and a global, multilateral route in the other. To my mind the choice is clear: the only way forward is for countries to work harder than ever multilaterally, through institutions such as the EU and the OECD. The trouble is, too many people question their legitimacy. The EU is faced with the upending effects of Brexit and regrettably certain other centrifugal forces pulling it in different directions; meanwhile, the OECD faces a difficult budgetary climate, and the constant challenge of instilling a clear sense of purpose among its sometimes sceptical members. How the world has turned on its head, as the UK and the US, which both championed outreach and globalisation for over 50 years, should turn inwards now. No wonder people, just

OECD.ORG

like the three-headed Hecate, are looking in every direction for an answer.

on a stronger, more systematic and institutionally more robust basis?

Could Hecate hold a key by pointing to a third way? Even the most ardent of globalists would acknowledge that the multilateral system, as it currently stands, needs some fixing to be more relevant in people’s lives. Hence my suggestion: to consider a formal rapprochement between the EU and the OECD.

The answer in my view is yes. Here are five reasons why the OECD and the EU should work more closely together:

As global governance faces into strong headwinds, international organisations should work harder together and relies on peer pressure to nudge all countries to do ever better. It has no parliament, but is governed by a web of committees and a ministerial council that reports to capitals.

Though 23 of the OECD’s 36 countries are EU member states, the EU is a more powerful entity, with its decision-making European Council run by member governments, its Commission and European Parliament, and its central bank and legal courts. It is a union where nations pool their sovereignty together, notably to support the single market and other relevant common policies.

But the EU nevertheless looks to the OECD for guidance, analysis, expertise and support, and is in fact very actively involved in the OECD, albeit without contributing to the regular budget–the EU is nevertheless among the top providers of voluntary contributions to the OECD–or being able to vote on legal acts. Could this evolve? Are there complementarities to develop further? Could the relationship be put

Second, it would help us better address global challenges, such as the UN Sustainable Development Goals and climate change, by setting ambitious common standards and benchmarks with an enhanced legitimacy; Third, it would help boost trade and better stem protectionist tendencies; Fourth, it would bolster the EU’s efforts in addressing structural challenges by mobilising and leveraging OECD expertise, and so help EU member states implement structural policy recommendations, such as investing in skills and integrating migrants, or enhancing productivity and fostering a more sustainable “circular” economy; And fifth, a closer arrangement would enhance the political legitimacy and attractiveness of the OECD on the world stage, helping it to brush off its backoffice image and engage more with the public, while enhancing the EU’s own global network and outreach.

We are at a Hecate-like crossroads and bold decisions are needed. We have a chance to safeguard the rules-based global order, even if we must reform it and build a new, stronger multilateral system. A closer EU-OECD relationship could be a step in the right direction. *The views expressed in this article are strictly the author’s only, and do not purport to reflect the views of the EU, the OECD or any of their members.

References and further reading For more on the Goddess Hecate: http://arcana.wikidot.com/hecate https://www.patheos.com/blogs/ adamantinemuse/2018/01/hekate-zeus-janus/ Le Monde (2018), “Il faut sauver la gouvernance mondiale”, Editorial, 9 November, see www.lemonde.fr Pierros, Philip and Philip Wegmann (2016), “The OECD: New wings or still the same old club?” in OECD Observer No 308 Q4, see www.oecdobserver.org Share article at http://oe.cd/obs/2sD

One question mark arising from a closer relationship would be the extent to which OECD members that are not in the EU, particularly the major ones like the US and Japan, might influence EU affairs, but in my model the OECD would act strictly as a consultant, with no right to participate in internal EU decisionmaking. However, an EU contribution to the OECD budget could be considered.

©Hervé Cortinat/OECD

Is this fantasy? After all, on the face of it there are so many differences.

The OECD uses data, analysis and its federating power to coax its members to pursue better policies for better lives.

It has few legally binding conventions,

First, a closer relationship would strengthen and cement the multilateral co-operation and global governance that are so critical for the future of a peaceful and prosperous world order;

would require courageous, out-of-thebox thinking, not to mention a strategic high-level agreement. But it could eventually lead to a template for other international organisations to follow, with wins for the multilateral approach more broadly. Our state-centric system has long overlooked the power, legitimacy and norm-setting potential of certain “sovereign” international and regional organisations. Engaging with them on a more systematic basis cannot but consolidate multilateralism. The EU is admittedly a global actor that falls into this category.

Building a closer EU-OECD relationship

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Sveikiname Lietuvą Lithuania becomes the OECD’s 36th member country

©Shutterstock

Balázs Gyimesi, OECD Observer

Sveikiname Lietuva˛ –welcome to the OECD, Lithuania! The Baltic country became the 36th member of the organisation on 5 July 2018, just one day before its Statehood Day, which commemorates the coronation of the first Lithuanian king, Mindaugas, in 1253. Lithuania is the third Baltic Republic to come on board, alongside Estonia (2010) and Latvia (2016).

The country, which is also member of the EU, NATO and several other multilateral organisations, has a population of 3.1 million, uses the euro as currency and has one of the fastest growing economies in the OECD area–its GDP grew by 3.8% in 2017, above the OECD average of 2.6%.

According to the OECD Economic Survey of Lithuania 2018, Lithuania’s economy has been quickly catching up with the OECD average, as the country’s GDP per head leapt from 36% to 73% of the OECD level between 2000 and 2017. Unemployment has dropped steeply, from 9.1% in 2015 to an estimated 6.6% in 2018. Public finances have also stabilised, thanks to ambitious reforms, the report notes.

Lithuania has a smart workforce, with 39% of its adult population (aged over 25) having tertiary education, compared to the OECD average of 35%. The public’s average rating of the quality of health services in Lithuania has increased from 5.1 to 6.3–on a scale from 1 to 10–between 2003 and 2016, the European quality of life survey shows.

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challenges alone, but will be able to look to the multilateral organisation for the intelligence, advice and encouragement it needs to follow on a path of inclusive, sustainable growth. The OECD will in turn learn from Lithuania’s experiences, which

Lithuania’s membership will help enrich the OECD’s work will help the organisation, as OECD Secretary-General Angel Gurría put it, “in our collective endeavour to provide answers to the leading economic, social and environmental challenges of our time. Lithuania’s membership will help enrich the OECD’s work through the country’s unique experience in several policy areas, while membership in the OECD will support Lithuania’s efforts to improve the well-being of its own citizens.”

References Eurofound (2017), European Quality of Life Survey 2016: Quality of life, quality of public services, and quality of society, Publications Office of the European Union, Luxembourg, www.eurofound.europa.eu/surveys/european-quality-of-life-surveys/ european-quality-of-life-survey-2016 OECD (2018), OECD Economic Surveys: Lithuania 2018, OECD Publishing, Paris, https://doi.org/10.1787/eco_surveys-ltu-2018-en OECD (2018), OECD Reviews of Health Systems: Lithuania 2018, OECD Publishing, Paris, https://doi.org/10.1787/9789264300873-en OECD (2017), Education in Lithuania, Reviews of National Policies for Education, OECD Publishing, Paris, https://doi.org/10.1787/9789264281486-en

Lithuania faces challenges, as the new economic survey argues, such as to reduce its above average inequality, population decline and need to boost low productivity.

See the full list of OECD member countries: www.oecd.org/about/membersandpartners/ list-oecd-member-countries.htm

As a member of the OECD, Lithuania will not have to face these

Share article at https://oe.cd/2jo

Recent speeches by Angel Gurría Signing of the OECD-AFIP MoU establishing a centre of the Academy for Tax and Financial Crime Investigation in Argentina Remarks delivered in Buenos Aires, Argentina, 22 July 2018

Ambassadors Ms Marlies Stubits-Weidinger, Austria Mr Ulrich Lehner, Switzerland Mr Zoltán Cséfalvay, Hungary

G20 Finance Ministers and Central Bank Governors Meeting, Session 5: Working for a globally fair and modern international tax system ©OECD/Julien Daniel

Remarks delivered in Buenos Aires, Argentina, 22 July 2018

For a complete list of the speeches and statements, including those in French and other languages, go to: http://www.oecd.org/about/ secretary-general/

Remarks delivered in New York, US, 25 September 2018 Emerging challenges and shifting paradigms: New perspectives on international co-operation for development Opening remarks delivered in New York, US, 24 September 2018

Mr Brian Pontifex, Australia Mr Jean-Joël Schittecatte, Belgium Mr Christopher Sharrock, United Kingdom Mr Erdem Başçi,Turkey Ms Ivita Burmistre, Latvia

G20 Finance Ministers and Central Bank Governors Meeting, Session 3: Advancing the

Mr Aleksander Surdej, Poland

roadmap to infrastructure as an asset class

Mr Dermot Nolan, Ireland

Remarks delivered in Buenos Aires, Argentina, 21 July 2018

Mr Kristjan Andri Stéfansson, Iceland

G20 Finance Ministers and Central Bank Governors Meeting, Session 2: Future of work–Delivering the menu of policy options Remarks delivered in Buenos Aires, Argentina, 21 July 2018

Launch of the Financing Climate Futures initiative

Ms Michelle d’Auray, Canada

Mr Pekka Puustinen, Finland

Mr Alessandro Busacca, Italy Mr Petr Gandalovič, Czech Republic Ms Irena Sodin, Slovenia Mr Hiroshi Oe, Japan Mr Alar Streimann, Estonia Ms Monica Aspe, Mexico Mr Martin Hanz, Germany

Presentation of OECD 2018 Economic Survey of the Czech Republic at the Technical Agency

Ms Martine Schommer, Luxembourg Ms Jane Coombs, New Zealand

of the Czech Republic

Mr Bernardo Lucena, Portugal

Remarks delivered in Prague, Czech Republic, 16 July 2018

Ms Catherine Colonna, France

OECD Roundtable on Equal Access to Justice Remarks delivered in Riga, Latvia, 6 July 2018

Ms Ingrid Brocková, Slovak Republic Mr Felipe Morande, Chile Mr Manuel Escudero, Spain Mr Per Egil Selvaag, Norway

Launch of the OECD 2018 Economic Survey of Lithuania

Mr Guido Biessen, Netherlands

Remarks delivered in Vilnius, Lithuania, 5 July 2018

Ms Rania Antonopoulou, Greece

Achieving responsible, effective and inclusive multilateralism

Launch of the OECD 2018 Employment Outlook

—­—

Remarks delivered at ESSEC, Cergy campus, France, 12 September 2018

4 July 2018

Launch of Education at a Glance 2018

2018-2027

Remarks delivered in Paris, France, 11 September 2018

Remarks delivered in Paris, France, 3 July 2018

High-Level panel: Blockchain for better policies

Launch of the OECD 2018 Economic Survey

Opening remarks delivered in Paris, France, 4 September 2018

Remarks delivered in The Hague, Netherlands, 2 July 2018

10 years after the failure of Lehman Brothers Remarks delivered in Paris, France, 14 September 2018

Remarks delivered in Paris, France,

Launch of the OECD-FAO Agricultural Outlook

of the Netherlands

Mr Carsten Staur, Denmark

Ms Anna Brandt, Sweden

Mr Andrew Haviland, United States Chargé d’Affaires a.i.

Mr Seong Ho Lee, Korea Chargé d’Affaires a.i.

Ms Lina Ramanauskaite, Lithuania Chargé d’Affaires a.i.

—­— European Union Mr Rupert Schlegelmilch Israel Pending information September 2018

OECD Observer No 315 Q3 2018

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OECD.ORG

Calendar highlights Please note that many of the OECD meetings mentioned are not open to the public or the media and are listed as a guide only. All meetings are in Paris, France, unless otherwise stated. For a comprehensive list, see the OECD website at www.oecd.org/newsroom/upcomingevents JULY

OCTOBER

12-14 Internet Governance Forum

2-3

Conférence de Paris

4

Tax Inspectors Without Borders–Annual Report 2017-18

13-14 Fostering Women’s Economic Empowerment in MENA, Tunis, Tunisia

6-7

EduExpo, Mexico City, Mexico

14-16 Women’s Forum

Launch of Employment Outlook 2018

9

Launch of OECD Economic Surveys: Lithuania 2018, Vilnius, Lithuania

Launch of Regions and Cities at a Glance, Brussels, Belgium

15-16 Ibero-American Summit: A thriving, inclusive and sustainable Ibero-America, Guatemala

9-14 WB/IMF Annual Meetings, Bali, Indonesia

19-20 Eurasia Week

10

20-24 Second OECD meeting of Mining Regions and Cities, Darwin, Australia

2

Launch of OECD Economic Surveys: The Netherlands 2018, The Hague, Netherlands

3

Launch of OECD FAO Agricultural Outlook 2018, Rome, Italy

4 5

6-8 OECD Roundtable on Equal Access to Justice, Riga, Latvia 9-12 Morocco OECD days, Rabat, Morocco

Meeting of the Global Parliamentary Network

22-24 Global Forum on the Circular Economy, Yokohama, Japan

21

Launch of the Economic Outlook

13

Launch of OECD Economic Surveys: Turkey 2018

22-24 International Anti-Corruption Conference, Copenhagen, Denmark

27-29 Green Growth and Sustainable Development Forum

16

Global Forum on Transparency and Exchange of Information for Tax Purposes

23

27-29 OECD World Forum on Statistics, Knowledge and Policy, Incheon, Korea

17-19 Open Government Partnership Global Summit 2018, Tbilisi, Georgia 23

Launch of OECD Economic Surveys: Canada 2018

SEPTEMBER 4-5

OECD Blockchain Policy Forum

10

1st Meeting of the Global Parliamentary Network for Latin America, Santiago, Chile

11

Launch of Education at a Glance

Equity in education: Breaking down barriers to social mobility

31 International Economic Forum on Africa

29-30 Global Forum on Competition

31- Global Perspectives Conference, Berlin, Nov 2 Germany

DECEMBER

NOVEMBER

2-14 OECD at the UN Climate Change Conference (COP24), Katowice, Poland

6

3

Launch of the OECD Pensions Outlook 2018

4

Launch of the OECD Jobs Strategy

6-7

OECD Conference on Culture and Local Development, Venice, Italy

9

Launch of Settling in 2018: Indicators of Immigrant Integration

10

OECD Development Co-operation Peer Reviews: European Union 2018

Government at a Glance: Southeast Asia, Manila, Philippines

6-8 Les journées de l’économie, Lyon, France 8-9

18-19 LEED Forum, Porto, Portugal

Conference on Implications of the digital transformation for the business sector, London, UK

19-21 OECD-IAOS Conference, Better Statistics for Better Lives

11

19

11-13 Paris Peace Forum

Launch of Interim Economic Outlook

Launch of Global Outlook on Financing for Sustainable Development

The strip originally appeared in OECD Observer No 267, May-June 2008.

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13-14 OECD Forum on Green Finance and Investment

13-14 Global Forum on Digital Security and Prosperity

BOOKS OECD iLibrary

Migration: Old phenomenon, new policies Migration is nothing new.

People have moved across communities, states and continents for millennia. In 2017, about 258 million people worldwide were living outside their country of birth, nearly half in OECD countries. The International Migration Outlook 2018 looks at who these migrants are and maps what is driving their flow into OECD countries, where an estimated 5 million new migrants settled permanently in 2017, representing a 5% drop from 2016 levels.

Migrants come for many reasons: to take up studies, request asylum, join family, seek or take up new work, or at the request of their employer. Work-related

migration is an area that often makes the headlines, reflecting worries about the impact of migrants and refugees on the job market. What does the data show?

Temporary labour migration–the recruiting of immigrant workers on a short-term basis, normally used for either low or very high-skilled workers– increased by 11% between 2015 and 2017 across the OECD. International recruitment of seasonal workers rose by 30% in 2016. Within the European Union (EU), the number of posted workers (EU workers sent by their employers to other EU countries) neared 2.2 million.

Refugees also seek work, and their impact on the labour market varies across and within countries. In the EU overall, the inflow of refugees is expected to have expanded the working-age population by less than half a percent by December 2020. However, in some places, recently arrived refugees may increase the

number of people looking for a job, at least in the short-to-medium term.

Migration isn’t new–and it isn’t going away. In order to ensure the best outcomes for everyone, countries need to anticipate changing trends in migration flows and labour market needs. Many are developing or refining programmes to attract highly qualified foreigners and some are creating specialised visas that cater to start-ups. Support may also be needed for those native-born people most affected by the impact of new arrivals on the job market, in particular men with little education or skills. Policies like these will help countries prepare for the future and generate more opportunities for everyone, within an increasingly diverse and mobile global society.

OECD (2018), International Migration Outlook 2018, OECD Publishing, Paris, https://doi.org/10.1787/migr_ outlook-2018-en Share article at https://oe.cd/obs/2tf

Nudging us forward Most people probably believe they make decisions with integrity. Yet behavioural evidence reveals otherwise. Often, we’re not even aware when we are deviating from ethical standards, simply because justifications and biased judgments affect our perception of what constitutes a breach of integrity.

Policymakers traditionally create anticorruption policies predicated on rational human decision-making, for instance, aiming for the higher goal, rather than the–alas!–lower reality. But a better approach may be to integrate human fallibility or irrationality into policy design instead.

While rational decision-making models

produce policies that favour control and sanctions, policies based on behavioural insights aim to nudge an individual moral reflection and social dynamics to influence better behaviour and ethical choices. For example, the Secretaría de la Function Pública in Mexico, in co-operation with the research centre CIDE, tried sending different types of reminder emails to public employees requiring them to register their received gifts. As a result, the number of gifts registered around the Christmas period, compared to previous years and to a control group that didn’t receive any message, increased.

However, the messages reminding public officials of their legal obligations and appealing to their impartiality and honesty were more effective than those referring to sanctions or registrations made by colleagues.

Behavioural insights can also point out problems in the ways responsibilities are assigned within an integrity system. When responsibility is widely shared among

individuals, each feels less responsible in cases of joint misconduct: guilt is smaller when shared. For example, if an individual takes a test knowing that all the other candidates are helping each other, not cheating will put him at a disavantage. He may then feel he had little choice in the matter. Such situations must be identified and addressed through interventions from outside the group and strict enforcement.

Policymaking has historically neglected natural human, that is, not always rational, behaviour, yet this approach can help nudge integrity and anticorruption policies in the right direction, making them not just more efficient, but more human too.

OECD (2018), Behavioural Insights for Public Integrity: Harnessing the Human Factor to Counter Corruption, OECD Public Governance Reviews, OECD Publishing, Paris, https://doiorg/10.1787/9789264297067-en Share article at https://oe.cd/obs/2tg

OECD Observer No 315 Q3 2018

41

BOOKS OECD iLibrary

New publications State-Owned Enterprises and Corruption: What Are the Risks and What Can Be Done?

Corruption is the antithesis of good governance, and it is a direct threat to the purpose of state ownership. This report brings a comprehensive set of facts and figures to the discussion about the corruption risks facing state-owned enterprises (SOEs) and how they, and state ownership, go about addressing them.

ISBN: 978-92-64-30304-1 September 2018, 160 pages €30.00 $36.00 £24.00 ¥3 900

Why do Countries Export Fakes?

This study provides an in-depth exploration of a series of factors that can explain a country’s propensity to export fake goods. The analysis explores the role and interplay of macroeconomic factors, governance variables, and the presence of Free Trade Zones, logistics facilities and trade facilitation.

ISBN: 978-92-64-30246-4 June 2018, 64 pages €24.00 $29.00 £19.00 ¥3 100

Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda This report analyses the evolution of financial flows, emerging trends and innovative paradigms related to the development co-operation of local and regional governments, including but not limited to official development assistance extended by sub-national governments.

ISBN: 978-92-64-30290-7 August 2018, 228 pages €45.00 $54.00 £36.00 ¥5 800

42

All publications are available to read and share at www.oecd-ilibrary.org OECD-FAO Agricultural Outlook 20182027

The 14th joint edition of the OECD-FAO Agricultural Outlook provides market projections for major agricultural commodities, biofuels and fish, as well as a special feature on the prospects and challenges of agriculture and fisheries in the Middle East and North Africa.

ISBN: 978-92-64-29721-0 August 2018, 108 pages €70.00 $84.00 £56.00 ¥9 100

States of Fragility 2018 The report exposes the critical challenge posed by fragility in achieving the aspirations of the 2030 Agenda, sustainable development and peace. It highlights twelve key aspects of fragility, defying common assumptions and simplistic categorisation. It documents progress made in fragile situations on attaining sustainable development, unveiling exit doors from the fragility trap.

ISBN: 978-92-64-30206-8 September 2018, 280 pages €55.00 $66.00 £44.00 ¥7 100

International Migration Outlook 2018 The 2018 edition of International Migration Outlook analyses recent developments in migration movements and policies in OECD countries and some non-member countries, and looks at the evolution of the labour market outcomes of immigrants in OECD countries, with a focus on the migrants’ job quality and on the sections and occupations in which they are concentrated.

ISBN: 978-92-64-30194-8 September 2018, 408 pages €119.00 $143.00 £95.00 ¥15 400

Fiscal Decentralisation and Inclusive Growth Certain institutions and policies can contribute to a more equitable distribution of economic gains across jurisdictions and income groups, such as equalisation systems. In particular, the quality of public sector outcomes depends on how responsibilities and functions such as education or health care are shared across government levels.

ISBN: 978-92-64-30247-1 August 2018, 260 pages €50.00 $60.00 £40.00 ¥6 500

Rethinking Urban Sprawl: Moving Towards Sustainable Cities This report provides a new perspective to the nature of urban sprawl and its causes and environmental, social and economic consequences. This perspective, which is based on the multi-dimensionality of urban sprawl, sets the foundations for the construction of new indicators to measure the various facets of urban sprawl.

ISBN: 978-92-64-18988-1 June 2018, 180 pages €35.00 $42.00 £28.00 ¥4 500

OECD Insurance Statistics 2017 This annual publication shows official insurance statistics for all OECD countries including data on premiums collected, claims, and commissions by type of insurance; investments by type of investment; and numbers of companies and employees.

ISBN: 978-92-64-30342-3 August 2018, 168 pages €116.00 $140.00 £92.00 ¥15 000

BOOKS OECD iLibrary

Focus on economics OECD Economic Outlook, Volume 2018 Issue 1 This issue includes a general assessment, a special chapter on policy challenges from closer international trade and financial integration, and a chapter summarising developments and providing projections for each individual country, and a statistical annex.

ISBN: 978-92-64-30006-4 July 2018, 335 pages €104.00 $125.00 £83.00 ¥13 500

OECD Compendium of Productivity Indicators 2018 This report presents a comprehensive overview of recent and longerterm trends in productivity levels and growth in OECD countries, accession countries, key partners and some G20 countries. It includes measures of labour productivity, capital productivity and multifactor productivity, as well as indicators of international competitiveness.

ISBN: 978-92-64-30111-5 August 2018, 140 pages €70.00 $84.00 £56.00 ¥9 100

Tax Policy Reforms 2018 This third edition covers the latest tax policy reforms in all OECD countries, as well as in Argentina, Indonesia and South Africa. Monitoring tax policy reforms and understanding the context in which they were undertaken is crucial to informing tax policy discussions and to supporting governments in the assessment and design of tax reforms.

ISBN: 978-92-64-30445-1 September 2018, 124 pages €24.00 $29.00 £19.00 ¥3 100

All publications available at www.OECD-iLibrary.org OECD Economic Surveys: European Union 2018

After years of crisis, the European economy is expanding robustly, and GDP growth is projected to remain strong in 2018 and 2019. With an expansion underway, attention needs to shift to Europe’s long-term challenges. To further strengthen the confidence of all its citizens, the European Union needs to focus on policies that support a stronger and more inclusive growth.

ISBN: 978-92-64-30212-9 August 2018, 116 pages €49.00 $59.00 £39.00 ¥6 300

OECD Sovereign Borrowing Outlook 2018 The 2018 edition of the OECD Sovereign Borrowing Outlook presents gross borrowing requirements, net borrowing requirements, central government marketable debt and funding strategies for the OECD area and country groupings.

ISBN: 9789264292598 July 2018, 92 pages €24.00 $29.00 £19.00 ¥3 100

Economic Policy Reforms 2018: Going for Growth Interim Report

OECD Employment Outlook 2018 The 2018 edition of the OECD Employment Outlook reviews labour market trends and prospects in OECD countries.

Wage growth remains sluggish due to low inflation expectations, weak productivity growth and adverse trends in low-pay jobs.

ISBN: 978-92-64-30178-8 August 2018, 296 pages €119.00 $143.00 £95.00 ¥15 400

Trade Facilitation and the Global Economy In a globalised world, where goods cross borders many times as intermediate and as final products, trade facilitation is essential to lowering overall trade costs and increasing economic welfare, in particular for developing and emerging economies. Facilitation efforts undertaken by various countries around the world also show that the benefits of such measures clearly compensate the costs and challenges posed by their implementation.

ISBN: 978-92-64-27756-4 June 2018, 140 pages €40.00 $48.00 £32.00 ¥5 200

Tax Challenges Arising from Digitalisation– Interim Report 2018: Inclusive Framework on BEPS

Going for Growth is the OECD’s regular report on structural reforms in policy areas that have been identified as priorities to boost incomes in OECD and selected non-OECD countries (Argentina, Brazil, the People’s Republic of China, Colombia, Costa Rica, India, Indonesia, Lithuania, the Russian Federation and South Africa). The next full report will be published in 2019.

This interim report sets out the Inclusive Framework’s agreed direction of work on digitalisation and the international tax rules through to 2020. It describes how digitalisation is also affecting other areas of the tax system, providing tax authorities with new tools that are translating into improvements in taxpayer services, improving the efficiency of tax collection and detecting tax evasion.

ISBN: 9789264291959 May 2018, 112 pages €87.00 $105.00 £69.00 ¥11 300

ISBN: 9789264293052 June 2018, 216 pages €40.00 $48.00 £32.00 ¥5 200 OECD Observer No 315 Q3 2018

43

BOOKS OECD iLibrary

Dealing with dementia In her Oscarwinning performance as the main character of the 2014 film Still Alice, actress Julianne Moore played a linguistics professor diagnosed with early-onset familial Alzheimer’s disease, a rare form of dementia. It was a reminder of the struggle that is affecting the everyday life of a growing number of people worldwide.

In 2017, 19 million people were living with dementia in OECD countries, and by 2050, it will reach an estimated 41 million people, according to Care Needed: Improving the Lives of People with Dementia. Though Ms Moore’s character was relatively young, the ageing population of many OECD countries is widely seen as a key factor

contributing to the growing prevalence of the disease.

Despite the lack of a cure, there is a range of services available that can improve the health and quality of life of people living with dementia. The trouble is, many people can live with the disease without realising it. Fewer than 40% of countries are able to estimate diagnosis rates nationally, and in most countries, non-specialist primary care serves as the first point of contact for people with memory problems. The quality of care for people with dementia is often poor, with most care facilities not being designed appropriately, even though 70% of nursing home residents have some form of cognitive impairment.

Fortunately, governments have started to realise the scope of the challenge ahead.

To date, 25 OECD countries have set up specialist centres called “memory clinics”

to help with diagnosis. Over 90% of OECD countries have developed dementiafriendly community initiatives to reduce stigma and improve the communities’ response to people living with the disease.

But beyond formal care, policymakers should not forget about family and other informal carers, who represent an estimated 40-75% of all costs of dementia care through the likes of unpaid labour, forgoing work, and the out-of-pocket costs that informal carers spend on their loved ones. Furthermore, the emotional strain of caring for someone with memory loss can be a burden and lead to burnout, depression, anxiety and other health issues. Those caring for people living with dementia need care and attention too.

OECD (2018), Care Needed: Improving the Lives of People with Dementia, OECD Health Policy Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264085107-en Share article at oe.cd/obs/dementia

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Taking inequality out of growth “All progress is precarious, and the solution of one problem brings us face to face with another problem,” said Martin Luther King, Jr. The annual GDP growth rate of the global economy and the average unemployment rate across OECD countries have returned almost to precrisis levels. Although these are positive signs for the future, policymakers must resist rose-coloured glasses. One major reason is that inequality, in incomes and opportunities, continues to widen.

As Going for Growth argues, the trend began before the crisis. Indeed, inequality is on a long-term rise in many countries, and to explain this, experts point to stagnating productivity growth and megatrends such as digitalisation and automation. But how should policymakers respond?

Reducing inequality requires a “mixed” policy approach that bridges economic improvements with greater social cohesion. Countries must cultivate

% 14

Insurance, 2014

Assistance, 2014

20 05

Total, 2007

12 10 8 6 4 2 EU

OE

CD

0 R JP N HU N PO L SV K KO R US A CH L CZ E IS R NO SV R N LU CA X N LT U NZ L ES T CH E IT A LV A GB R DN K NL D AU S PR T AU T SW E BE L FR A DE U ES P IR L FI N

This is partly due to people taking lowerpaying, less-productive jobs after being cut off from crisis-period unemployment benefits. The number of public assistance recipients shot up after 2008 but dropped quickly as people exhausted their rights to benefits. Without welfare, workers took on lower paying jobs than they might have otherwise, especially less productive, part-time positions. This is reflected in decreased hourly productivity rates since 2008. Prior to the crisis, productivity was growing 2.3% annually in OECD countries.

Now, average productivity growth is 1.2%.

Rise in unemployment benefit recipients Recipient totals from administrative sources, in % of working-age population (ages 16-64)

TU

For the first time since 2008, employment in OECD countries is higher than it was before the financial crisis. But this doesn’t mean that jobs are of higher quality or better paid than they used to be. In fact, wage stagnation and job inequality are higher than pre-crisis levels for low and middle earners, and wage growth has been limited to the top 1% of income earners only.

DATABANK

Source: OECD Employment Outlook 2018

Boosting productivity will require investment in re-training and reemployment–and the earlier, the better.

Countries with early intervention programmes see the most success. For example, 90% of displaced workers in Finland and Sweden are re-employed within one year, compared to just 30% in France and Portugal. It is also crucial

that countries develop lifelong highquality education and training systems that provide the skills adapted to the changing nature of work.

OECD (2018), OECD Employment Outlook 2018, OECD Publishing, Paris, https://doi. org/10.1787/empl_outlook-2018-en.

Share article at https://oe.cd/obs/2sR

Inequality remains a challenge, particularly in developing economies 2014 or latest available year* 0.7 0.6 0.5 0.4 0.3

Least unequal upper half of the sample

0.2 0.1 0

IS L SV N SV K DN K CZ E FI N BE L NO R AU T SW E LU X HU N DE U PO L FR A KO R EU CH E IR L NL D OE CD CA N IT A JP N ES T PR T AU S GR C ES P LV A IS R NZ L GB R LT U RU S US A TU R CH L M EX BR A CR I IN D CH N ZA F

Employment is back up, but salaries aren’t

20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16

0

20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16

0

* Gini at disposable income (after taxes and transfers), for total population: 0 = equality, 1 = inequality. The latest available year is 2016 for Costa Rica; 2015 for Chile, Finland, the UK, Israel, Korea, the Netherlands, the US, South Africa; 2013 for Brazil and China; 2011 for India and the Russian Federation.

Source: OECD Income Distribution Database

business dynamism, innovation and knowledge to boost flagging productivity, while also focusing on labour market policies, such as helping workers acquire and improve the high-level skills that are demanded by today’s rapidly changing economy. These policies should especially seek to encourage the inclusion of groups with traditionally lower employment rates and fewer opportunities, including women, ethnic minorities and young people. In terms of tax and transfer

policies, shifting the tax burden towards immovable property, broadening the tax base and moving towards environmental taxation would all improve both growth and well-being.

OECD (2018), Economic Policy Reforms 2018: Going for Growth Interim Report, OECD Publishing, Paris, https://doi.org/10.1787/ growth-2018-en.

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OECD Observer No 315 Q3 2018

45

DATABANK % change from: previous period

46

level:

previous year

current period

same period last year

Australia

Gross domestic product Industrial production Consumer price index

Q2-2018 0.9 3.4 Q2-2018 0.2 3.4 Q2-2018 0.4 2.1

Current balance Unemployment rate Interest rate

Q2-2018 -10.2 -8.3 Q3-2018 5.2 5.5 Q3-2018 2.0 1.7

Austria

Gross domestic product Industrial production Consumer price index

Q2-2018 0.3 2.9 Q2-2018 1.8 6.0 Q3-2018 0.3 2.1

Current balance Unemployment rate Interest rate

Q2-2018 2.6 2.2 Q2-2018 4.7 5.5 Q3-2018 -0.3 -0.3

Belgium

Gross domestic product Industrial production Consumer price index

Q2-2018 0.4 1.4 Q2-2018 0.3 1.2 Q3-2018 0.6 2.3

Current balance Unemployment rate Interest rate

Q2-2018 -2.3 0.9 Q2-2018 6.3 7.3 Q3-2018 -0.3 -0.3

Canada

Gross domestic product Industrial production Consumer price index

Q2-2018 0.7 1.9 Q2-2018 1.7 3.5 Q3-2018 0.5 2.7

Current balance Unemployment rate Interest rate

Q2-2018 -12.3 -11.1 Q3-2018 5.9 6.2 Q3-2018 1.8 1.2

Chile

Gross domestic product Industrial production Consumer price index

Q2-2018 0.7 5.0 Q2-2018 0.3 5.2 Q3-2018 0.7 2.8

Current balance Unemployment rate Interest rate

Q2-2018 -2.1 -1.3 Q2-2018 6.8 6.7 Q3-2018 2.6 2.5

Czech

Republic

Gross domestic product Industrial production Consumer price index

Q2-2018 0.7 2.4 Q2-2018 1.1 2.2 Q3-2018 0.6 2.4

Current balance Unemployment rate Interest rate

Q2-2018 1.3 0.7 Q2-2018 2.3 3.1 Q3-2018 1.4 0.4

Denmark

Gross domestic product Industrial production Consumer price index

Q2-2018 0.1 0.5 Q2-2018 -1.0 -1.3 Q3-2018 0.4 0.9

Current balance Unemployment rate Interest rate

Q2-2018 3.7 6.5 Q2-2018 5.1 5.7 Q3-2018 -0.3 -0.3

Estonia

Gross domestic product Industrial production Consumer price index

Q2-2018 1.4 3.7 Q2-2018 -0.5 2.6 Q3-2018 1.2 3.6

Current balance Unemployment rate Interest rate

Q2-2018 0.1 0.1 Q2-2018 5.1 6.6 Q3-2018 -0.3 -0.3

Finland

Gross domestic product Industrial production Consumer price index

Q2-2018 0.3 2.5 Q2-2018 -0.1 4.1 Q3-2018 0.3 1.3

Current balance Unemployment rate Interest rate

Q2-2018 -0.5 -0.6 Q2-2018 7.6 8.7 Q3-2018 -0.3 -0.3

France

Gross domestic product Industrial production Consumer price index

Q2-2018 0.2 1.7 Q2-2018 -0.2 1.1 Q3-2018 0.3 2.2

Current balance Unemployment rate Interest rate

Q2-2018 -3.4 -2.2 Q2-2018 9.1 9.5 Q3-2018 -0.3 -0.3

Germany

Gross domestic product Industrial production Consumer price index

Q2-2018 0.5 1.9 Q2-2018 0.7 3.4 Q3-2018 0.7 2.1

Current balance Unemployment rate Interest rate

Q2-2018 87.7 64.0 Q2-2018 3.4 3.8 Q3-2018 -0.3 -0.3

Greece

Gross domestic product Industrial production Consumer price index

Q2-2018 0.2 1.8 Q2-2018 -1.6 1.7 Q3-2018 -0.8 1.0

Current balance Unemployment rate Interest rate

Q2-2018 -1.1 -0.2 Q2-2018 19.4 21.6 Q3-2018 -0.3 -0.3

Hungary

Gross domestic product Industrial production Consumer price index

Q2-2018 1.0 4.7 Q2-2018 0.6 3.2 Q3-2018 0.9 3.4

Current balance Unemployment rate Interest rate

Q2-2018 0.4 1.6 Q2-2018 3.7 4.3 Q3-2018 0.2 0.3

Iceland

Gross domestic product Industrial production Consumer price index

Q2-2018 1.8 6.9 Q4-2017 1.7 10.2 Q3-2018 0.6 2.7

Current balance Unemployment rate Interest rate

Q2-2018 0.1 0.2 Q2-2018 2.9 2.9 Q3-2018 4.7 4.9

Ireland

Gross domestic product Industrial production Consumer price index

Q2-2018 2.5 9.1 Q2-2018 1.6 4.6 Q3-2018 0.7 0.8

Current balance Unemployment rate Interest rate

Q2-2018 14.4 -1.2 Q2-2018 5.8 6.6 Q3-2018 -0.3 -0.3

Israel

Gross domestic product Industrial production Consumer price index

Q2-2018 0.4 4.0 Q2-2018 -3.1 1.1 Q3-2018 0.3 1.3

Current balance Unemployment rate Interest rate

Q2-2018 0.8 2.4 Q2-2018 4.0 4.4 Q3-2018 0.1 0.1

Italy

Gross domestic product Industrial production Consumer price index

Q2-2018 0.2 1.2 Q2-2018 -0.2 1.9 Q3-2018 0.6 1.5

Current balance Unemployment rate Interest rate

Q2-2018 13.4 11.5 Q2-2018 10.6 11.2 Q3-2018 -0.3 -0.3

Japan

Gross domestic product Industrial production Consumer price index

Q2-2018 0.7 1.3 Q2-2018 1.2 1.9 Q3-2018 0.5 1.1

Current balance Unemployment rate Interest rate

Q2-2018 50.4 45.0 Q2-2018 2.4 2.9 Q2-2018 0.1 0.1

Korea

Gross domestic product Industrial production Consumer price index

Q3-2018 0.6 2.0 Q2-2018 2.8 1.4 Q3-2018 0.6 1.6

Current balance Unemployment rate Interest rate

Q2-2018 18.4 16.8 Q3-2018 4.0 3.6 Q3-2018 1.7 1.4

Latvia

Gross domestic product Industrial production Consumer price index

Q2-2018 1.0 4.4 Q2-2018 -0.5 0.8 Q3-2018 -0.1 2.9

Current balance Unemployment rate Interest rate

Q2-2018 0.1 -0.1 Q2-2018 7.7 8.9 Q3-2018 -0.3 -0.3

Luxembourg

Gross domestic product Industrial production Consumer price index

Q2-2018 0.0 3.1 Q2-2018 -1.9 1.4 Q3-2018 0.5 1.7

Current balance Unemployment rate Interest rate

Q2-2018 -0.3 0.7 Q2-2018 5.2 5.6 Q3-2018 -0.3 -0.3

Mexico

Gross domestic product Industrial production Consumer price index

Q2-2018 -0.2 1.6 Q4-2017 0.4 ..

Q3-2018 1.3 4.9

Current balance Unemployment rate Interest rate

Q2-2018 -5.4 -2.6 Q3-2018 3.3 3.3 Q3-2018 8.2 7.4

DATABANK % change from: previous period

level:

previous year

current period

same period last year

Netherlands

Gross domestic product Industrial production Consumer price index

Q2-2018 0.8 3.0 Q2-2018 -4.1 -1.4 Q3-2018 1.0 2.0

Current balance Unemployment rate Interest rate

Q2-2018 25.7 18.2 Q2-2018 3.9 5.0 Q3-2018 -0.3 -0.3

New Zealand

Gross domestic product Industrial production Consumer price index

Q2-2018 1.2 3.0 Q2-2018 0.0 0.8 Q3-2018 0.9 1.9

Current balance Unemployment rate Interest rate

Q2-2018 -1.9 -1.1 Q2-2018 4.5 4.8 Q3-2018 1.9 2.0

Norway

Gross domestic product Industrial production Consumer price index

Q2-2018 0.4 1.5 Q2-2018 -0.9 -0.3 Q3-2018 1.1 3.3

Current balance Unemployment rate Interest rate

Q2-2018 9.5 6.7 Q2-2018 3.8 4.4 Q3-2018 1.1 0.8

Poland

Gross domestic product Industrial production Consumer price index

Q2-2018 1.0 5.0 Q3-2018 0.5 6.0 Q3-2018 0.0 2.1

Current balance Unemployment rate Interest rate

Q2-2018 0.8 0.0 Q2-2018 3.7 5.1 Q3-2018 1.7 1.7

Portugal

Gross domestic product Industrial production Consumer price index

Q2-2018 0.6 2.4 Q2-2018 -1.6 0.5 Q3-2018 -0.3 1.4

Current balance Unemployment rate Interest rate

Q2-2018 -0.6 0.2 Q2-2018 7.0 9.3 Q3-2018 -0.3 -0.3

Slovak

Republic

Gross domestic product Industrial production Consumer price index

Q2-2018 1.1 3.9 Q2-2018 0.9 2.7 Q3-2018 0.1 2.7

Current balance Unemployment rate Interest rate

Q2-2018 -1.0 -0.7 Q2-2018 6.8 8.3 Q3-2018 -0.3 -0.3

Slovenia

Gross domestic product Industrial production Consumer price index

Q2-2018 0.8 4.3 Q2-2018 0.7 6.7 Q3-2018 -0.3 1.9

Current balance Unemployment rate Interest rate

Q2-2018 1.0 0.8 Q2-2018 5.4 6.6 Q3-2018 -0.3 -0.3

Spain

Gross domestic product Industrial production Consumer price index

Q2-2018 0.6 2.5 Q2-2018 -0.5 1.2 Q3-2018 -0.1 2.2

Current balance Unemployment rate Interest rate

Q2-2018 2.8 5.9 Q2-2018 15.4 17.4 Q3-2018 -0.3 -0.3

Sweden

Gross domestic product Industrial production Consumer price index

Q2-2018 0.8 2.4 Q2-2018 -0.6 3.6 Q3-2018 0.8 2.1

Current balance Unemployment rate Interest rate

Q2-2018 2.7 5.1 Q2-2018 6.2 6.7 Q3-2018 -0.7 -0.7

Switzerland

Gross domestic product Industrial production Consumer price index

Q2-2018 0.7 3.2

.. ..

Q3-2018 -0.1 1.1

Current balance Unemployment rate Interest rate

Q2-2018 22.8 18.3 Q2-2018 4.9 4.7 Q3-2018 -0.7 -0.7

Turkey

Gross domestic product Industrial production Consumer price index

Q2-2018 0.9 5.5 Q2-2018 -0.9 5.1 Q3-2018 6.6 19.4

Current balance Unemployment rate Interest rate

Q2-2018 -11.9 -10.3 Q2-2018 10.6 11.1

.. ..

United

Kingdom

Gross domestic product Industrial production Consumer price index

Q2-2018 0.4 1.2 Q2-2018 -0.8 0.8 Q3-2018 0.5 2.3

Current balance Unemployment rate Interest rate

Q2-2018 -27.6 -29.7 Q2-2018 4.0 4.4 Q3-2018 0.8 0.3

United

States

Gross domestic product Industrial production Consumer price index

Q3-2018 0.9 3.0 Q3-2018 0.8 4.7 Q3-2018 0.3 2.6

Current balance Unemployment rate Interest rate

Q2-2018 -101.5 -121.8 Q3-2018 3.8 4.3 Q3-2018 2.2 1.2

European

Union

Gross domestic product Industrial production Consumer price index

Q2-2018 0.5 2.1 Q2-2018 0.0 2.3 Q3-2018 0.1 2.2

Current balance Unemployment rate Interest rate

Q2-2018 73.8 45.4 Q2-2018 6.9 7.7

.. ..

Euro area

Gross domestic product Industrial production Consumer price index

Q2-2018 0.4 2.2 Q2-2018 0.1 2.3 Q3-2018 0.2 2.1

Current balance Unemployment rate Interest rate

Q2-2018 115.7 82.1 Q2-2018 8.3 9.2 Q3-2018 -0.3 -0.3

1

Brazil

Gross domestic product Industrial production Consumer price index

Q2-2018 0.2 1.0 Q2-2018 -2.6 0.5 Q3-2018 1.4 4.4

Current balance Unemployment rate Interest rate

Q3-2018 -6.6 -6.2

.. ..

.. ..

1 China

Gross domestic product Industrial production Consumer price index

.. ..

.. ..

Q3-2018 0.6 2.3

Interest rate

Q2-2018 -1.5 46.1

.. ..

.. ..

1 India

Gross domestic product Industrial production Consumer price index

Q2-2018 1.9 8.0 Q2-2018 -0.7 5.1 Q2-2018 0.7 4.0

Current balance Unemployment rate Interest rate

Q2-2018 -16.2 -14.8

.. ..

Q2-2018 6.3 6.2

1Indonesia

Gross domestic product Industrial production Consumer price index

Q2-2018 1.3 5.2

.. ..

Q3-2018 0.6 3.1

Interest rate

Q2-2018 -9.5 -5.8

.. ..

Q2-2018 5.8 6.6

Russian

Federation

Gross domestic product Industrial production Consumer price index

Q2-2018 0.9 1.7 Q2-2018 1.0 2.7 Q3-2018 0.8 3.0

Current balance Unemployment rate Interest rate

Q2-2018 23.3 5.1

.. ..

Q2-2018 7.1 9.1

1 South

Africa

Gross domestic product Industrial production Consumer price index

Q2-2018 -0.2 0.5

.. ..

Q3-2018 1.2 4.9

Interest rate

Q2-2018 .. -2.0

.. ..

Q3-2018 7.1 7.2

Non-members

balance Current Unemployment rate

balance Current Unemployment rate

balance Current Unemployment rate

Gross domestic product: Volume series; seasonally adjusted. Leading indicators: A composite indicator based on other indicators of economic activity, which signals cyclical movements in industrial production from six to nine months in advance. Consumer price index: Measures changes in average retail prices of a fixed basket of goods and services. Current balance: Billion US$; seasonally adjusted. Unemployment rate: % of civilian labour force, standardised unemployment rate; national definitions for Iceland, Mexico and Turkey; seasonally adjusted apart from Turkey. Interest rate: Three months.

Current balance data are reported according to the BPM6 classification.

..=not available, 1 Key Partners.

Source: Main Economic Indicators.

September 2018.

OECD Observer No 315 Q3 2018

47

0

Insurance, 2014

The low-growth trap

20 05

20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16

20

0

20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16

DATABANK

20

Total, 2007

Growth in real average compensation per hour (employees) Total economy, CPI all items-deflated, % change at annual rate

The industries with lowest growth vary from country to country. In the US and Sweden, high-tech industries like electronics have seen some of the largest productivity decelerations.

In the Czech Republic and Slovenia, lower-tech industries like textiles have stagnated most.

Policymakers have finally started to recognise the drivers of their country’s slowdowns and are tentatively taking measures to reinvigorate growth.

6

2010-2016

2001-2007

5 4 3 2 1 0 -1 -3

A LT U ES T PO L SW E IS R KO R SV K DE U NO R IR L CZ E CH E FR A CA N AU T LU X FIN DN K US A SV N ZA F AU S M EX HU N BE L JP N NL D NZ L IT A ES P GB R PR T GR C

-2

http://dx.doi.org/10.1787/888933734227

Source: OECD Compendium of Productivity Indicators

Common drivers in the G7 economies are skills mismatches, higher trade barriers and decreasing investment in production technology. As these productivity indicators become clearer, policy reforms like targeted capital investment are beginning to turn the tide. The evidence points to gradual productivity increases in Canada, France, Germany and Japan over the next few years. But until labour

OECD Observer Crossword

© Myles Mellor/OECD Observer

12 9 9

LV

Everyone wants a raise. But the reality is that compensation growth is slowing down, and it has been for years. The cause? Economies have been stuck in a low-growth trap. Over the past two decades, labour productivity growth has slowed in every major advanced economy in the world. And although the volatility of the 2008 crisis inspired more cautious economic predictions, the low-growth trend is undeniable. Topping the lowgrowth list are G7 countries like France, the UK, the US and Canada.

No 3, 2018

productivity consistently increases, workers will have to wait on their raises.

OECD (2018), Compendium of Productivity Indicators 2018, OECD Publishing, Paris. https://doi.org/10.1787/pdtvy-2018-en Share article at https://oe.cd/obs/2sS

Try it online at www.oecdobserver.org/crossword

Across 1 Nation celebrating 50 years of OECD membership in Jan 2019 5 Consumption tax 7 One of the 2018 Nobel Peace Prize winners, ____ Murad 8 First name who played a big role in Brexit 9 The “city that never sleeps” 11 Sphere 14 ____ moment (sudden realisation) 15 Scandinavian country, abbr.

16 Ancient Peruvian civilisation 17 Colour that became synonymous with protests in France 20 Relay race segment 23 People or factors that determine trends and innovations 26 Iterate 28 Met, as a board 29 Its share of shopping income continues to increase

Down 1 Crisis that had its tenth anniversary in 2018 2 Head motion 3 Global retail giant 4 Confer a knighthood 5 Treaty that has its 100 year anniversary in June 2019 6 Noted manufacturer of electric cars 10 Ozone depleter, abbr.

12 Booker Prize winner Arundhati ____, also human rights activist 13 Unsettling EU departure 18 Middle East “bank” 19 Gulf of Arabian Sea 21 Ending for east or west 22 Come together 24 Soul singer Corinne Bailey ____ 25 ____ materials 27 Circle ratio

Myles Mellor is one of the top crossword writers in the world and has been producing them for the OECD Observer since 2013. You can try them online and on your mobile phone at www.oecdobserver.org/crossword. Subscribe to Myles’ crosswords at www.ilovecrosswords.com

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