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EDITORIAL

type of growth, driven by new start-ups, innovative research, and the dynamism of small and medium enterprises. We need new ideas, new entrepreneurs, new business models. And we need renewable energies and green technologies to move to a low-carbon era. In the large emerging-market economies, structural reforms can do much to narrow national and global balances in a durable manner. In China efforts to bolster social welfare systems could reduce the need for precautionary saving and lift consumer demand. This in turn could help curb the large current account surpluses there, while bolstering exports from deficit countries. —and go social But simply returning to growth is not enough. It is impossible to overstress this point. Human suffering and social strife have been the most tragic consequences of this crisis. Moreover, as this Yearbook shows, rising inequality and discontent among the middle classes risk undermining the entire economic system. I see three pressing social challenges to restore confidence: stop unemployment from becoming entrenched in many countries, focus more attention on youths, and reduce the inequality which threatens social cohesion and living standards. In 2012 governments must “go social” by deploying appropriate structural and social policies. Unemployment is the human face of the crisis. More than 200 million people are unemployed worldwide, and 45 million of them are in OECD countries. The situation is even more dramatic if we look at young people. Even before the crisis in 2007 and early 2008 when the OECD economies were at their strongest and the overall unemployment rate was less than 6%, average youth unemployment remained stubbornly high, at over 15%. Today, it stands at about 20%. The situation is worse still in some countries: one in four youths currently in the labour market in France or in Italy is jobless. Youth unemployment in Spain has risen to close to 49%. We must use every means possible to avoid the current risk of a “lost generation”. “Stronger!” This was the central message in the OECD Employment Outlook 2011 and behind the G20’s significant decision to set up a Task Force on Employment focusing on youths. What can governments do in 2012? A two-pronged approach is needed. First, they must ensure that their labour market programmes are active, with counselling, job-search assistance and temporary hiring subsidies for low-skilled youths. Then, to give all youths a better start in the labour market in the long run, they may need to review their whole education

systems and get started on the job of equipping youths with the basic skills they need. There may be vocational education and training programmes to design or best practices to emulate. For instance, youth unemployment rates are lower in countries with successful apprenticeship systems, such as Austria, Germany and the Netherlands. As part of our effort in supporting policymakers, we will be issuing the OECD Skills Strategy in 2012, identifying the skills that are needed to ensure a shift from lifetime employment to lifetime employability, and examining the most effective policies. A vital step to deal with the unemployment scourge is to reverse the steep rise in the number of people who have been unemployed for a year or more. Today, this concerns a third of unemployed workers in the US and about 40% in Spain, meaning wasted resources and, worse, exclusion and poverty. Given the crisis, governments must introduce pro-active, cost-effective measures, such as hiring subsidies which support companies ready to expand their workforces, and investment in training to boost skills and give jobseekers a better chance of finding decent work. Fighting inequality Going social will also help reduce inequality; this was already rising before the global financial crisis and may well have accelerated since. The title of our new publication on this issue sounds an ominous warning: Divided We Stand: Why Inequality Keeps Rising. In fact, inequality is on the rise in most advanced and emerging-market G20 economies and so threatens welfare globally, putting more and more ordinary people and their families in difficult circumstances. It doesn’t have to be that way. Clearly in many OECD countries, deficiencies of the tax and benefit systems and the inability to redistribute income are to blame. These systems must be redesigned. However, our labour market, education and training programmes must also work to maximise opportunity and inclusiveness. Action must be taken. For a start, policymakers must draw lessons from the countries where the social fallout of the crisis has been contained. Also, they should target policies on burden sharing and helping the most vulnerable. As past recessions have shown, across-the-board cuts in social programmes hurt low-income groups who depend most on social benefits. Tax cuts, which have often tended to favour the rich, have widened disparities and chipped away at social cohesion. OECD countries are not the only ones that must go social. Expanding the coverage of basic social protection is starting to help emerging economies reduce poverty and exclusion, for instance, through conditional cash transfers that combine

OECD Yearbook 2012 © OECD 2012

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2012 OECD Yearbook  

2012 OECD Yearbook

2012 OECD Yearbook  

2012 OECD Yearbook

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