Opening remarks by Angel Gurría, OECD Secretary-General, delivered at the OECD Forum 2013


28 May, 2013, OECD Conference Center, Paris 


(As prepared for delivery)
 

Your Royal Highness, Dear Ambassadors, Ladies and Gentlemen:

 

Welcome to the OECD Forum 2013. I am delighted to see so many people from so many backgrounds and nationalities here today. This OECD Forum and the Ministerial Council Meeting that follows, are precisely about people. This is the raison d’etre of this event: the wellbeing of our people. So be confident, you are at the right place, this Conference is about you, and your families, and your friends, and their dreams, fears and opportunities.

 

We are here to talk about “Jobs, Equality and Trust”. We have decided to focus on these three crucial issues because they have become the three main social deal-breakers, the three corner-stones to build a strong recovery and a new era of inclusive growth. At the OECD, we have identified these three elements as the “missing factors” after the crisis and we want to help our countries bring them back.

 

The economic outlook: some bright spots but still disappointing.

 

We are approaching the sixth year of the crisis. The global economy is moving forward reflecting some positive signs, like improving perspectives in the US and Japan and progress on structural and fiscal adjustments in euro area countries. However, the economic outlook is still disappointing. With fiscal policy still geared towards consolidation, growth in OECD countries will slow down even further in 2013, to a meagre 1.2%.

 

The global recovery is being hindered by multiple speeds and different paths towards self-sustained growth. Current account imbalances are still large and could be rising in the near future, while new imbalances are starting to affect a large and heterogeneous group of “innocent bystanders”, both in advanced and emerging economies, through inflationary pressures and rising asset prices.

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But the greatest source of anxiety comes from the social arena. Unemployment numbers are still alarmingly high. Today, we have close to 49 million people unemployed in the OECD area. This means we now have nearly 14 million more unemployed than before the crisis. And there are two particularly worrying facts in this drama: first, that the number of people out of job for more than 1 year has reached 17.3 million (that’s a 92% increase between 2007 and 2012); secondly, that the most affected in this wave of unemployment have been our youngsters: the average unemployment rate in OECD countries for youth stands close to 17%.

 

At a global level, the crisis of unemployment is also hitting hard. There are close to 200 million people unemployed around the world; nearly 73 million are young people.

 

Inequalities have also been increasing at a steady pace. As we document in our study “Divided We Stand”, during the three decades prior to the recent economic downturn, wage gaps widened and income inequality increased in a large majority of OECD countries. And now the crisis is widening these disparities. According to new OECD analysis, inequality has increased more over the past three years (to the end of 2010) than in the previous twelve. By 2011, the average income of the richest 10% of the population in OECD countries was about nine times that of the poorest 10%, that’s a ratio of 9 to 1.

 

This also is the source of concern in emerging and developing countries. Countries like China, India, the Russian Federation and South Africa have all become less equal over the past 20 years. And while Brazil has managed to reduce its disparities, the inequalities ratio in this country is still 50 to 1. It is now clear that the benefits of economic growth are not trickling down.

 

This has had a very negative impact on people’s trust. A myriad of studies and opinion polls reveal a systemic loss of trust in politicians, CEOs, governments, banks, corporations and markets throughout the world. One of the most worrying signals is the record low levels of trust in the government’s capacity to improve the situation: the 2013 Edelman Trust Barometer, reports that only 15% of the people surveyed trust that government leaders “can solve social or societal issues”, while only 14% trust that these leaders can “make ethical and moral decisions”.

 

This disturbing outlook is sending us a clear message: it’s time for a new deal! Our fundamental assumptions about the functioning of economies, our policies and structural reforms, our systems and institutions, need to be re-oriented towards one supreme objective: improving the wellbeing of people.

 

It’s time to focus on people!

 

It is high time to place people at the very centre of our strategies. It’s time to remind ourselves that the central purpose of economics is to improve the lives of people. It’s time to take actions that rebalance the rules of the game and promote equality. It’s time to lay the new foundations of trust, in governments and legislatives, in corporations and banks, in regulators and rating agencies, in public and private leaders. It’s time to recover the trust of people in international organisations! This is the aim of the OECD! This is the purpose of this Forum!

 

For this we need to admit that we got it wrong and revise our thinking and acting. We need to see economics and economic policy with new eyes and fresh ideas, particularly with regard to self-stabilisation and efficient markets. We need to address the limitations of existing tools for structural analysis to factor in key linkages and feedbacks – for example between growth, inequality, and the environment.

 

We need to foster a new type of growth, one that is more inclusive, with opportunities and benefits for the people who work their lives for that growth, not just for the big owners of capital. It’s time to bring “the forgotten” back to centre stage. We need to focus again on the poor families of this world, from Bangladesh and Zimbabwe to the billions of migrants that live in shanty towns surrounding our cities, doing the jobs we don’t want to do, making a solid contribution to our economies and sending more than 400 billion dollars in remittances every year to the poorest regions of this world.

 

We also need to rethink growth as a means and not as an end. We have to give priority to the quality of growth over the quantity of growth. For this we need new models and tools to measure progress and the quality of our lives. This new concept of growth also has to respect the environment and recognise that “we have to move from a growth without limits to a growth within limits paradigm”, as Professor Johan Rockstrom recently put it here at the OECD.

 

The OECD Forum 2013: Time to Think New!

 

All this will demand a big change in our mind-frames, but also courageous decisions to break with inertia and confront vested powers. At the OECD we have started this transformation through a myriad of new strategies and initiatives on New Approaches to Economics Challenges (NAEC), Green Growth, Innovation, Inclusive Growth, Development, Gender; introducing new tools to measure and foster human progress, like our Better Life Index.

 

All these concerns and new ventures will be at the centre of the OECD Forum 2013. We want you to help us enrich our vision and connect our policy knowledge to the realities of the people. We want to link your minds to our solutions and then link those solutions to policy-making. This is the purpose of this Forum. It’s all about people!

 

We will be discussing a production revolution for the 21^st century, a new role for banks, the come-back of SMEs in economic policy and the life challenges of the “unemployees”. We will also be taking a fresh look at the austerity vs. growth dilemma, the need of a new societal contract and the transition from school to work. We will tackle the big challenges of inequalities, tax evasion by big corporations and the crucial role of women in our economies. And we will present new tools to foster inclusive progress like our new study on “Interconnected Economies: Benefiting from Global Value Chains”.

 

We should visualise together a brighter and fairer world. We should visualise together a new social pact that institutionalises inclusiveness and people empowerment.

 

Your Royal Highness, Ladies and Gentlemen:

 

Our societies are facing some of the greatest challenges in history. They need help! Our governments are confronted with unprecedented dilemmas and very tough decisions. They need help! Our youngsters are being drained by persisting lack of opportunities. They also need help! Big time! Our planet is on the brink of a major environmental breakdown. It also needs all our help!

 

We can provide that help. Let’s share our knowledge and stretch our imagination to its limit to come out with new strategies. Let’s develop together a new understanding of the economy as a highly complex human system which is uncertain, unstable and fragile by nature; a system that should be treated as a live environment rather than a mathematical model.

 

I therefore convene you, in these two days of joint efforts, to think more as gardeners than as mechanics, to remember that there are many out there suffering waiting for innovative solutions, new enthusiasm and hope, the three great deliverables that should come out of these doors. We are here on a great endeavour, and I want to thank all the sponsors that have made this event possible. And I want to thank you, for being here. As I said, this is all about people. This is all about YOU!

 

Have a path-breaking Forum!