Remarks by Angel Gurría
London, United Kingdom, 6 November 2017
(As prepared for delivery)
Ladies and Gentlemen,
I am delighted to set the scene at the 2017 Annual Conference of the Confederation of British Industry – the beating heart of the UK economy.
Nearly a decade after the worst economic crisis in living memory, our countries may finally be escaping the low-growth trap. Global growth is projected to rise from 3% in 2016 to 3.5% this year, and to 3.7% next year, with the upturn increasingly synchronised across the world. This is welcome news, but there is definitely no room for complacency.
Ladies and gentlemen,
An extra 0.2% of global GDP means little to the average person in the street. And so this brings to wonder whether, while we have been busy looking at how our economies are positioned on the global stage, we might be paying insufficient attention to how people, how communities, and how regions are experiencing globalisation.
Many countries are still facing high levels of unemployment. Across OECD countries, real wages have grown by only 0.2% per year since 2008, and in the UK they are now on a downward path.
Three weeks ago, I was joined by the Chancellor of the Exchequer to present the OECD’s Economic Survey of the UK. The Survey includes some striking findings on how the planned exit from the European Union is already impacting the UK economy. GDP growth has gone from being the strongest to being the weakest in the G7, and high inflation is hurting households.
This is compounded by important structural challenges. Over a quarter of UK workers have low skills. Thus, labour productivity is stalling. It takes a German, Dutch, Danish, French or American worker 4 days or less to produce what the UK makes in 5 days. There is also a big regional divide, with regions outside the south-east of England lagging behind.
Globalisation has brought many benefits, helping to lift hundreds of millions out of poverty worldwide. However, its benefits have not been shared equally. Globalisation has left many people behind.
Across the OECD, the average income of the richest 10% of the population is now almost 10 times that of the poorest 10%, compared with seven times only a generation ago. The concentration of wealth is even worse.
Inequalities harm growth. They erode trust in governments, in business, in modern capitalism, and in democracy. They also contribute to a polarised and dangerous environment where populism, protectionism, and exclusive nationalism tend to grow and spread.
We urgently need to reverse these trends.
We need to work together to create a more inclusive, people-centred and rules-based globalisation.
This action will need to be local and regional, as well as national and international. A moment ago, I alluded to the regional divides in productivity that Britain needs to tackle. The UK’s intention to develop a modern industrial strategy is timely. Britain needs to boost local and regional transport infrastructure, research and development, as well as housing and skills.
Globally, governments need to reinforce the redistribution capacity of their tax systems, building better social protection and safety nets, as well as developing national skills strategies to empower people to make the most of globalisation and to enable them to thrive in the face of increasing digitalisation of our economies and societies.
Firms also have a vital role. The discharge of their corporate responsibilities will ultimately define our success. Companies that focus on the well-being of their workers will prove to be visionaries. They know that their workers are their best assets, and also their markets. More needs to be done to improve corporate governance and strengthen responsible business conduct. Tools such as the OECD/G20 Principles on Corporate Governance and the OECD Guidelines on Multinational Enterprises are already helping many firms to make important strides forward.
Business shares a responsibility in promoting growth that is resilient, inclusive, and green; in delivering on the Paris climate agreement; and in ensuring the survival of our economic and social models for generations to come.
It is also vital that corporations pay their fair share of taxes. A failure to do so by some has fuelled the backlash against globalisation.
Last June, 76 countries and jurisdictions signed the OECD’s multilateral convention on Base Erosion and Profit Shifting (BEPS), which is tackling the gaps and mismatches in tax rules that allow profits to be shifted to low or no-tax locations. These practices are estimated to have cost our treasuries up to 240 billion Dollars per year.
This is just the beginning. We have yet to define, together, how we will approach the issue of taxing an increasingly digitalised economy.
When it comes to individuals, the train has already left the station. Up to 85 billion Euros (some 100 billion USD) have already been collected from taxpayers who now know that through the Automatic Exchange of Information there is, quite literally, no place to hide.
Ladies and Gentlemen,
Globalisation is irreversible. But harmful divides in our economies and societies are putting our systems and institutions at risk. We must bridge these divides, starting with a fairer redistribution of opportunities and wealth. We need to empower people through better skills and public services. I very much hope that each of you can join the OECD in this quest to make globalisation work for all, by designing, developing, and delivering Better Policies for Better Lives. Thank you.
OECD Economic Outlook 2017