09/05/2010

Table of contents:

• I. Introduction and Summary
• II. Employment and Fiscal Consolidation
• III. Sources of Growth: Inequality, Measurement, Innovation and Green Growth
• IV. Responsible Business Conduct
• V. Global Cooperation and OECD Enlargement
• VI. Conclusions

The full statement is attached.

Introduction and Summary

1. OECD Ministers meet at a critical moment for the global economy. The recovery remains fragile and uncertain in most OECD countries. The G20 Employment and Labour Ministers concluded at their meeting in April 2010, in Washington D.C. that government action saved or created 21 million jobs world wide in 2009-2010. Yet, global unemployment has risen by 34 million since the crisis began and many millions more workers who cannot find regular employment are not recorded as unemployed. The United Nations estimates that over 300 million new jobs will need to be created to return to pre-crisis levels of unemployment . The estimate of the OECD “Jobs Gap” was 20 million at the end of 2009  – it is now almost certainly higher.

2. Moreover with pressures rising from some quarters to cut back on recovery programmes and reduce public deficits, the risk is that premature “exit strategies” could tip the global economy back into recession with catastrophic results, with the result that mass unemployment could become entrenched – now being referred to as “the new normal”. This must not be allowed to happen. We cannot afford a lost decade of stagnant labour markets and with it a lost generation of youth shut out from productive activity. Rising public deficits must be addressed by growth-expanding demand that leads to an increase in output and jobs, not by measures that would put recovery at risk. OECD governments, working with the G20 and international institutions, must muster the same level of political will that was used to save the global banking system to beat the global jobs crisis.

3. Economists, including in government and at the OECD, failed to predict either the onset or scale of this crisis. It is imperative that they now learn its lessons. Ministers and the OECD must reassess the policies of the past two decades that led to the crisis – financial deregulation, rising income inequality and global imbalances – in line with TUAC’s 2009 statement to the OECD Ministerial Council, which called on the OECD to: "…revise its own analysis and actions to ensure that the policies that led to this crisis are not repeated. A new model of growth that is fairer, more environmentally sustainable and balanced between regions must emerge. This will require a paradigm shift in economic thinking at the Organisation."

4. This learning and policy reorientation must go much further than the Organisation’s “Strategic Response” to the crisis. The work on Green Growth potentially represents a step in the right direction, providing it also addresses the social dimensions of sustainability. The OECD should assess the impact of all its recommendations on income distribution and focus on strengthening labour market institutions, including collective bargaining, which help produce fairer income distribution as recognised by the G20 Labour Ministers.  TUAC stands ready to support the OECD in developing a skills’ strategy to equip workers with the skills they need to work in tomorrow’s global economy.

5. Beyond the OECD countries, the crisis is fast extinguishing hope of meeting either the Millennium Development Goals (MDGs) or nationally agreed development objectives, especially in low income countries. It is now clear that, without radical action, most countries will fail to achieve several of the MDGs.  Governments meeting at the forthcoming United Nations High-Level Plenary Meeting on the MDGs in September 2010 will focus on “accelerating progress” towards the MDGs. Yet the latest OECD figures reveal that OECD governments have still to honour past aid commitments.

6. On OECD membership, TUAC supports accession and enhanced engagement with non-member countries so long as enlargement serves to increase the legitimacy, effectiveness and credibility of the OECD. This depends on all OECD members – current and future – respecting “the basic values which are common to the OECD countries: pluralistic democracy, respect for human rights, and a competitive market economy” as identified by the 1990 Ministerial Statement. This includes respect for core labour standards as reiterated by the most recent meeting of G20 Labour Ministers . These must not be undermined.

7. On responsible business conduct, TUAC has already provided inputs to the work on developing a common Standard on Propriety, Integrity and Transparency for International Business and Finance. TUAC considers that the Standard must provide a vehicle for improving coherence between OECD instruments and increasing the level of political commitment, thereby raising standards across the board. The Standard should also form a building block of the G20 Global Charter for Sustainable Economic Activity.

8. TUAC calls on Ministers to give strong support to the forthcoming Update of the OECD Guidelines for Multinational Enterprises. Increasing the relevance of the Guidelines depends on broadening their application and improving the performance of National Contact Points (NCPs).

9. TUAC is therefore calling on Ministers to:

• Jobs and growth: endorse an aggressive agenda to ensure more robust growth that delivers more jobs. Governments must take further steps to support global demand and employment over the months ahead (§10-11);
• Maintain stimulus and focus on job creation: ensure that there is no exit from fiscal or monetary stimulus until adequate growth levels have been attained, the danger of a further slump averted and the recovery in jobs is self-sustaining and ensure that the size, duration, coordination and targeting of stimulus packages maximise job creation (§12);
• Use progressive taxation to tackle the public finance deficits and step up work on tax evasion: develop progressive tax reforms that contribute to social cohesion and step up the OECD’s work on tax havens (§14, 16);
• Develop a financial transactions tax (FTT): governments should develop a financial transaction tax to help pay for the cost of the crisis (§15);
• Help build a sustainable labour market model: take measures, including strengthening collective bargaining, that place combating labour market and income inequalities at the centre of the post-crisis policy framework (§18-19);
• Tackle gender inequality: agree an ambitious programme to reduce gender inequality in employment and wages (§20);
• Broaden measurements of progress: develop new measurements of economic performance and social progress that include inequality and use these as the basis for the OECD’s economic and social policy recommendations (§21);
• Re-skill and upgrade the OECD workforce: work with the ILO and the G20 to develop a skills strategy that builds quality skills and employment, working with the social partners, in particular, prioritising skills for ‘green’ jobs (§23-26);
• Ensure that the Green Growth Strategy supports ‘Just Transition’: undertake large-scale and labour-intensive investments in green infrastructure, promote social innovation, develop training and skills’ development programmes, provide social protection and support social dialogue (§27-33);
• Strengthen the governance of business conduct: develop the standard on Propriety, Integrity and Transparency for International Business and Finance so as to achieve greater visibility of OECD instruments and increase policy coherence, ensuring that there is an overall increase in standards (§35, 37);
• Strengthen the OECD Guidelines for Multinational Enterprises:  ensure that the Update of the OECD MNE Guidelines broadens the applicability of the Guidelines and delivers improvements in the performance of the National Contacts Points (NCPs), in particular by introducing mandatory peer review and follow-up procedures, including consequences (§36-37);
• Meet aid commitments and support the MDGs: agree an Action Plan for meeting the MDGs, invest in public services, place decent work at the heart of development assistance, support strategies for creating quality employment, especially for women, and provide social protection (§38-40);
• Safeguard “basic values” and respect labour rights: ensure that OECD enlargement increases OECD effectiveness by monitoring the “like-mindedness” of members as regards their respect for “basic values of pluralistic democracy, respect for human rights and a competitive market economy” (§41).