TUAC - TRADE UNION ADVISORY COMMITTEE TO THE OECD

17/10/2014

The TUAC Economic Policy Working Group met on October 13-14 in Paris to discuss trade union priorities and concerns with the current economic situation of workers as well as the related OECD and G20 work streams. The meeting was followed by a seminar organized jointly with the Friedrich Ebert Stiftung on October 15 on the central issue of how to reverse the rise in inequality.

The most recent economic data and country-level experiences point to the fact that the social effects of the economic crisis remain unresolved. Many policies have no effects on workers. In Japan, the government’s revival strategy is favouring business interests. In the US, workers’ participation is peaking up but wages remain flat. The EU is in its leadership transition phase and it needs to be seen whether the investment plan for Europe or the introduction of minimum wages in all member states will be followed up by the new Commission. In emerging economies, real earnings are not keeping up with the growth in GDP and irregular work is not declining. In India alone, 90% of the population face difficulties in their livelihoods, while unions have no say on government policies. Participants specifically pointed to the lack of action on the reform of the financial sector, high youth unemployment and non-regular workers.

TUAC members called the OECD to develop a more multi-dimensional focus beyond GDP, specifically in its Going for Growth recommendations and indicators. The following 12 pillars could be integrated into future work to help assess economic performance with an overall focus on social well-being, mainstreamed through all of the points:

1. The role of Institutions (public and private)
2. Infrastructure development
3. Macroeconomic conditions
4. Health and primary education
5. Higher education and training
6. Product market efficiency
7. Labour market efficiency
8. Financial markets
9. Technological readiness
10. Market size
11. Business sophistication
12. R&D and Innovation

In preparing for the G20 Leaders Meeting in Brisbane through the Labour20 (which holds its own summit on November 12-14), participants took stock of the past country specific commitments and reviewed the pressing issues that unions should push their governments for, to not only reach the 2% GDP growth target as set out by Finance Ministers, but to ensure that this growth is inclusive and sustainable. This can only be achieved through quality jobs, better pay, green growth strategies and public investments in infrastructure and skills. There is a wrong assumption on full employment that justifies supply-side policies instead of comprehensive and integrated social policies, participants said.

TUAC has put out a L20 modelling paper for Brisbane based on findings of Professor Ozlem Onaran (University of Greenwich) that shows that coordinated mix of polices in the G20 targeted to increase the share of wages in GDP by 1%-5% in the next 5 years and to raise public investment in social and physical infrastructure by 1% of GDP in each country can create up to 5.84% more growth in G20 countries. Onaran presented the results to the working group and underlined the fact that profit-led growth is not enough as a stimulus for more investment or consumption.

Also on the agenda of the working group and the Inequality seminar was the G20 Base Erosion and Profit Shifting Action Plan and its impact on working families. The OECD recently released its mid-term reports on 7 out 15 deliverables (to be completed by the end of 2015) that will be discussed at the G20 Leaders’ Summit. In discussions with the OECD, several gaps – despite a promising path towards implementation – were identified including the lack of involvement of developing countries and of a comprehensive approach to tax and finance. According to TUAC’s assessment, the OECD should collaborate with the Financial Stability Board (FSB) on the taxation of shadow banking and private pools of capita.

The main gap in the current state of the BEPS plan is that public disclosure, or even partial disclosure, of the reporting framework is not under consideration at all. This exclusion will not help rebuild citizens’ trust in global businesses’ wealth creating mission for societies. Transparency in country-by-country reporting would also allow for better risk mapping.

The two-day meeting helped highlighting the challenges workers face in OECD and developing and emerging economies in view of reducing inequalities and distributing wealth. TUAC will integrate these points in the preparations of upcoming OECD consultations, the TUAC-OECD Liaison Committee meeting in December, focussing on inequality, and with the ITUC at the L20 Summit in November in Brisbane.