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  • TUAC LCM Paper on Inequalitypdf

One of the key messages given by Ministers at this year’s OECD Ministerial Council Meeting was the need to move to an inclusive growth model that begins by reducing widening income gaps. To discuss OECD plans on these issues, TUAC representatives met with the OECD Secretariat and Ambassadors for the annual Liaison Committee meeting (LCM) on December 15.

Prior to that, the TUAC issued a Discussion Paper focusing on how the OECD New Approaches to Economic Challenges (NAEC) initiative can effectively produce substantial policy recommendations on moving towards more inclusive growth. 

TUAC representatives urged the OECD to give particular attention to policies and institutions that push back against inequality including trade unions, collective bargaining and minimum wages. Delegates drew attention to increasing in-work poverty, downward pressure on wages, precarious and informal work, reductions in social protection schemes and to the fact that many governments refuse to engage in social dialogue on structural reforms. The TUAC discussion paper looked into the impact of the weakening labour market and wage setting institutions leading to growth in temporary, casual and other forms of precarious work.

The LCM highlighted the important of skills in promoting life-long learning as well as of eliminating tax exemptions in the financial sector, re-establishing more progressive tax systems and restricting corporate tax exemptions and tax benefit schemes. In this respect, future OECD analysis has to shed light on the capture of much of the income gain by the top 1% per cent.

The OECD Secretary General, Angel Gurria, acknowledged that inequality restrains broad based sustainable economic development. He underlined the need to tackle the issue across social, economic and environmental policy dimensions to ensure quality jobs and green growth, specifically in view of the upcoming COP21. This month, the OECD published findings that show that more equality is key to higher and more inclusive growth. This challenges the belief in ‘old school’ economics that inequality would be positively correlated with growth.

The new OECD Chief Economist, Catherine Mann, said that the OECD would look into how different kinds of structural policies can affect the deciles of income distribution as well as on their effects on individual household incomes and employment opportunities. The OECD Employment work will thus look into the quality of working environments and the effectiveness of distributional systems to map out opportunities for policy actions, also in regard to technological progress. While implementing the BEPS Action Plan, OECD work will also focus on the social dimension of taxation and shifting taxation patterns.

The OECD secretariat also referred to the OECD focus on well-being and cooperation with developing countries on establishing diversified product markets and social protection systems. As the next OECD Ministerial Council Meeting will focus on promoting investments, the TUAC asked to feature responsible investment and business conduct in the discussions – specifically on global value chains – to ensure that financial flows and public-private partnerships contribute to sustainable growth, demand and decent jobs. The TUAC will follow the preparations of the meeting and of the next steps in the NAEC process closely in the course of the next months.