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See below the remarks made by TUAC and AFL-CIO President Richard Trumka during the OECD Forum Panel on the just released Economic Outlook and during the Ministerial Council Meeting on the New Approaches to Economic Challenges (NAEC) on May 6, 2014, during the OOECD Week.

Talking Points on the OECD Economic Outlook

You know, whenever I come to the OECD, it’s always interesting to discover which OECD I am talking to – the Monday Forum OECD that is getting serious about income inequality and going social, or the Tuesday OECD of the Economic Outlook—the OECD that makes excuses for continued mass unemployment and stagnant wages that is the reality in the majority of the OECD countries.

  • Because the real problem—whether we are looking at the threat of deflation in Europe, the radical inequality in the US, or the global imbalances driven by China—is wage suppression, driven by fiscal austerity and mass unemployment.
  • The massive global jobs gap that opened at the height of the financial crisis is not closing. The ILO’s Guy Ryder said in Washington at the IFIs Spring Meetings that “the gap will widen unless the global economy steps up the pace of growth to generate the jobs needed”. Unless growth picks up, the jobs gap will widen to 75 million by 2018. 
  • Ultimately, the response to continuing economic weakness by the OECD in its editorial on the Economic Outlook remains a combination of proposals that will make this situation worse, like fiscal austerity and attacks on workers’ bargaining power, with optimism that just over the horizon lies good times.   An example of that type of optimism is the section on private investment, which is an eerily reminiscent of the same section in the 2012 outlook.  Good times always seem to lie just over the horizon.
  • And then, we have the following statement in the editorial section of the Economic Outlook—“It is time to speed up the pace of structural reforms.  Such reforms, while often facing resistance from vested interests, can offer a win win by raising growth potential and allowing many of the poorest to achieve higher living standards.
  • I couldn’t agree more.  Let’s start with raising the minimum wage across the OECD.  Nothing would be more effective at helping the working poor—that’s according to Alan Krueger, whose work is cited in the Economic Outlook.  Powerful vested interests among low wage employers like the restaurant industry and Walmart are trying to keep wages low across the OECD.  It’s about time the OECD and its member governments stood up to these vested interests.  Then let’s take a look at the banks.  We all know that quantitative easing isn’t working like it should to provide credit to the real economy because powerful vested interests in the financial system are preventing the separation of lending to the real economy from financing speculation.  It’s time the OECD and its member governments stood up to these vested interests that are blocking investment in the real economy.  But most importantly, it’s time to restore a political and economic voice to the majority of the population of OECD countries whose bargaining power and political voice is succumbing slowly to the rising power of the 1% as described by Professor Picketty.  The first step is to restore workers’ bargaining rights in those OECD countries—from Greece, Portugal and Spain to the United States—where those rights have been fatally weakened.  
  • TUAC looks forward to working with the OECD and particularly with the authors of the Economic Outlook to take on the power of vested interests that benefit from radical inequality.   

Talking points of Richard Trumka for the MCM NAEC LUNCH

TUAC strongly supports the New Approaches to Economic Challenges Project (NAEC) and the Inclusive Growth focus at the OECD Week. We appreciate that the NAEC synthesis report recognises the problems of inequality, particularly the rising shares going to the top 1%.

  • In particular, the economic and social risks associated with rising inequality are important to TUAC; they affect economic growth and social cohesion. There also needs to be a profound discussion on gender effects of dual labour markets.
  • But, there is too little attention so far in the NAEC process to the interplay of past policy recommendations that have driven rising inequality—and in particular to the impact of weakened labor standards and workers’ rights.
  • The NAEC process needs to include a policy focus as well as an analytic focus. The NAEC needs to address how we got to a place of continued long-term unemployment, low wages, weakened global labor standards and financial sector instability, and how we can address these problems through policy.  There is too little discussion on how to address the declining share of labor income and unbalanced growth benefitting only those at the extreme upper income levels. 
  • Specifically, as part of the NAEC process, TUAC is calling on Ministers to launch an update of the 2006 OECD Jobs Strategy to evaluate recommendations in terms of inequality, economic security and macro stability.
  • The NAEC should also address financial regulation.  The OECD should be leading in tackling “too-big-to-fail” (TBTF) banks and propose the structural separation of TBTF banks and creation of simple leverage ratio of 5% on core bank deposits.  What is necessary from the NAEC project is helping to ground these recommendations better in what we learned from the crisis.
  • Similarly, in the area of taxation, the NAEC can help the OECD continue its work on international tax evasion, and in particular help the OECD understand better how tax revenues are not lining up with productive activity, leaving the social costs of unemployment unfunded, hurting fiscal resiliency. NAEC should also assess how implementation of a financial transactions tax (FTT) would affect speculative behavior in financial markets and country revenues—with attention to the goal of providing additional space for fiscal policy resilience against the inherent risks of financial collapse.