05/06/2021 – OECD Secretary-General Mathias Cormann welcomed today’s ground-breaking agreement by G7 Finance Ministers on key elements of international tax reform designed to address the tax challenges of the digitalisation and the globalisation of the economy.

“Governments around the world need to be able to raise the necessary revenue to fund the essential public services and support that their populations require and expect, in a way that is efficient, least distorting and also fair and equitable”, said Mr. Cormann. 

“The combined effect of the globalisation and the digitalisation of our economies has caused distortions and inequities which can only be effectively addressed through a multilaterally agreed solution. 

“Today’s consensus among the G7 Finance Ministers, including on a minimum level of global taxation, is a landmark step toward the global consensus necessary to reform the international tax system.  

“There is important work left to do. But this decision adds important momentum to the coming discussions among the 139 member countries and jurisdictions of the OECD/G20 Inclusive Framework on BEPS, where we continue to seek a final agreement ensuring that multinational companies pay their fair share everywhere.”

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

23/03/2021 – Creating an emergency Rapid Response Forum to ensure global supplies of essential goods continue to flow during major international crises is one of a broad range of recommendations contained in a new OECD report to the G7 on building economic resilience.

Fostering Economic Resilience in a World of Open and Integrated Markets says the devastating impacts of the Global Financial Crisis and now the COVID-19 pandemic will continue to leave lasting scars on our economies and societies. With the risk of other systemic threats on the horizon – starting with climate change but also spanning security threats, including cyber attackss – it is critical to learn the lessons of these and previous crises in order to tackle the vulnerabilities of our economic system, absorb shocks and engineer a swift rebound.

Ensuring the resilience of global supply chains of essential goods is crucial, the report says. An emergency Rapid Response Forum would provide G7 and other governments with a means of upstream policy co-ordination and, particularly, consultation ahead of the imposition of any trade restrictions. Such an initiative could also prepare timely co-operation on logistics, transportation, procurement, planning and communication.

Commissioned by the UK government, which is currently holding the G7 presidency, the OECD report underlines the need for governments to co-operate both with the private sector through, for instance, supply chain stress tests and emergency planning, and with other countries to boost transparency, discipline export restrictions and adhere to international regulation and standards.

The report says the COVID-19 crisis has caused a huge surge in demand for certain goods, notably in the health and information technology sectors but argues that global supply chains have been part of the solution. After shortages of masks and personal protective equipment, in particular at the beginning of the pandemic, both global production and trade of facemasks later increased tenfold to meet demand.

Strategies based around a reliance on domestic production are unlikely to ensure supply of essential goods and can remove important risk management options such as the diversification of sourcing, the report says. Although temporary scale-up of domestic production for essential goods could be explored as a risk management strategy, reliance on domestic production is not cost-effective nor feasible for strained health budgets, especially for lower income countries, which are almost entirely dependent on global markets to source medical products related to COVID-19. Global supply can allow products to be sourced from the most efficient and cost-effective supplier and enable access to more and different varieties of medical products, ensuring that future surges in global demand are fully met. 

Presenting the report alongside Lord Sedwill, chair of the G7 Panel on Economic Resilience, OECD Secretary-General Angel Gurría said: “As we have seen in the past decade alone, in today’s interconnected world, shock events can quickly cascade across borders and economic sectors, and have devastating effects on people’s lives, jobs and opportunities, and on their trust in governments, institutions and markets.”

“Building economic resilience in the face of future shocks is a global challenge for the post-COVID world. For global markets and supply chains to serve as a source of resilience, governments and the public need to have the confidence that markets are and will remain open and fair, including during times of stress.”

Lord Sedwill said: “The unprecedented impact of the covid pandemic on the global economy has highlighted issues of resilience, arising from the growth of monopolies, geopolitical trade tensions, global economic governance falling behind innovation and technology, and the supply of the critical elements essential to the future economy. In response, we should renew our common purpose and commitment to open, well-regulated global markets which promote the green transition, inclusive growth and economic resilience as we build back better.”

The report looks at how to build resilience in global markets, including by reducing distortions and promoting a level playing field for competition, trade and investment. Ensuring global markets are reliable and predictable includes ensuring access to critical raw materials. This calls for enhanced co-operation to develop international agreements for stronger monitoring, notification and disciplines on export restrictions on critical raw materials, promoting responsible sourcing and increasing circularity in this sector. Tackling harmful practices that undermine trust such as foreign bribery is also key.

The OECD proposes governments revise their risk management policies and frameworks to ensure a systemic all-hazards-and-threats approach to resilience with international co-operation playing a central role. This could be supported by a comprehensive evaluation of the lessons learnt from the COVID-19 crisis, including benchmarking and comparison of national preparedness responses.

The OECD says emerging technologies, particularly digitalisation, can contribute to boosting resilience through prevention, absorption and recovery capabilities but can also pose threats. Among its recommendations, the report says governments could strengthen the responsiveness of innovation systems to global policy challenges, reconsidering the way they are organised, structured and financed. It also proposes linking support for innovation more closely to broader public policy objectives and improving international collaboration on emerging technology governance, including by moving towards smarter and more agile regulation.

For further information, journalists are invited to contact the OECD Media Office (tel. +33 1 4524 9700)

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

14/10/2020 – The United Kingdom faces major challenges from the COVID-19 crisis and leaving the EU Single Market. Ramping up investment in the digital economy, the service sector, green infrastructure and adult skills would strengthen the recovery and help to boost productivity and environmental sustainability for the long term, according to a new OECD report.

The latest OECD Economic Survey of the United Kingdom underlines the importance of the emergency support measures put in place to address the coronavirus crisis, but also stresses the need to address longer-term challenges. Active labour market spending for displaced and low-skilled workers should be increased to help workers in sectors with uncertain futures move into quality jobs, and infrastructure spending should focus on the most deprived regions. Low interest rates mean there is room for more stimulus, if needed. Public investment should build on existing efforts to revive productivity growth and transition to a low-carbon economy.

“The combination of COVID-19 and the exit from the EU Single Market makes the UK outlook exceptionally uncertain. Actions taken to address the pandemic and decisions made on future trading relationships will have a lasting impact on the UK’s economic trajectory for years to come, so they should be in line with long-term objectives,” said OECD Chief Economist Laurence Boone. “Productivity growth in service sectors will have to accelerate significantly for the recovery to be long-lasting and sustainable.”

The coronavirus crisis erupted against a background of subdued growth, stagnant productivity and flat investment in the United Kingdom and triggered one of the most severe falls in output of OECD countries, reflecting the economy’s deep integration in the world economy and the fact that the hard-hit service sector makes up around 80% of UK output and employment.

While a rapid and massive emergency response has helped to steady the economy, the United Kingdom still faces a prolonged period of disruption to economic activity, which risks exacerbating pre-existing inequalities and regional disparities. Most households have reported a drop in income since the crisis. Economic activity will only recover gradually, with several years of high unemployment likely due to business closures and delayed investment. The Survey, assuming a smooth transition to an EU Free Trade Agreement, projects an unprecedented fall in GDP in 2020 of 10.1%, with activity still below its pre-crisis level by the end of 2021. The unemployment rate is projected to be 7.1% in 2021, up from 3.8% in 2019.

Leaving the EU Single Market at the end of year will require firms to adapt. Avoiding a “no deal” outcome would benefit both the United Kingdom and the European Union. Were there to be an EU exit with no free trade deal, the government should be ready to provide targeted support for affected firms and workers and put in place trade facilitation measures to smooth disruptions at the border.

While the increase in barriers to trade resulting from any form of exit from the EU Single Market will lower growth over the medium term, a disorderly exit would be more costly and disruptive. Managing a disorderly exit would be complicated by the fact that firms have diverted their attention to dealing with COVID-19, and those with reduced earnings will be less able to invest in new systems, staff and training.

The UK’s Industrial Strategy should help to revive productivity growth – which is key to sustaining jobs and wage growth – yet more could still be done to encourage innovation and reduce gaps in adopting new technology between leading firms and laggards. Overall public investment has been lower than in other leading economies in recent years, and investment in digital infrastructure still lags investment in transport, energy and utilities. These are all areas where the UK lags the best-performing OECD countries and which are likely to bring high productivity gains. Planned spending to improve digital skills could also be more ambitious, as the COVID-19 crisis makes the low level of adult training in the United Kingdom a more urgent concern.

See an Overview of the UK Survey with key findings and charts (this link can be included in media articles).

For further information, journalists are invited to contact Catherine Bremer in the OECD Media Office (+33 1 45 24 97 00).

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

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19/11/2017 – The United Kingdom has record-high employment levels and very low jobless rates compared to most OECD countries. However, labour productivity growth remains weak and the job prospects of many adults are hurt by their poor literacy and numeracy skills. To boost growth, productivity and earnings, the UK should encourage lifelong learning among adults and promote better skills utilisation, according to a new OECD report.

Getting Skills Right: United Kingdom says that educational attainment has been rising in the UK, with 42% of adults having a tertiary degree, compared with 34% across the OECD. Sixteen per cent graduate in the field of sciences, more than in any other OECD country, and nearly half of science graduates are women.

The share of young adults enrolled in vocational education and training has risen to 43% but remains lower than in many other European countries. Apprenticeships are also less popular, pursued by around 24% of upper secondary students, compared to 59% in Switzerland or 41% in Germany.

Recent reforms to the regulation of apprenticeships should bring training content more in line with employer needs. The new apprenticeship levy should also encourage employers to take more responsibility for training, but  care should be taken to prioritise quality of apprenticeship training to discourage employers simply rebadging existing training as an apprenticeship, according to the report.

Challenges remain in matching skill supply with skill demand in the UK. A high proportion of jobs remain low-skilled while the proportion that are high-skilled remains low relative to the increasing supply of workers with higher level qualifications. Among the countries covered by the OECD Survey of Adult Skills, the UK is only behind Spain in terms of the share of jobs that require lower-level qualifications (22%) while demand for higher level qualifications falls short of supply, with only a third of jobs requiring a tertiary education.

About 40% of British workers are either over-qualified or under-qualified for their job, and the same number are working in a field of study different to the one in which they studied in school.  Furthermore, the OECD Skills for Jobs database reveals shortage pressure in knowledge related to education and training, health services and STEM subjects. More efforts are needed to improve skills utilisation and to stimulate innovation and growth in knowledge sectors, says the report.

Among the OECD’s recommendations are that the UK should:

Strengthen career guidance services. There should be more interactions between employers and secondary schools and access to career guidance services should be extended to cover employed workers as well as the unemployed.

Encourage lifelong learning. Advanced Learner Loans could be made more attractive for low-skilled workers by tying repayment waivers to employment in some shortage occupations. Personal learning accounts or paid training leave for in-demand skills could also help.

Enhance awareness about the value of training. More efforts need to be made to convince employers of the return on investment of training. Group schemes may also encourage more small and medium-sized firms to offer training.

For more information, journalists should contact Katharine Mullock of the OECD Skills and Employability division (tel. + 33 1 45 24 19 17) or the OECD Media Division (tel. + 33 1 45 24 97 00).

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.