AA17CR30ADD1

AS (2017) CR 30
Addendum 1

2017 ORDINARY SESSION

________________________

(Fourth part)

REPORT

Thirtieth sitting

Tuesday 10 October 2017 at 10 a.m.

Debate:

The activities of the Organisation for Economic Co-operation and Development (OECD) in 2016-2017

The following texts were submitted for inclusion in the official report by members who were present in the Chamber but were prevented by lack of time from delivering them.

Ms ANTTILA (Finland) – I would like to thank the rapporteurs, Mr Heer and Mr Davies, for their excellent report and presentation on this important and topical matter.

Recovery in the global economy is continuing, but very slowly in the eurozone compared with the OECD area. It is also notable that the slightest negative shock in the market could trigger a new downturn, as stated in the report. That is why member States need to carry out structural reforms to avoid the low-growth trap.

There should also be more synergies between labour, product and financial market reforms. In this respect, we need to guide policies to improve youth employment, especially long-term employment prospects. Governments also need to be prepared for the technological changes that can bring fundamental changes to labour markets in the future.

To restore citizens’ confidence in institutions and the markets, we need to combat all forms of aggressive tax planning and tax avoidance. Greater international openness and tracking the global value chains are key elements in this. I agree with the report that the redefinition of the international tax system is an example of successful multilateralism. We also need to continue to strengthen the rule of law and better governance in the fight against corruption.

Likewise, we need to keep in mind that reducing poverty and income inequality are important objectives for the well-being and social cohesion of citizens. It has been demonstrated that there is a negative relationship between widening income inequality and growth. Growth must benefit the many, not the few, as is well said in the report.

To conclude, we need to keep a wide economic perspective; the digital revolution, ageing populations and globalisation are profoundly changing the types of jobs available and the way we work. We also cannot forget our sustainable development goals, including the climate change targets.

Lastly, I want to thank the OECD for its valuable work in providing data and country-specific economic analysis. OECD recommendations on the renewing of transport, for example, are being made in Finland to provide seamless transportation to citizens and lift productivity. Our plans are to utilise in an efficient way the newest possibilities of digitalisation. 

Mr HONKONEN (Finland) – I thank the rapporteur, Mr Heer, for his excellent report on the macro-economic outlook for 2017-18 based on the OECD’s analysis.

We have all heard the good news – the economy has started to recover again, even though, as the report says, growth is fragile, not strong. Therefore, further structural reforms are needed to ensure employment and productivity in the long term while providing growth for everyone.

I would like to stress a significant issue related to the importance of the inclusiveness of economic growth. Indeed, as Mr Heer states in his report, growth must benefit the many, not the few. Keeping everyone involved is not only a question of social justice but is essential for GPD growth. Ensuring individual socio-economic mobility is one of the key questions in developed societies. In a healthy economy, people are not bound to the class they are born to, but have opportunities to raise their income level.

This leads me to the second point I would like to raise; we must provide access to the labour market for everyone and actively reduce barriers which hinder labour force participation. In many European countries, such as Finland, employment has been declining and labour productivity has weakened over the past years.  This is mostly because of an ageing population and a rather gloomy outlook in the job market. Many graduates struggle to get hired and, as the report points out, youth employment was hit hard by the recession.

At the same time, we are experiencing a major transformation of the labour market. The ways we work have changed. There are fewer nine-to-five-jobs and many tasks are no longer bound to place and time. Higher education has increased massively and digitalisation has transformed the whole job market while making many jobs easier and more efficient. The job market has become more diverse, wide-ranging and flexible. There are many ways to enter the labour market; entrepreneurship is one good example. Starting one’s own business has become easier and is a suitable solution for many people.  

In my opinion, and on this point I deeply agree with Mr Heer, a policy involving greater labour market liberalisation is needed to foster employment. A more liberal job market would encourage employers to hire and it would certainly boost job creation. I think this is also the right medicine regarding youth unemployment. In the end, work is the best way to prevent inequality and to ensure social mobility. A high employment rate is the key to growth.

Ms NAGHDALYAN (Armenia) – The report presents a brief macroeconomic review of the OECD countries, including ongoing risks and ways to reduce them, many examples of successful multilateral activities in the ethically and economically decisive sphere of financial transparency and the issue of inequality. It also touches upon the situation of youth unemployment in the OECD region, as well as other important issues.

Armenia has been a member of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes since 2015. The Armenian Government also signed the multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting in 2017.  We attached special importance to technical assistance, recommendations and the contribution to the long-term regional programmes provided by the OECD.

Armenia continues to face critical economic challenges, despite significant progress in macro-economic and structural reforms. Although the country’s economic growth has been strong over the last few years, many aspects of economic development still need to be addressed.

We share the concern that wealth and income inequality is not only an important economic issue, but a moral one. We consider that government policies have to elaborate programmatic policies to strengthen the link between labour markets and social protection.

I would like to address some macroeconomic factors that are crucial for the economic stabilisation of Armenia. The main issue in this sphere is the unilateral economic blockade imposed on Armenia by Turkey and Azerbaijan. The borders of Armenia are the only closed borders in Europe and they are closed by member countries of the Parliamentary Assembly of the Council of Europe.

Parliamentarians should condemn the continuing practice of imposing such measures, particularly in the South Caucasus region. The General Assembly of the United Nations has already condemned and rejected the imposition of such activities. Economic blockades are affecting developing countries, which account for over half the members of the Global Forum. The report, as regards multilateral trade, clearly states that the weakness and fragility of the economic recovery mean that we should come out strongly in favour of an open economy.

I want to highlight the call to combat the increase in the number of unemployed youth. The youth unemployment rate is considerably higher than the average rate in Armenia. The Armenian Government scrapped its passive policy of paying unemployment benefits and turned to an active policy of ensuring employment for the population.

Once again, we want to point out that integrity and transparency in public life are an integral part of good governance, economic stabilisation and growth.

Mr ŠIRCELJ (Slovenia) – I welcome the report which, among other things, reveals that non-taxation leads to losses in revenues of between US$100 billion and $440 billion for national budgets every year. That means that more than 3 500 tax treaties do not reach their goal of avoiding double taxation. On the contrary, the implementation of tax treaties has the result of the non-taxation of income.

Let me give a simple example: a company from country A in Europe transfers dividends to country B, also in Europe, without any taxation. The company from country B sends the same dividends to the bank account in country C, outside of Europe. Country C has no income taxes. In this transaction, no tax is paid. This works in practice and such transactions are based in these tax treaties. The OECD proposed 15 actions to overhaul the architecture of the international tax system, one being the BEPS multilateral instrument.

The report mentions that the BEPS multilateral instrument already has 70 signatures, plus seven already promised. Secretary General, could you please let us know when the BEPS instrument will be fully in force and when the OECD plans to start its implementation? I would also like to know what instruments are foreseen by the OECD to be used against those countries that refuse to sign it.

Mr WALLINHEIMO (Finland) – I fully agree with the rapporteur on the importance of education to ensure future growth. Therefore, our particular interest should be the so-called NEETs – young people with no education, employment or training. It is clear that our future economic growth will be considerably lower if we let some 10% to 20% of our youth be derailed from labour markets or society.  

There is no single action to tackle this complex challenge. Pathways to such a vulnerable situation are always individual. Moreover, the situation varies between nations.  However, there is still some common understanding of the most effective methods to tackle youth exclusion. I would like to outline three points that have been the cornerstones of Finland’s anti-NEET policy, few of which are mentioned in the report.

First, an effective strategy to fight youth exclusion should contain both short and long-term actions.  Although it is important to help our NEET youths today, it is even more vital to ensure that our children can avoid NEETism from the beginning. Providing early childhood education to all children and ensuring that our basic education is resourced and that issues such as bullying are taken seriously are the best ways to prevent youth exclusion. 

Secondly, as every path to exclusion is individual, our means to help should also be individual. That means tailoring the services to each NEET. A great number of our youth in jeopardy need only a good tutor to find them a place to study or work while others will need counselling or other social services to get them to even think about studying or work. 

On the other hand, at least in Finland, NEETism is more common among boys than girls. In fact, a fifth of our 20 to 24 year-old men can be defined as NEET. In addition, PISA studies show that our girls are doing better in reading. As a response, our government has studied opportunities to make education attractive to boys, for example by integrating digitalisation and sports in the average school day. 

Thirdly, we need easier and accessible services and bureaucracy. In Finland, we have noticed that many of our NEETs are not necessarily aware of the support mechanisms and education, health and social services provided by our government or local administrations. On the other hand, many NEETs feel that it is too difficult or time consuming to access our services. 

My goal, and I suppose the goal of many of us, is to make decisions that help future generations. The existence of NEETs is a challenge to our future, as the G20 and OECD among others have pointed out. I think it is a challenge to my generation of decision makers to make NEETs disappear in the coming years. 

Mr WHALEN (Canada, Observer) – Canada is a proud member of the OECD, and looks to the OECD for the empirical evidence that both demonstrates and guides international best practice for stable and inclusive global economic growth.

In addition to Canada`s support for efforts to combat tax evasion, through both the base erosion prevention strategy and the recent adoption of automatic information exchange, we are also very interested in the evidence that inequality is an impediment to growth. 

The teachings of the OECD, including that the bottom 40% of income earners have fallen further behind in incomes and wealth, are a call to action.  We must do more to combat inequality of income, wealth and opportunities.  We must do this to raise the standard of living for all people.

The Canadian delegation supports the draft resolution which calls on members to address the increase in income and wealth inequality by concentrating efforts on early childhood education and better educational outcomes.  To this end, the Government of Canada, with domestic provincial and indigenous partners, has adopted a number of measures over the past two years, to address these impediments to growth: providing Can$1.2 billion over three years to support early learning and child care programmes; changing our child benefit regime to make it more generous, tax free, and targeted to low and middle-income families, up to $6 400 per child under the age of six and up to $5 400 for those aged 6 to 17; improving financial supports for  post-secondary education for students from low and middle-income families; and by investing almost $400 million over the next three years in our youth employment strategy, to fund 33 000 skills development jobs, 15 000 new green jobs, and over 1 600 opportunities in the heritage sector each year.

The OECD has recently noted that our Canadian economy is beating projections and posted 4.5% growth in the last quarter.  I am not sure whether we can give the credit entirely to these initiatives, but I hope that the OECD will be able to answer questions like this for us in the future.  We look forward to its future work on inequality as it relates to growth and trade and to its upcoming work on the digital economy.