G20-Germany-Hamburg-2017

Building resilience
of jobs in OECD countries at high
9% 40%
risk of automation (average)
of the world’s people
linked to a network
The world is experiencing
an unprecedented
backlash against globalisation and a
severe trust deficit. Sluggish growth,
increased inequalities of income and
opportunities, and disruptive trends (such
as digitalisation, ageing or migration) have
fuelled mistrust and put into question the
value of international cooperation. With
public confidence in governments in the
Organisation for Economic Co-operation
and Development (OECD) at just 42 per cent,
all alarms should be ringing.
The Hamburg Summit is thus a
significant opportunity for the G20 to
rise to the challenge to deliver concrete
outcomes based on the German presidency’s
priorities of resilience, sustainability and
responsibility. G20 economies must work
together to create conditions for higher
growth and greater inclusion.
Growth has been at the core of G20
work since its ‘upgrade’ to the leaders’
level in 2008. In 2014, the G20 adopted the
ambitious Brisbane Action Plan to increase
the G20’s collective gross domestic product
by an additional cumulative two per cent by
2018, above the baseline growth trajectories
at the time. This is not being achieved.
Despite a modest recent acceleration, at
3.5 per cent, growth remains below the
pre-crisis levels of around four per cent.
Productivity growth is slowing, business
start-up rates are falling across OECD
countries, and the ‘diffusion machine’
needed for innovation and technological
progress to benefit all firms appears broken.
Income disparity
Inclusiveness is also a major concern. While
unemployment is declining, employment
rates remain below pre-crisis levels in several
G20 members. Average household disposable
incomes are still below pre-crisis levels in a
third of OECD countries, and households in
the poorest decile experienced a 15 per cent
reduction in labour income between 2007
and 2014. Conversely, incomes for the top
10 per cent continued to rise.
Germany’s G20
presidency has
emphasised the need to
step up reform efforts
and enhance resilience
25BN
active ‘smart’ devices connected to
networks by 2030
These trends have produced distrust in
policies and public institutions, fractious
politics and a surge of populist movements.
Ultimately, this generates ‘reform fatigue’ at
a juncture where reforms should actually be
stepped up. As reported in the OECD’s recent
Going for Growth report and its Enhanced
Structural Reform Agenda (ESRA) report to
the G20, the implementation of reforms has
steadily decelerated, compared to before
the crisis. Thus, Germany’s G20 presidency
has emphasised the need to step up reform
efforts and enhance resilience.
As the 2018 Brisbane deadline nears,
now is the time for the G20 to revisit
its policy agenda to harness new, more
inclusive and sustainable sources of growth,
create jobs, and restore citizens’ trust in
governments and an open global economy.
G20 members, individually and collectively,
should respond to the pressing economic
challenges and growing social demands
with swift action.
International standards can make a
difference by supporting pro-growth and proinclusiveness
policies at the national level.
G20 achievements in tax transparency and
tax avoidance, supported by the OECD, are
a good example. The Global Forum on Steel
Excess Capacity, facilitated by the OECD, is
another promising development. Promoting
responsible business conduct could form
the new frontier of the G20’s contribution to
levelling the global playing field.
Governments should also act to get
the most out of digitalisation. We live in a
world of rapid technological change, a trend
likely to accelerate, generating far-reaching
transformations in the way our economies
function and citizens live and work. Today,
40 per cent of the world’s population is
connected to networks, compared to just
four per cent in 1995. By 2030, eight billion
people and 25 billion active ‘smart’ devices
will be connected. Digitalisation is driving
structural change, leading to the demise
of some economic sectors, creating new
ones, and generating new opportunities
for existing industries to grow and for
44 G20 Germany: The Hamburg Summit • July 2017 G7G20.com