The problems are getting clearer; the solutions, ah… not so much: OECD in Canada to talk work and social policy

 

by Terrance Hunsley

The OECD social policy ministers were in Canada on May 14 to talk about some familiar themes – economic inequality, precarious work, job destruction by automation, and how to adjust social protection and income redistribution. Underlying the exchange of views was the spreading concern about voter backlash and the disappearance of trust in government. There was a feeling that large social and economic disruptions are taking shape and are testing the competence of democratic nation states.

As the OECD Secretary General, Angel Gurria put it in his address, the time is now for social policy to be advanced, to respond to the problems and opportunities presented by information technology, globalization, demographic changes and population movement.

And a more urgent tone came from Joachim Breuer, President of the International Social Security Association. He pointed out that many international agencies have been studying and discussing changes in work and labour markets for several years, but that the changes are taking place faster than governments can learn and respond. If social protection is going to be effective in the future, it needs to be reformed now. And an obvious place to start is to provide protection for self-employed and precarious workers. Ireland, for example, has recently implemented a new tax on employers who use contract workers, in order to provide those workers with some forms of protection.

Europe is somewhat behind North America in emerging from the 2008 financial crisis. Giorgos Kaminis, Mayor of Athens, emphasized that every financial crisis is a multidimensional social crisis. It is not over when GDP starts to grow again. People’s lives are disrupted by job loss, wage cuts, disappearance of opportunity, increased personal debt and stress. And at the time when they need extra assistance, service systems are overstressed, and under current political dogma, governments are often cutting spending.

In Portugal, social protection was cut back during the crisis and, according to Portuguese minister Vieira da Silva, that exacerbated job losses and wage losses. They are trying now to reverse the process with increased minimum wages and increased minimum social allowances, and whether or not directly associated, economic growth has returned.

The general discussion here reflected a kind of consensus among participants that the old model for redistributing benefits only after economic growth, needs to be changed. Increased redistribution of income, not only to cushion the impact of change, but also to reduce economic inequality in the society, needs to be integral to the economic model. Strengthening middle class families, economic opportunity and living standards for low wage workers was stressed by Canada’s Minister Duclos.

It is encouraging that the need to modernize social protection systems and to reduce inequality is being recognized. But the responses so far have been both slow and modest. The recent increase in children’s benefits in Canada is one of the more significant changes. Most of the discussion was on filling obvious and often longstanding gaps. There seems to be little enthusiasm for significant redistribution of income or wealth; little talk of making tax systems more progressive and more effective at the high end of income and wealth. These concerns may be the territory of finance ministers, who may not share the views of social policy ministers.

And if those particular elephants were not in the room in Montreal, another was. Middle and lower income voters are throwing out the governments and political parties which appear to be most concerned with their well-being. It seemed to be voiced for all elected officials when one of the ministers exclaimed that it wasn’t that governments have not put some good policies in place, “…it’s that people don’t trust us.”

Didn’t Rome burn while someone was fiddling?

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