Opportunities for All
A Framework for Policy Action on Inclusive Growth
Globalisation, digitalisation, demographics and climate change are transforming our economies and our societies. They provide new opportunities for growth but at the same time increase the risk of deeper inequalities, in a context where these are already high. Reducing inequalities by making growth beneficial for all is the best way to build strong foundations for future prosperity and to give everyone the opportunity to contribute and succeed. To make this happen, equality needs to be considered from the start when governments design growth policies, rather than tackled afterwards through redistribution. Such an ex ante approach can help people, firms and regions fulfil their potential and drive growth, both locally and globally. By better aligning domestic and international policies, opportunities for growth can be used more effectively to provide higher standards for protection of social, environmental and human rights around the world. The OECD has developed a Framework for Policy Action on Inclusive Growth to help governments to improve the prospects of those currently being left behind. Using a dashboard of indicators, the framework presents key policy recommendations to sustain and more equitably share the gains of economic growth by investing in people and places that have been left behind, supporting business dynamism and inclusive labour markets, and building efficient and responsive governments.
Support business dynamism and inclusive labour markets
This chapter starts from the trend of sluggish productivity growth that is slowing wage growth, and then elaborates on how ongoing economic transformations are likely to impact the productivity-inclusiveness nexus.While some countries have made progress, high levels of income and non-income inequalities hamper economic growth in most OECD countries. In the context of weak productivity growth in OECD countries, growing wage differences between and within firms have spurred market-income inequality. Concentration has increased in the manufacturing and services sectors in many OECD countries. While employment-to-population rates have increased in several OECD countries, some groups have been left behind. Women, young people and the older population, in particular, do not participate equally in labour and capital markets and find it difficult to start and run business in most countries.Both structural and fiscal policies are needed to align better growth and inclusiveness objectives - for example, to foster competition and enabling policy frameworks that can open up markets and encourage investment in people, cities, infrastructure and skills. Better coordination of product and labour market policies (also at the international level) would ease implementation of reforms, maximise their impact on growth, job-creation and equity. Labour market policies and institutions are needed to strengthen workers’ bargaining position. Shifting part of the financing of social programmes to general tax revenue can help to raise labour market participation, reduce labour market duality and boost labour productivity and economic growth, while at the same time extending support to a larger fraction of society and also covering atypical jobs. The new OECD Jobs Strategy sets out a state of policy principles for promoting a more inclusive labour market that is more resilient and adaptable and built upon more and better jobs.The Inclusive Growth Framework for Policy Action on Inclusive Growth consolidates some of the key policy recommendations to sustain and more equitably share the gains of economic growth from related OECD work, around broad principles to support business dynamism and inclusive labour markets through:(i) broad-based innovation and technology diffusion; (ii) strong competition and vibrant entrepreneurship; (ii) access to good quality jobs, especially for women and under-represented groups; and (iv) enhanced resilience and adaptation to the future of work.