This article is part of the Forum Network series on New Societal Contract 

Ken Ash, Director of Trade and Agriculture at the OECD, opened the discussion by highlighting that free trade has brought many benefits to consumers and workers around the world, in the form of lower prices, greater product choice and jobs supported by both imports and exports. The opening of markets and the freer flow of goods and services has also helped lift hundreds of millions of people out of poverty over the last quarter-century. OECD evidence shows that the real income of the poorest 10% segment of the world’s population would be 50% lower today without trade. Today’s public scepticism of the benefits of trade seems to be just one element of a wider backlash against globalisation. According to Bruce Stokes, Director of Global Economic Attitudes at the Pew Research Center, of 17 major trading OECD countries surveyed only 28% of people believed trade raises wages and only 44% thought it creates local jobs.

Particularly in OECD countries, many feel left out and left behind through job loss and community decline, through wages that seem permanently stuck at the same level year after year. According to Anabel Gonzalez, Senior Director for Trade and Competitiveness at the World Bank, this is in large part due to a failure to put in place policies spreading the benefits of globalisation and trade more widely: “We need to enable the poor to accumulate the human and fiscal capital that is necessary to participate in trade and minimise frictions within countries and across countries. Combined with the disruptive effect of technology, governments really need to be investing in people’s skills.

Source: LinkedIn

The fast pace of digitalisation is causing further anxiety as nine per cent of jobs are at high risk of being automated, and an additional 25% of the workforce will see their tasks change significantly because of automation. Luca Visentini, General Secretary of ETUC, stressed the need for a wider, more integrated policy approach to trade as quality jobs must be created to compensate job destruction. Ben Digby, International Director of the Confederation of British Industry, United Kingdom, highlighted that social protection cannot be framed as compensation for job losses. The focus must be on creating jobs, allowing people to progress towards quality employment and supporting individuals so they can adjust to market changes.

All panellists agreed that governments are grappling with the speed of change and its cultural, social and political ramifications. In the Australian context, Justin Brown, Deputy Secretary of the Department of Foreign Affairs & Trade, emphasised that the lack of clarity on “the destination of globalisation” fuels an “underlying anxiety” which manifests itself when trade agreements are presented to parliaments for approval. Todd McClay, Minister for Trade, New Zealand, sided with this concern highlighting that, in the aftermath of the global financial crisis and given the level of dependence of New Zealand vis-à-vis global trade, it has been key to engage in a broader conversation with the public on the benefits of global trade. 

While the concept of a “new trade narrative” was welcomed by both panellists and participants, it is not enough. There is a clear need for a “new social contract” in which governments, business and trade unions co-create policy ecosystems in their countries – and among nations – that afford better prospects and better protections for each member of our interconnected society. The OECD is developing a new government-wide policy framework that aims to preserve the best features of the current trade system while addressing the downsides. In preparing for OECD Week this year, Secretary-General Gurría has argued that policy must go beyond trade and even beyond safety nets, to help people thrive in the digitalised and global world. Echoing this, Martin Tlapa, Deputy Minister of Foreign Affairs, Czech Republic, stressed that protecting people should not be confused with protectionism as it is fundamentally a matter of rebuilding trust between citizens and the government, and helping those that are left behind.

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Session panellists:

Moderator

• Bruce Stokes, Director, Global Economic Attitudes, Pew Research Center @bruceestokes

Scene Setting

• Ken Ash, Director, Trade and Agriculture, OECD @OECDtrade

Speakers

• Justin Brown, Deputy Secretary, Department of Foreign Affairs & Trade, Australia @dfat
• Ben Digby, International Director, Confederation of British Industry, United Kingdom @bendigby
• Anabel Gonzalez, Senior Director for Trade and Competitiveness, World Bank @Gonzalez_WBG
• Todd McClay, Minister for Trade, New Zealand @toddmcclaymp
• Martin Tlapa, Deputy Minister of Foreign Affairs, Czech Republic
• Luca Visentini, General Secretary, ETUC 

Watch the session "It Takes Two To Tango: Trade & Social Protection Policies" at the OECD Forum

See results of the full Pew Research Center survey of OECD Forum attendees

Read the OECD Policy Brief on the Future of Work “Automation and Independent Work in a Digital Economy”