This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
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This year’s OECD Interim Economic Outlook has grim news in it. There remain millions more people unemployed throughout the OECD than before the pandemic. Output is down. Working hours are down. But I see the Outlook as a profoundly positive, hopeful document on two fronts. First, it projects an end at last to the COVID-19 crisis. Second, it shows that the OECD itself has learned the many bitter lessons of the period since the financial crisis, and is approaching this unprecedented crisis in a much more pragmatic and positive fashion than the last.
Here are the key conclusions of the Interim Economic Outlook from working peoples’ perspective:
- The most important issue is defeating the disease—distributing vaccines and maintaining public health protections so that we minimise the chances of more dangerous mutations;
- “Premature tightening of fiscal policy must be avoided”;
- “Very accommodative monetary policy stance should be maintained”; and
- “Continued income support for households and companies is warranted”; AND
- “Underlying inflation remains mild, held back by spare capacity around the world”
We can see these points in action through the OECD’s analysis of the GLOBAL economic consequences, following the change in the U.S. Administration. In the aftermath of the passage of President Biden’s emergency American Rescue Plan, the OECD has revised projections of economic growth in the United States up by 3% for 2021—three percent! But more telling is the impact the OECD projects President Biden’s policies will have on the rest of the OECD countries: growth will be a quarter to a half a percent higher as a result of the impact of increased United States demand on the rest of the world’s economies.
There is a lesson here about interdependence, and about how when we lift up working people we lift up the world. We are—all of us—dependent on whether the vaccine is effectively distributed around the world to working and poor people, and to poorer countries. The Interim Economic Outlook warns about divergence. Not just economic divergence, but also VACCINE DIVERGENCE. A lot of fiscal space is going to be necessary, globally, to get enough vaccines into enough arms to tame the global pandemic. Picking up the rate of vaccinations globally, to reach children and adults in a reasonable time frame before more mutations of the virus are generated, must be the highest priority.
We should be careful not to assume that, in this moment of possibility and peril, whatever the invisible hand concocts is going to be what the world economy needs. This crisis did not grow out of market cycles—it grew out of failures of social provision, of preparedness, of governance—so we should not expect that the world’s economy will recover on its own. Instead, in the words of both the OECD and President Biden, we should be planning to Build Back Better. And that means both increasing public investment and increasing worker bargaining power. Because as President Biden recently said, in words that could be applied to all OECD countries, “America was not built by Wall Street. It was built by the middle class, and unions built the middle class”.
As we recover, we must be mindful of the incredible imbalances that the pandemic has fed—in health, wealth, income and security—and we should beware of worsening them. For example, as we look at the e-commerce and online platform monopolies benefiting from the crisis and their inflated equities prices, we should ask ourselves: what lies behind this precariously concentrated wealth? Monopolies stifling competition and new firm formation? Workers’ rights violations backed up by the political power of monopoly? Increasingly unstable and unregulated financial markets? Business models dependent on ever-growing carbon emissions? A commerce of total surveillance?
We must learn from how vulnerable we were to the pandemic, and address how inequality increases our vulnerability to climate change, to racial injustice, to income insecurity. COVID-19 will not be our last globalised pandemic. And climate change continues to accelerate. We must create good jobs by investing in the technologies that can make global society truly sustainable and growth truly inclusive. We must provide workers and communities facing the costs of change both a voice in what happens and an economically just transition—both can be achieved through strong unions and collective bargaining. Otherwise, we face a grim future.
While it may be too early to declare V-C Day—Victory over Coronavirus—the end looks in sight if we continue the necessary investments to build for a stronger and sustainable recovery. The OECD was established to build back a better world at the end of World War II. The lesson of World War I, embedded in the DNA of the OECD, was that it is not enough to end the fighting. Winning peace can be just as daunting.
The Interim Economic Outlook reinforces what has been the OECD’s message throughout the pandemic—to build back better, strengthen public investment and public health structures, and protect against the casualisation of work that leaves too many people in precarious working conditions. That building back better requires strengthening social partners if we are to ensure strong democratic institutions. Because not only can we build back better together—we must.
Read the full OECD Economic Outlook, Interim Report March 2021: Strengthening the recovery: The need for speed
|Tackling COVID-19||Green Recovery||Income Inequality||Squeezed Middle|
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