Ten years since the onset of the global financial crisis, we still have a world where corporate and financial concentration, unemployment, job precarity and persistently high inequality continue to constrain the engines of inclusive growth.
The few OECD economies recording higher employment have done so at the expense of decent work and job quality, and corporate investments and wage increases are far too weak to support robust growth. In emerging economies a repeat of the late 1990s financial crisis is looming, with South Africa entering a recession, Indonesia and Turkey experiencing a currency crisis and Argentina facing unsustainable interest rates and instability. The possibility of contagion is too big to ignore.
And corporate monopoly power is growing with “too big to touch” companies like Amazon that are not returning profits while their stock price is soaring on a gamble. Competition policy is failing to break up corporate power: instead, it is imposing constraints on collective bargaining for a fair contract price where digital business is fragmenting work and impoverishing workers. Regulation is failing the challenge of fair and stable 21st century economies.
Multilateralism is also in crisis. While international institutions champion slightly improved global growth, they fail to signal or address the impact of multiple risks concerning the health of the real economy for workers and employers. Social risks have not abated: historical levels of inequality persist, minimum wages are not adequate to cover basis needs in almost all countries and collective bargaining, which ensures shared prosperity and economic health, is in decline.ago yet the majority of the world’s people are living on the edge, while job quality and human and labour rights deteriorate.
- A Model Failure: Why the world needs a new social contract
- Rethinking trade and globalisation to benefit everyone
And environmental risks continue. We are facing a “hothouse earth” yet there is some sort of collective blindness or denial driving us to a world that is simply uninsurable.
The G20 is a case in point. Its original mandate was to bring our economies back to robust and inclusive growth paths through co-ordination of economic policies, while addressing the future global challenges through international co-operation.
In 2009, the leaders decided to invest 2% of global GDP and it worked to avert the worst of the potential impact of the crisis. However, for working people in too many countries taxpayers’ money bailed out the banks and the financial markets continued largely with business as usual. And even as financial speculation continued to grow, the rush to mindless austerity in 2010 destroyed jobs and social protection in many economies and subsequently shackled demand for the real economy. It also destroyed trust when we most need investment in a secure pathway to the future in the face of global shifts, including the climate crisis, technological change and the massive displacement of people.
Even where leaders of wealthy countries subsequently agreed that it was a priority to invest in infrastructure or to raise women’s participation – thus creating jobs and investing in education – we have not seen these commitments realised. Ninety-four per cent of the workers in our global supply chains are a hidden workforce, unknown to the CEOs of global corporations and paid low wages on insecure contracts and often in unsafe work. Eighty-four per cent of the world’s people say that minimum wages are not enough to live on and only 28% have adequate universal social protection.
While there is clearly a deficit in political will, and thus collective action, from the leaders of the largest economies, the major problem is an acceptance of the continuation of 20th century capitalism that is no longer fit for purpose: as a result, we could well be stumbling into another economic crisis.
- Read more in the Forum Network series 10 Years after the Crisis
- Find out more about the OECD New Approaches to Economic Challenges (NAEC) conference, 10 Years after the failure of Lehman Brothers: What have we learned?
- Read To have and have more: Wealth management and the growth of global inequality by Brooke Harrington, Author and Associate Professor, Copenhagen Business School
- Read New Approaches to Economic Challenges: A sustainable and inclusive growth agenda by Gabriela Ramos, OECD Chief of Staff and G20 Sherpa