News brief– May 2005

Better boardrooms

Donald J. Johnston, OECD secretary-general, announced in April the launch of a high-level business group initiative to promote better boardroom practices in both developed and less-developed countries. The OECD already plays a leading role in spreading best practices in corporate governance, notably through its Principles of Corporate Governance that have become a standard for corporate reform efforts worldwide.

To continue this important initiative, the OECD is launching a new project–the Business Sector Group–to give practical guidance to board members, particularly directors, trying to improve their act. “Boards of directors worldwide have come under increasing criticism in the last several years for failing in their obligation to oversee the performance of management,” Mr Johnston said in launching the new project. Noting recent corporate disasters that have resulted from malpractice, the secretary-general said that “this new OECD initiative will offer practical guidance and hopefully spur boards around the world to embrace an active and attentive role”.

The group will provide concrete advice on how board members can put good corporate governance into practice, notably in the absence of detailed or prescriptive regulation, and will address a range of challenges that boardrooms face around the world. A draft report will be posted on the OECD website for public consultation and comment in late 2005.

Ira M. Millstein, senior partner at Weil, Gotshal & Manges LLP, a US law firm, will chair the group. Mr Millstein chaired the 1998 Business Sector Advisory Group on Corporate Governance to the OECD that authored the report, Corporate Governance: Improving Competitiveness and Access to Capital in Global Markets. Other key members of the Business Sector Group will include: Peter Dey, author of the 1994 Dey Report on corporate governance, Canada; Sir Adrian Cadbury, author of the 1992 Cadbury Report on corporate governance, and former chairman of Cadbury Schweppes, UK; Gerhard Cromme, chair of the German Corporate Governance Code Commission and chairman of the Supervisory Board, Thyssen Krupp, Germany; and Dominique de la Garanderie, board director of Renault, France. Holly J. Gregory, a partner at Weil, Gotshal & Manges, LLP, will act as senior counsel to the group.

For more information, contact OECD Media Relations: Spencer Wilson

Slow growth ahead

The OECD’s composite leading indicators still point to slow expansion ahead in the OECD area, according to the latest figures. The leading indicators are designed to provide early signals of likely turning points in activity, but so far the trend remains weak. Leading indicators for the OECD area fell by 0.2 point in February. Its six-month rate of change was down, after three months of slight increases.

Data pointed to weakening performance for all G7 countries except Canada. In the US, the euro area, the UK and France, leading indicators fell by 0.1 point. The six-month rate of change fell in the US (after 3 months of increases) and in Italy. It has continued to drop in the euro area since December 2003, and for the past 12 months in France. In the UK, the six-month rate of change was stable, having fallen for three consecutive months. Leading indicators decreased more sharply in Japan, by 0.7 points, and its six-month rate of change was down for the second month in a row, having increased for the previous three months. In Germany, where leading indicators fell by 0.4 point, the six-month rate of change has been on a downward trend since January 2004.

Plus ça change

“Electricity consumption, on average, is doubling every ten years throughout the world, and there is no sign of this rate decreasing. Although future needs can for some years be satisfied from conventional energy resources, eventually (perhaps within a few decades), both the most industrialised and less developed countries will be compelled to turn to nuclear power.”

From “Atomic energy for Europe’s future needs”, OECD Observer No. 2, January 1963.

Saving oil in a hurry

What can we do in the face of an oil shortage or a continued oil price spike? In Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport, expected for release in late April 2005, the International Energy Agency (IEA), a sister organisation of the OECD, proposes several measures for saving oil in case of a serious threat of oil scarcity. These include reducing speed limits to 90 km/h, imposing driving bans, lowering or cutting public transport fares, compressing the work week, and promoting car-pooling and telecommuting. These proposals could save up to one million barrels a day. However, some of the controls, such as managing car use according to number plates, are costly or difficult to implement.

These measures are all the more important as the IEA, concerned by oil costs and oil supply security, insists on toughening up one of its basic principles: importing countries should take energy saving measures if oil deliveries are reduced by one or two million barrels a day, instead of the original official figure of 7% of global oil supply (about six million barrels a day), agreed in the treaty that founded the IEA as an energy watchdog for industrialised countries after the oil crisis of the 1970s. A fall of just one or two million barrels per day would be roughly the equivalent of the drop caused by the 2003 Iraqi war. 􀂄

More information is available at www.iea.org

Job rate stable

Unemployment is holding steady in the OECD area, averaging 6.7% from November to February 2005, some 0.3 percentage points lower than a year earlier. The US unemployment rate fell from 5.7% in February 2004 to 5.4% in February 2005, and to 5.2% in March. The rate in Japan, at 4.7% in February, was 0.3 percentage point lower than a year earlier. But in the euro area, the jobless rate edged up from 8.8% in January 2005 to 8.9% in February, the same rate as a year earlier. It was a point higher than a year earlier in France, at 9.8% in February 2005, and in Germany, at 9.7%. The UK’s rate remained low at 4.6% in December 2004.

Challenging goals

Five years after the UN Millennium Development Goals were established, the consensus is clear; the relief offered to developing nations simply is not enough. Official development aid (ODA) rose 4.6% in real terms to a record $78.6 billion in 2004, according to the OECD’s Development Assistance Committee (DAC), but remains well below the 2015 goal of $195 billion.

Fifteen of the 22 members of DAC reported increased aid in 2004. The US led, with $19 billion. Though rising slightly, at just 0.16% of gross national income (GNI), it was the second lowest ratio in the OECD after Italy. The 15 EU members of DAC contributed 55% of ODA in 2004. The $42.9 billion donated by these nations represents 0.36% of their combined GNI.

ODA is expected to rise again in 2005-2006. If all donors deliver on their promises, aid should rise from 0.25% of GNI last year to 0.30% by 2006. Only five OECD countries exceeded the 0.7% UN target.

For more, see www.oecd.org/dac/stats.

Migration steadies

Fewer people emigrated to major OECD countries such as Australia, Canada, the US and major European countries including Germany and the Netherlands in 2003, according to the latest data. The US, for instance, welcomed 706,000 permanent immigrants in 2003, compared with just over 1 million in 2002.

The data, released in the latest edition of the OECD’s Trends in International Migration, also show there were fewer asylum seekers in OECD countries in 2003-2004, reversing an upward trend. Numbers of asylum seekers in the 15 countries that were members of the EU at the start of 2004, fell by 25% during the year. France received more asylum seekers than any other OECD country, with 61,600 new applicants in 2004.

Despite initiatives to facilitate integration, immigrants, particularly women and younger people, have more difficulty than nationals to find work, the new report points out. In the Netherlands, for instance, the labour market participation rate of women (in work or looking for work) is 34 percentage points lower than that of nationals.

In a bid to improve management of migration flows, many OECD governments have imposed stricter laws on entry and residence of foreigners. The new report also shows that 12.3% of the US population in 2003 was foreign-born, compared with 9.7% in Europe (EEA and Switzerland), 19.3% in Canada, as much as 23% in Australia and just 0.8% in Japan.

Trends in International Migration 2004 can be ordered at www.oecdbookshop.org. For data, please click here

©OECD Observer No 249, May 2005




Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.6% May 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Mar 2018
Last update: 06 Jul 2018

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