News Brief - October 2008

UK warned on corruption; Gender gap persists; Tax progress mixed; Economy; News shorts (healthcare, pollution, education, migration); Soundbites; Plus ça change…
UK warned on corruption
Gender gap persists
Tax progress mixed
Economy
News shorts
Soundbites
Plus ça change...
UK warned on corruptionAn OECD anti-corruption body has sharply criticised the UK’s failure to bring its anti-bribery laws into line with its international obligations. The OECD’s Working Group on Bribery, chaired by Mark Pieth (see photo), has now urged the rapid introduction of new legislation to correct this at the earliest possible date, so reiterating previous recommendations from 2003, 2005 and 2007. Current UK legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offenses, the group has found.Although the UK ratified the OECD Anti-Bribery Convention 10 years ago–the convention makes bribery of foreign officials a criminal offence in all OECD countries–it has so far failed to successfully prosecute any bribery case against a company. The OECD group, which brings together all 37 countries that are parties to the OECD Anti-Bribery Convention, is “disappointed and seriously concerned” about the UK’s continued failure to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery, which it said has hindered investigations.The group acknowledged positive aspects in the UK’s fight against foreign bribery, including resourcing up a specialised unit of the police for foreign bribery investigations. But recent cases have highlighted the need to safeguard the independence of the Serious Fraud Office and eliminate unnecessary obstacles to prosecution. Further reforms should be dealt with as a matter of political priority, the group says, including the need for effective corporate liability for bribery and removing considerations of national economic interest from all investigative and prosecutorial decisions.For more detail on the UK “phase 2bis” report on the application of the OECD Anti-Bribery Convention, please visit www.oecd.org/daf/nocorruptionGender gap persistsWomen are 20% less likely than men to have a paid job and they earn on average 17% less, according to the latest edition of OECD Employment Outlook. At least 30% of the gap in wages and 8% of the gap in employment rates in OECD countries result from discriminatory practices in the labour market. Virtually all OECD countries have anti-discrimination laws in place, but governments still need to do more to ensure a level playing field.The report highlights policies to help fight discrimination, and makes recommendations, such as in education and training, reforms to incite managers to drop discriminatory practices, and enforcement of existing legislation. The report also examines youth labour markets, informal employment, mental health at work and multinational pay (see article, page 15).Visit www.oecd.org/employmentTax progress mixedThe Isle of Man and the UK have signed a bilateral agreement for the exchange of information for tax purposes. The new agreement announced end-September 2008 was hailed as a further step in bringing greater transparency and fairness to crossborder financial transactions. Since the start of 2007, jurisdictions committed to the OECD principles of transparency and exchange of information have signed a total of 17 bilateral agreements with OECD countries.In July, Germany and Jersey signed the 16th bilateral arrangement. A total of 35 jurisdictions have now committed to work with OECD countries to improve transparency and establish effective information exchange for tax purposes. However, a report issued on 29 September said that despite some advances, progress on exchange of information on tax issues was more limited. “Significant restrictions” on access to bank information for tax purposes remain in three OECD countries–Austria, Luxembourg and Switzerland–and in a number of offshore financial centres, including Liechtenstein, Panama and Singapore. Further, a number of such centres had failed to follow through on commitments.Tax Co-operation: Towards a Level Playing Field–2008 Assessment by the Global Forum on Taxation is available at www.oecd.org/ctp/htpEconomyThe latest composite leading indicators (CLI) continued to point to slower economic activity ahead in the OECD area, by falling 0.7 points in July 2008 to stand 5.2 points lower than a year earlier. The CLI, which reflects the likes of order books, building permits, sentiment surveys and longterm interest rates, indicates a weakening outlook in all the G7 OECD economies. It pointed to expansion in China, Brazil and Russia, but a more sluggish India.Annual inflation in the OECD area at 4.7% in August 2008, easing from 4.8% in the year to July. On a monthly basis, the price level decreased by 0.1% in August, compared with 0.4% in July. Energy consumer prices increased by 20.9% year-on-year in August, up from a rise of 7.2% in July.Despite a modest recovery of quarterly trade volume growth in the first quarter 2008 (2.5% for exports and 0.4% for imports), year-on-year import volume for the G7 countries continued to slow to only 1%, the lowest rate since the first quarter 2006. Exports were up 5.6% compared with the same period in 2007. US quarter-on-quarter export growth fell 0.2% and imports were down 0.9%.Unemployment in the OECD area stood at 5.7% in May 2008, 0.1 percentage point higher than the previous month and 0.1 percentage point higher than a year earlier. Jobless figures in the euro area, the US and Japan were broadly stable, with some declines, including in Germany where it was 7.4%, 1.1 percentage point lower than a year earlier.For more on these and other economic stories, go to www.oecd.org/statistics News shortsHealth spending grew in real terms by just over 3% on average across the OECD area in 2006, the slowest rate since 1997. But spending remained unchanged as a share of GDP compared with 2005, at 8.9%. The online edition of OECD Health Data 2008 includes joint OECD, Eurostat and WHO data, and shows health expenditure by type of services and goods, healthcare providers and financing sources. The data can be queried in English, French, German, Italian, Spanish, Japanese and Russian. See www.oecd.org/bookshop and www.oecd.org/healthPollution of rivers, lakes, and aquifers exceeds recommended limits for drinking water in farming areas in many OECD countries, says a new report. According to Environmental Performance of Agriculture in OECD Countries since 1990, excess levels of nitrates, phosphorus or pesticides were found in more than one out of 10 monitoring sites in 13 OECD countries. Farm contamination of coastal waters is also a problem, the report says. Pesticide use has declined in OECD countries since 1990, but the persistence in soil and water of older, even banned, pollutants remains a concern. The report, which also examines water depletion, subsidies, organic farming and farm management, is available at www.oecd.org/agriculture, with data available at www.oecd.org/tad/env/indicatorsIn education, governments will face tough decisions on funding and quality as more secondary school students enter university, OECD warns. Entry rates to universitylevel education have risen by nearly half on average in OECD countries in the last 10 years, according to the 2008 edition of OECD’s annual Education at a Glance, but funding for tertiary education in many countries is barely keeping up, and in some cases has fallen. Public money still pays most tertiary education costs in most OECD countries, though average private spending has risen sharply in recent years. Order Education at a Glance at www.oecd.org/bookshop or visit www.oecd.org/educationDeveloped countries should adapt their labour migration policies to demand for workers in all areas of their economies, not just the highly skilled, the OECD International Migration Outlook 2008 argues. While OECD countries compete to attract high-skilled immigrants, many are wary of accepting less-skilled immigrants, despite strong demand. In fact, the report sees long-term, permanent demand for lowskilled labour in sectors such as home care, food processing and construction. Policies that encourage migrants to return have limited impact too, the report shows. Around 4 million people emigrated to OECD countries in 2006 on a permanenttype basis, an increase of 5% on 2005. See page 44 and www.oecd.org/migrationHungary should invest more in research and development to boost its economy, a new report says. Despite economic progress, business spending on R&D was less than half the EU average in 2006, at 0.48% of GDP, compared to 1.1%. To remedy this, the OECD advises Hungary to improve its science and technology system and put more emphasis on innovation in small and medium-sized firms, including services. For more, see Hungary: OECD Review of Innovation Policy 2008, at www.oecd.org/bookshopPeru has become the 41st adherent to the OECD Declaration on International Investment and Multinational Enterprises. In adhering, Peru commits to treating foreign investors in the same way as domestic investors and to promoting responsible business conduct. The country in turn benefits from such assurances for its investors abroad. See www.oecd.org/daf/investmentSoundbitesTrustwordy“Investors and lenders have moved from trusting anybody to trusting nobody.”Martin Wolf, Financial Times, 7 October 2008“The West is down and the state is up. Moreover, democracy itself risks falling into disrepute if solutions are not found.”Dominique Moïsi of France's Institute for International Relations, quoted in the Financial Times, 6 October 2008“The most urgent policy challenge…is to secure trust in transactions.”Korea's president, Lee Myung-bak, referring not to the financial crisis, but the Internet economy, quoted in The Chosun Ilbo, 18 June 2008. See also page 30.Plus ça change…A unified financial market is now emerging in which a wide variety of competitive forms of financing and savings instruments is available…In virtually all OECD countries, policies now favour liberalisation and the gains it can bring in resource allocation and the additional opportunities for savers and investors.“Liberating capital movements: A new OECD commitment”, No 159, August-September 1989.©OECD Observer No 269 October 2008


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