News brief Q1 2016

OECD Observer


Future pension pressures

Future generations are likely to find their pensions much less generous than today, according to a new OECD report. This is despite the fact that recent reforms in many countries have made pension systems more financially sustainable. About half of OECD countries have taken measures to make their systems more affordable and flexible in the long term, while a third have made efforts to strengthen safety nets and help the most vulnerable pensioners. Population ageing and changing labour market trends, such as the rise in temporary and often precarious jobs, both play a role. Retirement ages have already increased steadily since the early 2000s, with retirement at 67 becoming the new 65 in many countries, and with several countries planning to delay retirement to as old as 70.


Teachers’ salaries too low?

Governments face many difficulties in financing education, the latest Education at a Glance finds. Between 2010 and 2012, even though GDP began to rise again in most OECD countries, public spending on primary to tertiary educational institutions fell in more than one in three OECD countries. Amid budget cuts, most governments have chosen to reduce primary and secondary teacher salaries rather than increase class sizes.

Uncompetitive salaries will make it harder to attract the best candidates to the teaching profession, especially as the teaching workforce is ageing, with 35% of secondary school teachers at least 50 years old in 2013. High-performing countries in the PISA programme, such as Finland, Japan and Korea, tend to prioritise teaching and teachers over infrastructure and class sizes, though.


Households shoulder tax burden

Corporate tax revenues have been falling across OECD countries since the economic crisis, putting greater pressure on individual taxpayers, OECD research finds. While average revenues from corporate incomes and gains declined from 3.6% of GDP to 2.8% between 2007 and 2014, revenues from individual income tax edged up from 8.8% to 8.9%, and value added tax (VAT) revenues grew from 6.5% to 6.8% over the same period. “This underlines the urgency of efforts to ensure that corporations pay their fair share”, said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration.



Revolution not for all?

The heady progress of robotics, digital technology and biology opens the way for our first Renaissance in half a millennium. But the knowledge-based 4th Industrial Revolution will produce many have-nots.

Jean-Pierre Robin, Le Figaro newspaper, 2 February 2016 (our translation from French)

Forecast warnings

From the economic viewpoint, what matters is not so much whether the world will be managed: it will not be. What matters more is whether a disaster will be avoided.

Martin Wolf, Financial Times, 6 January 2016

The rich world must take greater responsibility for climate change.

Narendra Modi, Prime Minister of India, Financial Times, 29 November 2015


C’est impossible! French set to be the world’s most commonly spoken language by 2050 because of soaring population growth in sub-Saharan Africa.

Isabel Hunter, headline,, 19 December 2015


The hesitant recovery expected in the latest OECD Economic Outlook is confirmed in the latest OECD composite leading indicators. These anticipate trends and turning points in upcoming trends, based on the likes of order books, building permits and long-term interest rates. The leading indicators point to stable growth momentum, particularly for Canada, Germany, Italy and Japan, but to a loss of steam in the UK and the US.

Real GDP growth in the OECD area slowed slightly to 0.5% in the third quarter of 2015, down from 0.6% in the previous quarter. Private consumption was the main contributor, with 0.4 percentage points, followed by investment. Growth rebounded to 0.6% in Canada, following -0.1% in the previous quarter, while contracting to 0.5% in the US, following 1% in the previous quarter.

OECD-area inflation picked up to 0.9% in the year to December 2015, compared with 0.7% in November. Excluding food and energy, the OECD annual inflation rate rose slightly to 1.9% in December.

The OECD area unemployment rate was stable at 6.6% in October 2015, 1.5 percentage points below the January 2013 peak. Some 40.4 million people were out of work, 8.5 million less than in January 2013, but still 5.9 million more than in July 2008, before the crisis. The unemployment rate fell by 0.1 percentage point in the euro area to 10.5%, while increasing in Japan by 0.2 percentage points to 3.3% and remaining stable at 5% in the US.

Growth in unit labour costs in the OECD area slowed marginally to 0.3% in the third quarter of 2015, compared with 0.4% in the previous quarter. In the US and the UK, labour costs grew at a steady 0.5% in the third quarter, while slowing at a rate of 0.1% in the euro area.

As for trade, total (seasonally adjusted) merchandise exports of the G20 continued to contract by 0.9% in the third quarter of 2015, falling for the fifth straight quarter, while merchandise imports declined by 0.8%. In Canada, exports picked up by 0.8% and in China by 1.3%, while imports contracted.

For latest updates on economic statistics, see

Country roundup

The OECD’s Better Policies report on Latin America urges countries to tackle the twin challenges of inequality and low productivity to raise living standards and to boost innovation: OECD countries have registered some 132 patents per year per million inhabitants since 2010, compared with 0.9 in Latin America. Meanwhile, a new Latin America-China partnership to foster mutual development strategies is encouraged, according to the latest OECD Latin American Economic Outlook.

Finland’s economy has weakened and new reforms will be necessary to restart growth, boost productivity, increase employment and restore competitiveness, according to the latest OECD Economic Survey of Finland.

Unequal access to employment support hurts vulnerable laid-off workers in Sweden, according to a new OECD report.

Although Portugal has endeavoured to maintain its foreign aid programme since the economic crisis, its budget has been hit hard. A plan is needed to avoid a further decline and get back on a path towards internationally agreed targets, according to an OECD review.

Colombia has significantly improved its health system over the past 20 years, leading to a rise in life expectancy and a fall in infant mortality. But to maintain its ambition of universal and high-quality care, the country should focus on improving efficiency and strengthening financial sustainability.

Australia should build on its the mental health reform to strengthen employment outcomes of people with mental health issues, according to a new OECD report.

Switzerland’s recent economic performance has been impressive, but new reforms will be necessary to maintain high levels of prosperity and ensure future well-being, the latest OECD Economic Survey of Switzerland says.

The Netherlands should invest in the long-term sustainability of the food and agricultural system, a new OECD report recommends.

A long period of economic expansion in Chile has raised living standards and dramatically reduced poverty, but more needs to be done now to ensure that the country is in a position to move to a more inclusive and sustainable growth path, according to the latest OECD Economic Survey of Chile.

Israel signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters on 24 November, making it the 91st jurisdiction to join the world’s leading instrument for boosting transparency and combating offshore tax evasion.

Canadian author, filmmaker and social activist Naomi Klein with OECD Secretary-General Angel Gurría during the Coffees of the Secretary-General series on 24 November 2015 in Paris, France. See

Other stories

Boosting transparency in international tax matters: 31 countries signed a tax co-operation agreement on 27 January to enable automatic sharing of country-by-country information. See

Trade agreements: The OECD congratulated the World Trade Organization and its members for their accomplishments at the 10th WTO Ministerial in Nairobi on 15-19 December 2015. “The WTO’s decisions will help keep trade in step with the digital economy, rationalise the treatment of agriculture, and bring developing partners more fully into the global trading system”, OECD Secretary-General Angel Gurría said.

The sluggish global economy has led to excess steel capacity, and action is needed to address the challenge, according to industry and government officials meeting at the OECD’s Steel Committee in Paris on 30 November and 1 December 2015. Read more at

Plus ça change…

All professions should be ready to accept the diversification of skills and the relevant education as a modern reality; and the teachers should be ready to combine increasing professionalisation with more open recruitment of experienced people from other walks of life.

“Education, work and the quality of life”, by JR (Ron) Gass, Director, OECD Centre for Educational Research and Innovation in Issue No 67, December 1973.

©OECD Observer No 305 Q1 2016

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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