News brief– November 2004

Aid breakthrough

Export credits bidding to open

Public bidding from firms wishing to participate in projects financed by aid will soon be possible under a two-year pilot programme aimed at providing greater transparency and efficiency in the use of untied aid credits to poorer countries, it was announced in November.

Untied aid credits are development assistance loans that can be used to pay for purchases of goods and services from any country, rather than just the country providing the loan. The agreement between countries participating in the OECD Export Credit Arrangement is designed to create more effective competition in the use of such loans and to give developing countries the power to choose their suppliers at the best price.

Beginning 1 January 2005, public notification of untied aid credits of SDR5 million (Special Drawing Rights) or more will be provided 30 days before the start of a bidding period in an effort to encourage the widest possible participation in bidding. The minimum bidding period will be 45 days. The system will be administered by the OECD. For more information, see Export Credits at

Trade rises again

G7 merchandise trade rose by 3% in volume terms in the second quarter of 2004, compared to the previous quarter, according to our latest statistics released in October. G7 trade volumes continued their year-to-year upward trend: exports increased by 10.2% and imports by 9.6%.

Compared with the preceding quarter, Germany’s merchandise export growth fell to 3%, while imports turned positive, with a 3% rise. Compared with the second quarter of 2003, German exports jumped up by 14.5%, once again the highest rate of growth of the G7 countries, and imports expanded by 10.1%, slightly above the G7 average.

In the US, merchandise trade volume export growth slowed further to 1.5% in the second quarter, while import volume growth stabilised at 3.1%. Year-to-year exports and imports volumes have increased by 10.3% and 10.8% respectively.

Japanese merchandise imports stagnated at 0.4% in volume terms in the second quarter 2004, compared to the previous quarter, while export volume growth decreased to 2.3%. Japan’s export volume growth was a strong 13.5% year-to-year, while import growth, at 6.4%, was below the G7 average.

Plus ça change

“Next, with regard to the incidence of automation on the size of office staffs, it was found that, contrary to the fears expressed whenever the installation of a computer was announced, there was no direct reduction of staff in any of the countries studied, except Sweden, where non-manual labour was reduced by about 20% in one of the firms studied. The incidence on employment may thus be said to be slight.”

From “The social consequences of automation”, OECD Observer No. 1, November 1962.

Unemployment eases

The standardised unemployment rate for the OECD area edged down to 6.8% in September 2004, from 6.9% the previous month and 7.2% a year earlier.

For the euro area as a whole, the unemployment rate remained stable, but high, at 8.9%. The US standardised unemployment rate remained at 5.4%, 0.7 percentage points lower than a year earlier. Joblessness steadily declined in Japan, where the unemployment rate was 4.6%, 0.2 percentage points lower than the previous month and 0.5 percentage points lower than a year earlier.

There was no significant change from the previous month for France and Germany, with unemployment remaining at 9.6% and 9.9% respectively in September 2004, though the Germany rate was slightly higher than a year earlier. The joblessness rate declined from the previous year in Canada, in the UK, and in Italy, respectively to 7.1% in September 2004, 4.6% in July 2004, and 8.5% in January 2004.

Insurance drive

Friendlier, less fraudulent

Claiming insurance is rarely as easy as buying it, with customers often wary about tripping over the small print. OECD governments, working with the insurance industry, believe insurers could do more to look after their customers, and have published a checklist of good practice guidelines. Moreover, the OECD's Guidelines for Good Practice for Insurance Claim Management also recommend that companies monitor customer claims more closely as a way of combating fraud.

The guidelines, which were drawn up by the OECD's Insurance Committee, are not mandatory, but it is hoped they will provide a touchstone for best practice in an area where till now there was no international guidance. The guidelines advise on the basics, like giving customers the information and assistance needed to enable them to file claims quickly and with all the details required, or updating customers regularly on the status of claims. But the guidelines also encourage companies to help combat fraud, for example, through building industry-wide databases to report and share fraudulent claims. And they recommend that staff be trained to spot potentially fraudulent claims more easily.

For more on the insurance guidelines, see

A fifth of jobs offshoreable

The international sourcing of IT and IT-enabled services is growing rapidly, but beyond anecdotal evidence, there is not much solid information to go on. Using an approach that exploits existing data, OECD analysts have examined trade data and occupational employment data to determine how many jobs could potentially be affected by this so-called outsourcing (more formally referred to as international sourcing or offshoring). They have come up with a figure of around 20% for the EU15 as a whole, Australia, Canada and the US.

The share of these potentially offshoreable service jobs has declined in the US, Canada and Australia, particularly since 2001. This decline could reflect the possibility that these jobs are indeed being moved abroad, for instance, with IT-related and back office activities going to India. But the decline might also simply be caused by jobs disappearing, as they are being automated and digitised, or through drives to improve productivity. More analysis is being undertaken to establish the causes.

On the other hand, the share of jobs that could be outsourced is rising in the EU15, the study finds, particularly as services employment has risen. This rise backs other evidence to suggest that while European firms may well move some jobs abroad, they often do so within other EU countries. In fact, several OECD countries gain from international outsourcing, with Ireland being a notable recipient.

The jobs that are candidates for offshoring tend to come from tradeable services sectors which have grown strongly in recent years. For example, the shares in business services such as IT and consultancy services, financial services and R&D services, as well as some manufacturing areas, are well above 30%.

Finnishing school

The latest OECD survey of the competence and literacy of 15-year-old students in reading, mathematics and science, due out this December, shows that the performance gap among industrialised countries has further widened since the first survey in 2000.

Finland moves further ahead in the OECD’s PISA 2003 survey of 15-year-olds, thanks to its improved performance in mathematics and science compared with three years ago. This places Finland on a par in mathematics and science with the previously unmatched East Asian countries such as Hong Kong-China, Japan and Korea. The previous edition of PISA, which stands for the Programme for International Student Assessment, attracted headlines in 2000 and 2001, because of the average performances of some major OECD countries, particularly Germany, whose showing this time was a little better.

But some countries at the bottom of the PISA scale showed even lower educational performance this time round, so widening the gap between the best and poorest performing participants. Over a quarter of pupils were not proficient beyond Level 1 mathematics in Italy, Portugal and the US, for instance, and over half in Mexico and Turkey.

Nor does high expenditure guarantee success, with some big spenders performing below average, and others getting more value, like Australia, Belgium and the Netherlands. Korea’s national income, for example, is below the OECD average, but its students are among the best performers in the OECD area. Overall, the survey confirms that while wealthier countries tend to do better in education than poor nations, students whose parents are well-educated with cultured homes tend to perform the best. Also, while girls outperform boys in reading in all countries, gender differences in mathematics tended to be small.

More than 275,000 students in 41 countries took part in the survey, which involved written tests lasting two hours.


©OECD Observer No 245, November 2004

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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