Women taking risks: closing the gender gap in entrepreneurship

EAG 2015OECD Statistics Directorate

Women entrepreneurship is increasingly recognised as a key source of employment creation and innovation, and for addressing inequalities. McKinsey for example have just published a study estimating that “$12 trillion could be added to global GDP by 2025 by advancing women’s equality.” Women entrepreneurs could be a major part of this, but the latest figures presented in the OECD’s Entrepreneurship at a Glance 2015 show that in OECD countries there are two and a half times more men than women that are self-employed with paid employees. On average, 2.2% of all employed women are entrepreneurs who employ paid personnel, while the average for men is 5.6%. There are gender differences also when looking at the sectors of entrepreneurial activity, with a higher concentration of women in the services sector, particularly trade and hotels, while only few have businesses in manufacturing and construction. However, these patterns seem to be changing for young women entrepreneurs. Evidence points to considerable diversity in many OECD countries, including high shares of young women owning businesses in the construction sector, suggesting that stereotype barriers may be eroding.

Encouraging findings are also observed in terms of earnings from self-employment. Although a gender gap continues to exist in all countries, it has nevertheless decreased significantly in many. This is particularly true for Belgium, Finland, Iceland, Luxembourg, and the Netherlands where the gap has closed by more than 10% in recent years (see figures 1 and 2).

Figure 1. Gender gap in self-employment earnings
Percentage

Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933231185

Figure 2. Changes in gender gap in self-employment earnings

Percentage points, 2010-11 average compared to 2006-07 average

Fig 2
Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933231194

This could be an important driver for inspiring entrepreneurial motivation among women. Indeed, the fear of low or erratic earnings is one of the main reasons why many people do not become entrepreneurs. While entrepreneurship is a pathway to wealth for highly successful individuals, many people that are self-employed struggle instead with relatively low incomes, a condition that results in lower opportunities to accumulate savings and a higher likelihood of falling into poverty if the business fails.

Inevitably, there are risks when choosing to set-up a new business. But some of these risks, like achieving a gratifying remuneration or attaining a satisfactory work-life balance are often more inhibiting for women than for men. In fact, independently of a country’s economic context and cultural attitude toward entrepreneurship, women always appear less prone to take the risk of creating their own business than men (see figure 3). The share of men who would rather take a risk and build their own business than work for someone else is larger in virtually all countries, from high income OECD countries to least developed low income economies. There are a few exceptions where woman are more willing to take the risk, including Mexico and South Africa.

Figure 3. Willingness to take the entrepreneurial risk

2013, Percentage

Fig 3
Click to see full size or on the link below for the original data

http://dx.doi.org/10.1787/888933230517

Why are women less willing to engage in entrepreneurship? Perhaps because the share of women declaring that they have access to money or training to start-up and grow a business is always inferior to the corresponding share of men. As expected, the average share of women having access to money or training is the highest in OECD countries and lowest in low income countries. However, the main fact remains that across all countries in the world there is an important gender gap in accessing funds and training which are key ingredients for becoming an entrepreneur.

Evaluating the policies that support women entrepreneurs is complicated by the difficulty of measuring gender differences in entrepreneurship. The evidence presented Entrepreneurship at a Glance 2015 clearly shows that policy initiatives are needed to improve access to finance and training for setting up a business. Such initiatives would have a beneficial impact on women’s willingness to become entrepreneurs.

Useful links

Entrepreneurship at a Glance 2015

Gender Data Portal

Corporate Accountability and the UN Sustainable Development Goals: How Responsible Business Conduct could and should play a decisive role

SDGsProfessor Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct (@nieuwenkamp_csr)

The UN has now agreed to the Sustainable Development Goals, a set of 17 goals which will define the post-2015 development agenda. It is recognised that the private sector has an important role to play in economic and social development. Private sector growth can create income opportunities, contribute to human capital development and lead to technology transfers, among other positive economic and social effects. For example, in Bangladesh the apparel sector has been credited in lowering the official poverty rate from 70% to less than 40%. Today it employs tens of millions of workers globally, predominantly women, which has contributed to empowering women from poor communities.

However, as we have also witnessed in Bangladesh in the context of the apparel sector, in order to avoid other negative impacts, businesses must behave responsibly. Not just within their direct operations but throughout their supply chains and business relationships. This is particularly important in weak regulatory contexts. Given that a significant portion of global manufacturing takes place in such contexts, if multinationals would commit to promoting sustainability and responsible business conduct throughout their supply chains this would have a decisive impact on the success of the SDGs.

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct currently represent the most comprehensive set of government-backed recommendations on responsible business conduct. They are an important tool for promoting responsible business conduct globally, and therefore for supporting global development.

The OECD Guidelines state as an overarching objective that enterprises should contribute to economic, environmental and social progress with a view to achieving sustainable development. Furthermore under the Guidelines enterprises are expected to avoid causing or contributing to adverse impacts (social, environmental, human rights, etc.), through their own activities, and address such impacts when they occur. Therefore the Guidelines promote a concept of responsible business conduct which includes both the idea that business should do no harm and that they can do well by doing good. This applies to an enterprise’s direct operations as well as products, operations and services throughout its supply chain.

Currently 46 countries adhere to the Guidelines, and therefore make a binding commitment to promote RBC amongst businesses operating in or from their territories. Adherent countries represent diverse geographies and include OECD member states as well as 12 non-OECD member countries (Argentina, Brazil, Colombia, Costa Rica, Egypt, Jordan, Latvia, Lithuania, Morocco, Peru, Romania and Tunisia). These 46 countries account for around four-fifths of outward FDI and two-thirds of inflows and are home to the majority of multinational enterprises. This means that the Guidelines are relevant even for non-adherent nations looking to attract investment or home to companies operating abroad.

Linkages amongst the OECD Guidelines and SDGs

Given the instrumental role that business has to play in sustainable development the OECD Guidelines directly support many of the aims of the SDGs. Some of the main complementarities amongst the OECD Guidelines are outlined in the table here: MNE Guidelines SDGs

Perhaps the most important feature of the Guidelines is the National Contact Point mechanism, the built in grievance mechanism of the Guidelines. Countries adhering to the Guidelines are obligated to establish NCPs which are tasked with promoting the Guidelines as well as providing a platform for mediation and conciliation of alleged non-observance by the Guidelines. Given the substantive overlap between the RBC recommendations of the OECD Guidelines and the SDG’s the NCP system can serve as an important tool in advancement of the objectives under the SDGs.

Although the NCP mechanism does not have legal authority and thus cannot impose sanctions nor mandate that parties participate in the process, it has nevertheless proven to be an effective tool in promoting sustainable development. Utilizing the NCP mechanism provides a venue for enterprises to discuss and explore issues regarding responsible business conduct in a low-cost, non-adversarial manner, which can avoid further escalation of disputes. The OECD NCP mechanism has a growing track record of agreements resulting through mediation. For example in 2014 the UK NCP resolved a complaint brought by the World Wildlife Fund based on the activities of Soco, an oil exploration company, in Virunga national park, a world heritage site in the Democratic Republic of the Congo (DRC). The mediation resulted in Soco agreeing to cease its operations, to never again jeopardise the value of another world heritage site and to conduct environmental impact assessments and human rights due diligence in line with international standards. Such a result directly supports the environmental agenda of the SDGs.

A complaint submitted by UNI Global Union and the International Transport Workers Federation against DHL also led to a useful agreement at the German NCP. The complainants and the company agreed to respect the rights of workers to establish and join trade unions in Turkey, India, Colombia, Indonesia and Vietnam. In another case concerning the Tazreen factory fire in Bangladesh, the complainant, Uwe Kekeritz, member of the German Bundestag, and Karl Rieker, a garment company, reached an agreement in which Karl Rieker committed to improve the fire and building safety standards in its supplier factories. Measures included reducing of the number of supplier factories, establishing long-term supplier relations, close supervision by local staff, and signing the Bangladesh Accord on Fire and Building Safety. The conclusion of these cases supports the SDG goal of protecting labour rights and promoting safe and secure working environments for all workers.

Many NCP cases tackle multiple issues and thus can contribute to several aspects of the SDGs. For example in a complaint by several NGOs against the Cameroon palm oil giant Socapalm and its owners (France’s Bolloré) the French NCP brokered an agreement in which Socapalm agreed to improve workers’ conditions in Socapalm and its suppliers, improve stakeholders engagement with local communities, and reduce environmental damage.

Although non-binding, this soft law mechanism can have hard consequences. If mediation in the context of an NCP procedure fails an NCP may issue a statement with recommendations, sometimes including a statement on whether a company did or not act in adherence with the recommendations of OECD Guidelines. While such determinations may cause significant reputational damage to a company they can also protect a company’s reputation in instances when conduct is found to be consistent with the recommendations of the OECD Guidelines. Furthermore in some contexts governments consider NCP statements with regard to economic decisions, e.g. in the context of public procurement decisions or in providing support to international operations. For example, export credit agencies of OECD member countries must take into account the final statements of NCPs when they make decisions on export credit guarantees. Additionally, some countries have taken NCP decisions and processes into account with regard to their commercial diplomacy.

Beyond government related commercial consequences, increasingly financial institutions are conducting human rights due diligence. This process is being conducted to avoid ethical and commercial risks associated with being linked to such operations. Likewise institutional investors have increasingly started to apply pressure in situations where human rights issues are identified and in some cases have been known to pull their investment where adverse impacts are not adequately addressed. For example in 2010, investors withdrew from mining company Vedanta following an upheld NCP complaint. All this can increase the cost of capital.

The private sector has an important role to play in realizing the SDGs and in this respect, the OECD Guidelines provide a strong existing framework for corporate accountability supporting the aims of the SDGs. Specifically, where the SDG address behaviour of enterprises the NCP mechanism of the Guidelines will continue to function as a strong tool for encouraging responsible behaviour. Governments should take a whole of government approach to this tool and strengthen the NCP system with the SDG’s in mind. For countries with an existing NCP this means strengthening the mechanism and providing it with adequate resources to fulfill its tasks. Finally, multinationals should play their role by behaving responsibly within their direct operations as well as throughout their supply chains.

Useful links

OECD and the Sustainable Development Goals

Air pollution and diesel: from theory to practice

Pollution guaranteed
Pollution guaranteed

Suzi Tart, OECD Environment Directorate

The current Volkswagen diesel emissions scandal highlights the difficult reality of making the transition to a low-carbon economy. It also highlights the growing need for governments to make smart policies, based on actual costs.

One might think air pollution is not a big problem because in most cases we can’t see or smell it until it reaches a critical level. Data shows that we should be concerned. Health costs from outdoor air pollution in OECD countries in 2010 amounted to $1.7 trillion. Of that amount, road transport accounted for nearly $1 trillion. Outdoor air pollution not only takes away from the quality of one’s life, it also kills. The number of premature deaths due to outdoor air pollution is estimated to be around 3.3 million each year. The growth in vehicles being added to the streets in China and India mean that this figure is on an upward trend worldwide, although it has been declining in many OECD countries due to emissions controls on vehicles.

Car companies such as VW that are cheating the system therefore risk derailing the modest progress that has been made. Tighter emissions standards for vehicles in OECD countries were a step in the right direction; yet as we have learned, one step is not enough to get us to our destination. Policymakers had no doubt hoped to encourage innovation and investment in clean fuels with such measures. Rather than losing hope however, governments should maintain their strong regulatory regimes and emissions controls. They can also help unlock the potential market power for clean fuels by supporting more research and development in this field, as well as implementing wise tax structures.

Diesel is an example of an unwise tax. Diesel-fuelled engines are considered to be more damaging to both the environment and human health than gasoline-fuelled ones. Yet diesel has a lower tax rate than gasoline does in most OECD countries. Many people fear that diesel-fuelled cars outside of the US will also be found to have “defeat devices” installed on them. If that is indeed the case, at least some of the damage inflicted on our environment and health presumably could have been avoided. Had tax structures properly reflected the degree of environmental and social costs, the higher tax on diesel would have yielded a lower demand for diesel-fuelled cars, hence fewer consumers would be driving them today.

While the world waits to see just how many cars are cheating the system, citizens continue to suffocate and Earth continues to overheat. Transitioning to a low-carbon economy will not be easy, but with the right mix of policies, it can be achieved.

Useful links

Avoiding death by diesel, Simon Upton, OECD Insights

The Cost of Air Pollution: Health impacts of road transport OECD, 2014

OECD: On the road to COP21

Sustainable development goals: much more than just a group picture

SDG Christian KrollChristian Kroll, expert on sustainability at the Bertelsmann Stiftung and the Sustainable Governance Indicators (SGI) project manager

When world leaders from all UN member countries meet today in New York for the largest ever gathering of heads of state, it will be about so much more than a unique photo opportunity. Beyond the grand gestures and speeches, we are going to have to ask our leaders if they have done their homework. Seventeen new goals will be adopted at the summit in order to guide public policy over the next fifteen years: the Sustainable Development Goals. They follow on from the Millennium Development Goals, which have helped to halve child mortality, as well as fight hunger and disease since 2000. The key difference is that these new goals will be universal and include the high-income nations of this world – not just as donor countries for development assistance. The Sustainable Development Goals will demand fundamental policy changes in the rich countries themselves. These goals have the power to question the way we live, how we structure our economies, the way we produce, the way we consume. They can highlight the particular responsibilities of the rich nations for sustainable development and spark much-needed reform debates.

A first systematic assessment of how the rich nations perform with regard to all of the seventeen new goals reveals that most OECD nations are currently on track to fail the targets that they are about to set for themselves. The analysis was published by the Bertelsmann Stiftung with the support of the Sustainable Development Solutions Network just ahead of the historic summit. In his foreword, Kofi Annan, who was the driving force behind the Millennium Development Goals, writes: “This study will hopefully spark reform debates on sustainability and social justice in many high-income countries. We owe it to our planet and its people”.

In fact, the rich nations must take immediate policy steps to make their economic and social model more sustainable and inclusive. But we are not starting from zero: We can and must learn from each other. Sweden, Norway, Denmark and Finland perform best across the 17 new UN goals. These countries show that a strong economy with employment-to-population rates in the case of Sweden of 75 percent (ranked 4th of 34 OECD countries) can go together with sound social policies and an environmentally friendly infrastructure (the share of renewable energy in Sweden is 47 percent, ranked 3rd). By the way, these are also among the world’s happiest countries, thereby deconstructing the myth that a sustainable lifestyle is one where you will have to forsake all those precious things that make you happy.

Most high-income nations, however, are on the wrong track with economic systems that widen the gap between rich and poor, and their highly un-sustainable consumption and production patterns. In 23 OECD countries, the wealthiest 10 percent of the population now earns at least as much as the poorest 40 percent. The earnings of the richest 10 percent in the USA are even 1.7 times as great as those of the poorest 40 percent. Countries such as the United States and Denmark generate 725 and 751 kg, respectively, of municipal waste per person every year. The United Kingdom and Estonia overexploit 24 and 22 percent, respectively, of their fish stocks.

When the ink has dried on the outcome document of the New York summit, the work to implement the SDGs should start immediately. In the next fifteen years, let us learn from best practices on the seventeen goals. As the goals are merely political and not legally binding, civil society will have to hold governments to their pledges at the UN summit and accelerate the change over the next fifteen years. That is you, me, and everyone who is not going to be in that historic picture dated 25 September 2015. It is in our hands.

Useful links

Sustainable Development Goals: Are the rich countries ready? Christian Kroll, Bertelsmann Stiftung, SGI Network, 2015

OECD and the Sustainable Development Goals

The Sustainable Development Goals: translating ambition into action

ACCESSOn 14 September, we published an article on health and the Sustainable Development Goals by Eduardo Pisani, Director General of IFPMA – the International Federation of Pharmaceutical Manufacturers and Associations. Today, Echo Collins-Egan, ACCESS Health International’s Country Manager in Morocco, gives her opinion.

It is 2015 and we have reached the deadline. The Millennium Development Goals (MDGs), which we aimed to achieve by this year, have a new incarnation.

The Sustainable Development Goals (SDGs) represent a renewed and revitalized global effort to come together and face our common human challenges. There is so much to applaud about both the how and the what of these new goals. The United Nations has sought to address many of the criticisms aimed at the MDGs in terms of both creation and content. The SDGs have been arrived at through a thorough consultation process involving non-governmental organizations, academia, the private sector and, of course, governments. They place a new emphasis on topics such as gender equality, the importance of partnerships and the part that business and industry have to play. Although the Millennium Development Goals were, in theory, universal they were tacitly considered to be objectives for low and middle income countries to aim for with the financial aid of richer nations. The Sustainable Development Goals help undermine the age old paradigm that there are developed and developing countries. Instead these new Goals will apply to all of us.

The advantage of such a joint declaration of global intention is that it acknowledges all the pillars that must be simultaneously erected to make development work for the people it is built for. Education is no good without health, a healthy justice system no use without gender equality. And none of these will be relevant if climate change catches up with us. I call them pillars because they must be strengthened together to be able to support sustainable development. Ignore one of these pillars and the others will struggle to stabilize. As the SDGs state we must find integrated solutions to our collective problems; that means across sectors and across countries. The down side of all this of course is scale. Each of the Goals represents a thousand challenges and a thousand complexities. In other words the problems in poverty eradication, gender equality, economy and health are sometimes overwhelming in their size and scope. We could accuse the SDGs of being too aspirational or too vague. To arrive at global objectives which we can all agree upon is difficult, that they be actionable and accountable seems almost impossible. Yet there is no way around the fact that we have to try. The Goals are an expression of that unavoidable reality, we must come together to solve our common problems. They serve the very real purpose of focusing the development sectors’ minds. They help drive funding and streamline our efforts.

Ultimately however the question has to be how we translate our ambitions into action. How we make those actions accountable. How we measure their impact. ‘We will also build upon the achievements of the Millennium Development Goals and seek to address their unfinished business.’ We need to think about why we did not achieve all our previous goals by 2015 and how we can improve upon them this time around.

Sometimes it can feel as though these Global Challenges, Partnerships, Projects, Alliances and Goals are something vague and somehow separate from those of us working in the development sector, in the field or even in local government. I work for a global healthcare organization in Morocco and often find myself asking how we can link these global objectives to the practical realities faced by the four hundred million people in the world who still lack access to good quality healthcare. This globalized world has become a smaller place but one whose complexities are more obvious than ever. We have more information and the means of communicating it; we are living in a moment where we have more tools than ever before to help us close the gap between ambitious global vision and local on the ground realities.

I, like Eduardo Pisani, want to focus on two of the Sustainable Development Goals:

Goal 3. Ensure healthy lives and promote well-being for all at all ages and specifically its sub point 3.8 Achieve universal health coverage, including financial risk protection, access to quality essential healthcare services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

And Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development

As someone who spends a lot of her time thinking about Universal Health Coverage I welcome the inclusion of this goal. The concept of Universal Health Coverage has gained astounding momentum over the last few years and helped pushed the agenda for more accessible healthcare service for all. But what does it mean? Like the SDGs themselves, we could accuse Universal Health Coverage of being a vague pipe dream which although worthy, is almost impossible to achieve (or define!). But like the goals it also provides a platform for us as an industry to reflect on the multifaceted challenges we face if we are to one day offer access to quality essential healthcare services for all.

Which leads me to Goal 17. There is something deeply insightful that one of the Goals revolves around the concept of partnerships. It is one of the first lessons I learned about development: nothing can be achieved without strong complementary partnerships. We cannot have Goal 3 without it. Goal 17’s sub points cover precisely the areas I see are needed all around me every day and they demonstrate that these Goals are about implementation. Finance; Technology; Capacity Building; Systemic Issues; Multi-stakeholder partnerships; Data, monitoring and accountability. Music to my colleagues’ and my ears.

To make both these Goals a reality we need practical tools that support the kinds of partnerships that will help us achieve this dream. Mario Pezzini, director of the OECD Development Center emphasised the need for knowledge-sharing platforms for policymakers to dialogue and develop common strategies to achieve the Sustainable Development Goals.

I would like to briefly talk about one such platform that I have had the honor to work with. The Joint Learning Network for Universal Health Coverage (JLN) is for me an example of what partnerships can help us achieve when it comes to health and development. The Joint Learning Network connects practitioners and policymakers across countries to help bridge the gap between theory and the practical ‘how to’ of implementing reforms to achieve universal health coverage. Practitioners and policymakers from member countries set the agenda and technical priorities. Technical Facilitators frame the issues based on international experience and harvest the tacit knowledge of members. Network members participate in a variety of joint learning activities to share their experiences, learn from one another, and co-produce new knowledge. Technical Facilitators work closely with members of the network to develop and adapt new knowledge products focused on the ‘how to’ of health reform implementation. Members so far include Ghana, Kenya, Indonesia, India, Philippines and many more.

It is an active community of people trying to convert a big goal into a day-to-day reality. Last month, we helped organize a workshop for costing of health services for provider payments in Bangalore, India. An essential but often challenging topic for countries on the path to Universal Health Coverage. Participants from ten countries learned about different costing methodologies, how to manage costing data and how to use that data to reform provider payments. But most crucially they were trained to become trainers themselves, to go back to their countries and share the lessons learned with others. A month later, costing workshops are being organized in almost all the countries that participated.

Platforms such as these allow for an understanding that each country has unique contexts and challenges but that working together makes us stronger.

I would advocate for many more such networks and the resources to support them.

Ultimately the Sustainable Development Goals are an expression of hope. They represent a grand vision rather than a work plan. It is our leaders who will sign this declaration but it is the millions of us on the ground who must really act, in partnership, to make these goals a reality. So let’s get to work.

Useful links

OECD and the Sustainable Development Goals

OECD work on health

OECD work on development

Investment Treaties: A Renewed Plea for Multilateralism

Investment ForumJan Wouters, Professor of International Law, Director of the Leuven Centre for Global Governance Studies, University of Leuven

We are living in interesting times for investment treaties, whether bilateral treaties or investment chapters in free trade agreements. Never before have they aroused such an interest from parliaments. People and politicians alike are concerned about their impact on international and domestic affairs. Their scope is expanding dramatically: just think of mega deals like the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP), and the rise of intra-regional investment agreements. Debates on investment agreements have intensified recently within the EU because of the European Commission’s newly-acquired exclusive powers in this arena.

While competition for foreign investment is fierce, current levels of investment, both foreign and domestic, remain (too) low in many jurisdictions. The increased importance of global value chains (GVCs) and ever more integrated trade and investment flows call for (a renewed consideration of) more coherence between trade and investment policies. Today, governments adopting a regulatory measure (e.g. Australia’s plain-packaging legislation for cigarettes) can face both WTO and investment treaty claims, often raising similar issues, but with sharply different adjudication mechanisms – ad hoc arbitration, WTO Dispute Settlement with a permanent Appellate Body – and diametrically opposed remedies – damages vs. non-pecuniary; and very high costs, especially in Investor-State Dispute Settlement

The growing debate requires attention from governments, in particular at the multilateral level. Increased coherence in the system would be beneficial to all countries, including those that have so far navigated it successfully. Governments currently may feel exposed to multiple claims, unlimited damages, and to uncertain or excessively broad interpretations of treaty obligations. If they consider that the treaties they are party to restrain them, rather than help them in attracting investment, they may drop out of the system altogether, instead of seeking reform. This would be unfortunate, because properly-designed treaties can play a constructive role in fostering investment.

Many treaties focus only on investor protection. In addition to being increasingly controversial, those provisions are too narrow for today’s needs, including ensuring sufficient productive investment, providing the infrastructure to support the development of GVCs and removing barriers to cross-border investment that hinder technology spill-overs. Good policies to support the liberalisation of investment are ever more needed. One also needs to consider ISDS carefully in order to respond to public concerns in many jurisdictions. Governments need to modernise, simplify and strive for coherence in investment treaty policy.

For all these reasons, we must revitalise the multilateral debate on investment treaties. A key role should be played in this respect by the G20, the OECD and other international organisations. All G20 governments have been invited to participate in the regular meetings of an OECD-hosted Roundtable that has focused on investment treaties since 2011. At the latest OECD conference on investment treaties in March of this year, major countries, including OECD members, China and India, expressed support for treaties but also for significant reform.

Where to start? We first need to find broad agreement on some core principles and some clearly-defined options for governments with differing interests. That could lead to more ambitious goals like discussions of a multilateral framework or model provisions in key areas. The G20 could give the lead by giving impetus, showing broad government interest, and commissioning work. Turkey has put investment at the centre of its G20 presidency. That is why the G20 and the OECD will be co-hosting a Global Forum on International Investment in connection with the G20 Trade Ministers meeting in Istanbul on 5 October. The trade and investment nexus, and investment treaties, will be key issues there. It is likely that China, in presiding the G20 next year, will similarly place particular emphasis on investment. This should be applauded.

Multilateral attention to improve investment treaties is long overdue. At the adjudicative level, the recent proposal by the European Commission to establish a permanent ‘Investment Court System’ in the context of the TTIP negotiations is an interesting starting point for further discussion. The system, according to the proposal, should be based broadly on the WTO’s Appellate Body, with strict qualifications and ethical requirements and permanent remuneration for its members. It remains to be seen whether the US will go along with the proposal. In any event, it may serve as the starting point for reform of the heavily criticised current system of investor-state arbitration.

Useful links

G20-OECD Global Forum on International Investment

OECD work on international investment law

OECD-hosted freedom of investment roundtables

Now more than ever, migration policy needs to be comprehensive and co-ordinated

IMO 2015This post, by Stefano Scarpetta, Director of the OECD Directorate for Employment, Labour and Social Affairs, is also the editorial of  the “International Migration Outlook 2015”, published today.

OECD countries are facing an unprecedented refugee crisis. In 2014, more than 800 000 asylum applications were recorded, an historical high, but the figure for 2015 is expected to be even higher.

Even if humanitarian migration is an issue of increasing concern in several parts of the world, notably in Asia, most asylum applications were made in Europe (more than 600 000 in 2014). This is clearly an emergency situation that requires a co-ordinated response at both European and global levels.

In Europe, this humanitarian crisis is taking place in the broader context of increasing challenges associated with irregular migration. The absence of controls at Libyan borders has created a unique situation and the number of irregular entries, as recorded by the European agency Frontex, is on a constant rise. In the first six months of 2015, about 137 000 people landed in Greece, Italy, Malta and Spain, corresponding to a staggering 83% increase on the 75 000 recorded for the same period of 2014. The fact that these landings include not only potential refugees but also migrants who are not always in clear need of protection adds to the pressure.

Images of people landing on the European shores and information on the many who died in their attempt to find a better life are as powerful as the tragedy of these people is real. The current refugee crisis also takes place in a context of relatively weak European economic and labour market conditions, as well as against the background of a global fight against terrorism. The anxiety regarding migration issues has reached new highs and antiimmigrant sentiment is spreading.

Building consensus among European countries to identify and agree on ad hoc emergency solutions has proven particularly challenging, in part because of expected negative reactions in public opinion at the national level. Nevertheless, in light of the worsening situation, current policy responses may need to be prolonged and enhanced. The failure to anticipate – and to communicate on – ongoing trends may actually have a very detrimental effect on trust and ultimately on the capacity to adapt further emergency policy responses but also, more generally, to adapt migration management systems as required.

Most resources (political capital, administrative staff, energy and attention of policy makers) are currently devoted to addressing the humanitarian crisis. However, one should not forget that existing legal migration systems also need to be constantly adjusted because of changing economic and demographic conditions, international competition for talent, and lessons learnt from evaluation of past policies and experiences. This also applies to integration policies, which help ensure migrants’ skills are used to their best potential. Most migration to Europe and the OECD still occurs through legal channels and is managed in an orderly fashion. Legal permanent migration to the OECD amounted to 4.3 million in 2014, a 6% increase compared to 2013. In the European Union (EU), permanent legal migration from outside the EU is now equivalent to what is recorded in the United States: about one million a year.

The integration of immigrants and their children also needs to be supported by appropriate public policies. Recent OECD evidence shows that despite some marked improvements across generations, in many OECD countries immigrants are more likely to be unemployed, in low quality jobs or overeducated in their jobs and to face poverty including in-work poverty. Their children attain on average lower levels of education. To make the most out of skills of migrants who are here to stay, it is important to continue investing in integration policies and reinforcing the efficiency of these investments.

The European Agenda on Migration proposed by the European Commission in April 2015 was initially meant to develop a global approach with proposals for immediate action but also longer term proposals for a new labour migration management system and integration. The second part of this equation should not be forgotten.

Even in the current context of the humanitarian crisis, a global policy strategy is needed, which has the right tools – and international co-ordination – to deal with current and future refugees and asylum seekers flows as well as more long-term tools to get the most out of legal migration. Failure to act on the first is likely to jeopardise efforts to improve on the second, as it will fuel anxiety about migration, regardless of the actual numbers involved.

Useful links

OECD migration insights

International migration: The human face of globalisation Brian Keeley, OECD Insights book