Today we publish the next article of a summer series in which Kimberley Botwright of the OECD Public Affairs and Communications Directorate looks at OECD work through a Shakespearean lens.
Before there was punk, there was Shakespeare, and his Romeo. Communication between generations has never been fluid. At the start of the play, Romeo is a brooding, isolated teenager, and his parents are at a loss about what to do with him; “Could we but learn from whence his sorrows grow / We would as willingly give cure as know.” Worse, Romeo is part of a brawling, bawdy gang-orientated youth culture. The overall context of the play appears to be one of society in crisis, parents can no longer control their children, whilst the presiding Prince of Verona has trouble maintaining law and order; “On pain of torture, from those bloody hands / Throw your mistempered weapons to the ground.”
Although emerging unrest continues to feature in our modern world, unlike Romeo’s father Old Montague, we can have a good guess at what ails today’s youth. OECD labour data indicate a 16.3% average OECD unemployment rate among 15-24 year olds in 2012, rising to 55.3% for Greece and 53.2% for Spain. Both these last figures have continued to climb into 2013. By way of comparison, in 2012 average unemployment rates (15-64 year olds) were 8.2% for OECD countries, 24.5% for Greece and 25.2% for Spain. Then there’s the NEET group (Not in Education Employment or Training); in 2012 12.9% of OECD 15-24 year olds fitted into this category. These individuals run the highest risk of long-term exclusion from the labour market. Youth in OECD key partner countries also suffered into 2012, with a 51.5% youth unemployment rate in South Africa and 14.8% in Russia.
Ok, ok, you say, but why all the fuss about youth unemployment? They’re young and fit, they’ll bounce back! After all, “Care keeps his watch in every old man’s eye” in contrast to the “unbruisèd youth with unstuffed brain.” Maybe not however, as the OECD Employment Outlook 2013 warns; “Youth need to be actively supported to avoid long-term “scarring” effects as a result of prolonged unemployment and low-income spells early in their careers.” This significantly affects society as whole, as individual scarring generates collective long-term, structural unemployment problems due to a loss of human capital and vital skills.
Furthermore, at OECD Forum 2013 Ian Hickie, Professor of Psychiatry at The University of Sydney, explained why scarring is particularly detrimental for young people. Rapid changes take place in the brain between the ages of 15-25, and participation has positive effects on these changes, while exclusion has negative ones. OECD Secretary General Angel Gurría reminds us that exclusion from the job market often leads to exclusion elsewhere; “Youth unemployment often means material hardship, dire future prospects and delaying vital steps into adulthood, such as leaving home, building relationships or starting a family.” Romeo himself does not fit into his friend Mercutio’s description of “lovers’ brains” that “dream of love”, but instead speaks with dread of a bleak future; “For my mind misgives / Some consequence yet hanging in the stars.”
What “cure” then for this crisis or is it to be governed by the “stars”? The OECD Action Plan for Youth is designed to leverage OECD work on education, skills and youth-related employment policies, in order contribute to national and international youth unemployment reduction efforts. It calls for a two-pronged approach; tackle the current crisis, but also address structural problems, in order to ensure better outcomes for youth in the future.
Elements to aid the first objective include boosting job creation, addressing demand-side barriers to the employment of low-skilled youth, and encouraging employers to continue or expand quality apprenticeships. Examples of policy action would be stronger incentives for employers to hire new workers, with lower social security contributions where appropriate. Elements for the second objective include strengthening the role and status of Vocational Education and Training (VET), as well as matching education with employers’ demand for skills; “The co-existence of young unemployed or under-employed graduates, with employers who say they cannot find the people with the skills they need, suggests that there is scope to better link education systems with the world of work.”
On education policy design and investment, OECD Special Advisor on Education Policy Andreas Schleicher notes, “Our education today, is our economy tomorrow, so we are going to pay a price.” Romeo is “The only son” of the House of Montague. Likewise, Juliet is the only offspring of the House of Capulet, as Old Capulet makes clear: “Earth hath swallowed all my hopes but she: / She’s the hopeful lady of my earth.” Their passing away points towards something stronger than death: the end of hope, the onset of sterility and the destruction of all of tomorrow’s promise (“No future”, as the punks said). By the end of the play, the better part of Verona’s youth lie dead – Mercutio, Tybalt, Paris, Juliet and her Romeo. The Prince bitterly declares, “All are punish’d”; for without the youth, society will pay a very high price indeed. But the death of the young in Verona also finally paves way for reconciliation in society. The play embodies the concept of creative destruction, an old order dying and a new one emerging, often with violent side effects; “The earth that’s nature’s mother is her tomb / What is her burying grave, that is her womb.”
Fortunately for us today, “High youth unemployment is not inevitable, even during an economic crisis; it is the product of the interaction between economic context and particular policies. What matters more are the choices countries make in how to allocate…spending and the policies they design to improve the efficiency and relevance of the education they provide.”
There are choices to be made because ultimately, “we cannot afford this waste.”
A glooming peace this morning with it brings;
The sun for sorrow will not show his head
Go hence, to have more talk of these sad things;
Some shall be pardon’d, and some punished:
For never was a story of more woe
Than this of Juliet and her Romeo.
Give youth a chance by Monika Kosinska, Secretary-General European Public Health Alliance, at OECD Forum 2013
It’s receding into the past, but the Great Recession – and the factors that led up to it – are still very much on attendees’ minds at the OECD 50th Anniversary Forum this week. At a session entitled “Restoring Trust in the System,” a wide range of opinions were heard on lessons for financial regulation and corporate governance in the wake of the crisis.
Seated side-by-side on the first panel were ministers from two countries that had very different experienceces in the crisis: Canada, which sailed through the recession and has come to be seen as a paragon for financial regulation, and Iceland, whose Finance Minister, Steingrímur J. Sigfússon, admitted that “we were not quite as lucky as Canada”.
Steingrímur managed to get to Paris despite the clouds of ash from the latest troublesome Icelandic volcano – “we picked an easier name this time,” he joked. That led him to draw comparisons between the forces of nature and the forces of the economic system: “When faced with forces of nature, we feel humbled,” he commented. With financial markets, we need a similar attitude, he said. We must realise the limits of what we know and don’t know, he said, and admit that things went wrong: “There were fundamental flaws in the system, otherwise this would not have happened,” he said.
The Icelandic minister raised an issue that was echoed by a number of speakers – pay and compensation for bankers and executives: “Why do we accept that bankers need tremendous bonuses to do their jobs, but not surgeons saving people’s lives?” Steingrímur asked. The point was also raised by Peter Mandelson, a former EU Trade Commissioner and British government minister. “Executive pay has become disconnected from reality,” he said, citing a big increase in payments to British business leaders. In 1998, said Lord Mandelson, payments to executives at FTSE 100 firms were 47 times average earnings at their firms; since then, they’ve risen to a multiple of more than 100, far outrunning any improvement in the firms’ share price. While stressing that he didn’t believe in the politics of envy, he said the “scale of what has happened cannot be justified.”
But Federico Ghizzoni, CEO of the Italian-based banking group UniCredit, defended his remuneration. He said there was a perception that everyone got huge bonuses, but this was not the case. On average, he said, after-tax salaries in Italian banks were only about 30,000 euros a year. He added that half his bonus was based on customer satisfaction and his company’s reputation, as measured by an independent survey. Still, he wasn’t complacent about the challenges facing banking: “The crisis of 2007 was a crisis of values,” he said, “if you don’t measure and test the values of your management, it will come back.”
Values were also on the mind of John Hope Bryant, founder of Operation Hope, which works to expand economic education and empowerment in the US. He said the crisis had shown the need to improve financial education: “This is a civil rights issue – if you don’t understand the language of finance today, you’re an economic slave.”
Lord Mandelson warned about the risks to social stability from the after-effects of the crisis. Despite the enormous progress in OECD countries over the past 50 years, “the mood of our citizenry is not celebratory,” he warned. There was a lot of apprehension and scepticism about politicians and business, he said, and these attitudes were very corrosive. If left unchecked, he said, they would sap our capacity to make the decisions we need to make.
Echoing Lord Mandelson’s comments, Christine Varney, US Assistant Attorney General, Department of Justice, said there was an argument for a fundamental change in the attitudes of business. At present, boards were legally required to concern themselves only with increasing shareholder value. That approach may be too narrow, she said; she called instead for a focus on stakeholder value – in other words, the interests not just of a business’s shareholders but of its customers, suppliers, and the society in which it operates. David Begg, an Irish labour leader, went further, and said that the economy must be embedded in society, and not the other way round. “Until we achieve that,” he said, “there can be no possibility of restoring trust.”