1. TRADE AND GLOBALISATION: BRINGING EVERYONE ALONG COMMENTS FROM TUAC Ronald Janssen April 2017 Paris

2. Is there a further shift inside the OECD ?
“They believe that the system is not working for them, they feel that it is unfair and there is increasing evidence that many of them may actually be right”
(Remarks by Angel Gurria at Economic Club of Minnesota 19th April 2017)

3. Specifically on trade induced disruption
- From ‘compensating the few losers’ to
- Recent evidence suggests that losses from opening to trade have been
- more widespread
- larger
- more region-specific
- more durable
… than previously realised
How to bring all along ?

4. Getting economic policy right
« Creative destruction » does not work well when there is slack in the economy
Economic policy has not done a particular good job here
If trade/change is to work better, restore full employment as the principal objective of monetary and fiscal policy
Story of austerity and long slump in recovery after financial crisis
Background : Since the monetarist counterrevolution, objective of full employment has been abandoned by many policy makers

5. Rediscover labour markets institutions
LMI’s often thought of as rigidities
But what about the their positive role ?
Unemployment benefits smooth consumption and make it financially possible for workers to engage in training and jobs search
Job protection provides early warning signal
Multi-employer bargaining overcomes problem of individual employers leaving training to others
Macro is of course not enough
We also need labour market policy to step in

6. Job Security Councils in Sweden

7. Lower inequality supports change
Lower wage and income disparities imply workers moving into new job will be easier…
Workers also more willing to take risks when majority of jobs are stable jobs with decent pay
Triangle of ‘flexicurity’ actually a quadrangle: Low(er) inequality, backed up by wide collective bargaining coverage
Not just through a (longer term) educational effect…

8. Globalisation, trade and inequality: There are links
Capital gets an outside option, thereby lowering bargaining position of workers
New generation of trade agreements: Investor protection (replacing job protection)
If low inequality is important, we do have a problem here

9. One quarter of explained by GVC’s and financial integration

11. Summarizing Full employment macro economic policy
Invest in labour market institutions (ALMP’s but also unemployment benefits, stable jobs with advance warning in case of dismissal…) not deregulate them
Keep rising inequality under control by rebalancing relative bargaining power of trade unions and employers.

12. And do not do this (ECO WP 1342)

13. A final word: Communication has been too succesfull !
One key line of communication:
« Globalisation forces us to become more competitive »
Systematic downwards pressure on wages, social security, workers’ rights

14. The result
In Europe, large majorities of the people are of the opinion that globalisation benefits large companies and not average citizens.
In the US, surveys indicate that a good half take the view that involvement in the global economy is a bad thing because it lowers wages and destroys jobs
Stop this line of communication