IMF rediscovers “Political Economy” This summer, the IMF challenged yet another pillar of neoliberal thinking when it published its Working Paper on the negative impact of deregulating job protection on the labour income share. Whereas the economic mainstream has systematically argued that technological progress is the main reason for the global trend of falling labour […]
Decentralised Collective Bargaining: Oversold
Many international economic institutions share the idea that collective bargaining should take place at the level of individual companies. For example, the OECD, as far back as its 1994 Jobs Strategy, pushed for more firm level bargaining by insisting that the instrument of administrative extension of collective agreements to all firms within a given sector […]
OECD Meets Piketty: An Alternative Economic Narrative
Today’s profits are not tomorrow’s investments A picture can say more than a thousand words. This is certainly true for the set of graphs (see below) that the OECD published in its latest Economic Outlook and that show the rate of return on fixed assets – a proxy measure for the rate of profitability on […]
How The OECD Wants To Make Globalisation Work For All
Worried by the populist backlash against globalisation, a big crowd of ministers, politicians and economists participated last June in the annual OECD week in Paris to discuss how to make globalisation work for everyone. While a multitude of panels and presentations stressed the benefits of economic openness and trade, the papers and publications which the […]
Has The OECD Joined The Campaign For Higher Wages?
Weak wages produce a weak recovery Trade unions tend to see wages not as a factor of competitiveness but as an engine that drives demand, growth and jobs. The Economic Outlook published this week by the OECD supports this view as it explains the lacklustre economic that is going on via the stagnation of wage […]
The Rise Of The “Super Firms” And Inequality
Mainstream economic thinking often tries to explain the trend of high and rising inequalities by referring to the forces of technology. Technological progress, so the argument goes, works to destroy middle pay routine jobs while at the same time creating many high skilled jobs. There is, however, increasing recognition that this ‘technology’ factor is but […]
German Economy Ministry Backs Up OECD Call For Public Investment Stimulus
In European and international economic policy discussions, Germany (also thanks to its finance minister Wolfgang Schaüble) is renowned for taking up the role of fiscal policy watchdog. Any call, such as the OECD’s proposal to escape low growth by having a coordinated fiscal policy impulse, in particular in an economy such as Germany with its huge […]
OECD: Simulating “Tax Stimulus” – Questioning Stability Pact Rules
The latest OECD’s Economic Outlook (EO) contains several surprises. First, it argues for a rethink of the current fiscal policy stance. Secondly, it forecasts an acceleration of the recovery in the OECD because of a major fiscal stimulus in the US. Last but not least, the OECD tackles the Euro Area’s Stability Pact and proposes […]
The OECD And Job Protection: New Findings But Old Policy Recipes On ‘Your Wage Or Your Job’
One of the key findings from the 2016 Employment Outlook just released by the OECD is that easier firing does not create jobs. Moreover, the OECD also finds that loosening job protection in the middle of an economic downturn results in immediate and substantial job losses. However, instead of cautioning policy makers against the danger […]
Central Banks Warm To Collective Bargaining
Something peculiar is happening. Up until recently, many central bankers were looking at robust collective bargaining and wage formation systems as a possible source for inflationary wage developments. Indeed, central banks, and the ECB in particular, have on numerous occasions called for more flexible and decentralised (read: weakened) wage bargaining systems so as to remove […]
Collective Bargaining And Rising Inequalities: Do The OECD And IMF Get It?
In a paper published in spring 2015, the IMF’s research department made the case for trade unions and collective bargaining as a powerful tool to keep inequalities in check. Whereas previous literature and statistics were already showing the existence of such a link, the IMF paper went even further by pointing out that trade unions […]
Break The Vicious Circle Of Falling Prices And Wages
The IMF has recently released its latest World Economic Outlook (WEO) Update pointing to persistently weak growth and another downward revision of its projected growth rates for 2016 and 2017 by 0.2 percentage points in each year. Despite this, the IMF’s growth trajectory still sees the world economy recovering slightly from the weakness it experienced […]