OECD Observer
News brief– Q4 2011

Mental illness alert; Rural promise; Economy; Country roundup; Global steel grows; Green growth platform; Soundbites; Plus ça change...

Mental illness alert

Mental illness is a growing problem in society and is increasingly affecting productivity and well-being in the workplace, according to a new OECD report.

Sick on the Job? Myths and Realities about Mental Health and Work says that one in five workers suffers from a mental illness, such as depression or anxiety. Three quarters of workers with a mental disorder report reduced productivity, compared to one in four workers without a mental disorder. Work absences are also much more frequent and about 30% to 50% of all new disability benefit claims in OECD countries are attributed to mental ill health. People with a mental disorder are two to three times as likely to be unemployed as people with no disorders. This gap represents a major loss to the economy, as well as for the individuals and their families. Moreover, the share of workers exposed to work-related stress is increasing, the report notes.

The report challenges some myths and urges policy makers to look for new solutions. It urges early intervention because half of all mental disorders start in adolescence, and notes that the population claiming disability benefits is getting younger. Good working conditions, monitoring of sick leave behaviour; and help with reducing workplace conflicts are among the remedies suggested in the report. Visit www.oecd.org/els/disability

Rural promise

The crisis has hit some areas far harder than others, in job losses for instance, and huge regional variations in economic and social conditions within a country require a rethink of how governments design economic policies, says a new report. The OECD’s first Regional Outlook calls on policy makers to pay greater attention to regional factors such as amenities, infrastructure and demographics, as well as industry specialisations and networks, rather than relying on government transfers.

The report observes that on average 70% of the economic growth of OECD countries occurs outside metropolitan hubs, indicating that “rural” is not synonymous with decline. And with local and regional government accounting for two-thirds of total public investment in OECD countries, their capacity to manage in the most efficient, growthenhancing way is critical, the report says. Visit www.oecd.org/regional/outlook


Gross domestic product (GDP) growth in the OECD area decelerated sharply to 0.1% in the fourth quarter of 2011, against 0.6% in the third quarter, quarterly provisional estimates show. The OECD total masks diverging patterns however. In the US, GDP growth accelerated to 0.7% in the fourth quarter of 2011, compared with 0.5% in the third quarter, while in Japan GDP declined by 0.6% following the strong technical rebound (1.7%) in the third quarter. In the euro area and the EU, GDP also fell, by 0.3%, for the first time since the second quarter of 2009.

Meanwhile, composite leading indicators from the OECD, which are designed to anticipate turning points in economic activity, pointed to slower activity in most countries but showed stronger signs for Japan, the US and Russia.

Growth for six Southeast Asian economies, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam, is expected to reach 5.6% during 2012- 2016, according to the latest OECD Southeast Asian Economic Outlook released at the end of November. Latin America and the Caribbean countries are projected to grow 4.4%.

Consumer prices in the OECD area rose by 2.9% in the year to December 2011, compared with 3.1% in the year to November 2011. This easing in the annual rate of inflation mainly reflected the slower growth in energy prices, which increased by 8.1% in the year to December, up from 4.1% in November.

The OECD area unemployment rate was stable at 8.2% in November 2011, unchanged since August. The rate has hovered at this level since January 2011. However, stability at the aggregate level masks different national situations. The euro area’s unemployment rate remained at 10.3% in November– the highest rate recorded since the start of the global financial crisis.

Merchandise trade growth stalled in most major economies in third quarter of 2011, as total imports of G7 and BRICS countries contracted by 1%, compared to 4.2% growth in the previous quarter. Total export growth slowed to 1%, compared to 4.6%. Visit www.oecd.org/statistics

Country roundup

With recovery slowing, swift implementation of new reforms is needed to ensure sustainable, inclusive long-term growth, according to the OECD’s latest Economic Survey of the Czech Republic in November. The ongoing recovery has been weaker than in neighbouring countries, constraining the pace of convergence with more prosperous European countries. Worsening trade performance and declining domestic demand will limit economic growth to 1.6% in 2012.

In recent years Israel has strengthened its environmental policies and now should develop a green growth plan that combines environmental, economic and social policies, the OECD Environmental Performance Review of Israel says.

For 35 years, the Netherlands has surpassed the UN target of spending at least 0.7% of its national income on Official Development Assistance (ODA). National belt-tightening will extend to ODA, albeit keeping it at 0.7% by 2012.

The Russian Federation must further modernise its economy to meet long-term development and income inequality challenges, while improving energy efficiency, the OECD said in two reports, a Review of Labour Market and Social Policies in the Russian Federation and the Economic Survey of the Russian Federation, both issued in December.

The Slovak Republic has made major progress in protecting the environment and enhancing the quality of life, but as the economy strives for recovery, the OECD Environmental Performance Review of the Slovak Republic recommends that it strengthens environmental policies and institutions, promoting green growth to help achieve its economic goals.

Though the economic crisis has forced Spain to cut public spending, including to development co-operation, its aid has almost doubled since 2003, the OECD’s Review of the Development Co-operation Policies and Programmes of Spain notes, though urges more focus.

Sweden’s 2008 reform of its labour migration policy, now one of the most open in the OECD, has helped businesses hire foreign workers quickly and cheaply, without hurting conditions for local workers, according to a new report in December. Visit www.oecd.org/newsroom

Global steel slows

One good indicator of the health of the world economy is steel, which underpins industrial output and construction. World steel production and demand growth slowed in 2011. In the first three quarters, production reached 1,514 million metric tonnes (mmt) in annualised terms, representing a 9% increase from the same period in 2010. In China, in the first three quarters of 2011, steel production increased by 12% to 703 mmt annualised. International trade in steel expanded more slowly too.

World finished steel consumption increased by 7% in the first three quarters of 2011 compared to the same period of the previous year, marking a slowdown from 15% in the year earlier period. Annual growth rates of steel consumption from January to September 2011 stood at 6% in North America and Europe, 11% in the Commonwealth of Independent States (CIS) and 9% in Asia.

Green growth platform

Policy makers seeking to effect green growth policies now have a new information and advice resource, after four leading global organisations–the Global Green Growth Institute, the UN Environment Programme, the World Bank and the OECD–agreed in January to create a Green Growth Knowledge Platform. The initiative will address major knowledge gaps in green growth theory and practice, and aims to underpin local, national, and global economic policy making, and collaboration. Visit www.greengrowthknowledge.org


Vive la différence

“France prefers taxes to savings”

Headline about austerity, in French daily, Le Monde, 24 December 2011

Euro trouble, as seen from China

“At this time of difficulties, members with more resources should not hesitate to extend their helping hands to debt-ridden neighbours, not only as a show of solidarity but also as a move necessary to keep themselves afloat in the long run.”

Wang Haiqing for Xinhua, the official Chinese news agency, referring to the euro crisis, 7 January 2011

Latin goal

“Our goal is to become the third biggest Latin American economy and to join the Organisation for Economic Cooperation and Development.”

Sergio Diazgranados, Colombia’s minister of commerce, industry and tourism, quoted in Colombia Reports, 16 January 2012

Plus ça change...

Expenditure on education and research represents a very long-term investment. It initiates cumulative processes that extend over decades and, as a rule, does not yield quick returns. On the other hand, public finance has, by tradition, been shortsighted.

Ingvar Svennilson, in issue No 1 November 1962

©OECD Observer No 287, Q4 2011