Third Meeting of OECD Champion Mayors for Inclusive Growth: Cities are the key to a just transition
Remarks by Angel Gurría
Seoul, Korea, 19 October 2017
(As prepared for delivery)
Mayor Park, Mayors from around the world, Ladies and Gentlemen,
It gives me great pleasure to welcome you to the Third Meeting of OECD Champion Mayors. Let me begin by thanking Mayor Park for hosting us today and in particular, for his leadership in taking up the challenge of meeting both climate and inclusion objectives.
I would also like to thank our partners, especially those who made it to Seoul: the C40 Cities Climate Leadership Group, ICLEI Local Governments for Sustainability, the Lincoln Institute for Land Policy, the United Cities for Local Governments (UCLG), as well as the United Way Worldwide.
Disparities in cities persist
Today, some of the largest disparities are witnessed in cities: from income to health to housing, right down to our capacity to recover from natural disasters. OECD research has found that income inequalities are higher in cities relative to their national average. Inequality has a clear spatial dimension: the most income-segregated cities in the Netherlands and France, for example, are at comparable levels to the least segregated cities in the US.
Moreover, disparities are striking within cities: for example, in Baltimore (US) and London (UK), life expectancy can vary by up to 20 years across neighbourhoods!
Concerted efforts are being made
Mayors, however, are not sleeping at the wheel. In these challenging political times, they face pressures from constituencies to deliver more, better and faster. And in many cases, Mayors are stepping up because some national governments are failing to do so.
It was in this vein that more than 50 Mayors from around the world joined the global coalition of Champion Mayors for Inclusive Growth, which I launched with Mayor Bill de Blasio in New York last year.
Champion Mayors committed to work together across four policy pillars outlined in the “New York Proposal”: education; skills development; housing; and public services; and endorsed the concrete actions outlined in the “Paris Action Plan”. Now is the time for implementing those actions.
Later this morning, Mayor Park and I will be launching the “Seoul Implementation Agenda”, to help us achieve measurable outcomes in two dimensions of the Inclusive Growth agenda: Aligning climate change and inclusive growth in cities, and Supporting small businesses and entrepreneurs in cities.
Let me briefly focus on those dimensions.
Aligning climate change and inclusive growth in cities
Our ground-breaking study, Investing in Climate, Investing in Growth – which was commissioned by the G20 – demonstrates that taking action on climate change will boost economic growth. Specifically, it highlights that combining strong climate action with fiscal and structural reforms will boost growth in both the short and long term - adding 1% to average economic output in G20 countries by 2021 and lifting output by up to 2.8% by 2050.
However, these climate policies can also have a range of distributional consequences that are not limited to climate outcomes. For instance, carbon pricing can make energy less affordable for low-income households. As a result, this can disproportionately affect disadvantaged populations who are most vulnerable to climate change impacts by the very policies meant to prevent them. But we can overcome this by investing the proceeds of congestion charges and carbon taxes into the factors that underlie energy poverty and income inequalities: this includes more energy-efficient houses and appliances, or improved public transport systems.
Our forthcoming OECD Case Study of Inclusive Growth in Seoul, which I am launching today, shows that climate action can lead to an opportunity for more inclusive growth if both objectives are incorporated into the process ex ante.
For example, Seoul’s Energy Welfare Public-Private Partnership Programme, uses profits from the energy-savings of households and companies to finance energy retrofits for poorer populations – reducing energy consumption and energy poverty at the same time. The programme also trains and employs underprivileged workers to conduct energy assessments for low-income households.
Other cities are also leading on this agenda. Following Hurricane Sandy, Mayor de Blasio is working with disadvantaged populations in Lower Manhattan to protect residents from flooding, while boosting other essential neighbourhood amenities.
Supporting small businesses and entrepreneurs in cities
This brings me to the second topic of the day. As we embark on the low-carbon transition, firms of all sizes and people of all backgrounds must have the opportunity to contribute to and benefit from greener growth.
Small and medium enterprises (SMEs) form the backbone of our economies. Across the OECD, on average in 2014, they accounted for 99.7% of all firms, 60% of employment in manufacturing and 75% in services. But barriers prevent them from reaching their potential. SMEs are disproportionately affected by market and institutional failures.
Securing stronger and more inclusive growth means reinvigorating SMEs and opening up avenues for entrepreneurship to a broader range of people. As such, Mayors are taking a number of actions in these areas. For example, Mayor Park’s plan for economic democratisation has implemented 23 measures to level the playing field for small firms and disadvantaged workers. In addition, Mayor Rawlings’s “GrowSouth” initiative in Dallas has put neighbourhood businesses and organisations at the heart of efforts to rebuild one of the city’s most disadvantaged areas.
Ladies and Gentlemen,
Later today we will also be launching our new web platform for Inclusive Growth, a tool to bring together leaders, policymakers, citizens and the business community to learn more about inequalities and exchange best practices.
Make no mistake, cities play a fundamental role in achieving a fairer low-carbon transition – a more just transition – as well as in promoting more inclusive, sustainable growth that puts people at its main focus.
The OECD stands ready to support you and your work on the road ahead; together we can promote policies that protect the planet and its most vulnerable people.