Tag Archives: FoodIssues

The productivity and equality nexus: is there a benefit in addressing them together?

NAECGabriela Ramos, Special Counsellor to the OECD Secretary-General, Chief of Staff and G20 Sherpa

Productivity growth has slowed since the crisis and inequality has been getting worse. Could they be influencing each other?

The linkages between the productivity and inequality challenges are still to be fully explored. Each may have its own solution, but there is also good reason to think that there is a nexus between them. For instance, OECD evidence suggests that wage dispersion between firms, which reflects diverging rates of productivity growth, has contributed to rising inequality of incomes between workers. At the same time, the increased prevalence of knowledge-based capital and digitalisation may have unleashed winner-take-all dynamics in key network markets, which in turn may have led, in some instances, to an increase in rent-seeking behaviour.

OECD research has highlighted how the rise in inequality over the last three decades has slowed long-term growth through its negative impact on human capital accumulation by low income families.

Since the crisis, stalled business dynamics have seen resources, including workers, being trapped in firms where they are not using their full potential. In particular, individuals with fewer skills and poorer access to opportunities are often confined to precarious and low productivity jobs or – in many emerging countries – informal ones.

In the spirit of our integrated framework on inclusive growth and our New Approaches to Economic Challenges (NAEC) initiative, at the OECD we believe that our efforts to address productivity and inequality challenges could have a better chance of succeeding if we looked at the synergies and trade-offs emerging from policies to address them. This means designing policies for each of these two core issues bearing in mind how they might impact one another and avoiding the “silo” approach through more effective and comprehensive policy packages.

We must also learn from previous policies. Traditional measures to boost productivity in competition, labour market, or regulatory frameworks would allow for the reallocation of resources to more productive activities, or for increasing productivity in specific sectors. But this may have an adverse impact on inequalities of income and opportunities, as workers better equipped to cope with change are usually those with higher skill sets. For instance, in the past, the drive towards flexible labour markets has benefited many employers, and particularly the most productive firms that have gained from an improved allocation of labour resources. But increased flexibility has also brought a greater prevalence of non-standard work. Recent OECD work on job quality highlights how low skilled individuals can be trapped in precarious low wage jobs, and receive less training.

Our approach to designing policies to ensure that individuals, firms and regions that are left behind can fulfil their full potential and contribute to a more dynamic economy, draws on OECD work from diverse policy areas. It starts from the Inclusive Growth agenda, by focusing on well-being as an ultimate objective of policy. It builds on OECD productivity work via The Future of Productivity report and efforts Towards an OECD Productivity Network. It also synchronises with the Organisation’s efforts to measure productivity more accurately at a time when traditional measures are ill-adapted to account for the full effects of rapid technological change and innovation centred on knowledge based capital, the increasing prominence of the services sector, and productivity in the public sector.

The ultimate outcome is for governments to focus on the extensive range of win-win policies that can reduce inequalities while supporting productivity growth, thereby creating a virtuous cycle for inclusive and sustainable growth. This calls for distinct but complementary policy interventions at the individual, firm, regional and country levels. What this entails in practice will vary for each country depending on its circumstances. But broadly speaking, a number of policy areas are worth considering:

First, a new approach is needed to boost productivity at the individual level so that everyone has the opportunity to realise their full productive potential. Expanding the supply of skills in the population through more equal access to basic quality education is crucial, but not enough. With rapid technological change, skills need to keep up with the demands of the market to avoid the skills mismatches which have contributed to the productivity slowdown. A broad strategy is also needed to ensure a better functioning of the labour market, promote job quality, reduce informality, allow for the mobility of workers and inclusion of underrepresented groups such as women and youth, and promote better health outcomes for everyone.

Second, for people to realise their full productivity potential, businesses have to realise theirs. While heterogeneity among firms is normal, the widening dispersion in productivity levels and its implications for aggregate productivity and workers is a cause for concern. According to our productivity report, the early 2000s saw labour productivity at the global technological frontier increase at an average annual rate of 3.5% in the manufacturing sector, compared to just 0.5% for non-frontier firms. The gap was even more pronounced in the services sector. The larger the share of business that can thrive, the more productive and inclusive our economies will be. Achieving this requires a reassessment of competition, regulatory and financial policies to ensure a level playing field for new firms relative to incumbents. It also requires policies to facilitate the diffusion of frontier innovations from leading to lagging firms.

Third, policy prescriptions will be ineffective unless they take regional and local circumstances into account. Inequalities that play out in regions, like housing segregation by income or social background, poor public transport, and poor infrastructure, can lock individuals and firms in low-productivity traps. This means that some policies to promote both productivity and inclusiveness are best undertaken at the regional level.

Finally, adopting a more holistic approach to policy requires fundamental changes to public governance and institutional structure to strengthen the ability of national governments to design policy that promotes synergies and deals with trade-offs. In highly unequal societies, governments also need to address political economy issues including the capture of the regulatory and political processes by elites that benefit from the status quo, and policies that favour the incumbents.

None of this will be easy, but it is nevertheless essential. At the OECD we believe it is time to develop a better understanding of the dynamics between two of the key issues of our time – productivity and inequality – in order to build a more resilient, inclusive and sustainable future.

Useful links

OECD Inclusive Growth Initiative

OECD Centre for Equality and Opportunity

OECD Inequality webpage

OECD Future of Productivity

OECD Productivity Statistics

 

Survey Finds Shoppers Define “Local” as Being Within 100 miles

The third annual A.T. Kearney survey of U.S. shoppers’ local food-buying habits finds that local food has made the leap from a “hot” consumer trend to a central growth driver for grocery retailers and restaurants. Two years ago, when A.T. Kearney conducted its first study of local food-buying habits, merely offering local food was a differentiator for retailers. In 2015, participation in the local food category is table stakes and merchandising excellence in the category is critical for growth.

For this year’s study, A.T. Kearney surveyed more than 1,500 U.S. shoppers who indicate they are the primary shopper or share shopping responsibility in their households. The report summarizes the findings of the study and provides retailers with specific recommendations for growing their share of the local food market.

Randy Burt, A.T. Kearney partner and co-author of the study, noted, “The ‘locavore’ movement has taken root. Consumers—especially women and young people—have come to expect not only high-quality local meat, seafood, and produce, but also jams, ice cream, and bread. Forward-thinking retailers and restaurants with a distinctive definition of local and a focus on marketing and merchandising fresh, high-quality products at the right price will capture a long-term advantage in this growing market.”

Survey findings include:

  • “Local food” has been redefined. Almost all consumers have coalesced around a stricter definition of local: 96% now describe local food as products grown or produced within 100 miles from the point of sale—up from 58% in 2014.

  • Access to local food is no longer the primary roadblock to increasing local food sales; only 27% of consumers say products are not available. However, about half say they are not buying local because of a lack of clear advertising/in-store signage.

  • 93% of respondents associate local with “fresh,” which is the primary purchasing factor for grocery consumers.

  • Regardless of the category, 78% of consumers are willing to pay a premium of 10% or more for local food, up from 70% in 2014.

  • Demand for local food is expanding beyond produce, meat, and seafood. More consumers say local is also an important attribute for prepared foods and dry groceries. For canned and jarred products, local increased in importance from 5% in 2014 to 13% in 2015; for prepared foods, the jump was from 10% to 23%; for bread, the increase was from 9% to 18%.

The online survey was conducted in May 2015 and included 1,519 U.S. respondents. Sixty% of the respondents were women, and all were older than 18. Household, income, age, and urbanization characteristics were representative of the U.S. population as a whole. For a copy of the full report, “Firmly Rooted, the Local Food Market Expands,” visit www.atkearney.com.

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Blue Moon Sued Over Craft Beer Marketing

A California man plans to amend his lawsuit alleging that MillerCoors deceived consumers by marketing its Blue Moon beer as a craft brew.

Evan Parent, of San Diego, originally sued MillerCoors in April. He claimed that he purchased Blue Moon in 2011 and 2012 believing that he was sipping craft beer instead of a product owned by one of the largest brewers in the world.

Meat Processor Recalling 167,427 Pounds of Ground Beef

OMAHA, Neb. (AP) — A meat company based in Nebraska is recalling 167,427 pounds of ground beef that might be tainted with E. coli bacteria.

The U.S. Department of Agriculture said Sunday that All American Meats Inc. is recalling the meat that was sold to retailers nationwide. No illnesses have been linked to the beef.

The recalled meat was produced on Oct. 16, and it was sold in either 60-pound or 80-pound packages.

All the meat that is being recalled had a sell-by date of Nov. 3 and establishment number 20420 in the USDA inspection stamp.

Ecola Seafoods Inc. Issuing Voluntary Recall on all Canned Salmon and Tuna Because of Possible Health Risk

ECOLA Seafoods Inc. of Cannon Beach, Oregon is voluntarily recalling all canned salmon and tuna with any code starting with “OC” because it has the potential to be contaminated with Clostridium botulinum, a bacterium which can cause life-threatening illness or death.  Consumers are warned not to use the product even if it does not look or smell spoiled.

Kroger Withdraws Unrefrigerated Caramel Apples Due to Potential Food Safety Risk

CINCINNATI (PRNewswire) — The Kroger Co. on Thursday announced its decision to withdraw from sale unrefrigerated caramel apples that have been pierced with dipping sticks due to new scientific evidence that the product, if left unrefrigerated, may be at risk for listeriosis.

No illnesses have been reported in connection with these products. Kroger made its decision out of an abundance of caution after reviewing a study published online by the American Society of Microbiology.