This presentation by Paloma Baena Olabe, OECD, on "Inclusive Growth: Overview and Public Governance Implications" was made at the meeting of the OECD Working Party on Public Employment and Management on 20-21 April 2015. For further on information on the OECD work on Public Employment and Management please see http://www.oecd.org/gov/pem/.

1. INCLUSIVE GROWTH
Overview and Public Governance
Implications
Paloma Baena Olabe
Public Governance & Territorial Development Directorate

2. The context: rising income inequality +
concentration of growth benefits at the top
Gains in disposable incomehave beenstronger in the upper-half of the
distribution
Average annual growth GDP per capita and household disposable income (1995-2011)
Weighted average over 26 OECD countries
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
GDP per
capita
The poor Lower middle
class
Median
income
Upper middle
class
The rich
Source: Going for Growth (2015) and OECD Income Distribution Database.

3. The context: rising income inequality +
concentration of growth benefits at the top
IncomeShare ConcentrationTop 1 %
Share of top 1% incomes in totalpre-tax income, 1981–2012 (or closest)
Source: Going for Growth (2015) and OECD Income Distribution Database.

4. We Need a Shift: the standard paradigm no longer
serves us
• From GDP as a compass of progress, to improving societal
well being
– Rising inequalities despite growth
– Lion’s share of growth concentrated at the top
• From “Growth or Redistribution” to Inclusive Growth
– Inequality likely to affect growth
• From Income to Multidimensional Living Standards
– Material living standards (income, jobs, housing) and quality of
live (well being)
– For households across different points of the distribution
Inclusive Growth targets strong growth AND tangible
improvements for people’s quality of life across society, both
in terms of higher income and better living standards.

5. So what’s new:
• Which growth, whose growth, what outcomes?
Multidimensional
(MORE THAN
INCOME)
• Which growth?
•Going beyond income to include dimensions that matter for people’s life and well being
(presently employment and health, more to come)
• Place people at the heart of economic policy making
Distributional
(MORE THAN
AVERAGE)
•Whose growth?
•Considers groups of households like the middle class or the
bottom 10, 20, 40 %
•Distributional impact an explicit policy concern and objective
Policy Relevant
(OUTCOMES)
•What outcomes?
•Quantitative links between multidimensional outcomes and policy variables allow
identification of synergies among policy levers and compensatory action when trade-offs
•Identify, assess, negotiate trade-offs and complementarities ex-ante, not ex post
(transparency, accountability)

6. • The role of governance tools
– IG is essentially about dealing with complexity, trade-offs, and
multidimensionality at the policymaking level, whereas governments are
conventionally structured in silos
– IG also requires a focus on outcomes, rather than outputs, which refocuses
attention on ultimate policy goals
– IG is not only about policy design, but actions throughout the policy cycle
(policy design, implementation, evaluation)
• The role of political economy
– A focus on the policy cycle to deliver IG requires actions to ensure voice and
access by the different stakeholders, whose interests (may) differ and need
to be reflected
– In addition to guaranteeing voice and access, avoiding capture requires
institutions to uphold strong standards of integrity
But it won’t happen in a vacuum – public governance
has a key role to play

7. IG Challenges Governance
Implications
Governance Tools
Focus on
OUTCOMES
Evidence made
decision making
Horizontality vs silos
• Ex ante, ex post evaluation
• Feedback loops
• Centre of government
• Incentives, performance across
PMP
Reflect needs of
societies
Openness vs capture • Stakeholder engagement
• Political Finance, lobby
Place based
considerations
• Multilevel governance
Well-being over
time
Policy resilience,
sustainability
• MTER, skill building
Governance for Inclusive Growth: better policy
making, for better policies, for better lives

8. Implementing policies for Inclusive Growth demands a
‘whole-of-government’ approach that involves all
stakeholders along the policy making cycle.

9. Governance for Inclusive Growth: what challenges
and opportunities for Public Employment?
What kind of Civil Service workforce is required to meet the
challenges of inclusive growth? What skills and capacities are
needed? What kind of leadership?
What kind of HRM is required to enable the workforce to
contribute to inclusive growth?
This is also a question of public institutions’ own diversity –
should public organisations be a model-employer for
diversity and inclusion? Should we hold ourselves to a
higher standard?