- Reset + Print

Better policies for better lives, OECD SG candidacy launch event

05.10.2020

Dear friends, honoured ambassadors, journalists all over the world

Welcome to Tallinn, welcome to Estonia!

I am the president of the Republic of Estonia. Last week I became an official candidate of the Republic of Estonia for the post of the next Secretary General of OECD.

I’m standing here to tell my story. To tell the story of my country and introduce the experiences I want to bring to OECD level.

20 years ago, a young lady, a book-keeper, having finished her studies in Norway,  moved back to her country of origin, Estonia. She came from a small isolated island of Kihnu, were She now resettled. She was probably one of the very first Estonians – and Europeans – who became an internationally occupied teleworker. This was already 20 years ago, remember?

OECD has been an organization reflecting the best and happiest part of the 20th century. The period when developed world healed its wounds inflicted by the big wars and concentrated on economic co-operation instead.

This period was characterized first by industrialization and thereafter by globalization. Both trends brought economic and social wellbeing to developed countries and gave opportunities to emerging markets.

It had its downside – rapid depletion of natural resources of our planet, notably the capacity to balance the CO2 emissions caused by the exploitation of fossil fuels. The otherwise positive rise in the purchasing power of developing and emerging nations has also meant quick growth in the crude oil demand set to peak at 2023.

In 2020, we are living the period of Great Transition. Transition from industrial to digital economy, and from fossil to clean energy. The two are of course, closely related - 15% of the energy consumption globally is internet use.

At the same time, digital tools help to manage green energy production and use in flexible way, helping to resolve the CO2 emissions problem.

They also offer new opportunities to growth from services, in a geographically neutral way.

In 2020, we are also facing the global pandemic, which is enhancing some megatrends like the digital development.

This is happening notably in developed countries, which were able to consolidate the existing digital solutions into rapidly emerging digital societies.

What does this mean for the Member States of the OECD? How to manage both transitions to the benefit of our societies and the global community?

OECD has been the pillar of international economic co-operation helping the community of developed – and democratic – nations to share best practices. Practices of steering the societies towards reasonable tax and fiscal policies.

OECD has facilitated co-operation and to a certain extent competition between its members, allowing for the development of varied socio-economic models.  The people of democratic nations directed their governments to various balances between economic freedoms and social guarantees.

At macro level, they slowly but surely, pushed the states to change from someone who exercises power to someone who is the ultimate insurer for difficult times and situations.

At micro level, the people gathered into enterprises for narrower specialization. The enterprises tended to become international and chose various ways of diversification or, vice versa, specialization. Business became global, and access for global markets meant working for the big internationals.

By now, the engine for development in the private sector is more and more a person – quite natural, if we think that for 40 years we have been recognizing human capital as important, but intangible and unmeasurable value of any high-value added business.

The digital change is shifting this balance even more towards the group of people we are used to call employees. Instead, more and more of them are independent service providers. More and more of them simultaneously offer their services, often of very high value, for more companies than one and in more countries/continents than one.

This changes our tax flows – no more river flowing in from the payroll of the big and small enterprises. Rather a workforce of educated people who does less and less associate for long periods with single job provider, even single country were to live and pay taxes.

This is already happening – the big fragmentation of the market where individuals can test their chances without an obligatory mediation by something we know as an enterprise. Each year hundreds of thousands take this route and will continue to do so.

This new world does not fit the 20th century tax and serve model, which demands constant employment. Model, which has been demanding a stable address according to which social, educational and other redistributional services are delivered. This model sets rigid rules well suited for industrial era, but not for the new digital era.

Who provides for the social support of these digital nomads, who might chose not to leave their kitchen table despite being an international service provider? Or for those who travel and live intermittently wherever they fancy, with their job in their pocket all the time?

Who gets their taxes? How do we make our redistributional services available for this workforce? Where do we do it, if the people live and work globally?

How to think about taxes, government services, employment, jobs? Obviously, it has to be more flexible, yet accessible to keep our citizens happy. This is a true OECD level question. Question, which builds on the excellent work OECD has done so far.

OECD as an organization of not only rich, but democratic nations have to lead in how to sustain our societies in the digital age.

And then there is the other big change: from fossils to green.

This also takes global agreements to reach a global incentive system for really and truly making CO2 neutrality competitive rather sooner than later. COP process is a good framework, but WTO and all other multilaterals, including OECD in support of G7 and G20, need to define the ways and means to allow necessary market distortions like EU pledge for climate neutrality by 2050.

For OECD, monitoring various market distortions set in place and making sure they do not discriminate unfairly, seems an acceptable part in this global work. This is the work we need to undertake in the coming decade, unless we want to be too late.

OECD is an enabler for its global community of developed nations.

It has to take an active role in bringing together the best knowledge globally to help the governments cope with these changes. That we see so much social unrest, so much dissatisfaction within developed societies today, is the clear sign that we are collectively falling behind the curve.

In the year 2000, OECD represented 60% of the world economy (PPP). By 2010 it had declined to 51% and is predicted to decrease to 43% by 2030. It must not be viewed as a negative development, as it is also showing that the global work distribution is delivering for less developed countries.

OECD has been a fantastic mediator and facilitator to its members. It can build on what it has achieved, taking into account the changing trends of global economy and the need of its member states not to react belatedly to these trends.

OECD is also an organisation of democratic nations. We need to be clear about that - sustainable economic development which benefits large parts of society have only ever happened in democracies. Long-term innovative growth can only be based on democratic values, because only free people are able to be creative.

OECD must stimulate rapid adaptation to the changed world. It has to provide scientific analysis of the risks and showing where failures of the old model can be turned into the successes of the new, emerging, greener, more individualistic economic model. Model, which is based on wide accessibility to digital technologies.

Dear listeners

Before the Second World War, Estonia used to be one of the best-governed nations of Europe, according to the words of one ambassador from UK to Estonia in the thirties.

Iron curtain fell right on us in 1940 and crushed our hopes of being part of Europe restoring itself after the atrocities of the war, working together, stronger and stronger supported by shared democratic values. 

Iron curtain, when lifted, revealed a poverty-stricken country, where the memories of an independent statehood supported our belief that we can do it again – rebuild, and build back better. In 2010 we became a member of OECD, proving that we had finally made it – reintegrated the ranks of democratic and developed nations.

Since regaining independence, Estonia has used many opportunities to be a responsible member of international, multilateral community. Only 4 years into independence, we started pulling our weight in UN led (in Croatia) and later EU and NATO peacekeeping missions.

From 2018-19, I had an honour to lead Estonian successful campaign to take the elected seat behind the United Nations Security Council table – the most difficult negotiation table, where you have to, among other things, face the deepest imperfections of human race, and deal with them often knowing that all achievements are too little, too late for many people suffering and dying.

Since January this year we are elected members of the Security Council; armed with international law, our habit of sticking to its principles and also our digital prowess, which of course we thought not to be so relevant to the practical functioning of the UN as it is shaping up to be.

Estonia is ready to contribute also to the multilateral debate of global economic co-operation. I am ready. We want to support multilateral work particularly in these difficult times, bringing to the table our recent experience of rapid transformation, which would not have been possible without free and global markets.

Our experience of digitally transforming the whole society can be of use when, particularly due to COVID pandemic, the global economy is set to transform. It will transform towards global services markets and maybe more regional manufacturing markets, both driven by powerful digital toolbox we can arrange to suit distanced working habits.

By the way – do you still remember the girl, who came 20 years ago from Norway to settle on a tiny Estonian island? I mentioned her in the beginning of my speech. She is still working online as a book-keeper. With rising productivity levels in the sector She is now able to serve tens of companies. Some are still Norwegian, but many are not, they are from different jurisdictions. More and more online tools allow quicker and quicker to absorb varied rules for her job in various countries. She, and, by today millions and millions of others can adapt their work patterns for the demands of the coming decades rather easily. Can the governements be equally flexible?

Ladies and gentlemen,

If I were to serve as the Secretary-General of the OECD

- I would invite the member states to consider the potential of digital transformation in achieving our obvious common goals: sustaining democracy, developing economy and also saving our planet

- I would propose to the member states to develop some greenfield thinking for harnessing the power of digital, including rethinking the global tax co-operation, knowing that both goods and services markets are global and driven by more and more independent workforce and striving to remove administrative restrictions from these development

- I would propose to the member states to analyse how the tax model of industrial era needs to gradually grow into digital era tax system, taking into account the need of serving globally our globally working citizens

- I would invite member states to strive for safety in the digital economic ecosystem by promoting the state provided digital ID models and their interoperability

- I would consider all abovementioned opportunities as tools to develop the free market and global trade in goods and services

- And I would recognize the potential of more automated and digitized world for silver economy, to support better our ageing societies.

With 30 years my homecountry – Estonia – has gone through comprehensive, rapid and successful reforms. We have built the first truly digital society and developed one of the best education systems in the world according to OECD.

These are the experiences I want to bring to the OECD in order to be prepared for the  challenges we will face in the next decades.

Being a firm believer in multilateralism, with my background in private sector and also in education,  experiences in high-level diplomacy and European level cooperation, I feel qualified to serve members states while they undertake these difficult, but necessary and transformative discussions.

History knows many cases when those who were ahead failed to adapt to rapid changes in technology or society. They lost their global role, for the other regions to take their place. OECD has been set up to perpetuate economic and societal success of its members. It has to take 21st century, the big Transitions of our time, seriously and offer the ground for global reckoning.

That is why it was set up – better policies for better lives.

Thank you for your attention!