Norwegian Minister of Finance Sigbjørn Johnsen

Opening speech at the OECD-conference "Creativity, innovation and job creation"

Holmenkollen Park Hotel, Oslo 11th and 12th of January 1996

Mr. Chairman, ladies and gentlemen,

It is a pleasure, and a privilege, for the government to host the OECD conference on "Creativity, Innovation and Job Creation".

Facing a new millennium our nations are confronted with vital demographic, economic and environmental challenges. How to secure jobs and welfare, when we know that we must meet human needs within the limits set by nature, and that present production and consumption practies are unstainable and must change.

We know that we must change and renew our societies. History tells us that innovation and change is the prime engine of human progress, and that few human efforts yield such high returns as investments in education,knowledge and research.

When I, together with my colleauge Bjørn Tore Godal, chaired the OECD Ministerial Meeting in 1992, OECD ministers of Foreign Affairs and Finance decided to launch the OECD Jobs Study. The main reason was the alarming increase in unemployment in industrialised countries over many years which accelerated during the recession of the early 1990s.

The OECD Jobs Study is now in its fourth year. A synthesis report was presented by the Secretary General to the OECD Ministerial Council Meeting in 1994, containing general guidelines for policies to promote employment in nine areas, technology and jobs being one. The Ministers decided to ask the OECD to continue its work in order to make the policy recommendations more concrete, operational and country specific.

The theme of this conference: "Creativity, Innovation and Job Creation" is one of four thematic reviews which will serve as a base for the follow up report by the OECD to the Ministerial Meeting in May this year. In addition, there is a process reviewing employment policies country by country with a view to making the OECD Jobs Study operational for policy makers in national capitals.

The importance of the theme of this conference is also emphasised by the fact that it will be an important input to the G-7 employment conference of labour and finance ministers in Lyon in France in early April.

The notion that the pace of technological progress has accelerated to the point where it results in "technological unemployment" is in fact a long standing one. But as documented in the OECD Jobs Study, the evidence simply does not support this view.

On the contrary, technological developments contribute to growth in productivity, employment and living standards in the medium and longer term. While technological progress may substitute labour inputs in the short run, in particular in low skilled occupations, the higher productivity accociated with process innovations increases real incomes. Further more, the creation of new products and services generates additional demand. Thus technological progress and the international division of labour should be encouraged as we strive to reduce the unacceptably high unemployment in the OECD area.

But technological change also increases the need for new skills and reduces the need for old ones. Thus policies to encourage innovation need to be seen in a larger context of enhanced education and training for young people. Active and efficient labour market policies to help unemployed persons and to combat long term unemployment, encouragement of life-long learning, and a number of policies more generally that contribute to the creation of new jobs.

We may approach innovation and change from various angels, but in the essence it may boil down to this: There is a growing need to focus on knowledge as an important resource and as an engine of growth and change. The best prospects for our future seem to lie in the inexhaustible potential of the human mind.

The fact that recent technological breakthroughs coincide with general access to education, suggests that we may only have seen the beginning of technological change. Progress and breakthroughs are, furthermore, a hallmark of societies where the flow of information is free. But we must also ask ourselves: what kind of knowledge do we need to create the future we want? We must be able to take advantage of the new possibilities, made available by new technology. But at the same time we must be aware of the warning signs, and thus not create new class differences in our societies between users and non-users of new technology, specially in the field of information technology.

Thus, knowledge is an important resource, and there should be more than enough for everybody. Knowledge in the wider sense cannot in practice become the exclusive property of any company or individual despite efforts to maintain secrecy, patents etc. Individual knowledge will always spread and become common knowledge. Still, it has been at times of important political change that knowledge as a common good has expanded most widely, and wider diffusion of knowledge is one of the recommendations of the OECD Jobs Study.

Increased funding of research and education will not in itself produce growth and development. Success requires quality as well as quantity. Teamwork is vital in developing and using knowledge. Competition is important as an incentive, but co-operation is necessary for success.

Rathet than talking about the competitive advantage of nations, we should speak about their "co-operation advantage". On the whole, Western cultures seem to reward competition more than cooperation, whereas many Asian nations have an advantage in that their cultures traditionally value the contribution of the group higher than individual success.

In Norway, extensive educational reforms have been implemented in the 1990s. The guiding principle behind them is that education and training should enable the population to meet and to master the changes in the work place and in society. And it is a key element in our national employment strategy.

Skills tend to become obsolete more rapidly than before, so that the skills and knowledge being acquired must serve for jobs that have not yet been created. In consequence, education must be broadly based. Specialization must not come too early, and systems of continued or recurrent training and lifelong learning must be strenghtened.

Our labour market policy emphasizes upgrading and learning, because training and competence-building represent the best ways out of passivity and unemployment. I am pleased to note that soon after this conference, the OECD is arranging a conference on "Making lifelong learning a reality for all". One of the main issues at that conference will be: How can education and training infrastructures and arrangements, based on an earlier industrial society, be re-designed to meet the needs of the future, information-intensive, globalised world?

In my country, following the important educational reforms we have undertaken and are undertaking, the time has now come to focus more on adult and vocational training. We cannot allow large segments of our people to enter the next century trained for the jobs of the past. The responsibility must be shared between the individuals, the business sector and the public sector. Everybody has an obligation to acquire new skills, but it must be supported with comprehensive strategies for adults and the already employed. OECD countries cannot afford to fail in this important endeavor.

A look at history tells us how innovation can be accidental, how many technological breakthroughs that were only belatedly made generally available, and how efforts in one field create progress in an entirely different field.

Let me give you one example: It is generally thought that the fax machine was an invention of the 1980s. But in fact it was a Scottish clockmaker, Alexander Bain, who patented the first fax in 1843. Two decades later an Italian priest named Giovanni Caselli began exploiting it commercially. Napoleon III became a major customer, setting up a fax link between Paris and Lyon in the 1860s. And yet it took nearly a century and a half before faxes became generally available.

Today, the authorities should not only be supporting the efforts of the business sector, but be actively promoting new solutions, setting new requirements and facilitating cooperation between various sectors and professions. The public sector can make demands, not only through its own procurement of technology, but also with respect to the framework conditions for industry.

Labour market developments since 1992 have only further underlined the need for comprehensive and concerted action to fight unemployment. Levels of unemployment in the OECD area remains above 33 million persons, and this is simply unacceptable. Employment policies are largely the responsibility of national authorities, but strenghtened international cooperation and strategies are necessary. Such strategies should be broadly based and involve both policy makers and the social partners.

Political attention and impetus are needed as well, both nationally and internationally. The European Council held in Madrid in December 1995 stated that: "job creation is the principal social, economic and political objective of the EU and its Members States, and declares its firm resolve to continue to make every effort to reduce unemployment". This is an important and vital message from that Summit to the Intergovernmental Conference starting later this year.

We all face a demographic challenge early in the next century containing rapid growth in the number of old people requiring pensions and health care. At the same time the share of the economically active population is declining in many countries. This is why increased employment and a strenghtening of the work force is not only needed for the medium term, but is also a key economic and social reform for the longer term future. Human capital is our most important asset and "refining" this capital is therefore crucial. If we fail in this respect, welfare and the social fabric of our societies are at stake.

In Norway we believe in concensus building and have pursued this strategy through our "Solidarity-alternative" - outlined in the recent Long Term Programme. As part of this strategy, employment has risen substantially and unemployment is comming down, so that open unemployment is now below 5 per cent of the labour force - lower than in most other OECD countries. This is still an unacceptably high level, and job number one of the government is to further reduce the level of unemployment, and to increase employment on a sustainable basis in the medium and longer term.

As already mentioned, in 1994 OECD ministers endorsed guidelines in nine policy fields to create more jobs in industrialised countries. Regarding the major theme of this conference, technology and jobs, it was recommended that policies should be aimed at improving the ability of societies and economies to create and make effective use of technologies which form a base for the expansion of high productivity and high-wage employment, i.e. more jobs and better jos.

Creation on new knowlede through basic scientific research should be stimulated, and the access of firms to scientific and technological knowledge should be facilitated. Mechanisms for international co-operation, the raison d'être of the OECD, to reap ecnomies of scale and reduce duplication in long term research and development, should be promoted and strenghtened, especially in relation to the needs of megascience projects and networks of practising scientists and scholars. Uncertainties which impair the creation and diffusion of new technoligies should be reduced. And finally, absorption of new technologies in firms should be facilitated.

In Norway we fully support these general guidelines for policy as part of the OECD Jobs Study. But we think the time has now come to make these and other recommendations operational, more concrete and - as far as possible - country specific. Thus, in my opinion, the OECD should not only be an organisation for analysis, but also provide an operational base for the implementation of policy measures in member countries.

Thus, a major challenges of this conference is to help policy makers to move from general analysis and principles to concrete and specific policy recommendations in the area of technology, productivity and job creation. These should then be part of a larger set of policy recommendations in a number of areas so that we can have an OECD Programme for Jobs to be discussed at the OECD Ministerial Council Meeting in May this year.

The role of the OECD does not stop there. The next phase should be to follow up through continuous surveillance of how the policy recommendations are actually implemented in member countries.

I hereby open this conference and wish you good luck with your work. Your task is an important one!

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Lagt inn 15 januar 1996 av Statens forvaltningstjeneste, ODIN-redaksjonen