crisis, challenges & opportunities for regions and cities€¦ · covid-19 cases have been...

© OECD |

CRISIS, CHALLENGES & OPPORTUNITIES

FOR REGIONS AND CITIES

WEBINAR CIM ALTO MINHO, 16 SEPT 2020

Joaquim Oliveira Martins, Deputy-DirectorOECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE)

Covid-19 cases have been concentrated in some

cities and regions within countries

2

France

37% in Île-de-France

30% in Grand est

Italy

41% confirmed cases

are in Lombardy

United States

40% in New York

China

83% in Wuhan Province

As of March 31,2020

The share of jobs potentially at

risk during confinement ranges

from 15% to 35% across OECD

regions

Regional differences in the share

of regional employment at risk

vary by more than 20

percentage points

CFE Update: Territorial Impact of Covid-19

Some regions

have a higher

share of jobs at

risk from

containment

measures

Tourist destinations

and large cities have

a higher share of

jobs potentially at

risk in the short term

Regions with the highest share

of jobs potentially at risk, by

country


0 10 20 30 40 50 60

South Aegean - GRC

East Slovakia - SVK

Algarve - PRT

Balearic Islands - ESP

Vilnius Region - LTU

Jeju-do - KOR

Nevada - USA

Prague - CZE

Bolzano-Bozen - ITA

Île-de-France - FRA

Bucharest - Ilfov - ROU

Salzburg - AUT

New South Wales - AUS

Eastern and Midland - IRL

Adriatic Croatia - HRV

Hamburg - DEU

Stockholm - SWE

East of England - GBR

Flevoland - NLD

Copenhagen - DNK

Greater Oslo - NOR

Ticino - CHE

Pest - HUN

British Columbia - CAN

Estonia - EST

Flemish Region - BEL

South West - BGR

Greater Poland - POL

Western Slovenia - SVN

Helsinki-Uusimaa - FINAccommodation and food services (I)

Manufacture of transport equipment (C29,C30);Air transport services (H51)

Construction (F);Real estate services (L68)

Wholesale and retail trade (G)

Professional, scientific and technical activities (M)

Art, entertainment and other services (R to U)

Jobs potentially at risk (%)

SMEs are at the epicenter of the Covid-19 crisis

Over 50% of SMEs are

experiencing an increasingly

strong drop in revenue

More than 50% risk being

put of business in less than

three months

Smaller firms dominate in the

most affected sectors - 75%

of all jobs

Self-employed are hit

strongly

Share of total employment in the most adversely affected sectors by firm size (%)

5Source: OECD Annual National Accounts and Structural Business Statistics databases, OECD calculations.

OECD Economic Outlook 6

Unemployment is projected to spike to levels higher than the 2008

Projected unemployment rate, Q4 2020

Source: "Regional labour markets", OECD Regional Statistics (database)7

Employment recovery across regions from the 2008 crisis

Governments have responded mainly on short-

term measures (“act now, review later”)

Deferral of payments

and (temporary)

redundancies

2

Provision of grants

and wage subsidies

4

Health

measures and

information

1

Enhancing access

to credit for SMEs

3

Structural

Policies

5

8Gradual shift from crisis

management and rescue policies…

… To structural policies to foster

business dynamism,

competitiveness and resilience over

the longer term.

The Portuguese SME policy response was based

on deferrals

9Presentation Title

Immediate fiscal impulse Deferrals Other liquidity/ guarantees

Belgium 1.4% 4.8% 21.9%

Denmark 2.1% 7.2% 2.9%

France 4.4% 8.7% 14.0%

Germany 13.3% 7.3% 27.2%

Greece 3.1% 1.2% 2.1%

Hungary 0.4% 8.3% 0.0%

Italy3.4% 13.2% 32.1%

Netherlands 3.7% 7.9% 3.4%

Portugal 2.5% 11.1% 5.5%

Spain 3.7% 0.8% 9.2%

United Kingdom 4.8% 1.9% 14.9%

United States 9.1% 2.6% 2.6%

Selected discretionary fiscal measures adopted in countries in response to COVID-19 As of 23 June 2020, % of 2019 GDP

Source: Job Creation and Local Economic Development 2020: From pandemic to recovery

Challenges

• Lower capacity as public

and SME debt increase

• Less pressing demand as

lockdowns are gradually

lifted

• Addressing heterogeneous

needs, differentiating policy

action and reaching the

right targets (e.g. start-ups

versus family businesses,

cities vs. rural areas?)

• Urgency and speed of

policy intervention and

adaption

• Pre-existing structural

weaknesses

10

A shift in focus towards structural policiesFocal points

• More of structural policies

(skills, training, innovation,

regulatory FWK,

infrastructure)

• Supporting digitalisation,

teleworking and e-

commerce, as well as new

business models and

reconversion

• New approach to smart

specialisation and

internationalisation?

• Industrial policy in strategic

areas (automotive,

aerospace, medical/pharma.)

with focus on supply chains

& resilience

Instruments

• Smart conditionality in public

support and funding

• Gradual phasing out of crisis

measures

• Public private partnerships,

e.g. for infrastructure, data

sharing

• Taxation and smart regulation

• Competition neutrality

• Training and apprenticeship

• Insolvency regimes and

second chance for

entrepreneurs

• E-government

Source: Job Creation and Local Economic Development 2020: From pandemic to recovery

Communication & awarenessBristol and Dusseldorf have broadcast

video messages from the mayor on

social media

11

Cities are at the frontline of managing the crisis

Workplace & commutingTokyo is promoting teleworking up

to four times a week for municipal

staff to introduce flexible working

hours

Social distancing & confinementMoscow is embracing e-learning through

the "Moscow Electronic School" so that

pupils can follow their studies online.

Vulnerable groupsLjubljana organised food delivery for children

from at risk families and elderly citizens. The

Ljubljana Health Centre has ensured

psychosocial support via phone or email

Continuity of local public servicesIn Detroit, water services are to be

temporarily restored to thousands of

households previously disconnected due to

unpaid bills amid a public health outcry

Support to business

& economic recoveryMilan announced a mutual aid fund to

help those most in need and support

recovery of city activities

Policy

responses


Connecting workers to essential jobs The US National Association of State Workforce

Agencies launched a national website for

displaced workers to access COVID-19

employment opportunities

12

Managing the crisis in local labour markets

Offering access to skills The Occitanie region (France) launched a

EUR 4 million plan to “train rather than fire”

and expanded e-learning programmes

Providing direct financial

assistance to SMEsThe Basque Country (Spain) set up a 25

million EUR credit line at 0% interest to

support SME liquidity, while the government

prepares a EUR 500 million credit line.

Berlin allocated over EUR 100 million in

support of micro enterprises and freelance

workers.

Implementing partner for national

government Italian regions are responsible for

disbursing the national redundancy fund.

Navigating national programmesIn Canada,many cities help low-income

individuals, the self-employed and recently laid-

off workers to apply for the Canada Emergency

Response Benefit

Policy

responses


13

Community responses to help

deliver food & medical equipmentRural cooperatives in Italy offer free

grocery deliveries to people over 65-

years-old

Mobilising local networks of health

care workersIn Belgium, communities set-up car-sharing

initiatives in rural areas

Supporting rural business and

communitiesCommunity Futures Network provides

access to capital to rural business and

community in Canada

Ensuring basic services to rural

householdsThe ReConnect Program in the US

reconnects water and electricity to rural

households that have not fulfil payments

Improving digital infrastructuresIn Korea, initiatives support full access

to WIFI internet in rural schools and low-

income familiesPolicy

responses


Policy responses in Rural areas

Opportunities for cities and rural areas

14

Revisiting

globalisation

Increasing

preferences towards

public goods

Re-engineering

cities

Accelerating the

digital transition

• More rapid automation of jobs

• Rise in teleworking

• Online delivery of local

education and training

• Greater shift from bricks and

mortar to online commerce

• Increased need for digital

infrastructure and tools for all

communities and households

• Re-location of

production in strategic/

essential goods and

services

• Restrictions on

international

movements of people

• Diversification of

suppliers

• Increased willingness to

implement green measures, albeit

pressure to create any job fast

• Greater role for the social

economy and corporate social

responsibility in local development

• Revisiting job quality for essential

workers

• Resilient health systems

• Changes to local

spatial planning

• Rethinking cultural

and sporting events

Digitalisation can bring economic efficiency in all places

15

Raise the quality and reducing costs of service delivery (e-Health and e-Education

Attract new economic activity and connecting to new markets (e-Commerce)

Improve productivity of firms (automation, 3D printing)

Increase resilience to shocks (teleworking)

Transformation towards smart cities (smart transport systems and electric grids)

16

Regional differences are significant in high-speed

internet access

Differences are

especially wide in

Germany,

Portugal, and the

United States


Lisbon

Stockholm

Madrid

SouthernDenmark

Agder andRogaland

LiguriaÅland

RhodeIsland

Île-de-France

CentralAnatolia- East

Hamburg

Border,Midland,Western

SouthernGreatPlain

Yorkshireand

The Humber

Latvia

Lithuania

Luxembourg

Estonia

Algarve

CentralNorrland

GaliciaZealand Oslo and

Akershus

Bolzano-Bozen

SouthernFinland

Connecticut

Bourgogne-Franche-Comté

SouthernMarmara

- West

Bremen

Southern& Eastern

CentralTransdanubia

North East

-40

-20

0

20

40

60

80

100

LVA PRT LTU SWE ESP DNK LUX NOR EST ITA FIN USA FRA TUR DEU IRL HUN GBR

Maximum National average Minimum%Coverage of optical fibre

internet access in OECD

regions

Rural households have lower broadband quality

than on average

17

Just 56% of rural

households have

access to a fixed

broadband with a

minimum speed of 30

Mbps

Households in areas

where fixed broadband

with a speed of 30 Mbps

or more is available, as a

% of the total

0

20

40

60

80

100

% Rural Total

Digital skills are lower in rural areas than in cities

18CFE Update: Territorial Impact of Covid-19

Share of individuals

living in rural areas

and cities in Europe

with basis or above

digital skills (2019)

0

10

20

30

40

50

60

70

80

90

100%

Individuals living in cities Individuals living in rural areas

19

Rural areas have fewer occupations amenable

to teleworking

CFE Update: Territorial Impact of Covid-1910% 20% 30% 40% 50% 60% 70%

ESP

ITA

ROU

LVA

PRT

GRC

BEL

SVK

AUT

DEU

CZE

HUN

IRL

NLD

GBR

EST

HRV

LTU

ISL

FRA

NOR

DNK

CHE

FIN

SWE

LUX

Rural Areas Towns and semi-dense areas Cities

Teleworkability

across cities, towns

and rural areas in

European countries

But adoption of different digital technologies is

uneven

• Additive manufacturing (e.g. 3D printing)– Drastically reduces costs of small

production runs and tailor-made goods

• Autonomous vehicles (self-driving cars)– Can make a large number of professional

drivers redundant

– Can make transport much more efficient and convenient, but could also lead to congestion and sprawl with inadequate regulation

• Civic technology solutions

• Drones– Potential solution for goods delivery

• Virtual reality and augmented reality– New teleconferencing solutions

– Remote specialist consultations (e.g. in medicine, engineering, …)

– Increased adoption of teleworking

Emerging technologies could benefit low-density areas

Smaller firms are often at a disadvantage in innovation

Source: OECD SME and Entrepreneurship Outlook

2019 based on business use of ICT data.

Cloud computing adoption rate

(% of firms by size, 2018)

Source: Labour Force Survey for EU countries, Chile, Israel, Japan and Korea; Census for Australia, Canada and New Zealand; Occupational Employment Statistics (OES) Survey for the US 22

The share of middle-skill jobs has declined across OECD countries

Links between knowledge conditions and

entrepreneurship

Source: OECD Territorial Statistics and Indicators Database and Regional Business Demography Database (McCann and Ortega paper for OECD)

Italy

Austria

Belg

ium

Canada

Spain

Cz

ec

h R

ep

ub

lic

Denm

ark

Esto

nia

Fin

lan

d

Fra

nce

Germ

any

Gre

ec

e

Hu

nga

ry

Icela

nd

Ire

lan

d

Isra

el

Australia

Ja

pan

Ko

rea

Latv

ia

Lith

uania

Lu

xe

mb

urg

Mex

ico

Neth

erlands

New

Zeala

nd

No

rwa

y

Pola

nd

Portu

gal

Slo

va

k R

ep

ub

lic

Slo

ve

nia

Sw

itze

rlan

d

Sw

ed

en

Ch

ile

Tu

rke

y

United K

ingdom

Unite

d

Sta

tes

70

72

74

76

78

80

82

84

86

Demographic challenges5 main dimensions:

• Rising life expectancy

• Ageing

• Population decline

• Urbanisation

• Migration

• 57% of all OECD regions are

expected to decline in population by

2050

• Demographic shocks are going to be

very asymmetric between different

types of regions

• Automation and migration can

compensate for ageing and population

decline

Life expectancy at birth in TL2 regions

The strategic role of Multi-level Governance

A central government cannot have as many policies as different types of

cities and regions. Designing place-based policies is a too complex task

to be centralised.

But decentralisation needs to be organised as a partnership and not only

as a process of autonomy and devolution of competencies. By delegating

certain tasks central governments can be more strategic

Decentralisation works better when it is done in a process allowing for

the asymmetry of capacities at the local level and experimentation

(learning-by-doing)

To find the right scale: address governance fragmentation of

metropolitan areas, promote supra-municipal cooperation and use of

a regional level

Sources of subnational governments’ revenues, OECD 2018

0 10 20 30 40 50 60 70 80 90 100

ESTLTUSVKMEXNLDTURAUTGBR

IRLGRCBELITA

KORPOLAUSHUN

OECD27 (UWA)LUX

OECD36 (UWA)DNK

OECD9 (UWA)OECD27 (WA)

NORESP

EU28 (WA)SVNISR

PRTCHL

OECD36 (WA)CZEFIN

OECD9 (WA)JPNUSANZL

SWECANFRACHEDEULVAISL

%

Taxes Grants & subsidies Tariffs and fees Property income Social contributions

OECD (2020) Subnational governments in OECD countries: key data 2018

0 10 20 30 40 50 60 70 80 90 100

CHLIRL

HUNEST

GRCSVKNZLTURGBRLTULVAISL

LUXNOR

OECD26 (UWA)AUTSVNDNKNLDPRT

OECD35 (UWA)POLCZE

OECD26 (WA)EU28 (WA)

SWEITAFIN

OECD35 (WA)USAFRAKOR

OECD9 (WA)MEXDEUJPN

OECD9 (UWA)CHEESPAUSBEL

CAN

% of total public investment

Local government State government

State and local government Central government & social security

Share of Subnational Governments in Public investmentSubnational investment in % public investment (2018)

OECD (2020) Subnational governments in OECD countries: key data 2018

Portuguese Municipalities are relatively large

Size structure of municipalities in the OECD

3%

27%

27%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%C

zech

Rep

ublic

Fran

ceSl

ovak

Rep

ublic

Cyp

rus

Hun

gary

Spai

nU

nite

d St

ates

1Ic

elan

dC

anad

aSw

itzer

land

Aust

riaG

erm

any

Italy

Cro

atia

EU 2

8 (U

WA)

OEC

D36

(UW

A)Lu

xem

bour

gR

oman

iaN

orw

ayAu

stra

liaFi

nlan

dM

alta

Slov

enia

Mex

ico

Gre

ece

Esto

nia

Latv

iaLa

tvia

Chi

leJa

pan

Isra

elBu

lgar

iaN

ew Z

eala

ndD

enm

ark

Portu

gal

Belg

ium

Net

herla

nds

Pola

ndTu

rkey

2Ire

land

Lith

uani

aSw

eden

Uni

ted

King

dom

Kore

aLi

thua

nia

Less than 2 000 inhabitants 2 000 to 4 999 inhabitants

5 000 to 19 999 inhabitants 20 000 or more inhabitants

Well-being regional gaps – Portugal

North Metropolitanarea of Lisbon

North

Azores

Madeira

CentralPortugal

Metropolitanarea of Lisbon

CentralPortugal

Algarve

North Azores

Azores

Alentejo

Algarve

Madeira

Metropolitanarea of Lisbon

Azores

Azores

Metropolitanarea of Lisbon North

Azores

CentralPortugal

Health Access toservices

Safety Community Environment Jobs Education Housing Income CivicEngagement

LifeSatisfaction

Top region Bottom region

Ra

nkin

g o

f O

EC

D r

eg

ion

s(1

to

44

0)

top

20

%b

ott

om

20

%m

idd

le 6

0%

LisbonRegions (Comissões de Coordenação e Desenvolvimento Regional e Regiões Autónomas)

© OECD |

Obrigado!

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Twitter: @OECD_local

LinkedIn: www.linkedin.com/company/oecd-local

Website: www.oecd.org/cfe

crisis, challenges & opportunities for regions and cities€¦ · covid-19 cases have been...

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