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Tuesday, January 21, 2020 / 05:55 PM / By World Economic Forum / Header Image Credit: World Economic Forum
Globalization and the Fourth Industrial Revolution
have generated great benefits to society, raising the living standards of
billions and lifting millions out of poverty. But they have also exacerbated
inequalities in our societies. Inequality is rising even in those countries
that have experienced rapid growth. The social and economic consequences of
inequality are profound and far-reaching: a growing sense of unfairness,
precarity, perceived loss of identity and dignity, weakening social fabric,
eroding trust in institutions, disenchantment with political processes, and an
erosion of the social contract. The response must include a concerted effort to
create new pathways to socioeconomic mobility, ensuring everyone has fair
opportunities for success.
In this context, the World Economic Forum launches The
Global Social Mobility Report 2020 to provide a much needed assessment of the
current state of the paths to social mobility around the world. Traditionally,
social mobility is measured across generations, thus only capturing the effect
of measures taken decades ago. The Global Social Mobility Index focuses on
those policies, practices and institutions that collectively determine the
extent to which everyone in society has a fair chance to fulfil their potential,
regardless of their socio-economic background, the origin of their parents, or
the place where they were born.
The launch of the report coincides with the 50th
anniversary of the Forum's Annual Meeting taking place this year under the
theme "Stakeholders for a Cohesive and Sustainable World" and the start of a
decade of delivery towards the Sustainable Development Goals and the 2030
development agenda. The results of the inaugural edition reveal that, on
average, most economies are far from providing fair conditions to thrive to all
their citizens. An individual's chances in life remain disproportionately
influenced by their starting point-their socio-economic status at
birth-resulting in economies and societies that too often reproduce rather than
reduce historic inequalities.
It is the calling of this new decade-one in which
there is more transparency than ever before on who has opportunity and who does
not-to make progress on the pathways to social mobility. At the World Economic
Forum's Platform for Shaping the Future of the New Economy and Society over 200
leaders from business, government and civil society work together to deepen
their understanding of complex issues, shape new standards, and drive
collaborative action for systemic change on three deeply interconnected areas
which all impact social mobility: growth and competitiveness; education, skills
and work; and equality and inclusion. We invite more leaders to join us to
co-shape new solutions to the challenges highlighted in this report, working
together with the urgency and ambition that the current context demands of us.
On behalf of the Forum, I want to express my gratitude
to the core project team involved in the production of this report: Thierry
Geiger, Guillaume Hingel, Vesselina Ratcheva, Saadia Zahidi, as well as other
colleagues from the Platform for Shaping the Future of the New Economy and
Society. My gratitude also goes to the experts consulted in the course of this
project, as well as LinkedIn, Burning Glass Technologies and ADP LLC for
providing unique data sets and expertise to create this report.
The Global Social Mobility Report 2020 is designed to
help policy-makers, business leaders and other stakeholders shape their
socio-economic strategies in the era of the Fourth Industrial Revolution. We
hope it will also serve as a call to action to engage in the visionary and bold
leadership required to build a new social mobility agenda for growing,
sustainable and inclusive economies that provide opportunity for all.
Key Findings
The
World Economic Forum's Global Social Mobility Index provides a new, holistic
assessment of 82 global economies according to their performance on five key
dimensions of social mobility distributed over 10 pillars: 1. Health; 2.
Education (access, quality and equity, lifelong learning); 3. Technology; 4.
Work (opportunities, wages, conditions); 5. Protection and Institutions (social
protection and inclusive institutions).
Economies
with greater social mobility provide more equally shared opportunities-namely,
an equal and meritocratic footing irrespective of socio-economic background,
geographic location, gender or origin. There is a direct and linear
relationship between a country's income inequality and its social mobility
score on the index. Low social mobility entrenches historical inequalities and
higher income inequalities fuel lower social mobility. Enhancing social
mobility can convert this vicious cycle into a virtuous one and has positive
benefits on broader economic growth.
The
Global Social Mobility Index equips policy-makers with a tool to identify areas
for improving social mobility and promoting equally shared opportunities for
the entirety of their citizens, regardless of their development stage. The
index is supplemented by a deep dive into the situation in the United States,
through innovative metrics developed in partnership between the World Economic
Forum and three private sector companies which hold unique data sets and
provide new insights into the distribution of advantages and disadvantages
across the population.
Key findings include:
Global momentum is needed on tackling inequality through a new social
mobility agenda
The
Global Social Mobility Index shows that very few economies have the right
conditions to foster social mobility and consequently income inequalities have
become entrenched. On average, across key developed and developing economies,
the top 10% of earners have nearly 3.5 times the income of the bottom 40%.
The Nordics and parts of Europe outperform the rest of the world
The
countries that provide their populations with most equally shared opportunities
are mostly Nordic economies: Finland, Norway, Sweden, Denmark and Iceland.
Among the 82 economies ranked by our index, Germany ranks 11th, France ranks
12th, Canada ranks 14th, Australia ranks 16th, Japan ranks 15th, the United
Kingdom ranks 21st, the United States ranks 27th, the Russian Federation ranks
39th, China ranks 45th , Saudi Arabia ranks 52nd, Turkey ranks 64th, Mexico
ranks 58th, India ranks 76th and South Africa ranks 77th.
Low wages, lack of social protection and poor lifelong learning systems
are the greatest challenges globally
Most
countries underperform on three critical dimensions. The average score of the
Fair Wages pillar is 52.5 out of 100, the lowest average among all pillars of
the index, with these results underscored by particularly poor performance in
prevalence of low pay. The average score of the Social Protection pillar is
58.2 out of 100, which highlights deficiencies in coverage and limited funding
of social safety mechanisms across countries covered in our ranking. The
average score of the Lifelong Learning pillar is 57.0, underscored by a
relatively low percentage of firms offering formal training and poor access to
training for unemployed workers.
The economic and social returns from investing in the right mix of
social mobility factors are substantial
If
countries included in this report were to increase their social mobility index
score by 10 points, this would result in an additional GDP growth of 4.41% by
2030 in addition to vast social cohesion benefits. The existence of pockets of
over- and under-performance in each region suggests that there is little
determinism across regional and income groups. Proactive efforts by government
and business can enhance the ability of economies to foster social mobility and
ensure that every child, young person and adult has a reason to believe in the
prospect of a better future. Countries that adhere to the "stakeholder
capitalism" model tend to perform better than countries with a focus on "shareholder
value maximization" or "state capitalism".
A new financing model for social mobility is necessary through taxation
but must be complemented by a new mix of spending and tailored approaches
Many
policies designed to address social mobility require both additional public
resources through taxation and a different mix of public spending on the key
drivers of social mobility. Fiscal policy can maximize the impact of
redistribution through careful design of how resources are allocated to
different groups, geographical areas and types of spending. Improving tax
progressivity on personal income, policies that address wealth accumulation and
broadly re-balancing the sources of taxation can support the social mobility
agenda
Improving access to education opportunities throughout an individual's
life is a critical factor for all economies
Education
is a powerful 'equalizer' of chances. Ensuring that individuals have equal
opportunities to access the best schools is essential to reviving social
mobility. In addition to a new focus on the availability, quality and
distribution of education programmes aimed at disadvantaged children and youth,
there is an urgent need for a wholly new agenda around promoting and financing
skills development throughout workers' careers due to technology-driven
disruption to jobs and skills.
Forging a new social contract that provides adequate social protection
beyond full-time employment contracts is important across economies
In
addition to existing self-employment, as globalization and digitalization
continue to reshape work, workers and employers are entering into more flexible
work relationships. A new policy agenda aimed at creating holistic protections
and support for all individuals irrespective of their status in employment is
urgently needed.
Businesses must be a core stakeholder in the efforts around social
mobility for their own employees, workers in their value chains and their
communities broadly
Companies
can contribute to improving social mobility by a set of inter-connected
priorities: a focus on promoting a culture of meritocracy in hiring; active
participation in vocational and technical education programmes; providing
timely and comprehensive reskilling and upskilling curricula to employees; and
paying fair wages that allow employees to meet their basic needs.
A combination of technological change, economic trends and talent demand
is changing income inequality outcomes within different industries
Metrics
from ADP demonstrate the inequalities workers are likely to face on the basis
of the industry in which they're employed. The Media, Entertainment and
Information (MEI) industry is the most unequal in the United States. The
Financial Services (FS) industry is similarly unequal but has seen a reduction
in those inequalities in the period between 2014 and 2018. In contrast, the MEI
Industry and the Information and Communication Technologies industry have seen
increasing inequalities between 2014 and 2018.
Professional networks, an implicit driver of social mobility, are
affected by geography and socio-economic background
LinkedIn
data reveals that individuals in rural areas of the United States face more
limited professional networks as do those who grew up in low-income households.
The locations where individuals have the most diverse social network in the
United States are urbanized states such as the District of Columbia, which
houses the country's capital Washington D.C. It is followed by Massachusetts,
New York, Connecticut, New Jersey and California. At the opposite end of the
scale are a set of less urbanized states, namely Kansas, West Virginia,
Mississippi and Arkansas in ascending order.
The geography of social mobility is in part determined by an
individual's profession
Metrics
from Burning Glass data reveal that different professionals employed in
different occupations are more or less "rooted" in particular geographic
locales. Higher paid and skilled professions are more likely to retain their
value across different locations. Professionals such as Chief Executives,
Dentists, Computer Research Scientist and Human Resources Mangers are offered
similarly (high) wages across different parts of the United States. On the
other hand, Judges and Magistrates, Specialized Teachers, Transportation
Workers, Gaming Managers and Agricultural Engineers face more unequal prospects
around the United States.
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