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The Global Social Mobility Report 2020 - Equality, Opportunity and a New Economic Imperative

World Bank IMF and Dev Agencies	1330 VIEWS
World Bank IMF and Dev Agencies
1330 VIEWS

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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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