Most economies are now failing to create conditions in which their citizens can thrive, with income inequality more entrenched than ever, according to the World Economic Forum (WEF).
Developed economies are heavily dependent on a strong middle class with the means to engage in discretionary spending. But low wage growth, poor educational standards, and entrenched financial inequality have made it harder than ever for citizens to graduate from the lower- to the middle-class.
“Inequality is rising even in those countries that have experienced rapid growth,” wrote Klaus Schwab, chairman of the WEF.
“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.”
The WEF report used a new global social mobility index to rank 82 countries based on access to health, education, technology access, fair work opportunities, and social protections.
Nations that scored the highest in the WEF’s index were invariably located in Europe, with the Scandinavian countries heavily represented. Australia was ranked 16th, while the US trailed the pack at 27th.
“An individual’s chances in life remain disproportionately influenced by their starting point – their socioeconomic status at birth – resulting in economies and societies that too often reproduce rather than reduce historic inequalities,” Mr Schwab wrote.
Improving social mobility would result in an additional GDP growth of 4.4 per cent by 2030, in addition to social cohesion benefits. The report advises action on four key areas – improvement of health outcomes, embracing “lifelong learning”, enhancing social protections, and reforming taxation and public spending.
The report also called on businesses to improve standards for their workers who are most at risk of displacement by automation or flexibilisation by providing adequate on-the-job training and reskilling and upskilling to make employees more productive.
Facilitating youth access to working life by enrolling more young people in vocational training could also help improve lifetime social mobility outcomes.
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