Promoting social mobility can boost economic growth – World Economic Forum

(Kitco News) – Sputtering momentum in the global economy could see a turn in fortunes if nations adopt policies that promote social mobility, according to a new study from the World Economic Forum.

A report published Monday said that ahead of the WEF ’s international conference in Davos Switzerland, promoting social mobility could reduce the widening gap in income inequality and boost economic growth by 5% over the next 10 years.

The report comes on the same day that the International Monetary Fund (IMF) downgraded its growth forecasts for 2020. The IMF said that it sees global growth rising 3.3% this year, compared to 2.9% it forecasted in 2019, the lowest pace of growth in a decade.

The key findings in the inaugural report show that only a handful of counties are fostering conditions to promote social mobility.

The key findings of the WEF ’s Global Social Mobility Index show that children who are born into less affluent families typically experience greater hurdles to success compare to their more affluently born counterparts.

“A common theme in the report is that few economies have adequate conditions to foster social mobility. As a consequence, inequality has become entrenched and is likely to worsen amidst an era of technological change and efforts towards a green transition,” the report said.

The report notes that four areas most countries underperform are fair wages, social protection, working conditions and lifelong learning.

“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 by business and government must include a concerted effort to create new pathways to socioeconomic mobility, ensuring everyone has fair opportunities for success,” said Klaus Schwab, founder and executive chairman of the World Economic Forum.

The top countries embracing social mobility policies include Denmark, Norway, Finland, Sweden and Iceland. Among the Group of 7 nations, Germany is at the top, with a global ranking of 11. Canada comes in third with an overall ranking of 14 and the U.S. is sixth with a global ranking of 27.

However, the WEF said that the U.S. economy would see some of the biggest benefits if it supported social mobility initiatives. China which is ranked 45 globally would see the biggest economic benefits, the report said.

The report noted that government and businesses have to work together to develop policies to promote social mobility. The Report recommended that government ’s play the role of “equalizer” to re-balance wealth concentration.

Meanwhile, businesses need to provide vocational education for their employees and pay fair wages to eliminate gender pay gaps.

“Looking purely at a business case, companies increasingly realize that they face equal risks from system challenges, including inequality. By helping to make societies more equitable, consumer bases grow, operating environments become more stable and there is greater trust between customers and stakeholders,” the report said.

By Jim Wyckoff
For Kitco News

Contact jwyckoff@kitco.com
www.kitco.com

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