A Journal of People report
The World Economic Forum (WEF) assesses:
Rising income inequality poses a severe risk to the global economy and could result in the reversal of globalization.
The WEF is concerned that democracy is in crisis.
The WEF said:
Fundamental reform of capitalism may be needed to tackle public anger.
The WEF said the growing mood of anti-establishment populism meant economic growth was no longer enough to mend fractured societies; instead, “fundamental reforms” of market capitalism were vital.
On the eve of its annual meeting in Davos, the WEF said the gap between rich and poor had been behind the UK’s Brexit vote and Donald Trump’s election victory in the US.
The global risks report said Brexit, the US presidential election result and the referendum defeat suffered by former Italian prime minister Matteo Renzi last month meant some people were now questioning whether “the west has reached a tipping point and might now embark on a period of delocalization”.
The WEF’s Global Risks Report ranked rising income and wealth disparity first among the underlying trends that will determine the shape of the world in the next decade.
The report states:
Since the 1980s, the share of income going to the top 1% of wealthiest citizens has increased in much of the Western world including the UK, the US, Canada, Ireland and Australia although the same was not true in France, Germany, Japan or Sweden. The latter group has shielded themselves from austerity and the worst excesses of the post-financial crash recession although both sets have invested heavily in new technology, placed a premium on workers with higher education and better skills and outsourced jobs to the third world. While this has raised the living standards of poorer workers, many of the first-world poor now languish in low paid jobs or outright employment.
The report said:
The discontent produced by this dynamic has now become an “election-winning proposition,” and one which demands action.
Climate change was considered the second most important underlying trend, with the WEF noting that environmental concerns were more prominent in the report than ever before.
Societal polarization was ranked third in the report.
The report finds:
Policymakers and managers of public and private institutions have become divorced from their electorates both in terms of their cultural backgrounds and their pay and benefits, and austerity is blamed for eroding welfare provisions for the vulnerable in society.
Technology was ranked fourth issue of concern.
Of particular concern was the pace at which technology made traditional jobs redundant and was not matched remotely by the rate at which innovation created jobs.
The WEF report cites:
Only 0.5 percent of the current US workforce is employed in sectors created since 2000 while around 8% are employed in industries created in the 1980s.
The report notes:
Up to 80% of the decline in workers’ share of national income between 1980 and 2007 was the result of the impact of technology.
The WEF has warned:
There were new threats to social cohesion from the robotics and artificial intelligence revolution.
The WEF’s annual global risks report, prepared on the basis of opinions and assessments from 700 experts, found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying trends that will determine the shape of the world in the next decade.
Klaus Schwab, the founder of the WEF, said 2017 would be a pivotal moment for the global community.
The WEF said recent events in Europe and the US suggested an “appetite for rebalancing towards democracy and national sovereignty”.