It's January, which means that it's time for the annual meeting of the World Economic Forum—otherwise known to the global elite as Davos. One thing that you will not be surprised to learn is dominating the minds of those elites this year: things that represent a serious risk to the global economic status quo. And, spoiler alert, the list is kind of terrifying when you consider it in its full context, not least because of how interconnected the elements are:
- Economic growth and reform (including rising inequality both within and across societies)
- Rebuilding communities (otherwise known as trying to prevent the world from fracturing along cultural, religious and social fault lines)
- Managing technological disruption. (This one is about jobs, which is the thing I'm most interested in from the report, and which I'll discuss a little more below)
- Strengthening global cooperation. (International institutions)
- Accelerating action on climate change.
Told you it was terrifying.
For an explanation of how each of the factors depends on each other, check out this summary of the global risk report, courtesy of the WEF:
As I mentioned above, the thing I'm most interested in from the report is #3 from the list: the concept of managing technological disruption. It's a factor that is so closely linked not only to each of the other items on the list, but to so much of the national conversation that dominated economic policy around the election here in the US.
To get a sense of the scale of the coming disruption, consider that recent McKinsey research found that there exists the potential to automate around 45% of all jobs worldwide—and 46%, or 60 million jobs, in the US, exacerbating a trend that has only really been felt acutely in the manufacturing sector until now.
Even if the actual levels of automation only take half those jobs, that's a whole lot of disruption that will have a knock-on effect on pretty much every other item on the WEF's list.
And, perhaps most worryingly, automation is only one piece of the puzzle when it comes to how we're going to be living and working in an era that the WEF defines as the "Fourth Industrial Revolution." Other strands include "untethering some types of work from a physical location", and the fact that "the nature of the contract between employer and employee is changing at the same time."
So what do they suggest we do about it—and what does any of this have to do you with you?
Well: both of those things are interesting questions. To answer the second one: if the people leading our major organizations, be they in the public or private sector, are attempting to reach some kind of consensus on where we should go from here, then the answers they come up with have a pretty good chance of impacting the lives of you and/or the people you know.
As for that first question, here's what the WEF report suggests we may be moving towards in terms of social programs:
1. Untethering health and income protection from individual employers or jobs
From a US perspective, this would be the biggest change to how we live and work: it means changes such as single payer, nationalized health care, or some other system where your employer is no longer tasked with providing your health benefits. A major driver of this, according to the report, is the rise of the gig economy: with so much temporarily-attached labor, employer-provided healthcare no longer makes much sense.
2. Revamping pension models in line with the new realities of work and ageing
Short version: corporate pension plans will become a thing of the past.
3. Implementing policies to increase “flexicurity”
Stronger social safety nets to help people who are between jobs in an economy that is likely to be marked by frequent job changes and project-based work.
4. Implementing alternative models of income distribution
Negative income taxes, wage supplements, universal basic income: these 3 ideas are the sum total of the WEF's recommendations, all of which are designed to "not tie welfare benefits to being out of work." Which seems like a solid plan, albeit one that lacks the finer details of where this "income" to be "distributed" will come from.
5. Providing greater support for working into old age
This one is exactly what it sounds like: with people living longer and "underfunded" being the most common word to describe the average pension, it stands to reason that people will need to continue earning income for longer. Governments and companies should seek to support this, according to the report, largely by providing jobs and technologies that are better suited to elderly workers.
While it's hard to argue with any of the points raised in the risk report, or the broad-brush solutions outlined above, it's also difficult to see how the answers are going to be implemented. As such, these issues are likely to be hanging over most of us for much of the rest of our working lives—which seem set to not only be longer than our forebears' but marked by considerably less job security.
Here's hoping, then, that IBM's Ginni Rometty is correct: she told a panel at Davos today that, throughout history, "technological breakthroughs lead to new employment opportunities," according to the Wall Street Journal. As such, while "there's so much fear about jobs […] most of us will be working with these systems."
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