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OECD Report on Social Mobility

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OECD, the Organization for Economic Cooperation and Development, in June 2018 issued a new report, A Broken Social Elevator? How to Promote Social Mobility, that provides new facts on social mobility in the context of increased inequalities of income and opportunities in OECD and selected emerging economies. It looks at the issue across and within generations, in income, education, health and occupation, and at how these are linked to inequality and includes recommendations on how countries can improve social mobility.

When people at the bottom of the income ladder have little chance of moving up, and those at the top stay there, the social elevator is broken. This has harmful economic, social and political consequences. Lack of upward mobility implies that many talents are not being put to use which undermines potential economic growth. It also reduces life satisfaction, well-being, and social cohesion.

Social Mobility Not Helped by the Gig Economy – Universal Basic Income Might Help

According to the OECD, the gig economy may not result in greater social mobility as many workers who might otherwise be eligible for short-term contractor jobs do not have the requisite digital skills. Whilst not all gig job require digital skills, finding such jobs nowadays often does mean promoting oneself online and navigating digital freelancing platforms.

Depending on the details of their implementation, Universal Basic Income (UBI) systems may help social mobility by mitigating extreme poverty, a situation where people often find themselves in a so-called “poverty trap”, lacking resources to invest in their future through education, proper health, and time to look for a better job. UBI may give them the opportunity and peace of mind to do so.

A good state of health is required for social mobility as sick people are unlikely to learn or to get new, better job. Therefore, an accessible and well-performing health system (which does not need to be expensive at all) is a necessary precondition for upward social mobility.

Finally, wealth inequality at birth, which is highly and positively correlated with income inequality, is an even more powerful hindrance to social mobility.

Poor social mobility a threat to globalization, employers share responsibility

As far as global employee benefits and global mobility are concerned, the increased social and political instability that results from social mobility issues is not helpful for the key driver of our sector, globalization, which in turn drives investments abroad, international trade, talent mobility, relocations, and immigration.

Governments are responsible for creating the right conditions for social mobility. Very different outcomes from one country to another clearly show that public policies are relevant. Nevertheless, employers can do a lot to foster social mobility by providing employees with health and wellness plans; training opportunities; and of course through compensation and benefits practices that keep inequalities in check. In this regard, the people at the top – the executive group – must set the right example.

The report is available on the OECD website’s iLibrary.

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