India has been ranked very low at 76th place out of 82 countries on a new Social Mobility Index compiled by the World Economic Forum, while Denmark has topped the charts.
The report, released ahead of the 50th Annual Meeting of the WEF, also lists India among the five countries that stand to gain the most from a better social mobility score that seeks to measure parameters necessary for creating societies where every person has the same opportunity to fulfil his potential in life irrespective of socioeconomic background.
Increasing social mobility, a key driver of income inequality, by 10% would benefit social cohesion and boost the world’s economies by nearly 5% by 2030, the WEF said.
But, few economies have the right conditions to foster social mobility.
Measuring countries across five key dimensions distributed over 10 pillars — health; education (access, quality and equity); technology; work (opportunities, wages, conditions); and protections and institutions (social protection and inclusive institutions) — shows that fair wages, social protection and lifelong learning are the biggest drags on social mobility globally.
In the case of India, it ranks 76th out of 82 economies. It ranks 41st in lifelong learning and 53rd in working conditions.
The Areas of improvement for India include social protection (76th) and fair wage distribution (79th).
The inaugural Social Mobility Report showed that across the Global Social Mobility Index, only a handful of nations across the 82 countries covered have put in place the right conditions to foster social mobility.
The top five are all Scandinavian, while the five economies with the most to gain from boosting social mobility are China, the United States, India, Japan and Germany.
“Creating societies where every person has the same opportunity to fulfil their potential in life irrespective of socioeconomic background would not only bring huge societal benefits in the form of reduced inequalities and healthier, more fulfilled lives, it would also boost economic growth by hundreds of billions of dollars a year,” the WEF said.
“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 WEF.
The most socially mobile societies in the world, according to the report’s Global Social Mobility Index, are all European.
The Nordic nations hold the top five spots, led by Denmark in the first place (scoring 85 points), followed by Norway, Finland and Sweden (all above 83 points) and Iceland (82 points). Rounding out the top 10 are the Netherlands (6th), Switzerland (7th), Austria (8th), Belgium (9th) and Luxembourg (10th).
Among the G7 economies, Germany is the most socially mobile, ranking 11th with 78 points, followed by France in 12th position. Canada comes next (14th), followed by Japan (15th), the United Kingdom (21st), the United States (27th) and Italy (34th).
Among the world’s large emerging economies, the Russian Federation is the most socially mobile of the BRICS grouping, ranking 39th, with a score of 64 points. Next is China (45th), followed by Brazil (60th), India (76th) and South Africa (77th).
The report also examines which economies stand to gain the most from increases in social mobility. The economy with the most to gain is China, whose economy could grow by an extra USD 103 billion a year, or USD 1 trillion dollars over the decade.
The US is the economy that would make the second-largest gains, at USD 87 billion a year. Next is India, followed by Japan, Germany, Russia, Indonesia, Brazil, the UK and France.
Most importantly though, the returns are intangible in the form of social cohesion, stability and enhanced opportunity for more people to fulfil their potential.
The report also makes a powerful case for stakeholder capitalism. The most socially mobile economies all share an emphasis on effective social policies that benefit communities as well as provide a platform for healthy, competitive economies. By comparison, economies that are organized more on shareholder value maximization , or state capitalism , tend to perform less well.
It calls for a new financing model for social mobility: Improving tax progressivity on personal income, policies that address wealth concentration and broadly rebalancing the sources of taxation can support the social mobility agenda.
Most importantly, however, the mix of public spending and policy incentives must change to put greater emphasis on the factors of social spending.
Improving social mobility must be the fundamental imperative of this new decade: As long as an individual’s chances in life remain disproportionately influenced by their socioeconomic status at birth, inequalities will never be reduced,” growth, the green transition, trade and geopolitics,” said Saadia Zahidi, Managing Director, New Economy and Society, WEF.
“In a globalized world where there is transparent information on the gulf between the ‘haves and the ‘have-nots’, we will continue to see discontent, with far-reaching consequences for economic,” she added.