19-Jan-2020: Global Social Mobility Index 2020: why economies benefit from fixing inequality
The headline finding of the report is that most economies are failing to provide the conditions in which their citizens can thrive, often by a large margin. As a result, an individual’s opportunities in life remain tethered to their socio-economic status at birth, entrenching historical inequalities.
This is a major problem not only for the individual, but also society and the economy. Human capital is the driving force of economic growth. As a result, anything that undermines the best allocation of talent and impedes the accumulation of human capital may significantly hamper growth. Poor social mobility coupled with inequality of opportunity underpin these frictions, suggesting that if the level of social mobility were increased, it could act as a lever to economic growth.
The Global Social Mobility Index, which benchmarks 82 global economies, is designed to provide policy-makers with a means to identify areas for improving social mobility and promoting equally shared opportunities in their economies, regardless of their development.
Social mobility can be understood as the movement in personal circumstances either “upwards” or “downwards” of an individual in relation to those of their parents. In absolute terms, it is the ability of a child to experience a better life than their parents. On the other hand, relative social mobility is an assessment of the impact of socio-economic background on an individual’s outcomes in life.
It can be measured against a number of outcomes ranging from health to educational achievement and income.
Social mobility has become the pressing issue of modern life, and as the index highlights, while major improvements have been made in some areas, notably extreme poverty, in others, the situation is deteriorating. Globalization and technology are frequently blamed for this, but as the report highlights, there are a plethora of reasons – not least of which is poor policy-making – and it is the responsibility of a range of stakeholders to redress these.
The index considers what a country can do holistically to foster relative social mobility for all citizens, which is markedly different from other methodologies.
Historically, indices have analysed social mobility across generations by comparing earnings of children with those of their parents. Others have focused on outcomes, and as such, struggled to provide timely insights. The more academic tend to look at tracking income inequality. The problem with these approaches is that they capture the effect of measures that were taken 30-40 years ago.
The Global Social Mobility Index, however, focuses on drivers of relative social mobility instead of outcomes. It looks at policies, practices and institutions. This allows it to enable effective comparisons throughout regions and generations. It uses 10 pillars, which in turn are broken down into five determinants of social mobility – health, education, technology access, work opportunities, working conditions and fair wages and finally, social protection and inclusive institutions.
One of its key recommendations is the need for a new standard, which the report argues could be used to identify priority policy actions and business practices that would improve social mobility.
Key findings:
- The Global Social Mobility Index reveals that there are only a handful of nations with the right conditions to foster social mobility. Furthermore, most countries underperform in four areas: fair wages, social protection, working conditions and lifelong learning.
- The index also reveals that achieving higher levels of social mobility needs to be perceived as an important element of a wider move towards a stakeholder-based model of capitalism.
- Looking at all economies and average income levels, those children who are born into less affluent families typically experience greater barriers to success than their more affluently born counterparts. Furthermore, inequalities are rising even in countries that have experienced rapid growth.
- In most countries, individuals from certain groups have become historically disadvantaged and poor social mobility perpetuates and exacerbates such inequalities. In turn, these types of inequalities can undermine the cohesiveness of economies and societies.
Most economies need to bridge their social mobility gap. Overall however, the Nordic countries are the best performers. Denmark tops the rankings with a social mobility score of 85.2, closely followed by Finland (83.6), Norway (83.6), Sweden (83.5) and Iceland (82.7). These nations combine access, quality and equity in education, while also providing work opportunities and good working conditions, alongside quality social protection and inclusive institutions.
Among the G7 economies, Germany is the most socially mobile, ranking 11th with 78 points followed by France in 12th position. Canada ranks 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, which ranks 45th, followed by Brazil (60th), India (76th) and South Africa (77th). India 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 Fourth Industrial Revolution, globalization and technology: Globalization and the Fourth Industrial Revolution have generated significant benefits, but have also exacerbated inequalities. The Fourth Industrial Revolution, and with it, continuing and future disruption to labour markets, will likely compound differences in social mobility for those countries unprepared to take advantage of new opportunities.
Globally, the declining income share of labour relative to an increase in the income share of capital has significantly driven economic inequality and prompted a decline in equality of opportunity. This is reflected in huge wage disparities, which have grown exponentially since the 1970s. The report reveals that in the US, the top 1% of income earners in 2018 earned 158% more than in 1979, in comparison to just 24% for the bottom 90%.
The oft-cited causes of this polarization are globalization and technology. The index clearly shows that the former has increased inequalities within countries by transferring low-skilled jobs in high-productivity sectors in high-income economies to lower-income counterparts. This has effectively penalized workers in specific locations and types of job.
Concurrently, technology has polarized inequalities by reducing demand for low-skilled jobs while rewarding highly skilled jobs disproportionately. Exacerbating this has been the role of so-called “superstar” firms. These have high profits and a low share of labour, and as models of great productivity, have come to increasingly dominate markets.
The outlook remains mixed in the realm of technology. Analysis of the index reveals that in most countries, low social mobility is related to economic development issues that go beyond income. With this in mind, “digital leapfrogging” will not happen unless these issues are systemically addressed. More positively, technology has the potential to equalize the barriers to entry to knowledge, but only if the conditions are conducive.
Reversing the outlook is possible but requires concerted action, political will and time. The index suggests that governments must play the role of equalizer, levelling the playing field for all citizens, regardless of their socio-economic background. The report suggests:
- Creating a new financing model for social mobility: improving tax progressivity on personal income, policies that address wealth concentration and broadly re-balancing the sources of taxation can support the social mobility agenda. Most importantly though, the mix of public spending and policy incentives must change to put greater emphasis on the factors of social spending.
- More support for education and lifelong learning: targeted at improvements in the availability, quality and distribution of education programmes as well as a new agenda for promoting skills development throughout an individual’s working life. This includes a new approach to jointly financing such efforts between the public and private sector.
- Developing a new social protection contract: this would offer holistic protection to all workers irrespective of their employment status, particularly in a context of technological change and industry transitions, requiring greater support for job transitions in the coming decade.
Evidence suggests that companies that place purpose over profits perform better in the long term. 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. Furthermore, paying fair wages and eliminating the gender pay gap will also be crucial to boost social mobility.
Specifically, the report suggests that business:
- Takes the lead: primarily by promoting a culture of meritocracy in hiring, providing vocational education, reskilling and upskilling as well as by paying fair wages. This includes industry and sector-specific plans to address historic inequalities within and between sectors.
- Creates action plans specific to each industry: these are required to address shifts in inequality taking into account each industry's differing circumstances.
The bottom line is that companies can help improve social mobility, but business practices need to be updated.
16-Jan-2020: Henley Passport Index 2020
Henley Passport Index provides a measure of how much freedom a passport-holder of any particular country can enjoy in their quest to travel the world. One of the most trusted indices – this index ranks passports according to the number of countries their holders can access without a prior visa.
This particular index collects its data from the International Air Transport Association and ranks 199 passports in total.
India’s rank in Henley Passport Index as in the years 2018, 2019 and 2020:
|
Year |
Passport rank |
Number of countries Indian passport holders can visit without a visa |
|
2020 |
85 |
58 |
|
2019 |
82 |
59 |
|
2018 |
81 |
60 |
As per this new ranking, Indian passport holders can enjoy visa-free travel to 58 countries including Nepal, Bhutan, Cambodia, Indonesia, Myanmar, Sri Lanka, Seychelles, Mauritius, etc. The Indian passport ties its rank with Tajikistan and Mauritania.
Japan has the world’s strongest passport whereas Afghanistan (107th rank) has the weakest. Japan has been topping the Index for three years continuously. Singapore, in second place (same as in 2019) followed by Germany and South Korea both shares the third position in the index.
Serbia is the only European country to which Indian passport holders can travel visa-free. There is no major or developed country to which Indian passport holders have visa-free access.
The USA and the UK both countries are in eighth place in 2020; a significant decline from the rank 1 they jointly held in 2015.
The top 10 most powerful passports for 2020 are Japan, Singapore, South Korea, Germany, Italy, Finland, Spain, USA and UK, Luxembourg, Denmark.
The Henley Passport Index was launched in 2006 with the aim of providing a global picture of freedom of travelling.
4-Jul-2019: Henley Passport Index 2019
Henley Passport Index 2019 has been released. The Index is based on data provided by the International Air Transport Authority (IATA) and covers 199 passports and 227 travel destinations.
India is ranked at 86 with a mobility score of 58. India’s rank has improved from the earlier position of 79th in January 2019. The score points out that Indian passport holders can access 58 countries around the world without a prior visa. India shares the 86th position with Mauritania and Sao Tome and Principe.
Asian countries dominate the rankings with Japan and Singapore holding onto the top spot with a score of 189, after they unseated Germany from its first position at the beginning of 2018. With a few notable exceptions, the latest rankings from the Henley Passport Index show that countries around the world increasingly view visa openness as crucial to economic and social progress. Afghanistan at 109th is last on the list with a visa-free/visa-on-arrival score of just 25.
Background: The Henley Passport Index (HPI) is a global ranking of countries according to the travel freedom for their citizens. It started in 2006 as Henley & Partners Visa Restrictions Index (HVRI) and was modified and renamed in January 2018.
The HPI consists of a ranking of passports according to how many other territories can be reached ‘visa free’. All distinct destination countries and territories in the IATA database are considered.
23-Jan-2020: Corruption Perceptions Index released
This year’s Corruption Perceptions Index (CPI) reveals that a majority of countries are showing little to no improvement in tackling corruption. It shows corruption is more pervasive in countries where big money can flow freely into electoral campaigns and where governments listen only to the voices of wealthy or well-connected individuals.
The index ranks 180 countries and territories by their perceived levels of public sector corruption, according to experts and business people. It uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean. More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. Similar to previous years, the data shows that despite some progress, a majority of countries are still failing to tackle public sector corruption effectively.
The top countries are New Zealand and Denmark, with scores of 87 each, followed by Finland (86), Singapore (85), Sweden (85) and Switzerland (85).
The bottom countries are Somalia, South Sudan and Syria with scores of 9, 12 and 13, respectively. These countries are closely followed by Yemen (15), Venezuela (16), Sudan (16), Equatorial Guinea (16) and Afghanistan (16).
In the last eight years, only 22 countries significantly improved their CPI scores, including Greece, Guyana and Estonia. In the same period, 21 countries significantly decreased their scores, including Canada, Australia and Nicaragua. In the remaining 137 countries, the levels of corruption show little to no change.
This year, Western Europe and the EU is the highest scoring region with an average of 66/100, while Sub-Saharan Africa is the lowest scoring region with 32 points. Both regions have kept an unchanged average since last year.
This year's research highlights the relationship between politics, money and corruption. Keeping big money out of politics is essential to ensuring political decision-making serves the public interest and curbing opportunities for corrupt deals. Countries that perform well on the CPI have strong enforcement of campaign finance regulations.
With a score of 77, Canada dropped four points since last year and, more significantly, seven points since 2012. Low enforcement of anti-corruption laws is evident in the recent case against SNC-Lavalin, a Canadian construction company, which allegedly paid US$48 million in bribes to Libyan officials.
Following four decades of military dictatorship, Angola (26) jumped seven points in this year’s CPI. Although the country has recovered US$5 billion in stolen assets, more needs to be done to strengthen integrity and promote transparency in accounting for oil revenue
With a score of 53, Saudi Arabia improved by four points since last year. However, its score does not reflect its dismal human rights record and severe restrictions on journalists, political activists and other citizens. As Saudi Arabia takes on the presidency of the G20 this year, the country must end its crackdown on civil liberties.
While the CPI shows top-scoring countries like Denmark and Switzerland to be among the cleanest in the world, corruption still exists, particularly in cases of money laundering and other private sector corruption.
Asia-Pacific: A regional average of 45 on the Corruption Perceptions Index (CPI), after many consecutive years of an average score of 44, illustrates general stagnation across the Asia Pacific. Despite the presence of high performers like New Zealand (87), Singapore (85), Australia (77), Hong Kong (76) and Japan (73), the Asia Pacific region hasn’t witnessed substantial progress in anti-corruption efforts or results. In addition, low performers like Afghanistan (16), North Korea (17) and Cambodia (20) continue to highlight serious challenges in the region.
Even in democracies, such as Australia and India, unfair and opaque political financing and undue influence in decision-making and lobbying by powerful corporate interest groups, result in stagnation or decline in control of corruption.
Recommendations:
To end corruption and restore trust in politics, it is imperative to prevent opportunities for political corruption and to foster the integrity of political systems. Transparency International recommends:
- Manage conflicts of interest.
- Control political financing.
- Strengthen electoral integrity.
- Regulate lobbying activities.
- Empower citizens.
- Tackle preferential treatment.
- Reinforce checks and balances.
29-Jan-2019: India improves on global corruption index in 2018
India has improved its ranking on a global corruption index in 2018, while its neighbour China lagged far behind, according to the annual index released by an anti-graft watchdog.
India rose by three points to 78 in the list of 180 countries in the world, while China ranked 87 and Pakistan 117 in 2018, the Transparency International said in its Corruption Perceptions Index (CPI) for 2018.
As India gears up for its upcoming elections, we see little significant movement in its CPI score, which moved from 40 in 2017 to 41 in 2018.
The top countries on the list are Denmark and New Zealand, with scores of 88 and 87 respectively. Somalia, Syria and South Sudan are at the bottom of the list, with scores of 10, 13 and 13 respectively.
Overall, more than two-thirds of countries score below 50 in the 2018 CPI, with an average score of only 43.
With a score of 71, the US has dropped four points since last year. This marks the first time since 2011 that the US falls outside of the top 20 countries on the CPI.
21-Feb-2018: Corruption Perception Index 2017
This year’s Corruption Perceptions Index highlights that the majority of countries are making little or no progress in ending corruption, while further analysis shows journalists and activists in corrupt countries risking their lives every day in an effort to speak out.
The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean. This year, the index found that more than two-thirds of countries score below 50, with an average score of 43. Unfortunately, compared to recent years, this poor performance is nothing new.
This year, New Zealand and Denmark rank highest with scores of 89 and 88 respectively. Syria, South Sudan and Somalia rank lowest with scores of 14, 12 and 9 respectively. The best performing region is Western Europe with an average score of 66. The worst performing regions are Sub-Saharan Africa (average score 32) and Eastern Europe and Central Asia (average score 34).
India has been ranked 81st. While it maintained its score at 40 on a 100-point scale where anything below 30 is considered seriously corrupt, its ranking changed from 79th last year partly because Vanuatu, one of the countries added to the rankings this year, was rated higher and partly because others improved.
The index also characterised India as “among the worst regional offenders” in the Asia Pacific region on grounds of journalists, activists, opposition leaders and even staff of law enforcement or watchdog agencies being threatened or even murdered. In this, it was clubbed with the Philippines and Maldives.