My friend Jonathan Tame, from the Relationships Global, sends every Friday a newsletter in which he comments on world issues from the point of view of Christian relationality. His new item on 27 January deals with Davos and the problem of growing economic inequality in the world.
Here is an extended quote from this newsletter:
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The World Economic Forum’s annual meeting at Davos brings together global leaders, including 800 CEOs whose companies represent 25% of the world’s GDP. So it is perhaps surprising that one of the major topics of conversation this week is pay differentials – a crucial indicator of how fair the economic system is. Despite the economic downturn, CEO salaries of top companies are 145 times the average salary of their employees.
The BBC’s Robert Peston says that rising inequality used to be accepted as a necessary price for growing prosperity during the boom years. But something is badly wrong when salaries of top earners, whose high risk strategies led to the financial crash of 2007-8, continue to spiral upwards when most people face years of stagnant wages (executive pay of the FTSE100 companies rose by 49% last year, compared to just 1.5% for average UK workers).
Compounding the problem of inequality is large scale unemployment; across the EU, over 16 million people are officially unemployed, 10% of the working population (these figures exclude those who want to work but are not registered). Governments are responsible for running the largest economic entity in their country (called the public sector), but the actions they take (such as raising levels of taxation) to try and keep that “business” solvent are often at odds with what’s needed to encourage job creation in the private sector.
At heart is the question, what is the purpose of the economic system? Is it about maximising rates of growth (which assumes that the whole population will thereby be better off) or should it be about ensuring that every person of working age has the opportunity to earn a decent living for themselves and their dependents? Crudely speaking, do people serve the economic system or does the economic system serve the people? The current form of global capitalism is geared towards maximising profits, but is failing society as a whole. Is there a road from Davos towards a more relational economic system?
150 kms to the west of Davos lies Ibach, home to a company famous for Swiss army knives, which puts jobs first. This relational business has managed to avoid making anyone redundant for economic reasons for the last 80 years, and yet has survived several recessions to become a global brand. Read the Victorinox story here.
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