This article is part of our special report Davos 2018 debates ‘shared future in a fractured world’.
If you thought the EU was incapable of being inclusive or attracting and producing talents, you’d better think twice, business leaders gathered in Davos heard on Monday (22 January), hours before the start of the World Economic Forum.
European countries top the list of the Inclusive Development Index, released in Davos today. The most inclusive advanced economy in 2018 is Norway, but small EU economies dominate the top of the index, with Australia the only non-European country in the top ten.
The Inclusive Development Index is an annual assessment that measures how 103 countries perform on 11 dimensions of economic progress in addition to GDP, including inclusion, intergenerational equity and sustainable stewardship of natural and financial resources.
Lithuania, Hungary, Latvia, Poland, Croatia and Romania perform well on Growth and Development, benefiting from EU membership, the WEF report reads.
The EU seems to be doing things right when it focuses policies on solidarity and cohesion. In other countries, the excessive reliance by economists and policymakers on gross domestic product as the primary metric of national economic performance has been part of the problem.
— World Economic Forum (@wef) January 22, 2018
GDP measures current production of goods and services rather than the extent to which it contributes to broad socio-economic progress as manifested in median household income, employment opportunities, economic security and quality of life, the WEF underlined.
“Policymakers need a new dashboard focused on sustainable development progress rather than economic growth as measured by GDP,” said Richard Samans, managing director and head of global agenda at the World Economic Forum.
“That could help them to pay greater attention to structural and institutional aspects of economic policy that are important for diffusing prosperity and opportunity and making sure these are preserved for younger and future generations,” he added.
European countries also continue to dominate the Global Talent Competitiveness Index issued also on Monday on the sidelines of the World Economic Forum in Davos.
Published by business school INSEAD in partnership with the Adecco Group and Tata Communications, the Index puts 15 European countries atop the first 25 positions of its 118-country survey.
Launched for the first time in 2013, the GTCI is an annual benchmarking report that measures the ability of countries to compete in their ability to grow, attract and retain talent.
Switzerland, the United States and Singapore top the ranking but Norway, Sweden, Finland, Denmark, the UK, the Netherlands and Luxembourg follow closely, filling the rest of the top ten position. Furthermore, eight of the top ten cities ranked are in Europe, with Zurich, Oslo and Stockholm topping the list.
Many of these countries have something in common: a well-developed education system providing the social and collaboration skills needed for employability in today’s labour market.
Talent champion countries have education systems that provide the skills the new labour market needs. That’s the case of Switzerland, which despite having a low number of bachelors has a very adaptable and diverse labour force.
The index this year focused on diversity. “Diversity is a crucial lever for innovation,” said Peter Zemsky, deputy dean and dean of innovation of INSEAD. “Today, fuelled by the explosion of information in the knowledge economy, exploiting local innovation opportunities is becoming more important for the competitive advantage of corporations than exploiting R&D at corporate headquarters,” he added.
In its fifth edition, the index highlights, however, that there is a cost to diversity: people are often ill-equipped to collaborate with others who are different from themselves, noted INSEAD professor and co-author of the report, Paul Evans.
Accelerating diversity is not easy. But the corporate world needs to jumpstart the switch and consider diversity more like an investment than a cost.
Pia Pakarinen, deputy mayor of Helsinki, which ranks fifth in the GTCI for cities, noted that inclusion and diversity go hand in hand.
“Diversity is natural in Finland,” she said, explaining that the country offers social mobility through education.
The other co-author of the GTCI, Bruno Lanvin, underlined that diversity is an untapped resource for innovation. “We are still not investing enough in diversity,” he added.
In the grand scheme, Europe has got it right, even though European social and labour policies are often the source of heated disagreement between EU member states.
The European economy still faces challenges in terms of low investment, youth unemployment and the social fracture growing across the bloc.
Last November, the European Commission projected the highest growth rates for Europe since the start of the financial crisis in 2007. The EU executive significantly revised upwards its forecast for 2017 and 2018, as more jobs were added. The unemployment rate in the EU is now at 7.3%.
But French President Emmanuel Macron and European Commission President Jean-Claude Juncker, who will both attend the meeting in Davos this week, are on the same page, at least on some social issues.
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