Kristalina Georgieva, chief executive officer of the World [+]
The World Bank is warning that Europe’s poorest and least educated citizens are on their way to being left behind in a global economy that is rocketing beyond them with lightning speed.
The study, Growing United: Upgrading Europe’s Convergence Machine, finds – unsurprisingly – that the winners in the technology-fueled race are high-income workers and the most advanced companies in the richest regions of the European Union while unemployment is increasing, and more Europeans headed for poverty, in some of the continent’s hardest-hit areas.
The report documents that while the poorest 10% of Europeans have suffered earnings decline of 7% , the Union’s most affluent 10% saw earnings growth of 66%.
It was with a chilling sense of déjà vu that I read the report. Back in the mid-1990s, as a foreign correspondent in Latin America, I wrote a piece for Foreign Policy magazine warning that the growing gap between rich and poor in the region – in skills and wealth – threatened stability and democratic governments and institutions. That was before the Internet, before technological transformation, before the acceleration of the concentration of the world’s wealth in the accounts of a handful of individuals.
“In Latin American economies forcing their way into the 21st century, hundreds of thousands of jobs have been lost,” I wrote then. “Nearly a decade into regionwide economic reform, the failure to create and sustain enough work and well-being is starting to affect the popularity of presidents and to raise questions about future economic and political stability.”
While the context is wholly different, the message from another time and another place resonates as loudly today.
As “the modern world’s greatest ‘convergence machine’” over the course of its 60-year history, the European Union helped transform its poorer, newer members into stronger economies, “delivering to its citizens some of the highest living standards and lowest levels of income inequality in the world,” the report noted. “Today, however, Europeans are increasingly recognizing that convergence is not automatic.”
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