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How rich are you?

How rich are you? You might be surprised by the answer based on recent reports on global poverty and inequality. We’ll be tackling these in turn over the next few issues of TINAN.

The first, A Global Middle Class Is More Promise than Reality by the Pew Research Centre, compares changes in incomes between 2001 and 2011 in 111 countries. The study looked at five income groups: poor (an income of $2 or less per day), low income ($2.01 to $10 per day), middle income ($10.01 to $20 per day), upper-middle income ($20.01 to $50), and high income (more than $50 per day). As part of the study Pew has created a great interactive map showing how these income groups are distributed around the world. There is also an eye-opening calculator to figure out whether you’re part of the global middle class.

The good news is that the portion of the global population living on $2 or less a day dropped from 29% to 15% between 2001 and 2011. The low income group grew from 50% of the world’s population to 56% during this time while the middle income group grew from 7% to 13%. This growth means that the number of people in the middle income group nearly doubled from 399 million to 784 million people. While an income of $10 a day may seem low in many advanced economies, the study highlights that this income level provides financial stability beyond subsistence and a buffer from extreme poverty. At this level, people also become part of the “global consuming class”, which has significant implications for purchasing power and economic growth driven by demand.

As well as a look at income levels around the world, the report's analysis of income levels in advanced economies gives some context for broader debates about income inequality and the state of the middle class in countries like Canada and the Unites States. Take a look at the full report for more details.

Three key ingredients for creative competitiveness

In the new knowledge economy, creativity is closely linked with economic development. High levels of creativity contribute to higher levels of economic output, greater economic competitiveness, higher rates of entrepreneurship, and higher levels of overall human development. In a recent Global Creativity Index report released by the Martin Prosperity Institute, Canada ranked 4th among 139 countries around the world in global creativity (up from 7th in 2011). The GCI represents a broad measure for economic growth and prosperity based on three core elements of creative competitiveness: Talent, Technology, and Tolerance.

Talent represents a country's ability to attract and retain skilled knowledge workers, professionals, and members of the creative class. Canada ranks 14th on the GCI, with Australia, Iceland, the United States, and Finland ranking in the top positions. Technology represents various measures of innovation, research and development, and protection of patents. Canada ranks 13th on the GCI behind technology powerhouses like the United States, Japan, Germany, South Korea, and Israel. Tolerance represents a measure based on Gallup polls of how tolerant a country is when it comes to race, ethnicity, gender and sexual orientation. Canada ranks 1st on the GCI, highlighting Canada's status as a diverse, open-minded and tolerant country. Tolerance contributes to economic development by establishing a positive environment for technological innovation, talent attraction, and the mobilization of new ideas. 

It is important to recognize that while Canada is a world leader in tolerance, it is lagging on talent and technology. For Canada to continue to compete when it comes to creativity, it is critical to prioritize talent attraction and retention, investment in research and development of new technologies leading to the generation of new innovations, and supporting more high-tech start-ups.

Which jobs are most at risk of being automated?

NPR recently tackled the ongoing debate about robots in the workforce by creating an interactive tool that shows what chance specific jobs have of being automated. The tool is based on a 2013 report by two Oxford University researchers, Carl Benedikt Frey and Michael A. Osborne. Frey and Osborne assessed 702 occupations and estimated that 47% of total US employment is at risk of being replaced by robots. Occupations that require negotiation, interpersonal communication, and complex problem solving are at less risk, but occupations that are highly regimented and require few interpersonal communication skills are at a high risk of being automated. For example, factory workers who pack goods have a 98% chance of having their jobs automated, but even highly skilled occupations such as librarians and paralegals have a 64% and 94.5% chance of being automated, respectively. The shift towards automation is already evident in some industries. Daimler Chrysler, for example, was cleared to begin testing self-driving trucks in Nevada. A move towards self-driving trucks would have significant impacts on the workforce. The BBC reports the automation of the trucking industry could put 3.5 million drivers and 5.2 million additional support personnel out of work in the United States.

So what does the future hold for work? Peter Frase, the author of Four Futures, a forthcoming book about how automation will change America argues that with less work it will allow people to pursue activities that they are passionate about. It could also mean a return to a more artisanal economy. Lawrence Katz, a labor economist at Harvard, sees the next wave of automation returning us to an age of craftsmanship and artistry. These are only two possibilities, so we will just have to wait and see.

Manufacturing competitiveness and innovation

A recent World Economic Forum report, Future of Manufacturing: Driving Capabilities, highlights the challenge of current global manufacturing competition. On the one hand, economies are largely reactive structures dependent on market forces, capabilities, resources, and policy as differentiators of competitiveness. On the other hand, a firm understanding of the drivers of change is needed to innovate along the global value chain. The report argues that if drivers like an aging population, skills gaps, and accessibility of next generation technologies are not planned for, the capabilities and competitiveness of a manufacturing economy will dwindle. The report advocates for the convergence of government, private sector and societal stakeholders to further advanced manufacturing capabilities.

With nearly 50% of Canadian manufacturers facing labour shortages Canada may already appear to be behind the competitiveness curve.  But, some private sector companies are regaining lost ground by being proactive in providing in-house opportunities for skills development. These programs incentivize long-term commitment while allowing companies to be more agile and innovative. Provincial governments are also taking steps to launch strategies that bring a holistic approach to strategic planning, such as Ontario’s Innovation Agenda or the Manitoba Innovation Strategy, which both offer strategic objectives based on governance, private sector and societal considerations. As more stakeholders embrace these holistic approaches and proactively work together, Canada’s manufacturing competitiveness can be expected to grow.