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More social protection, affordable child care, and entrepreneurship will promote inclusive growth

September 12, 2015

“What are the areas of policy and institutional strength that have a particularly strong bearing on social participation in the process (productive employment) and outcomes (median household income) of economic growth?”

In other words, what promotes inclusive growth?

This is the question that animates a report released by the World Economic Forum, which suggests that three policies appear to be holding back the process in Canada: limited social protection, particularly an inappropriately designed and not terribly generous Unemployment Insurance program, the lack of affordable child care, and lackluster entrepreneurship.

The Forum’s analysis of 112 countries leads to the suggestion that all countries have room for improvement, but at the same time that it is not terribly fruitful to frame the comparisons with a simple ranking. The 100 odd page report draws some high level lessons to inform country-specific policies. All policy makers should recognize, to quote directly from the report, that:

There is no inherent trade-off in economic policy-making between the promotion of social inclusion and that of economic growth and competitiveness; it is possible to be pro-equity and pro-growth at the same time.

Larger fiscal transfers are not necessarily incompatible with growth and competitiveness, but nor are they always the primary or most effective available option for broadening socioeconomic inclusion.

The current debate on inequality and social inclusion is unduly narrow and unnecessarily polemicized. It is possible, indeed essential, to be pro-labor and pro-business, to advocate a strengthening of both social inclusion and the efficiency of markets.

click to enlarge

Source: World Economic Forum, The Inclusive Growth and Development Report 2015.

An analysis of over 140 statistical indicators is framed into a dashboard of seven policy pillars, and a look through this lens shows that Canada’s strength lies in its financial system, and in its schools and universities.

But other pillars are less sturdy. Canada does not appear so admirable on the “Corruption and Rents” set of indicators. And the report says that the country could “do more in terms of social protection especially in terms of unemployment benefits and by making it easier for parents to participate in the workforce through more generous family-leave policies and affordable childcare options, as well as fostering greater entrepreneurship and new business creation.” (page 39)

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One Comment
  1. Yes I think this makes the essential points very well.

    In Canada, from my perspective, the emphasis in the business community and government seems to be on procuring cheap labour and cheapening people – versus seeking ways to get the best value for money from people, whether they are employed or not.

    The current approach in Canada also seems to me to be based on popular disinformation spread in the mainstream media, and the resulting popular but ill-informed social prejudices at the expense of people out of work.

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