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Technology makes growth inclusive

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This is a sponsored article from Royal Bank of Canada.

Frédérique Carrier, head of Investment Strategy, RBC Wealth Management

Much as technology swept away small workshops and expedited the establishment of large factories in the 19th century, advancements over the past few decades are changing the nature of work. The proliferation of connectivity and the fast, cheap exchange of large amounts of data and information are instrumental to this profound transformation.

Technology can cultivate greater inclusion by creating new ways of working, such as through digital labour platforms, and by mitigating obstacles to employment, such as long commutes. Beyond the world of work, technology can support educational attainment at all levels and enable faster, more effective retraining, thereby accelerating the adoption of innovations to boost productivity and grow businesses. All this can help lift more people out of poverty, narrow the gender gap, and increase the overall participation in the global labour force, nurturing a stronger and more sustainable economy for all of us.

The percentage of women who work via digital platforms

Source: McKinsey, RBC Wealth Management

Women, make up some 39% of the global labour force, according to McKinsey, and are perhaps the biggest beneficiaries of this opportunity. Already in five of the G20 countries, the percentage of women who work via digital platforms exceeds the global participation rate for women in the traditional economy: 58% in Italy, 53% in the UK, 51% in Canada, 48% in the U.S., and 41% in Germany. In addition to growing the labour force, the transformation of work processes and WFH in particular can also boost productivity by removing barriers to work, such as the miserable commutes endured by many workers.

When one hears the expression “gender gap” — the well-documented gender pay gap comes to mind. The UN estimates the global gender pay gap to be 23%, meaning that women on average earn 77% of what men earn for work of equal value. The reasons for this gap are many. In a December 2019 report, the World Economic Forum (WEF) pointed out that as many as 10% of girls aged 15–24 in the world are illiterate, largely, but not exclusively, in developing countries, which limits their opportunities. Moreover, women tend to be underrepresented in the sectors with the highest employment growth rate, including data and AI, engineering, and cloud computing.

Governments can do much to address these gaps. Liberating markets and ensuring there are no restrictive practices – e.g. forbidding women’s access to bank accounts, property ownership, or inheritance rights – are the most essential steps towards empowerment. Targeted policies such as basic social safety nets also help, but improved access to education, health care, and basic financial services are critical.

Technology can help provide education, as well as opportunities to upgrade skills and to re-skill. It can also deliver the financing that nurtures businesses. For instance, a digital wallet linked to a debit card can help small farmers or shop owners gain access to financial services, facilitating their ability to obtain better pricing from suppliers, greater savings, faster payments, credit, and government subsidies.

Finally, remote health care not only widens access to treatment but also gives working mothers flexibility. It may no longer be necessary to miss a day of work to go to a paediatrician’s office as virtual appointments can allow patients to see a doctor via online videoconferencing.

The global economy has untapped resources that could make decisive contributions as populations age and growth slows. Inclusion can draw in those segments of society that have been unable to fully participate in the labour force, with improving gender equality a key way to boost growth.

Progress remains slow and uneven across countries, but as policymakers and the corporate sector start to grasp that the persistent decline in the working-age population in most developed countries is a headwind to growth, they may be quick to embrace inclusion as a desirable and necessary strategy. We expect technology will be at the forefront of leading this charge.

This is a sponsored article from Royal Bank of Canada.

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