Just as we appear to be moving out of the worst ever post-war economic recession, out comes a report reminding us that the recession is likely to remain a reality for a huge swathe of the European Union’s (EU) population.
The independent think tank Rand Corporation has just published Europe’s Societal Changes: An analysis of global societal trends to 2030 and their impact on the EU. The report is close to my heart as I was one of the named experts the researchers consulted. I fear too the researchers’ conclusion that “inequality will be the single most prominent societal challenge for the EU in the coming decades”. We should in business all care about this because not only is it against the very purposes of the EU itself, but growing inequality will also lead to greater societal instability.
The re-emergence of what Disraeli called “two nations” will increasingly isolate those with affluence from the rest of the population. The rich will retreat behind private compounds, as in the third world, and an increasing number of people in society will feel alienated from it. Democracy will become unsustainable and enterprises will be caught in the midst of the implosion.
Companies simply have no option but to get increasingly political and go back to nineteenth century style paternalism. The era of the free-enterprise “greed is good” approach is now entirely over and the priority must be to prevent the proliferation of poverty. Governments around the world are failing to tackle poverty and few people now have faith in left wing politics, religious institutions or the voluntary sector to prevent their slide into penury.
Deprivation is not just affecting those who have failed to gain qualifications or missed opportunities in the pre-2007 scramble for personal gain. Throughout the EU, property prices remain far too high and credit card debt is mounting. This affects even those with middle incomes. There will, therefore, come a point when personal debt will not be sustainable and the outfall from this will not only hit demand once more, but finally lead to a huge social schism that will bring all of Karl Marx’s dire warnings back into reality.
So what can HR professionals do? The most important action will be to stop the widening income gulf and offer staff ways that can help them rid themselves of credit card debt. In many EU countries there are tax-free incentives for employees to save and payroll saving should always be encouraged. Large companies could also use their financial “clout” to negotiate deals with financial institutions in order to help employees with mortgage bills.
And last — but not least — companies should act directly to tackle extreme poverty in the countries where they operate. This could be done in a number of ways, but at its simplest they could fund homeless shelters and offer scholarships to deprived children, so that at least a favoured few of the next generation of family members can escape the poverty trap.