Can tackling digital exclusion address social inequality?

By

Andy Baldwin

EY EMEIA Area Managing Partner

Interested in innovation, FinTech, inclusive growth and geopolitics. Regular contributor in print and broadcast media. Leading commentator on financial services in the Eurozone.

4 minute read 26 Apr 2018

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The digital revolution can be an opportunity to reduce social inequality, but only if organizations drive digital inclusion.

Today, around 50% of the world’s population are internet users, less than 30 years after the internet was first invented.

If you want to put that powerful statistic into context, bear in mind that 43% of the world’s population still did not have piped drinking water by 2010, according to the World Health Organization, even though water pipes have existed since Roman times. Meanwhile, despite electricity being discovered more than 250 years ago, the World Bank estimated that 15% of global inhabitants did not have access to it in 2014.

I make the point about context for two reasons. The first is to illustrate how quickly the digital revolution has advanced across a host of different cultures, industries and markets, disrupting lives, jobs and business models. Billions of people have acquired some level of digital skill in the past three decades, even if that level of skill is basic in many cases.

Billions of people have acquired some level of digital skill in the past three decades, even if that level of skill is basic in many cases.

The second, arguably more important, reason is to highlight that while one in two people are internet users, one in two are not. And, as is the case with drinking water and electricity, we cannot assume that they will somehow “catch up” with digitalization. In fact, as we make more advances in areas such as analytics, automation and artificial intelligence, it is possible that instead of catching up, they will only fall further behind.

Digital exclusion, rising inequality and the need for inclusive growth are big topics right now as governments, business leaders and individuals start turning their attention to bigger societal and business issues ahead of the World Economic Forum Annual Meeting, taking place in Davos, Switzerland this month. 

And, it’s clear that the potential for technology to make life much, much better for everyone who lives on this planet is vast. Yet there is also a very real risk that instead of being a force for social good, technology will become a force for social exclusion and exacerbate the pronounced inequalities that already exist today.

How will technology impact social inequality in societies?

We know that women are badly underrepresented in the influential and well-paid technology sector. In fact, our EY FinTech censuses sample reveals that 71% of technology employees in the UK are male, with that figure rising to 87% for Australia and 91% for France.

This has ominous implications for the future. We’ve already seen how voice recognition systems failed to understand women in the recent past. We’re likely to have more serious implications if we don’t ensure more women enter and rise up through the ranks in the industry. 

We’ve already seen how voice recognition systems failed to understand women in the recent past. We’re likely to have more serious implications if we don’t ensure more women enter and rise up through the ranks in the industry.

Automation, in particular, poses some major dilemmas in terms of how economies and societies function in future. The more startling predictions expect that as much as 47% of jobs may be automated away. What will happen to unskilled workers in manual or process-driven roles if their existing jobs are displaced by technology and they are not equipped with the skills and experiences that they need to succeed in the new economy? Potentially millions of people will be deprived of a means to earn a living, and the sense of purpose and social status that go alongside that. This is a huge problem and one that governments cannot be left to wrestle with on their own – they simply do not have the resources and funding to do. It is a problem that must be addressed by businesses, entrepreneurs and governments together.

The Fourth Industrial Revolution that we are going through now is far more transformational than anything we have gone through before.

I believe that we can learn from the mistakes that were made during the previous phase of automation that hit the extractive and volume manufacturing industries in the 1970s and 80s. That phase of automation was handled badly in a number of countries, especially those that had little workers’ protection. As people were displaced from their roles, many areas effectively ended up as ghost towns because we relied too heavily on the mobility of individuals, and their willingness to move for new jobs, to offset the fact that the core industries in the town now required fewer workers. The Fourth Industrial Revolution that we are going through now is far more transformational than anything we have gone through before.

It is shaking up just about every industry and sector you can think of. But displaced people won’t have the option of moving to find work because the work may not be there for them unless they have the skills to do it.

Is collaboration the new innovation?

It is clear that businesses, entrepreneurs and governments must collaborate to create opportunities for everyone, regardless of their age, gender or background, to thrive in the digital economy. That means liaising with schools and universities to produce school leavers and graduates who are equipped with sought-after skills, retraining people who are mid- career or long-term unemployed and using technology to support people to work later in life – something that will be key to prosperity in an aging society.

Addressing the challenge of digital inclusion will require huge commitment, so there is a great temptation to make this someone else’s problem. And, what will happen if we, as business leaders, refuse to take up the baton? For one, businesses will miss out on growth, because fewer people will have money to spend on goods and services. We can also expect higher taxes to cover a rising social security bill. There is also a very real risk of popular unrest, which could result in an anti-business political environment and even a breakdown in law and order. Elements of the former are already evident today.

Going back to the analogy I made at the start, between the adoption of digital technology and the spread of piped water and electricity, history makes it clear that equitable progress cannot be taken as a given. Even in the more developed markets, there are huge gulfs in the living standards between rich and poor today. So it is imperative that we are proactive about driving digital inclusion and building a society where everyone can benefit from the transformative power of technology. If we solve this, certainly we can expect to see more inclusive growth.

Learn more about EY at WEF 2018.

Summary

It is imperative that we are proactive about driving digital inclusion and building a society where everyone can benefit from the transformative power of technology.

About this article

By

Andy Baldwin

EY EMEIA Area Managing Partner

Interested in innovation, FinTech, inclusive growth and geopolitics. Regular contributor in print and broadcast media. Leading commentator on financial services in the Eurozone.