Action needed to tackle 'cultural schisms', World Economic Forum says
Urgent action is needed to tackle global risks such as social polarisation, which helped drive events like Brexit and Donald Trump's presidential victory last year, the World Economic Forum (WEF) said.
The organisation's annual Global Risks Report identified social polarisation, alongside intensifying environmental dangers and economic inequality, among the top trends expected to shape world developments over the next decade.
The report said: "The highest-profile signs of disruption may have come in Western countries - with the United Kingdom's vote to leave the European Union and President-elect Donald Trump's victory in the US presidential election - but across the globe there is evidence of a growing backlash against elements of the domestic and international status quo."
WEF said leaders must "face up" to the importance of identity and community, explaining that rapid changes of attitudes in areas like gender, sexual orientation, international cooperation and multiculturalism "have led many voters - particularly the older and less-educated ones - to feel left behind in their own countries".
"The resulting cultural schisms are testing social and political cohesion and may amplify many other risks if not resolved," the report added.
It pointed in particular to "electoral surprises" of 2016 and the rise of "once-fringe parties" promoting national sovereignty and traditional values across Europe, as concrete examples of increasing polarisation.
The warning comes nearly a week ahead of WEF's annual meeting in Davos, Switzerland, where global leaders will gather to discuss some of the topics outlined in the report.
In order to tackle the risks at hand, WEF stressed "new economic systems" and policies are "urgently needed to address the sources of popular disenchantment".
While anti-establishment politics tend to blame globalisation for hurting domestic job prospects, a greater challenge will be managing technological changes, which have historically created new jobs and destroyed others and "catalysed" fringe voting.
Skill-based technological changes and global communications have increased job competition and helped increase chief executive pay, while middle-class incomes have grown at a "comparatively slower pace", particularly since the financial crisis.
WEF said discontent could be addressed in part by introducing policies which see more people benefit from skill-based technological changes, as well as local level governance that can "empower" individuals without sacrificing the benefits of globalisation.
"More fundamental reforms to market capitalism may be needed to tackle, in particular, an apparent lack of solidarity between those at the top of national income and wealth distributions and those further down", the report added.