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How is the Fourth Industrial Revolution changing our economy?

The Fourth Industrial Revolution (4IR) upends current economic frameworks. Who makes money – and how – has changed. Demographics have changed.
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Even the skills that brought our society to where we are today have changed. Leaders must account for these transformations or risk leaving behind their companies, their customers and their constituents.

The top three economic frameworks in most urgent need of a 4IR overhaul include income generation, labour force participation and gross domestic product (GDP) measures. Let’s unpack these concepts one at a time and redefine what they mean as we advance bravely into the Fourth Industrial Revolution.

Making money in a world of increased automation

The global middle class will play an influential role in how we make money in the future. Today, more than 50% of the world’s 7.7 billion people live in middle-class households.

Wealth divisions and rates of middle-class growth differ from region to region. More advanced economies such as Europe and Japan see their middle-class markets growing by 0.5% each year. Rising economies, namely China and India, are expanding their middle classes at 6% each year. Perhaps most striking, however, will be the maturity of Asia’s middle class, which will soon constitute 88% of the world’s entire middle class.

The implications of these changes mark an inflection point in world history: no longer do the poor make up the majority of the world population. That title now belongs to the middle class – who also provide the majority of demand in the global economy.

Despite the anticipated disruption and uncertainty of workers of nearly all skill levels, one thing remains clear: Workers are increasingly turning to alternative work arrangements like side hustles, freelancing, independent contracting and gigging.

In monetary terms, the size of the world’s gig economy exceeds $200 billion in gross volume, an amount that’s expected to more than double to approximately $455 billion by 2023.

The majority (more than 75%) of those currently generating income through alternative work arrangements do so by choice. For 86% of females in the gig economy, freelancing provides more than an opportunity to make a living – it’s an opportunity to receive equal pay.

Only 41% of female freelancers believe traditional work arrangements would offer them pay equity. This finding presents massive potential as the average gender pay gap is 16% at the global level; closing it and moving towards gender parity could unlock $12 trillion from the world’s economy.

What’s fuelling the global gig economy?

A host of factors contribute to the rise of the gig economy, including increased globalization, advancements in technology and static educational and institutional inertia that can’t keep pace with changing workforce demands.

It’s not only the alternative workforce that is impacted by these factors. Workers in every industry – women and men – will experience the transformation brought about by the 4IR, if they haven’t already.

Approximately 50% of companies worldwide predict that automation will trim their current full-time workforce by 2022. And, by that same year, researchers expect at least 54% of employees will need re-skilling and upskilling to complete their jobs.

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