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A New Birth for Social Democracy

ISTANBUL – Nowadays, with the global economy undergoing fundamental transformation, workers worldwide are coming under significant pressure. Particularly in developed economies, social policies must adjust to provide the support that lower-income groups need, while encouraging growth and advancing wellbeing.

The pressure has been unrelenting and inescapable. In the United States, real (inflation-adjusted) compensation for men with only a high school diploma fell by 21% from 1979 to 2013. In much of Europe, which provides stronger wage protection, unemployment has soared, especially since the euro crisis began in 2008. Germany and some Northern European countries remain an exception, although the German labor market contains a large low-wage, mini-jobs segment.

Driving these trends is the changing nature of work. For starters, services have been gaining ground worldwide, especially in developed economies. From 1970 to 2012, the GDP share of services in the OECD countries increased from 53% to 71%.

New technology and “intelligent” machines are not only displacing many types of workers in both the manufacturing and services sectors; they are also facilitating the rise of new business models, in which individuals perform (mostly low-paid service) jobs within loose networks, instead of as dedicated employees of structured organizations.