Perhaps. The main determinant of the outlook for workers is domestic investment---in capital, education, infrastructure, and technology
The most prosperous group of workers in the world---the skilled workers of the industrial countries---now earn on average some 60 times more than the poorest group---the farmers of Sub-Saharan Africa. Can the 21st century usher in an era of converging incomes? The stakes are high. There is the potential for great advances on all fronts: robust job creation, rising productivity, and improvements in job quality. But there is also the risk that progress will leave some out, from unemployed workers in the industrial countries to much of the population in Sub-Saharan Africa, and will fail to reduce severe inequalities in Latin America and elsewhere.*
Conditions both in individual domestic economies and in the international economic environment matter to the outcome. Probably of greatest importance are the conditions prevailing in developing and transition economies:
Two global scenarios illustrate the extent of what is possible and the magnitude of the dangers ahead for workers in each of the world's principal regions (figure 1). The first scenario is one of muddling through and is largely based on persistence of past trends. Because there is the distinct possibility that this path would lead to widening differences between some regions and widening inequality in labor income in some countries, this is called a scenario of slow growth and divergence---the "divergent" scenario. The second scenario explores the potential implications of strong policy action at the domestic level in all parts of the world, combined with deeper international integration. This is termed a scenario of inclusion and convergence---the "convergent" scenario.
Both scenarios are only illustrative---the numbers are projections based on many assumptions, and certainly not a forecast. But they are a plausible guide to the consequences of success and failure and take into account likely future trends in both economywide effects and international integration.
The divergent scenario assumes that recent trends in investments continue or deteriorate, that a sizable share of those already enrolled in schools drop out prematurely, and that the overall productivity of labor does not rise rapidly. The convergent scenario assumes that investment rates pick up, that enrollment rates stabilize at current levels and dropout rates decline, and that investments in infrastructure, technological transfers, and improvements in the quality of governance contribute to rising labor productivity. The convergent scenario must be supported by at least slight rises in savings rates, lower fiscal deficits in the rich countries, and reasonable amounts of international capital flows, including development assistance. The effort in Sub-Saharan Africa must be especially strong.
The international scene also matters greatly. In the divergent scenario protectionism does not go away, and countries either drag their feet in implementing the Uruguay Round agreement or offset gains in one area with protectionism of another sort. In the convergent scenario the Uruguay Round is fully implemented and there is further progress in trade liberalization---including in agricultureŅat both the regional and the multilateral levels.
How does labor fare? In both scenarios the technological bias favoring skilled workers that characterized the past two decades continues. Under the divergent scenario this bias interacts with slow capital accumulation and stagnating world trade. The result is slow GDP growth in most regions and rising inequality among and within regions. In contrast, the convergent scenario finds incomes rising and inequality falling across most countries and in most regions. In poorer developing countries the rise of globalization helps by increasing the demand for low-skilled workers. In the middle-income and wealthier countries the negative effects of globalization are swamped by the effects of skill improvement, which reduces the pool of unskilled workers and so increases the relative demand for their services.
International inequality will change only slowly under any realistic scenario. But the scenario of convergence and inclusion could start to reduce the immense differences that now exist. The ratio between the wages of the richest and the poorest groups in the international wage hierarchy---skilled industrial country workers and African farmers---could fall from an estimated 60 to 1 in 1992 to 50 to 1 by 2010. This would begin to reverse the large gap that has emerged over the past century, as workers in industrial countries reaped the benefits of economic takeoff, but those in Sub-Saharan Africa did not. Under the divergent scenario things could actually get worse---the ratio of labor incomes between these two groups could rise to about 70 to 1.
Governments have to work with the legacies of past policies and development structures. Workers have to live with the opportunities at hand. These are molded by the structure of the economies and societies in which they live and by the capabilities formed by their personal histories---what they have received from their parents and from their schooling. But for both governments and workers, that is just the starting point. Both are agents of change.
Good choices by governments, in the domestic and the international realms, can lead to advances in the living standards of all groups of workers in the world and help bring back into the fold those who are unable to keep up or adjust on their own. If international conditions are favorable and governments do their part to create the right environment, workers will be able to make the job choices, negotiate the conditions of work, and make the schooling decisions for their children that will improve the welfare of all groups of workers.
That could begin to reverse the long-run trend of widening international inequality between workers that has been so marked a feature of the past century, and bring new hope and opportunities to millions currently trapped in poverty. And that would set the stage for a truly global golden age in the 21st century.
* For more details, see World Bank, World Development Report: Workers in an Integrating World, New York: Oxford University Press, 1995.
