In a few days, leaders from all sectors will gather at Davos. In a world where politics is becoming more polarised, many are beginning to wonder about the limits of our systems, especially capitalism, and their ability to stand the test of time. Will capitalism stand the scrutiny of a generation of young people who have been impacted by a global recession, the narrowing of international migration opportunities and a future in which technology will make employment more precarious than ever?
Millennials are now becoming leaders across multiple facets of society—in business, government and non-profits. 50% of the world’s population is under the age of 27, with millennials expected to represent approximately 75% of the world’s workforce by 2025.
For that reason, we gathered millennials from nearly 20 countries in a series of roundtables to discuss the future of capitalism. In the report that followed, launched in partnership with the Coalition for Inclusive Capitalism, it was clear that there is a belief in capitalism as an overall construct but that the system must evolve.
The first generation of digital natives, millennials have a unique perspective that differs from previous generations of young people who want to see a better future. This generation, empowered by the Internet and a global perspective, believes that companies should be held to higher standards. In particular, millennials expect their values to be reflected as they engage with the economy- as consumers, employees and investors.
As consumers, millennials are focusing their spending power on brands that make a social impact. Three quarters of millennials believe it’s important that a company gives back to society instead of just making a profit. Over half will pay a premium for sustainable products and check packaging for sustainable labelling. And more than 90% would switch brands for one associated with a social purpose. It’s clear that brands need to do more than adopt corporate social responsibility– they need to make social purpose a core component of their value proposition.
As employees, millennials believe that the private sector in particular has a responsibility behave ethically. Contrary to popular beliefs about the gig economy, for most millennials, participating in precarious employment is not a choice but rather the result of a lack of opportunities. Only 16% of millennials see themselves with their current employers a decade from now. With many labour market challenges taking place, the traditional relationship between large corporations and long-term employees is becoming a relic of the past. Millennials expect companies to compensate for this increasing uncertainty in the workplace with pro-social behaviour.
And as investors, millennials are both sceptical of the financial sector and, as a result of precarious employment, unable to invest in their future. Traditional milestones, such as home buying, are out of reach for much of the millennial generation. A full 70% of millennials feel stressed about the prospect of planning for retirement and one in five young people are not saving at all. Additionally, millennials who are able to invest are looking at alternative models, eschewing financial advisors and actively seeking investments that provide a triple bottom line. Millennials are also problem solvers who actively look for alternative solutions to engage in capital markets. We’ve seen this with the growth in crowdfunding and Fintech platforms. Financial institutions must change their practices in order to benefit from the $30 billion wealth transfer that will take place from Baby Boomers to millennials in the coming years.
In spite of these challenges, millennials are optimistic about the potential for capitalism’s future, especially if it becomes more inclusive. Over 90% of millennials believe that businesses can move the dial on key issues. Even though millennials want to push capitalism forward, there is a strong belief in its power to make an impact.
Although meaningful changes need to be made in order to make capitalism sustainable in today’s world, most millennials would agree that inclusive capitalism holds the greatest potential for a prosperous 2017 and beyond.