Inequality Is Rising. What Start-ups Can Do?
Inequality is bad, whether economic or social. Both feed to one another. Eventually, historically, it has led to wars or revolutions. But, is it just the domain of state's policy making or is there a role start-ups can play?
Borrowing from Branko Milanovic's Global Inequality - A New Approach for the age of Globalization, to get a good job one needs to go to premier institutes, for which one needs to go to good schools, for which one needs to have parents who can afford all this. Premier institutes' entrance examinations are ultra competitive and many aspirants compliment their preparations by attending coaching centers. This needs money too. Increasingly, much of the success depends on the parents you are born to.
But, though things are getting bad, we can make things better. Start-ups are better placed to act, as by genesis, they challenge the traditional or status-quo. Following are few things we can do to improve the situations:
Focus on pro-poor innovations
Innovations that are focused on people with limited economic means can make large impact. Health, education remains their primary challenges. Economically empowering the marginalized section of our population, bringing them into mainstream of market can yield substantial societal benefit. But, a word of caution that effective implementation would require empathy and willingness to understand the challenges or poor.
More parity in salary
There is an ever increasing chasm between salary of top executives and average workers. This problem is also increasing because now the top executives not only earn high salaries, they also get income from capital like returns from stocks, real estate investment, rent income, etc. Start-ups founders start a company with a vision to bring change and high pay is never a priority. Let's pay more to everyone and reduce the difference between highest and lowest salary. There is substantial academic evidence that companies with equitable pay structure perform better, so there is a business case as well.
Don't follow traditional hiring models
What's the No. 1 university of Japan or South Korea? Both are developed economies, leaders in technology, manufacturing, and other sectors. Why don't we hear about their universities? Because, most of the universities in these countries are comparable in providing high quality education, hence there is minimal wage disparity amongst students who pass out from these colleges. Let's be more open in our hiring process. We can be more open to give chance to people who don't have impressive resumes. We can be more focused on internal training and mentoring systems and this pays rich dividends in future.
To understand the gravity of situation let's start with a simple exercise. Next time you walk out of your office gate, pause for few minutes and interact with the security guard. Discuss about his/her kids' education and health.
This list is not exhaustive by any means. I am keen to hear and learn from your thoughts.