Their businesses may rely on it, and most support it, but one in two Australian chief executives surveyed by PwC reject the assertion that globalisation has helped reduce income inequality.
The findings come from PwC’s CEO survey, which polls 1379 CEOs globally about their thinking once a year. The Australian results, to be released on Thursday, show local bosses grappling with the impact of globalisation at a time of rising protectionist rhetoric from the United States and Europe.
On the question of whether globalisation had helped close the gap between rich and poor, 49 per cent choose the “not at all” option. Almost all CEOs agreed globalisation had, to at least some extent, fostered global connectivity. And a majority (57 per cent) agreed their global ambitions were becoming trickier to balance with rising protectionist trends.
By bringing jobs from first-world corporations to third-world nations, globalisation has lifted the incomes of millions of people. But PwC Asia practice leader Andrew Parker said he wasn’t surprised to see CEOs highly divided when it came to globalisation’s impact on inequality.
“While it’s very true that the opening up of trade and investment is responsible for lifting hundreds of millions of people out of poverty in emerging markets … the gap between rich and poor in those countries is pretty significant. In China, hundreds of millions of people are still living on one or two dollars a day,” he said.
Discussion in Western countries has recently focused on the impact of globalisation on Western workers. Mr Parker said in China and many other developing nations, the discussion has been happening for a long time.
“I think Australian CEOs are very aware of the issues and risks that this presents,” he said. “While they’re generally positive about the environment, they do have concerns about how governments and society more broadly will address the gap between rich and poor.”
“The data says that Australian CEOs are still positive on globalisation,” said PwC Australia CEO Luke Sayers, adding that the results were similar to those of other country cohorts in the survey.
“But they’re also very cognisant of the wealth divide, and how do they also drive inclusive growth. Each CEO and business is very much looking at that … how do you drive inclusive growth and make sure everyone benefits?”
Australia’s open economy is highly reliant on trade, making it particularly vulnerable to protectionism. In the United States, President Donald Trump has made higher tariffs a key part of his economic agenda, while in Europe, Britain’s coming departure from the EU and the strong support of nationalist presidential candidate Marine Le Pen have made many economists fearful of the possibility of global trade wars.
Despite the risks posted by rising protectionism, the 81 Australian CEOs surveyed – most of whom worked for listed companies and a clear majority (70 per cent) of whom had previously worked outside Australia – were unusually bullish by global standards, with 42 per cent saying they were “very confident” of seeing revenue growth in the next 12 months. This is above the global average of 38 per cent. A majority were planning both M&A activity and nearly one in two said they planned to increase their organisation’s headcount this year.
When it came to international outlook, for the first time since PwC began asking the question seven years ago, the United States and China were tied when CEOs were asked to nominate the top offshore market for growth. “There’s obviously some turbulence at the moment in China as it transitions from very high levels of growth to more sustainable levels,” Mr Sayers said. “There are also some organisations that haven’t been overly successful in China, which spreads wide and far with corporate Australia.”
A majority of Australian CEOs surveyed nominated one of the three Western markets of the United States, Britain or New Zealand as the country where they saw the most potential for oversees growth. Such markets have far lower GDP growth than many others in our region, but they are viewed as “safe”, Mr Parker said.