The social contract in the 21st century: Outcomes so far for workers, consumers, and savers in advanced economies

This report examines the evolving social contract and its impact on workers, consumers, and savers in advanced economies.

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The research method involved an in-depth analysis of economic outcomes for individuals in 22 advanced economies, considering factors such as employment rates, wage growth, cost of living, and savings rates. The study also examined institutional changes and their impact on the social contract.

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The McKinsey Global Institute report “The social contract in the 21st century” analyzes how economic outcomes and relationships between individuals and institutions have changed for workers, consumers, and savers in advanced economies. The study covers 22 countries in Asia, Europe, and North America, representing 57 percent of global GDP. It finds that despite record employment levels, work polarization and income stagnation are widespread. The cost of discretionary goods and services has decreased, but essential items like housing, healthcare, and education have become more expensive, consuming a larger portion of incomes. Public pensions are being scaled back, and many individuals are not saving enough for retirement.

The report suggests that the social contract—the implicit agreements governing exchanges between individuals and institutions—has evolved, with individuals assuming greater responsibility for their economic outcomes. This shift has led to uncertainty, pessimism, and a loss of trust in institutions for many. The report calls for action from policymakers, business leaders, and individuals to sustain economic gains and address challenges to improve outcomes and increase broad prosperity in the coming decades.

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Categories: 2020 publication year | 2040 time horizon | 2040s time horizon | Asia geographic scope | English publication language | Europe geographic scope | North America geographic scope | advanced economies | consumers | discretionary goods | economic outcomes | essential services | global geographic scope | income stagnation | individual-institution relationships | policy recommendations | public pensions | saving | social contract | social contract evolution | work | work polarization