COVID-19 could shift our economic focus from growth to distribution

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Business is helping reshape how we live, work, consume, and connect in ways that could outlast the current crisis.

Just over a year ago, I wrote a column for strategy+business that explored the idea that economies might break out of growth-dependent frameworks. I put the onus on businesses, especially those in mature economies that were already in a slowdown before the novel coronavirus hit, to find viable alternatives. Now, facing a pandemic-induced recession, we must confront — sooner than many of us were prepared to — the possibility of a post-growth economy.

Reinforcing my call for businesses to lead us into a new paradigm is the fact that, according to recent research, people in many countries believe their employers are better prepared than governments to navigate the uncharted territory we are in today. With the COVID-19 outbreak unfolding rapidly, companies have quickly implemented policies around flextime, travel, and health, and have improvised operations to support local communities. In other words, as economic growth stalls, we are beginning to see business forge a new social contract with society based on principles of sharing and distribution. And I think this new model could outlast the crisis. Here’s why.

New worker protections are addressing inequality. COVID-19 has made it almost impossible to ignore the long-standing crisis of inequality in our society. The pandemic is exposing a divide in the workforce, for instance: Well-compensated, knowledge economy workers with employer-sponsored healthcare plans have, for the most part, transitioned to working remotely (with notable exceptions, such as doctors and nurses), while those in low-paying jobs that can’t be done remotely are, generally, facing risks such as income loss or elevated exposure to the virus.

As economic growth stalls, we are beginning to see business forge a new social contract with society based on principles of sharing and distribution.

Many regard technology as a driver of this divide. Some reports suggest that although automation is creating new opportunities for well-educated professionals, it’s automating away low-skill work in productive industries and pushing many people into sectors such as retail and home-health services, where pay and benefits are scarce.

Leading tech companies are sending out a powerful signal at this time by being among the first to address this gap. As the coronavirus crisis unfolds, many tech companies have announced full-time pay for hourly wage workers, such as security, food service, and cleaning staff, who are facing reduced hours. New protections are also coming to the gig economy through funds that various businesses are establishing to compensate sick and quarantined workers.

Other businesses are also stepping up in ways that could set a precedent. For example, in the U.S., where mental health services often comes with high out-of-pocket costs, Starbucks is offering healthcare benefits to workers struggling with anxiety, stress, and illness through a catastrophe pay program and free counseling sessions. The need for worker protections like these is not going to fade away anytime soon. The International Labour Organization is expecting worldwide job losses along the lines of 25 million as a result of COVID-19.

Coronavirus is localizing business operations. The coronavirus is spreading globally, but the effects are playing out locally as restaurants, museums, theaters, stores, gyms, churches, and other gathering places close. As a result, many businesses are doing what they can to prevent their home cities from becoming ghost towns. Italian fashion and luxury brands, for example, are funding hospitals and community organizations in Milan, the capital of the Lombardy region that has been severely hit by the coronavirus. Salesforce is giving financial aid to help small businesses around its headquarters in San Francisco. And leading banks in Canada, Australia, and the U.K. have announced mortgage relief for homeowners facing hardship.

As global companies pivot supply chains that have been disrupted by COVID-19, they will likely look for solutions close to their headquarters that meet their own business needs but also help shore up local economies. Policy could help push in this direction, too. The United States-Mexico-Canada Agreement, for instance, sets a high bar for regional production and wages to support the growth of good jobs. Another factor in localizing: Technology is shortening supply chains. For example, the coronavirus is fast-tracking 3D printing as companies test it to supply hospital ventilators in large numbers. A shift to large-scale 3D printing has potential to replace imports with locally printed goods (pdf). 

Will this focus on local economies also lead to cleaner and greener business operations? That’s an intriguing thought. The cleaner air over China and Italy during coronavirus shutdowns is causing some to ask if this crisis will show us a way to live with a smaller environmental footprint. It just might.   

Open collaboration and open sourcing are getting a boost. Localization is a not a retreat from global citizenship. If anything, the coronavirus is a reminder that we are all connected and in this together. The China-based Jack Ma Foundation and Alibaba Foundation have started sending test kits and masks to countries that are now racing to flatten the curve. The Bill & Melinda Gates Foundation is allocating US$20 million to strengthen coronavirus surveillance and treatment in South Asia and Africa, which are behind the global curve for infections.

Businesses, too, have quickly transitioned to sharing knowledge and resources. Publications are removing paywalls to make coronavirus information widely accessible, video conferencing services have become discounted or free, and massive open online courses, or MOOCs, are turning into a template for education. Could these actions by companies point to new ways of working together in which solving common problems takes precedence over short-term growth objectives? It’s too soon to say, but with large companies showing the way, there’s reason to think so. Open source platforms from companies such as Pfizer, for accelerating the development of antiviral therapies, Alibaba, for data sharing, and HP, for 3D-printing medical gear, are a few examples.

The coronavirus crisis has the potential to show how sharing data can work for the benefit of citizens. Telemedicine, for example, is valuable not only for being able to treat patients, but also because the data it generates can show patterns, such as the trajectory of the pandemic. It’s just as important, however, to address privacy and cybersecurity concerns with transparency so people feel it’s safe to “opt in” to sharing their information.

Prepare for reconstruction. The world is racing to contain COVID-19 and its economic fallout at the same time. Typical policy tools such as cutting taxes and easing borrowing rates will simply not get businesses to resume operations, employees to return to work, or consumers to shop. That’s why drastically different measures, costing trillions of dollars, are rolling out. Their goal is not to stimulate growth at any cost, but to meet a broader range of objectives such as improving public health, worker protections, and local resilience.

Fortunately, some companies and policymakers, already attuned to the limits of growth, have been proposing and testing alternative approaches. They are suddenly in a stronger position to influence policy and shape the new contract that’s forming between society and business.

Deepali Srivastava

Deepali Srivastava is senior director of content strategy at Global Gateway Advisors. Her articles on socioeconomic and environmental issues have appeared in Forbes Asia, MSNBC.com, and warscapes.com.

 
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