In all fairness

Danial Norjidi

The World Economic Forum (WEF) recently released a new report that outlines six paths consistent and fair economy recovery.

In a press statement, the WEF said that as the world recovers from the COVID-19 pandemic, the challenge now is to ensure a consistent and fair economic recovery. The WEF brought together experts to identify the most urgent economic and social challenges and explore a range of response options to build back on a much broader and more inclusive basis.

Titled ‘Building Back Broader: Policy Pathways for an Economic Transformation’, the report outlines six recommendation areas that focus on: a new approach to fiscal and monetary policy; shaping a new future of work, wages and job creation; developing, measuring and mainstreaming skills for the new economy; equity and social justice; new markets to drive long-term, inclusive and sustainable economic transformation; and confronting frontier risks.

Across these six areas, it emphasises avenues that will support the creation of more inclusive economic and social outcomes, offsetting the current dynamic of diverging, K-shaped recoveries. In addition, it presents “a set of cutting-edge pathways for reflection and action by public and private decision-makers for each”, while also considering “how economic emergency response mechanisms can be made more effective and tax systems fairer, while simultaneously proposing a set of targetted measures to increase opportunities and resilience for historically disadvantaged groups”.

For the first area on fiscal and monetary policy, the report proposes avenues for governments to support fairer economy-wide outcomes at the macro level through effective emergency measures, stimulus spending, an overhaul of tax systems and a new division of labour between fiscal and monetary measures.

“While emergency fiscal and monetary interventions in the early stages of the pandemic were considered timely and generous across advanced economies, policy makers are now challenged to rethink the overall system, including tax architectures, fiscal spending to increase equality of opportunity and ways to bridge financing gaps in low and middle-income countries. Economies should focus on investing in improving the capabilities of their people through education, physical and digital infrastructure and innovation.”

Secondly, regarding jobs and wages, the report sets out mechanisms for shaping fairer, more inclusive and more resilient labour markets by using opportunities to create high-quality jobs in new sectors and transforming jobs in traditional sectors. It also suggests pathways for improving wages through reskilling and upskilling, for upgrading labour standards and for rethinking social protection.

“The ‘double disruption’ of the COVID-19 pandemic and accelerated automation has destroyed jobs, deepened inequalities and ushered in the future of work, creating an urgent need to encourage the creation of quality jobs with decent wages and working conditions, especially for youth and other vulnerable groups,” it was shared.

The third area in the report, education and skills, discusses cutting-edge approaches for teaching and embedding the skills required in the new economy and for measuring firm-level and economy-wide progress in their acquisition. It also considers avenues for making skilling opportunities widely accessible in order to create better labour market outcomes for all.

“COVID-19 had a dramatic effect on education and skills systems, highlighting existing gaps in learning needs and presenting new opportunities to reassess priorities on this agenda. There is now an urgency to improve access to the skills to thrive in an increasingly digitised, inter-connected and automated world.”

Fourthly, on equity and social justice, the report explores targeyted interventions to create equality of opportunity for historically disadvantaged groups, and proposes avenues to shape a care economy that gives today’s unremunerated carers a choice over how to allocate their time, and identifies legal reforms, investment needs and channels through which business commitments can contribute to closing opportunity gaps.

According to the statement, “The authors call on businesses and governments to view the post-pandemic recovery through equity and social justice lenses and to leverage the unprecedented opportunity to build new equitable systems that honour the dignity and equality of every human being.

“Reforms will need to include legislating to outlaw all forms of discrimination, for businesses to advocate for positive societal reform and for all decision makers to prioritise the interests of marginalised groups.”

Fifthly, regarding new markets, the report “explores the levers at our disposal to set a new direction for growth by encouraging the creation and expansion of new sectors”. To this end, it considers a combination of patient investment in mission-driven research as well as avenues for scaling new products, fostering demand and rethinking intellectual property (IP) regimes.

It also calls for a new appreciation of true value creation over current accounting value.

“To create a new ‘green and equitable’ economy, governments will need to play a driving role in orienting markets towards a deep transformation,” explained the statement. “The goal is for industries to develop and mainstream a new set of products, services and business models that provide solutions to the problems that societies face today.

“To this end, public and private-sector actors must deliver new partnership models with a focus on shared intellectual property rights, a rebalancing of risks and rewards and a priority towards sustainability and societal benefit.”

For the sixth and final area of frontier risks, the report considers risk pathologies behind poor risk responses and offers pathways towards greater resilience for businesses, governments and societies.

“Recognising that attention and resources are focussed on managing COVID-19 and recovery efforts, this piece spotlights risks that may not be on immediate radars but could be the source of the next global crisis,” it was shared. “Frontier risks require a more agile and systematic approach to risk management, and the chapter considers how risk identification, communication, organisation and regulation can be improved to this end.”

This sixth area is further elaborated in the statement, which said, “As new technologies bring new opportunities, they also create new risks with unknown likelihood and impact, so-called frontier risks. Beyond exploring pathways to better preparedness, it is also important to consider why decision-makers so often fail to prepare for these risks. Societies will need to achieve greater resilience in particular with a view to new risks associated with space exploration, geo-engineering, social networks and AI and genetic enhancement.”

The report highlights that progress across these six areas holds the potential for achieving greater resilience and realising gains in economic prosperity that are more evenly distributed.

“Importantly, the areas are closely interrelated and success in one of the six areas is dependent on and will indeed amplify success in others. For example, the creation of new markets will bring greater inclusion and shared prosperity only if all workers can acquire the right skills to take up newly created jobs, regardless of their background. It should be noted, however, that the pathways proposed are often context-specific and will need to be adapted depending on government capacity or the overall institutional environment.”

The policy brief draws upon the insights of pre-eminent thought leaders in six Global Future Councils affiliated with the Centre for the New Economy and Society, which engaged in dialogues on the six topics between October 2020 and May 2021.

“The work of the centre will continue to create insights, action frameworks and leadership alliances that convert emerging ideas into action to build prosperous, inclusive, resilient and equitable economies,” the report added.