Post-COVID lives & livelihoods: Food for thought for decision makers everywhere
The COVID-19 pandemic leaves governments across the world with limited resources and tough decisions on strategizing the revival of their respective economies. In line with the principles of Triage in medical treatments, Prof Nandu Nandkishore, Indian School of Business, offers an actionable framework to enable governments to set their priorities right.
It’s early June 2020, and I write this reflection paper in the middle of the COVID-19 crisis. Societies everywhere are struggling with infection rates and fatalities. Searching for a vaccine, a cure. And trying to curtail the infection with lockdowns. These include restrictions on domestic and international travel. Even as worldwide cases of COVID-19 have crossed 7 million this week from 1 million a few months ago, economies across the globe including India, Mexico, US, Russia, South Africa and Brazil have decided to move towards unlocking their economies. On the other hand, countries like New Zealand and Tanzania have shown how effective leadership can help tide over the pandemic, even though the situation from country to country isn’t strictly comparable.
Nevertheless, the impact of lockdowns on these economies will be huge, and we will only be able to get some sense of the extent of the devastation in the coming months. The lockdowns have directly hit livelihoods of daily wage earners everywhere, including even the US, as record unemployment numbers show. The latter affects several of the largest urban employers: like for example the travel industry, which reportedly employs 30 million people globally or SMEs; which do not have the cash positions to survive a few months of zero business.
The choice for many policy makers is one between lives (often older people who are more at risk) versus protecting livelihoods (for younger, poorer people, often daily wage workers). Given that this crisis is likely to be long drawn out, with several complete or limited lockdowns until a vaccine is found, this dilemma gets compounded.
What we need, going forward is true global leadership in the next phase.
A few facts need to be kept in mind
1. This Covid crisis will pass. Eventually. Modern medicine and determined efforts by Governments and societies will see to this. Or we will adapt to it as a species. One bright spot has been the willingness of countries to help each other. Witness the open export of drugs like hydroxychloroquine and paracetamol out of India, or PPE out of China. We should encourage this trend and free up export of PPE and masks from anywhere instead of hoarding them like toilet paper. We all have to jointly eradicate this virus, otherwise it will keep coming back.
2. On the flip side, we already see that nature is not wasting this crisis… the air is cleaner, so are the waters, and people learn to do with less consumption… all promising good things for the ecosystem if these behaviours can be sustained. But on the economic side as well, let’s not waste this crisis; and instead use it to reshape our economies, going forward, by following inclusive global policies rather than short term oriented ‘beggar thy neighbour’ policies.There will be a strong temptation to move supply chains local, and this will be driven by business as well as Governments. While doing so, and it is good to have local back-up suppliers, I do hope we do not cast economics away and undo the gains we have made in the last few decades.
3. The last few decades have witnessed the most incredible economic growth the world has every seen. Billions have been lifted out of poverty. Human development indices have improved and we have started to understand the need to work together to preserve the fragile ecosystem. It would be short-sighted to throw these gains away as countries scramble to lock their borders down.
4. This infection, like the ecological crises earlier, serves to underline that humanity, indeed all life of this planet is interconnected in a delicate balance. What affects one part of this ecosystem affects us all. We are one. We prosper together or we destroy the whole. Post-COVID, this understanding will hopefully prevail and help boost new alliances between nations.
5. What will remain is the economic shock of economies which have shut down. Jobs lost. A significant number of businesses, which cannot survive the cash crunch driven by a few months of zero revenues. This does not spare large corporations. Witness the strain in the airline and travel industry, one of the world’s largest urban employers. But it impacts SMEs and the unorganised sector even more.
6. At the same time, there are sectoral winners and losers, because this crisis has accelerated the shift to a digital economy. We will possibly never entirely go back to the way things were. Remote working, video conferencing and virtual platforms for collaboration are here to stay.
Just as doctors and public health experts are resorting to principles of Triage in medical treatments, there is a need to focus our governmental support that has been announced across countries, to sectors where it can benefit society more. This paper is an attempt to suggest some principles, keeping in mind the facts above.
A few basic principles to help with this decision:
1. The first priority to support should be to those sectors that are essential hygiene sectors, without which society would not function. This includes food supply (agriculture, food manufacturers, supply chains), basic utilities such as electricity and water and basic services such as healthcare and policing.
2. Then prioritise support to sectors that maximise societal wealth creation (SMEs with employment creation, self employed service industries, supply of basic needs, followed by the travel sector, which is a large employer).
3. At the same time, we should fund the education sector to help retrain people who have lost jobs due to this crisis, to fit into the new economy. This should be a priority to support, rather than only give people unemployment benefits in the shape of a universal basic income (beyond a safety net of basic needs), opportune as it may sound politically.
As the saying goes, let’s teach people how to fish instead of only giving them fish. Let’s reward people who are willing to re-learn and work, instead of demotivating them by rewarding unemployed who do not choose to make the effort.
4. Only after these sectors are supported should we look to supporting other enterprises. In this approach, bank bailouts to mismanaged banks, or propping up currencies or real estate bubbles or over-leveraged companies would come last. We would also not support companies, where weak management has allowed the company to slip into irrelevance.
5. Before supporting any sector to return to robust economic health, we should ask if the effect of the crisis is a short-term one due to the lockdowns (in which case we should support it) or more a fundamental shift in the way we work (witness the shift to online conferencing and online education). We cannot stop such a tectonic shift with sectoral support, this would be moneys wasted. Jobs lost to this underlying paradigm shift must not be protected.
This includes not supporting jobs in declining sectors simply because of political expediency.
How would we know what these sectors are? Again a few steps to help governments understand:
1. Start a public debate on this topic. There will be a diversity of views and this is good, because nobody has a monopoly on the truth. And local insights often trump global views.
2. In each society/region/country/economic bloc, set up a panel of academics, industry leaders, economists and sectoral experts to help guide decisions regarding this economic recovery plan. Keeping the above principles in mind.
3. Political leadership should be guided by these inputs, but of course would have to show leadership in making tough choices, even if they were to disagree with the panel inputs.
As we move forward, this is a unique opportunity for countries and societies to shape the future of our global interconnected world. We cannot leave any society behind. This simply does not work. The need of the hour is stewardship and governance.
Are we ready?
Nandu Nandkishore, Professor, Indian School of Business, has almost 40 years with commercial organizations including 26 years with Nestlé and leading businesses all over the world as a CEO. Nurturing innovation as an Intrapreneur as well as a Venture Capitalist, he has helped people and businesses grow and realise their potential.
A noted keynote speaker, and an author of several articles in HBR, he is now a Professor at the Indian School of Business. His client list as a consultant includes Essilor, The Coca-Cola Company, JW Marriot, Banco Commercial Romania, Standard Chartered Bank, and several other global companies. He continue to mentor startups like Livinguard AG, Vyn, the Mom’s Co Ltd, Global Gene Corp Ltd, MPharma and others. All views are the personal opinion of the writer and do not represent any official point of view