This article was originally published in Caixin
In the face of the continuing COVID-19 public health crisis and the lasting impact of the pandemic on the global economy, policy makers around the world must seize this opportunity not only to think about how to achieve rapid recovery, but also to think about how to use this opportunity to transform the economic system.
If inequality and environmental problems are not addressed, economic growth and productivity improvement alone will not be enough. There is an urgent need for countries to change their policies to make economic sustainability and social inclusion an endogenous factor in the way they operate. This requires not only policies to manage environmental externalities or the establishment of safety nets for people, but also new policies and investment programmes to embed green, fair and people-centred markets. In other words, a country's economic competitiveness must include its ability to support and protect mankind and the planet.
1. Establish an enabling environment based on a long-term vision
The pandemic highlights the importance of providing public services. To serve citizens, public institutions must have strong governance principles and transparency to win the trust of the public. According to the report, the countries most prepared in this regard are Denmark, Finland, New Zealand and Switzerland.
In the case of Denmark, Estonia, Finland and the Netherlands, countries must also achieve energy transformation by upgrading their infrastructure. In the Netherlands, the share of renewable energy doubled between 2008 and 2019, while Denmark is expected to increase renewable energy consumption to more than half of total energy consumption by 2030.
No transformation can be achieved without an analysis of the way companies, wealth and labour are taxed domestically and internationally. Countries must move towards a more balanced and gradual tax structure, such as South Korea, Japan, Australia and South Africa.
2. Support people through education, skills and care
COVID-19 has led to a surge in global unemployment and accelerated the transformation of labor automation, and 85 million jobs in large and medium-sized enterprises are likely to flow to 15 industries and 26 countries by 2025, according to the Forum's Future Employment report 2020. In order to respond to these changes and meet the needs of the labour force, governments must reflect on labour laws and social security policies. Germany, Denmark, Switzerland and the UK have taken steps to combine adequate labour protection with the new safety net model.
At the same time, by 2025, more than 97 million new jobs will emerge in the "future market", which will adapt to the new division of labor between man and machine. This requires the government to update the teaching settings. The Netherlands, Denmark, Switzerland and Finland are working to maintain school curricula related to changes in the job market.
By 2025, more than 50% of employees will need to reshape their skills, and countries must also expand investment in the skills they need, such as data analysis, artificial intelligence and machine learning, and focus their skills reshaping and skills upgrading efforts on those who are currently unemployed or at greatest risk of unemployment. Countries are trying to provide support by funding individual skills, such as Singapore and France. In France, the government provides training funds of up to 800 euros a year for all workers for training programmes in various disciplines.
The COVID-19 epidemic also exposed the shortcomings of the health care system. The system has been slowly adjusted to adapt to the growing population in developing countries and the ageing of populations in developed countries. The key to economic transformation is to increase the pension, childcare and medical infrastructure to support current and future health needs. Sweden, Finland and Canada allocate a large amount of public resources to this area.
3. Build a more flexible and future-oriented market
Although the market stability has improved from the financial crisis of 2008-2009 to before the pandemic, the financial system still shows some fragility, and the problems of high risk of corporate debt and unequal financing channels always exist.
The pandemic and its economic impact have also increased market concentration in all industries. Countries should rethink the framework of competition and antitrust in order to lower barriers to entry, enhance competitiveness and form a dynamic business model. Canada, Finland, China and the United States are currently doing relatively well in these areas, but all countries must improve this regulatory area to prepare for the new economy.
Countries must also focus on financial stability while introducing incentives to encourage companies to engage in long-term, sustainable and inclusive investments, focusing on the new threshold of the ESG standard. In this regard Finland Sweden New Zealand and Austria are better prepared than other developed economies. According to the assessment of the report, the United States is the least prepared country and does not take the lead in this regard.
4. Investment innovation
The technology of the fourth Industrial Revolution is essential to support post-epidemic recovery programmes. However, progress in the application of technologies to emission control and the provision of inclusive social services has lagged behind. In the United States, Sweden and Japan, for example, more needs to be done to support public-private partnerships to promote these technologies.
Governments can also support new investment and job creation in "future markets" by establishing a network of public institutions that promote the science, technology and innovation agenda, such as Finland, Japan, the United States, South Korea and Sweden. In the United States, for example, the National Institutes of Health (NIH) has long created new markets in the areas of antibiotic drug discovery, rare diseases, and the recently developed mRNA vaccine for COVID-19. This is achieved through funding and other financing programs, supporting a rich R & D ecosystem, including universities, research centres and promising start-ups.
Finally, the public sector must motivate companies to achieve diversity, equity and inclusiveness in order to promote greater creativity and meet the needs of more social classes. Among the countries assessed in the report, China, Sweden, New Zealand and the United States performed best in this area. In Canada, the 50-30 Challenge is an initiative between governments, businesses and diversified organizations that aims to achieve gender equality between boards of directors and the entire senior management, while increasing the shares of underrepresented groups to 30 per cent.
Reflection on Economic growth in the Post-epidemic era
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