The most important lesson of the epidemic is the need to solve the joint problem
The International Monetary Fund published an article in which leading experts shared their views and forecasts of how the coronovirus epidemic would change the world community.
Economic inequality, employment challenges and increasing digitalization
Daniel Susskand, an economics researcher at Oxford University’s Balliol College and author of A World Without Work, said it gave world leaders “a political response in the form of an artificially induced economic disaster” to stop the spread of coronovirus.
The expert stressed that many aspects of the current crisis are not new. Among them, he said:
- Economic disparities reflected differences in COVID-19 rates and treatment outcomes;
- The inability of the market to adequately assess truly important sectors, resulting in significant discrepancies between the “critical categories of workers” and the social value of the work done by their low wages;
- “My country is at the top” of the lack of properly coordinated measures internationally, a lack of confidence in experts, and the political course of various countries of the world amid growing populism.
Saskind stressed that the current crisis has attracted the collective attention of society to the many injustices and shortcomings that are now “to ignore the difficulties”.
James Maniaca, president and director of the McKinsey Global Institute, said the epidemic has reinforced the development of such trends in the global economy:
- Development of Digital Economy – Against the background of increasing frequency of use of digital technologies (distance work, for distance education, receiving telemedicine and delivery services);
- Rapid structural change – with the possible regionalization of supply chains and the advancing of cross-border data flows.
Furthermore, according to Maniyka, Coronarasis has multiplied the problems of the employment sector:
- Income polarization;
- Vulnerability of workers;
- Increase in the number of short-term contracts;
- Workers need to adapt to changes in the type of activity.
“Countries and labor markets will need time to recover, and there is a high probability that they will endure a series of changes,” Manzi said.
As the impact of these trends has increased, the realities of the current crisis have modified many existing beliefs that may affect long-term decision-making in the socio-economic arena.
He also said that inspections of health systems often reveal their inefficiencies, while Social benefit concept (Paid sick leave, unconditional basic income) again gained attention. As a result, we can expect Long-term change in social protection Citizens and a more inclusive social contract, the expert said.
Need for reform and support for developing countries
Jean Saldanha, Director of European Network for Date and Development, stated that the COVID-19 pandemic “continues to test the limits of global cooperation,” Very low level of support for developing countries… The expert noted that such countries faced a global economic slowdown in the early stages, including record capital outflows and poor financial condition.
According to Saldani, the United Nations should develop a reform program in which the IMF should also participate to address structural problems, leading to increased debt burden of developing countries. Improvement program should include:
- Gradual abandonment of the use of funds allocated for development financing with the aim of improving the market and creating incentives to attract private investment;
- Disapproval of the ascetics of penance;
- Fulfillment of official development assistance commitments by rich countries;
- Fixing the imbalance of power within international institutions to recognize the needs and rights of two-thirds of the world’s population living in countries of the “global south”.
“A new multilateral system, in which the reform of Bretton Woods institutions will play an important role, is now needed, and should be based on a development approach that focuses on human rights, gender equality and climate issues,” Saldah …
Asylum Barrow, Secretary General of the Confederation of International Trade Associations, said the world needs to be more inclusive, flexible and resilient after the first wave of COVID-19 ends.
According to him, as a result of the “concessions race” in the field of trade regulation, as well as poverty among representatives of a significant portion of the global workforce, inequality between countries and regions intensified within countries.
Barrow noted that many countries have suffered external shocks due to the lack of COVID-19:
- A universal social safety net, a robust health care system, plans to achieve carbon neutrality by 2050;
- A stable real economy with quality jobs.
According to the expert, public investment in care services, education and low-carbon infrastructure can become a stimulating foundation for reducing inequality.
Wage policies, collective bargaining and labor market regulation have the potential to revive demand and restore income levels, as well as ending the business model that keeps employees out of the company’s responsibility.
Debt management must be addressed through a debt relief process focused on achieving the United Nations’ Sustainable Development Goals and maintaining sustainable economic growth in each country.
Part-time employment to keep jobs
Professor of International Finance in the School of Management. Kellogg Northwestern University Sergio Rebelo believes that the COVID-19 epidemic has taught the world many important lessons that will have lasting consequences for the global economy.
According to the expert, countries need to invest in infrastructure designed to detect future outbreaks of the virus. “Such investments will protect the economy if the population’s immunity to COVID-19 is temporary,” Rebelo said.
Rebelo stated that during the epidemic, many countries adopted options for the German part-time program – Kurzarbeit… This program ensures the preservation of jobs by reducing working hours and wages; However, the government compensates to some extent for the loss of wages. By maintaining labor relations between companies and employees, the economy will be better prepared to recover quickly.
The mechanism for implementing such programs should be improved and become part of the existing set of tools for economic recovery. Also, according to the expert, remote tasks may be more extensive.
He said that the epidemic crisis accelerated the process of transition to digital technology with the further spread of electronic technology and increased the rate of introduction of telemedicine, video conferencing, distance education and financial technology.
Ribello hopes that some companies may face supply shortages and other difficulties, with some production that was previously taken abroad may be returned to their countries. Also, according to his forecast, this trend will not create a large number of jobs, as the bulk of production is likely Will be automated…
Governments acting as insurers and investors taking last resort will play a more important role in times of crisis. Government debt will increase rapidly, causing financial problems worldwide.
Ian Bremer, president and founder of the Eurasia Group, said that coronoviruses accelerated three major geopolitical trends that would shape the new world order:
- Deglobalization Due to logistical difficulties, the use of global value chains with a gradual step to ensure that deliveries are received on time.
- Business localization With the transition of companies to national and regional supply chains, the number of economic problems increases with the increasing influence of nationalism and politics under the slogan “My country is above all”.
- The possibility of a Cold War between China and the United States. The Donald Trump administration is actively exploiting and reinforcing the general distrust of the PRC in its election campaigning strategy to try to hide information about the coronovirus outbreak. However, China, as Ian Bremer has said, “will not be left as such.”
Recall last week that Donald Trump signed a bill on sanctions against China, as well as an executive decree denying Hong Kong American economic and trade preferences.
According to the US president, such measures were introduced to hold China accountable for its “discriminatory actions” against the people of Hong Kong.
We are talking about a US bill that provides for sanctions against Chinese individuals and legal entities in relation to the situation in the PRC’s Special Administrative Region, where a new law on national security came into force on 1 July.
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