The long-term impact of Covid-19
Three seemingly distinctive trends have emerged from this period: high unemployment rates and financial distress, especially among workers in service industries like hospitality and childcare; perpetuation of longstanding issues for Millennials and younger generations, or the challenge of pursuing linear career trajectories and building savings; and a dramatic drop in carbon emissions due to cross-national lockdowns and shutdown of economic activity. An effective, forward-thinking response to the crisis will bring the three together in a revisioning of the relation between economy and society, namely how economic opportunities and social aspirations intersect.
For the moment, the economic data in Ireland suggests that the next 18 months will be very turbulent. The most recent EU Economic Forecast (Spring 2020) predicts a drop in economic growth in Ireland of 7.9% in 2020 and 6.1% growth in 2021. The debt ratio is predicted to be above 60% in 2021 and private consumption is expected to shrink by about 9% in 2020 and then grow again by 4 1/2% in 2021. Likewise, this year, there will be a decline in imports, lower personal and corporate income tax revenue, and lower social contributions, meaning that the state will have fewer resources to pay down debt and invest in public services.
Beyond the macro-economic data, in Ireland and elsewhere, there are other trends that have yet to be understood. For instance, we do not know how many employees have seen their salaries cut or how much households are forced to rely upon savings or borrow to pay bills. We do not know, and may not know this year, if businesses in sectors particularly hard hit because of the pandemic, like retail or hospitality, will rehire laid off staff, go out of business, or return as a slimmed down version dependent, where possible, on online services or staggered visits. We also do not know how many plans to buy homes have been postponed or how many temporary contracts are being allowed to end over the next year, without promise of renewal.
On the other hand, other trends potentially indicate how business may transform because of disruption to global supply chains and loss of income. Local supply chain models like Community Supported Agriculture (CSA), where farmers and consumers are more closely connected, have become more prominent internationally. Cycling or driving to work have become the government preferred modes of transport, meaning that both office space and commuting – as well as global travel for work - may become less the norm and the shifts in behavior that have overlapped with climate action may become more permanent. Perhaps the most dramatic shift in behavior, echoing the experience of Argentina after the economic crisis in 2001, has been the adoption of barter mechanisms in places like the Pacific islands as a way of securing wanted goods without cash.
The time is now for a change in economic policy
In Ireland, the government has an opportunity based on these trends to rethink the intended social impact of economic policy. Unlike larger Western European countries like the UK and Germany, or newer Eastern European countries, the Irish economy did not experience a period dominated by manufacturing, instead leaping from agriculture to services. The majority of jobs in services, and in general, have been created in the Dublin region, which also has the highest cost of living in the country. This concentration of employment opportunities in an expensive city has implications for career trajectories and how individuals plan their lives and expenditures.
If promoting local supply chains is now more necessary, as well as working close by or at home, and if both contribute to climate action, then the government has a chance to promote local economic development as a mechanism for re-orienting career aspirations, and implicitly, the meaning of social mobility. The aspiration to and practical possibility of social mobility between generations and across individual lifetimes is important because it has helped to legitimise modern states. The OECD (2018), reinforcing explanations of current dissatisfaction with conventional political leaders, notes that persons who gain in socio-economic status compared to their parents tend to fare better along a wider range of social and well-being dimensions (e.g. civic participation, personal relationships, subjective well-being) than those stuck at the bottom. Inversely, higher risks of downward mobility tend to reduce life satisfaction by increasing perceived financial insecurity. (1) In other words, the more diminished the possibility of improving life chances between parents and children or of improving one’s own circumstances with education and a job, the higher the risk of individual anxiety and alienation, social tensions, and political unrest.
Much of the progressive discussion of post-pandemic policy has centred on investment in sectors and industries aligned with climate action, for instance, renewable energy and retrofitting houses, to create jobs. The recommendations, whether framed as a ‘Green New Deal’ or not, make assumptions about the social and political effects of having a job. The EU Commission statement on a European Green Deal refers managing a transition that is “just and inclusive,” which puts “people first, and pay[s] attention to the regions, industries and workers who will face the greatest challenges,” and encourages “active public participation and confidence in the transition.”
To gain this confidence, policies must recognise that career trajectories and likewise, life aspirations, will shift with greater attention to public services and the role of the state, localized economic development schemes, and industrial transformation geared toward climate action. It could be that, rather than greater income and capacity to find better jobs, aspirations are more centred on access to quality public services, a clean environment, mechanisms for leading a sustainable lifestyle, and economic security achieved through work and perhaps Universal Basic Income. A recent Edelman Survey, which produces the annual Trust Barometer, found that the majority of people polled in 11 countries want to prioritize protecting health and saving lives over economic recovery. The desire for security in health rather than income may hint at how the pandemic has affected values, and likewise, expectations for their own lives and policy goals.
Dr. Shana Cohen is the Director of TASC.
She studied at Princeton University and at the University of California, Berkeley, where she received a PhD in Sociology. Her PhD analyzed the political and social consequences of market reform policies in Morocco for young, educated men and women. Since then, she has continued to conduct research on how economic policies have influenced political and social identity, particularly in relation to collective action and social activism.
She has taught at George Washington University, the University of Sheffield, and most recently, University of Cambridge, where she is still an Affiliated Lecturer and Associate Researcher. Her areas of teaching have included global social policy, globalization, and human services.
Before coming to TASC, she was Deputy Director of the Woolf Institute in Cambridge. In her role at the Institute, she became engaged with interfaith and intercultural relations in Europe, India, and the Middle East.
Beyond academic research, Shana has extensive experience working with NGOs and community-based organizations in a number of countries, including Morocco, the US, the UK, and India. This work has involved project design, management, and evaluation as well as advocacy. She has consulted for the World Bank, the Grameen Bank Foundation, and other private foundations and trusts.