- Davos 2021: to achieve a ‘great reset’, we can’t count on the same old globalists to lead the way
- Lessons from history
- The great reset
- The neoliberal drift
- Davos: COVID-19 pandemic exacerbates job market disruption
- How COVID made things worse
- Low-skilled workers bear the brunt
- Vital to reskill the workforce
- Social crisis warning
- The great equalizer
- In Davos speech, UN chief highlights private sector role in pandemic recovery
- Time to change course
- Vaccines for all
- Flick the ‘green switch’
- Impacts felt for years
- Women and girls bear the brunt
- Boost long-term investments
Davos 2021: to achieve a ‘great reset’, we can’t count on the same old globalists to lead the way
The 51st World Economic Forum starts on January 25, but with a major difference. Whereas this is famously the annual gathering at the Davos ski resort in Switzerland of global leaders from business, government and civil society, this year’s event will take place virtually because of the pandemic.
Inevitably, the event for the 1,200-plus delegates from 60 countries aims to respond to the apocalyptic events of the past 12 months. “A crucial year to rebuild trust” is the theme, built around the “great reset” that World Economic Forum (WEF) founder Klaus Schwab and Prince Charles launched last year.
The event will be accompanied by virtual events in 430 cities across the world, to emphasise the fact that we face global challenges that require global solutions and action.
This recognises that the effects of the pandemic are ly to be increasingly compounded by other major global threats, including the climate crisis, financial crises, and social and economic inequality. To give just one example, the COVID-19 mortality rate in England in December was over twice as high in the most deprived areas than the least deprived.
So how successful is the WEF’s mission ly to be?
Lessons from history
This is not the first time that global crises have required global action, but there have been mixed results in the past.
After the first world war, the UK played a pivotal role in forming the League of Nations on the international stage.
But this ultimately failed to deliver, with the UK’s insistence on post-war reparations undermining Germany’s economic recovery and political stability.
First meeting of Assembly of the League of Nations in November 1920. Wikimedia
When the world next sought to prevent future conflicts towards the end of the second world war, the lessons were to some extent learned from last time around. The allies met at Bretton Woods, New Hampshire, in the US in 1944 to develop policies for economic stability.
This led to a new system of interlinked exchange rates organised around a gold-backed US dollar, as well as new institutions to help manage it, including the International Monetary Fund and what later became the World Bank.
This was followed in the next couple of years by the United Nations and the forerunner to the World Trade Organization.
The Bretton Woods system endured until the early 1970s when the US came off the gold standard, but much of the system created in the 1940s survives in one form or another today.
The 2007-09 financial crisis, which involved the first global recession since the 1930s, led to many calls for action to prevent similar crises in future. There was some tightening of regulation, but the threat of instability remains due to excessive debts and too much speculation.
With only the 1940s seeing a really adequate response to global crises, what will make the difference this time?
The great reset
The WEF’s vision of a “great reset” recognises that what is needed to tackle these crises goes far beyond economic reforms, or climate measures, or tackling a pandemic – it is all of these combined, and more.
It is the idea that global action needs to be underpinned by a mission to change society, to make it more inclusive and cohesive; to match environmental sustainability with social sustainability.
It follows their call to “build back better” – one echoed by many around the world.
The WEF seeks action across seven key themes: environmental sustainability; fairer economies; “tech for good”; the future of work and the need for reskilling; better business; healthy futures with fair access for all; and “beyond geopolitics” – national governments collaborating globally.
The WEF says the key is reestablishing public trust, which is “being eroded, in part due to the perceived mishandling of the coronavirus pandemic”.
But this may prove difficult, given there is little change in corporate or government leadership.
The big hope is 78-year-old Joe Biden, who was US vice president for eight years during which many of these problems were mounting, not being solved.
Can Joe save us? EPA
Sadly, the main cause for optimism is the fact that today’s crises are so great that they may provoke action. Future financial crises look ly.
The climate crisis is increasingly accepted to be an existential threat.
And now the pandemic is a huge economic and human disaster, with further such pandemics recognised as ly because of everything from the explosion in global travel to the effects of climate change.
The neoliberal drift
A key question for this year’s conference, which is due to be followed by a second phase in Singapore in May, is whether a new form of globalisation will be developed.
There was a free-market form of globalisation leading up to the first world war, then a retreat during the inter-war period. Bretton Woods led to an era of regulated globalisation from 1945 until the 1980s. But since then, the “global elite” has pushed back regulatory restrictions on everything from speculative financial flows across borders to mergers and acquisitions.
A new era is required, building on the Paris Agreement to limit climate change now that the Americans are joining again – with more support of a Green New Deal geared towards achieving net zero emissions and making the global economy truly sustainable.
We need bold initiatives to tackle the threat of future pandemics; financial speculation, tax evasion and avoidance, and the threat of financial crises; and to reduce the unsustainable inequalities of wealth, income and power across the globe.
Will corporate and political decision-makers rise to the challenge? There needs to be sufficient popular pressure – from citizens, voters, consumers, workers, educators and activists – to push governments and business to change course fundamentally. These past few years have witnessed the Occupy movement, the Me Too Movement, Black Lives Matter and countless climate crisis groups.
Calls for action have been coming from business leaders at Davos and elsewhere for years. The hope is that this time, the scale of the emergency will finally make radical change unavoidable.
Davos: COVID-19 pandemic exacerbates job market disruption
Around 150 million people in developing countries are ly to fall back into extreme poverty in 2021, as the coronavirus pandemic continues to devastate economies, delegates at the virtual World Economic Forum (WEF) were told on Thursday.
The annual Davos summit, which is being held by video link rather than in the plush Swiss ski resort, heard that despite the roll vaccines, the social impact of the health emergency was ly to be felt for several years.
How COVID made things worse
The WEF Global Risks Report 2021, which was published alongside the summit, revealed how COVID-19 has exacerbated inequalities in health care, education and access to technology.
The report warned that “job losses, a widening digital divide, disrupted social interactions, and abrupt shifts in markets could lead to dire consequences and lost opportunities for large parts of the global population.”
The seismic shift in the world's labor market, already underway due to technological advances, has been accelerated by several years in just a few short months, prompting Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD) to warn of the potential “scarring” effect of the pandemic on workers.
Low-skilled workers bear the brunt
“If those who lose their jobs are inactive for a long time, their skills erode and their attachment to the labor market can weaken,” Gurria said, adding that those workers who had seen their incomes flatline or even fall over the past decade were particularly at risk.
“Those entering the labor force during a crisis are less ly to get the experience or training that they would get in normal times. This can blight their whole career.”
While some countries have introduced strong policies to protect jobs from being lost, while helping workers to upgrade their skills during lockdown, the measures need to be rolled out globally, the Davos speakers agreed.
Automation and robotics are set to replace tens of millions of jobs after the pandemic
Vital to reskill the workforce
Guy Ryder, the secretary-general of the International Labour Organization (ILO), predicted that higher government spending on retraining jobless workers would aid a stronger economic recovery.
“The net outlook for jobs may still be positive, so long as countries invest in skills and education,” Ryder said.
Separate ILO data released this week to coincide with the Davos summit showed that the equivalent of 255 million full-time jobs have been lost globally during the pandemic. The figure is four times greater than during the 2008/9 financial crisis and represents 8.8% of total working hours globally.
The managing director of the World Economic Forum, Saadia Zahidi, echoed the economic case for countries to boost education spending.
“This is not just an expenditure, this is actually an investment,” Zahidi said. “We can add $6 trillion to the global economy through upskilling investments by 2030 because of the returns it can generate.”
The failure to invest, however, could leave millions of workers jobless and forced into the black economy.
Social crisis warning
Huge populist events the Arab Spring uprisings, the Brexit vote and the 2016 election of Donald Trump as US president, were reminders to world leaders of the risks of failing to address inequalities caused by deindustrialization and technological advances.
“That polarization of the workforce ultimately becomes the polarization of the population … and we [could] move from a health crisis to an economic crisis to a social crisis,” warned Jonas Prising, chairman and CEO of Manpower Group, the world's third-largest recruitment firm.
Amid rising pressure for governments to intervene to protect jobs in unsustainable sectors of the economy, Prising said he thinks that is often a flawed approach. While Germany's reduced-hours working program (Kurzarbeit) was singled out as an emergency stabilizer, there was skepticism over its lasting impact on the labor market.
“Rather than protecting the job we have to protect the employment, and move people into growth areas.”
With tens of millions of people working fewer hours as a result of furlough schemes, the best companies have utilized this period to boost their workers' skills, delegates were told.
The great equalizer
Addressing the many inequalities that exist in the labor market is now taking center stage globally as a result of political movements, particularly around race and gender and socioeconomic status.
Frida Polli, the co-founder and CEO of Pymetrics — a company that uses artificial intelligence to help firms to overhaul the hiring process — highlighted how workers' soft skills are often a way for them to overcome the disparity.
“Soft skills have a fantastic equalizing potential,” Polli said, giving the example of frontline staff in hotels or retail who may have little experience of performing high-skill digital functions. Assessment of their communication, teamwork, critical thinking and problem-solving skills, rather than relying purely on their resume, will often reveal a “high aptitude for high-skill jobs.”
“If we really want to try to mitigate growing inequality, we have to look at people's potential through soft skills,” Polli said.
In Davos speech, UN chief highlights private sector role in pandemic recovery
UN Secretary-General António Guterres (on screen) addresses the World Economic Forum Annual Meeting in Davos-Klosters, Switzerland.
The private sector has a key role to play in lifting countries both the COVID-19 and climate crises, UN Secretary-General António Guterres told international business leaders on Monday.
“We need you more than ever to help us change course, end fragility, avert climate catastrophe and build the equitable and sustainable future we want and need”, he said in a speech to the Davos Agenda gathering of the World Economic Forum, which is taking place online this year instead of in the Swiss Alps.
— António Guterres (@antonioguterres) January 25, 2021
The Secretary-General addressed the forum as the UN released its latest report which warns that global economic recovery from the pandemic remains precarious.
Time to change course
COVID-19 has generated the worst economic crisis for nearly a century, exposing inequalities and fragilities both within and among countries, Mr. Guterres said, speaking from New York,
“We have reached a moment of truth. In 2021 we must address these fragilities and put the world on track”, he stated.
“It is time to change course and take the sustainable path. And, this year, we have a unique opportunity to do so. We can use our recovery from the COVID-19 pandemic to move from fragilities to resilience.”
The Secretary-General emphasized that pandemic recovery must be inclusive while also tackling climate change and biodiversity loss.
Vaccines for all
“Inclusive and sustainable recovery around the globe will depend on the availability and effectiveness of vaccines for all, immediate fiscal and monetary support in both developed and developing countries, and transformative longer-term stimulus measures”, he said.
While COVID-19 vaccines have been developed, distribution has been uneven, he said, as richer nations have received doses while the world’s poorest countries have none.
Reiterating that vaccines must be seen as global public goods, he called for funding for the COVAX Facility, the mechanism working to ensure equal access to all countries.
Mr. Guterres also underlined the need to address structural inequalities that have made so many societies vulnerable, including through debt relief for countries that need it.
“We also need to bring more fairness into the world of work”, he added. “That means that we reduce the very high increase disparities we have in incomes today in the labour markets. And it means closing the gender pay gap, ensuring women’s full and productive employment and increasing women’s participation in decision-making at all levels.”
Flick the ‘green switch’
On climate change, the Secretary-General stressed that the central goal this year is to build a global coalition to achieve carbon neutrality by 2050.
“Every country, city, financial institution and company needs to adopt credible plans backed by intermediate goals for transitioning to net zero emissions by 2050, and to take decisive action now to put themselves on the right path,” he said, adding “every sector must do its part, from aviation and agriculture to transport, shipping and industry.”
The world also needs to “flick the ‘green switch’” to renewable energy, which will create new jobs and a healthier future. The UN chief said all of this is within reach, as more countries register their commitment.
He called for private sector action towards achieving a sustainable future for all, and in implementing the Paris Agreement on Climate Change, which seeks to limit global warming.
“We count on businesses to play an important role by themselves and to put pressure on governments. Every action, big or small counts, but those with greater capabilities and resources should lead the way”, he said.
Impacts felt for years
The devastating fallouts from the pandemic will be felt for years unless smart investments in economic, societal and climate resilience ensure a robust and sustainable recovery of the global economy, the UN said in the latest edition of The World Economic Situation and Prospects report, published on Monday.
The world economy shrank by 4.3 per cent last year, which is over 2.5 times more than during the financial crisis a decade ago. The authors said the modest 4.7 per cent recovery expected this year would barely offset those losses.
Developed economies shrank the most in 2020, or by 5.6 per cent, due to economic shutdowns and subsequent waves of the pandemic. This has increased the risk of premature austerity measures which would derail global recovery efforts, according to the report. These nations are projected to see four per cent growth in 2021.
Meanwhile, developing countries saw a 2.5 per cent contraction in 2020 and are estimated to rebound by 5.6 per cent.
Women and girls bear the brunt
The pandemic also pushed 131 million more people into poverty, many of whom were women, children, and members of marginalized communities. The crisis has disproportionately affected women and girls, who have faced increased risk of devastation, poverty and violence.
Women also comprise more than half of the workforce in sectors that have been hard hit by lockdowns, such as retail, hospitality and tourism.
Although some $12.7 trillion in massive and timely stimulus measures prevented a total collapse of the world economy and averted another ‘Great Depression’, last manifest in the 1930s, stark disparity in the size of these packages mean developed and developing countries will be on different paths to recovery.
Additionally, financing stimulus packages has increased public debt globally by 15 per cent, representing a potential burden for future generations unless investments are made to promote growth.
Boost long-term investments
The report underscores that sustained recovery will depend not only on the size of stimulus measures, and the quick roll vaccines, but also on the quality and efficacy of these measures to build resilience against future shocks.
“The depth and severity of the unprecedented crisis foreshadows a slow and painful recovery,” said Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development.
“As we step into a long recovery phase with the roll the vaccines against COVID-19, we need to start boosting longer-term investments that chart the path toward a more resilient recovery – accompanied by a fiscal stance that avoids premature austerity and a redefined debt sustainability framework, universal social protection schemes, and an accelerated transition to the green economy.”