- Economic growth is set to return, but the recovery will be uneven.
- We can build something better: an economy that does, in fact, serve everyone.
- Here are six ways to “build back broader.”
For the first time in more than two decades, we’re seeing a rise in extreme poverty. Worldwide, inequality is soaring – between and within countries, including in the world’s wealthiest nations. Past shocks such as pandemics have not only exacerbated income inequalities but also had a lasting impact on education, labour market access and health. According to the latest predictions, growth is set to return, but the recovery will be uneven.
Over the last two decades, an imperfect but effective growth model rapidly expanded the global middle class and sharply reduced poverty. We’re now experiencing a reversal of this trend across developed and emerging economies. While most generations have had the assurance of social mobility – assurance that the next generation is likely to be able to do better than their parents’ generation – we’re seeing the middle class shrink, due to the technological changes of the past five years combined with pandemic-induced recession.
Put another way, for much of the world, the status quo is simply untenable – and it is and will continue to lead to broad social unrest. Moreover, there is no economic recovery possible without a social one – while there is some repressed consumer spending power that is likely to be unleashed as lockdown measures are eased, longer term growth prospects are tied to creating a virtuous cycle between broad based prosperity and a dynamic return of business activity. Similarly, a climate transition without a plan for supporting workers is only likely to worsen inequality.
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The good news is that the technology and capital exist to initiate an economic transformation – what we need is a longer-term vision and proactive efforts on the part of policy-makers and business leaders. With so much change underway, we can build something better: an economy that does, in fact, provide opportunity for all.
Here are six ways to “build back broader”:
1. Nudging growth to the “markets of tomorrow”
The fiscal stimulus being pumped into economies around the world is a good start at longer-term transformation, where it is being used to reshape social safety nets, support a green recovery and improve standards for workers. But the scale and scope of these measures differ widely across countries; advanced economies deployed an average of around 24% of GDP in fiscal measures, compared with only 6% in emerging markets, and 2% for low income countries.
The potential tightening of financial conditions and the uncertain nature of the recovery also puts these economies at risk of worsening debt overhangs and increasing debt servicing costs. For a truly sustainable, inclusive recovery, we must direct fiscal stimulus towards the “markets of tomorrow”, that will convert existing ideas and technology into wide-scale prosperity and environmental and social returns. At the World Economic Forum, we have identified more than 20 such new markets, including the mass job-creating markets for skilling and care.
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2. Providing reskilling and upskilling at scale
With the triple disruption to jobs – from the Fourth Industrial Revolution, the pandemic-induced recession and the green transition – reskilling and upskilling are central to any efforts to build back broader, expanding opportunity and reversing the labour market polarization currently underway.
The World Economic Forum’s Reskilling Revolution initiative aims to provide one billion people with better education, skills and jobs by 2030, working with governments and business globally. Over the last year, the Closing the Skills Gap Accelerators, national public-private collaboration platforms connected through a global learning network, have supported over 50 million people to reskill away from declining sectors and roles to growing industries and jobs. They have found that for two-thirds of businesses, there is a return on investment within one year – and companies have discovered it pays off to invest in reskilling rather than to lay off workers and rehire.
In parallel, the world’s largest online training providers, Chief HR Officers and Chief Learning Officers have come together to develop a global skills taxonomy. This common language around skills is critical for making skills the core currency of the future labour market and requires widescale adoption to ensure that workers, employers and trainers are using the same language around skills.
3. Accelerating a shift to the “jobs of tomorrow”
Skilling alone will not be enough. We need a proactive and structured shift to the “jobs of tomorrow”, the roles that will offer the highest opportunity for mass employment, broader benefits to society, higher wages and integration of technology and human traits in the workforce.
For governments there is a need to invest broadly in the sectors creating the jobs of tomorrow, to align fiscal and monetary policy to support employment and to expand access to finance for small and medium size enterprises to ensure that the growth boom expected in the next years creates opportunity for all rather than locking in benefits for the few. For business there is a chance to support redeployment of workers within their broader networks and value chains, supporting the within-industry and across-industry movement of workers that will be fundamental to ensuring that talent migrates into the jobs of tomorrow.
4. Building the care economy
There is longstanding focus on physical infrastructure, such as roads, bridges, airports, electricity and water in public policy to stimulate growth. According to recent estimates, a 1 percentage point of GDP of public investment in infrastructure can yield 20-33 million jobs globally. The current focus in many advanced economies aims to make new infrastructure greener, another area with job creation potential. But there’s a third element: social infrastructure.
The care economy and care infrastructure, from early childhood education and childcare to eldercare, create triple wins for society – improving lifelong prospects for children and quality of life for older persons, improving the employment prospects of working parents and caregivers, and generating high-quality new jobs in the care sector, especially when coupled with strong standards and certifications. Investing in care infrastructure is both beneficial for society and the economy.
5. Reforming education as a core element of the economic recovery
In 2018, more than 250 million children around the world did not have access to any school – and that was before pandemic lockdowns when nearly a billion children were out of school. A much larger number don’t have the right curriculum to prepare them for the jobs of tomorrow, support in building the curiosity and creativity that will inspire them to remain engaged in lifelong learning, the interpersonal and global citizenship skills to be ready for a world of collaboration and connection.
We need a new approach to education – particularly K-12, but also technical and vocational training as well as university and college education. We can’t afford to wait 5, 10 or 20 years when today’s young people enter the labour market to find out that they don’t have the skills needed to thrive. Prioritizing “Education 4.0” skills – innovation and creativity; interpersonal and intrapersonal skills; and digital skills – is a crucial part of the economic recovery and investments by government and business to build back broader.
6. Embedding equity into the new economy
The areas outlined above must be complemented by a sixth aspect – hardwiring equity, diversity and inclusion into how new markets are built, how reskilling and upskilling is done, how education systems are reformed and how the care economy is built. Without such a proactive approach to embedding equity, there is a risk of further polarization by race, gender, economic status or other forms of difference. Policy-makers must embed equity into economic reform.
Business also has a crucial role to play in this area, through their workforces, their communities, their products and services and through their advertising and marketing. In the last years, there has been a fundamental shift in how businesses are investing in the green agenda. A similar movement is now starting on the social agenda as it becomes clear that workers and consumers expect business to define an equivalent to “net zero” in the social space. Over the last year investments in social bonds have tripled, with rising inequality and social unrest – as well as a recognition of the new opportunities for investment in the S of ESG. This new holistic agenda is fundamental to building back broader.