Can COVID-19 Lead to a More Just Economy?
More than seven months into the pandemic, much is still unknown about the future of our global economy. COVID-19 has dealt crushing blows to many industries. Analysts do not expect tourism to reach pre-COVID-19 levels until 2024 endangering 120 million jobs worldwide.[1] Airlines project USD 84 billion in losses as a result of a 50% decline in sales.[2] 2020 is also the only year in history when oil prices (if only for a few hours) fell below USD 0.[3]
While some industries have taken a significant hit, the changing global environment has shone fortune on a handful of sectors that have the potential to re-shape not only our economies but our own individual behaviors as both consumers and professionals. Videoconferencing has heralded a new era as Zoom doubled its revenue to USD 328 million and quintupled its original IPO price in a year.[4] In response to increased demand, Amazon hired 175,000 new employees and is now valued at $1.5 trillion.[5]
Consumers are different now. Technologies that would have taken years for widespread adoption were embraced in a matter of months. Consumer values have changed as well. An Accenture survey observed that consumers are driven towards more “conscious consumption.”[6] Sixty-seven percent agreed that business will “build back better by investing in longer-term, sustainable, and fair solutions.”[7] Sixty-six percent agree that “Coronavirus has strengthened the need for greater business involvement in improving social and environmental outcomes.” [8] These are things many have spent years lobbying for.
Although these new behaviors are exciting, we can’t help but ask ourselves: how many of them will continue once the global pandemic has passed? Also, as our consumer values shift in response to the social inequalities exposed and pronounced by the pandemic, how can we reconfigure industries to work towards building societies where both prosperity and equity can co-exist? As the global economy that we knew rapidly shifts, how can we pause and allow ourselves as business leaders, investors, policy makers, philanthropists, and consumers alike to have better conversations around how it should be rebuilt?
Here, we will discuss six industries that have grown significantly due to COVID-19. Though we still don’t know how many of these booms will bust, we can begin to explore how these sectors should grow in a way that could lead to more resilient and inclusive economies.
Remote Workplaces
Physical distancing measures pushed many employees to work from home, and this behavior is likely to continue. Videoconferencing and cloud-based file sharing have become essential for daily work. Also, new subscription-based models for unified communications have seen increased demand.
However, remote work is not possible for most jobs. In the US, 60% of workers cannot work remotely.[9] In emerging markets, which is the focus of the Legatum Center, this percentage is even higher.[10] Considering the power of technology innovations to provide safe working conditions for remote workers, how can we extend this consideration to in-person workers? How can technology enable healthy and safe work environments for all? More specifically, when we talk about the virtualization of the workplace, how can we ensure that those who do not have that privilege are not forgotten?
Education
Stay at home orders across the globe interrupted the instruction of 1.58 billion learners.[11] Online learning platforms are at the frontlines of education systems across the globe. Those that deliver a high-quality educational experience in an engaging environment are poised to disrupt educational systems by making learning more accessible and affordable.
Scaling online education, however, reaches an upper limit marked by the digital divide. Access to reliable internet and devices is not a given across countries and levels of income.[12] In some communities where distance learning is not an option, young people are at higher risk of child labor.[13] What other solutions does remote learning need to scale? How can online education grow while increasing inclusivity and avoid compounding existing inequalities?
E-Commerce
E-commerce has experienced a decade of growth over a few months,[14] and the sector is now projected to represent one-quarter of total retail sales by 2025.[15] To accommodate this sustained increase in demand volume, supply chains are reorienting to service e-commerce platforms. Moreover, e-commerce platforms are increasingly relying on automation and AI to meet growing demand.
However, the meteoric rise of e-commerce leaves many unanswered questions for its employees. Though warehousing and delivery employees are “essential workers,” many are not afforded the wages, benefits, and health and safety protections that value their role. How can e-commerce scale in a way that prioritizes workers’ wages, health, and safety? How can the sector reinvest in the communities disrupted by automation? Perhaps, the question that remains of utmost importance to us, is how can the rapid expansion of e-commerce include those in remote or more marginalized areas? Could this be a chance to truly include low-income groups as consumers?
Healthcare
Even before COVID-19, healthcare executives forecasted that at least a quarter of outpatient, preventative, long-term, and well-being services would be delivered online by 2040.[16] COVID-19 has accelerated this trend. Online service delivery reduces time in waiting rooms, facilitates crowdsourcing second opinions, and has proven successful for delivering behavioral health services at home.
Consumer stickiness to telemedicine, however, will vary. The delivery and quality of healthcare differs significantly across the globe. For some consumers, telemedicine platforms have to compete with healthcare relationships that have been developed over many years. What functions can and cannot be replaced by telemedicine? How can healthcare systems blend remote and in-person services to increase the accessibility and affordability of care?
Fintech
In many markets, COVID-19 has accelerated the decline of cash.[17] Digital wallets have become more popular. A 2020 Accenture report anticipates a resurgence of blockchain and cryptocurrencies where trust wanes in conventional banking systems.[18]
Though increasingly popular, going cashless is not currently possible in all markets. In the Middle East, many online retailers pushed customers to pay online because of the pandemic but could not entirely eliminate cash on delivery in fear of losing customers.[19] How can the sector convert pandemic users into long-term users? How can pandemic exigencies drive financial inclusivity across global markets?
Real Estate and Reverse Urbanization
COVID-19 pushed us to reconsider how we use our indoor spaces. Real estate developers must consider new standards for occupancy and sanitation in line with the pandemic and grapple with new use cases for retail outlets and restaurants. Multiuse spaces that offer flexible leasing models may be the future as people reconsider norms for in-person interaction. Residential housing is also in flux. Income interruptions have placed people around the world at risk of eviction. A 2020 PWC report argues that investing in affordable housing in the US is a prime opportunity to gain a steady yield while addressing a critical social issue.[20]
As properties adapt to shifting user needs, the changes we make today will be with us for years to come. At this inflection point, how can we redesign properties and payment schemes that can withstand future shocks? Furthermore, will we see a new trend of professionals choosing to sacrifice city life for the space and access to nature that is availed in the suburbs? Who does and does not have this privilege? Looking at the future of cities, who will leave and who will stay?
A Chance at Something Better
COVID-19 has created significant hardships in the lives and livelihoods of people across the globe. There is much to despair in our economies and societies. However, as the pandemic tears down the conventions of daily life, we can identify solutions that build the future we want to see. For consumers, it is a privilege to vote with our dollars. For those that can, customers must stick to their values, and industry innovators must heed their call. So much has changed in these sectors in a short period of time. This velocity has left little time to reflect. As we unmake the system, let’s pause and think about what we want that system to be.
This article was co-authored by:
Regie Mauricio, Consultant, Legatum Center for Development & Entrepreneurship
Dina H. Sherif, Executive Director, Legatum Center for Development & Entrepreneurship
Richard Rabbat, MIT Alum & Director of Product, Platform at Twitter
[1] Constantin, Margaux, Steve Saxon, and Jackey Yu (2020). “Reimagining the $9 trillion tourism economy—what will it take?” McKinsey and Company. Accessed at: https://www.mckinsey.com/industries/travel-logistics-and-transport-infrastructure/our-insights/reimagining-the-9-trillion-tourism-economy-what-will-it-take.
[2] Klein, Matthew C. (2020). “These Industries Were Hardest Hit in the First 100 Days of the Pandemic. Where They are Headed Next.” Barron’s. Accessed at: https://www.barrons.com/articles/covids-first-100-days-hit-these-industries-hardest-heres-how-they-could-recover-51592643600.
[3] Ibid
[4] Associated Press (2020). “Zoom booms as teleconferencing company profits from coronavirus crisis.” The Guardian. Accessed at: https://www.theguardian.com/technology/2020/jun/03/zoom-booms-as-teleconferencing-company-profits-from-coronavirus-crisis.
[5] Semuels, Alana (2020). “Many Companies Won’t Survive the Pandemic. Amazon Will Emerge Stronger Than Ever.” Time. Accessed at: https://time.com/5870826/amazon-coronavirus-jeff-bezos-congress/.
[6]Accenture (2020). “How COVID-19 will permanently change consumer behavior.” Accessed at: https://www.accenture.com/_acnmedia/PDF-134/Accenture-COVID19-Consumer-Behaviour-Survey-Research-PoV.pdf#zoom=40.
[7] Accenture (2020). “How is COVID-19 changing the retail consumer?” Accessed at: https://www.accenture.com/_acnmedia/PDF-130/Accenture-Retail-Research-POV-Wave-Seven.pdf#zoom=40.
[8] Ibid
[9] Lund, Susan, Wan-Law Cheng, André Dua, Aaron De Smet, Olivia Robinson, and Saurabh Sanghvi (2020). What 800 executives envision for the postpandemic workforce. McKinsey Global Institute. Accessed at: https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-workforce.
[10] Dingel, Jonathan and Brent Neiman (2020). How Many Jobs Can be Done at Home? Becker Friedman Institute. Accessed at: https://bfi.uchicago.edu/wp-content/uploads/BFI_White-Paper_Dingel_Neiman_3.2020.pdf.
[11] Fabius, Victor, Sajal Kohli, Björn Timelin, and Sofia Moulvad Veranen (2020). “Meet the next-normal consumer.” McKinsey and Company. Accessed at: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/meet-the-next-normal-consumer.
[12] Li, Cathy and Farah Lalani (2020). “The COVID-19 pandemic has changed education forever. This is how.” World Economic Forum. Accessed at: https://www.weforum.org/agenda/2020/04/coronavirus-education-global-covid19-online-digital-learning/.
[13] ILO (2020). COVID-19 and the education sector. Accessed at: https://www.ilo.org/wcmsp5/groups/public/—ed_dialogue/—sector/documents/briefingnote/wcms_742025.pdf.
[14] Accenture (2020). “How is COVID-19 changing the retail consumer?” Accessed at: https://www.accenture.com/_acnmedia/PDF-130/Accenture-Retail-Research-POV-Wave-Seven.pdf#zoom=40.
[15] Sem Semuels, Alana (2020). “Many Companies Won’t Survive the Pandemic. Amazon Will Emerge Stronger Than Ever.” Time. Accessed at: https://time.com/5870826/amazon-coronavirus-jeff-bezos-congress/.
[16] Fera, Bill and Casey Korba, and Maulesh Shukla (2019). “The future of virtual health.” Accessed at: https://www2.deloitte.com/us/en/insights/industry/health-care/future-of-virtual-health.html.
[17] Lund, Susan, Wan-Law Cheng, André Dua, Aaron De Smet, Olivia Robinson, and Saurabh Sanghvi (2020). What 800 executives envision for the postpandemic workforce. McKinsey Global Institute. Accessed at: https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-workforce.
[18] Accenture (2020). “10 Ways COVID-19 is impacting payments.” Accessed at: https://www.accenture.com/_acnmedia/PDF-123/Accenture-10-Ways-COVID-19-Impacting-Payments.pdf#zoom=40.
[19] Fallouh, Faris (2020). “Will cash on delivery return post Covid-19?” Wamda. Accessed at: https://www.wamda.com/2020/06/cash-delivery-return-post-covid-19.
[20] PWC (2020). “The city never sleeps: urbanization and real estate after COVID-19.” Accessed at: https://www.pwc.com/us/en/industries/technology/assets/urbanization-real-estate-after-covid-19.pdf.
