The World Economic Forum: Why We Need A New Social Contract And Reskilling Revolution To Recover From COVID

Each January, the World Economic Forum holds its summit to discuss the most pressing global issues by gathering hundreds of world leaders in Davos, Switzerland. The Davos Agenda 2021 that took place on 25-29 January was held fully virtually and was a preparation for the Special Annual Meeting in the spring.

The meeting connected 1,500 leaders worldwide to explore how to best tackle the challenges ranging from the pandemic, climate change, cybersecurity to the fourth industrial revolution.

Restoring Economic Growth

On Monday, 25 January, the session on restoring economic growth focused on what prospects there are for the post-COVID economy and the extent to which the pandemic will impact our markets and businesses. In the panel discussion, three themes emerged as relevant for the world of work:

The need for international cooperation

Tharman Shanmugaratnam, Senior Minister of Government of Singapore, emphasized the importance of multilateralism in dealing with global issues. It benefits individual nations directly and helps countries become proactive in dealing with challenges such as pandemics and climate change. This message was also echoed by Germany’s Chancellor Angela Merkel who insisted that the world needs multilateral agreements and common standards concerning work and the environment. Smriti Zubin Irani, India's Minister of Women and Child Development, and Textiles noted that the current pandemic has brought the world together. By being in the same boat and sharing best practices, governments have eroded some of the differences between advanced and developing states.

Hybrid economy

Discussing how the pandemic will impact our economies, Andrey Kostin, President and Chairman of the Management Board of Russia's VTB Bank, said that while we all have embraced digital tools as a quick fix, people will not want to live like this forever. He warned that too high expectations are currently pinned to digital companies, which could potentially lead to asset bubbles further down the road. Mr. Shanmugaratnam believes that the world will need to adjust to the new reality. The possible solution is some form of a hybrid economy that marries both reliance on digital tools and face-to-face interaction. However, this shouldn't lead to creating new or widening existing inequalities between white- and blue-collar workers.

Reskilling and upskilling

The last of the themes concerns investment in skills. Mrs. Irani stressed that both in the formal and informal economies, many workers currently don't have the necessary skills, and these people must not be left behind. From her point of view, governments have a pivotal role to play. She used India's example where the textile industry reoriented in just 30 days to become the second-largest exporter of PPE equipment in the world. Haruhiko Kuroda, Governor of the Bank of Japan, explained that digitization is very important for Japan, so much so that the government has set up a new digital agency to promote the technological transformation in both the public and private sectors.

Growth in the Eurozone delayed not derailed

In order to build a sustainable economy and reduce inequalities, France's Minister of the Economy, Finance, and the Recovery, Bruno Le Maire, echoed the calls for more fiscal support coupled with investment in new technologies.

When asked about the Eurozone's economic recovery prospects, Christine Lagarde, President of the European Central Bank, said that the path to recovery has been delayed but not derailed. There is currently a high level of uncertainty as vaccines are produced and rolled out, and the world is facing a potential wave of harsher lockdowns caused by fears surrounding the new COVID-19 variants.

Advancing a New Social Contract

The Davos Agenda 2021 also dived into the issue of how best to reform our existing social contract, given that close to 1.6 billion of the most vulnerable workers have lost their capacity to earn a decent living, and many of our social safety nets are not fit for purpose.

The panel on the new social contract was joined, among others, by the Spanish Prime Minister Pedro Sánchez, who listed his government’s latest initiatives in tackling unemployment and youth unemployment in particular. At the beginning of the pandemic, Spain quickly set up short-time work and furlough schemes, which have helped 750,000 of those under the age of 20, for instance. Spain has also enacted a minimum income and law on teleworking to provide flexibility to both companies and workers. These initiatives have invested in jobs, reforms of the labour market to increase productivity, and upskilling and reskilling workers to help them transition into the digital and green economy.

Paul Kagame, President of Rwanda, emphasized that fixing the existing gaps in social protection will help our societies become more resilient in the face of future pandemics. Social security, however, should not be limited to wealthy countries alone. “We are interlinked and interdependent,” he added. James Quincey, Chairman and Chief Executive Officer of the Coca-Cola company, explained that big corporations play an important role in delivering a lasting change. Not only can they create an inclusive workforce themselves, but they can also use their ecosystem to help drive the change through their suppliers.

Sharan Burrow, General Secretary of the International Trade Union Confederation, spoke of the need to create a global social floor that would protect the most vulnerable and which could be achieved through the so-called Global Social Protection Fund. Explaining that the labour market is not a zero-sum game, Jo Ann Jenkins, Chief Executive Officer at AARP, said we needed a multigenerational workforce. It is not a question of either/or: companies benefit from both young and older workers, and 83% of businesses agree that more age-diverse workplaces bring greater value.

Delivering the Reskilling Revolution

The importance of reskilling workers using modern technology was the focus of the “Delivering the Reskilling Revolution” panel. Skills are a currency in today’s job market, panelists said, and acquiring new skills, as well as reframing the skills workers already have, is important to best position workers for the future. With modern technology, acquiring new skills and reskilling workers is now easier than ever. Panelists discussed the importance of reaching the youth early and helping them build the skill set they need to succeed in the developing job market to see success later in life.

Reskilling can be a profitable venture, too: Saadia Zahidi, Managing Director of the World Economic Forum, said upskilling workers could add up to 6 trillion dollars to the world economy. Linkedin’s Chief Executive Officer, Ryan Roslansky, noted that approximately 50 million tech jobs would be created in the next five years alone. Using technology to help reskill workers can help bridge the gap and create new careers, so workers aren’t left behind.