Business

Thinking big in governments' visions, policies and plans

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CORONAVIRUS has been a unique event, which has unfortunately taken many lives and has had unique consequences for our global economy.

It’s no surprise that the reaction from governments and central banks around the world has been unprecedented in terms of the speed and scale of the response.

One of the most dramatic outcomes of the pandemic is the light it has shone on jobs, working patterns and skills, and of course with this, also comes the impetus for innovation, change and the opportunity to do things differently.

That’s not to say this won’t be painful. Some estimates state that over 300 million job hours were lost in the first quarter of 2020. This is a significant reduction in global job numbers and some commentators believe that not all these job losses will be reabsorbed back into the economy. If so, we could be looking at a very significant labour reduction.

While many parts of the agri, industrial and manufacturing sectors were able to carry on (with health and safety adjustments) almost as normal, the more service and knowledge-based corners of our economy have experienced a large scale technological leap to home working.

The uncomfortable fact may be that this “technological revolution” will leave a number of global workers behind, at least in the short term, if they are without the skills, knowledge or indeed infrastructure and equipment to keep up.

Some argue that a state-produced support in the form of a universal basic income would enable the conditions for radical technological advancement to happen with minimum income disruption to the population.

However, studies are inconclusive. If you remember the old adage, “necessity is the mother of invention”, without financial hardship as a driver, it might be concluded that human invention does not thrive in such sanguine environments.

In any case, a universal income would not address some of the other pertinent points which this pandemic has highlighted – such as the growing, and at times, stark difference in educational advancement, even in developed economies.

And it’s not only in early stage education: if economies are to reinvent themselves, then a re-education and tooling-up of an already mature workforce is going to be needed.

While the upfront cost of this mass re-training may seem prohibitive, visionary governments will focus on what the world will look like in 10 years’ time - a very different place.

So with inflation (perhaps) a long way off and interest rates making borrowing so cheap, perhaps now is the time for governments to be revolutionary in their visions, policies and plans. Whatever the solution, it looks like they’ll have to think big.

:: Jonathan Sloan is wealth & investments director at Barclays in Belfast