13 Permanent Impacts of COVID-19 on the Economy, Society and Development

TEXT: Masha Scholl - 24. June 2020

From redefining social interactions to threatening some democracies, the pandemic has turned our life upside down. What changes are here to stay with us post-COVID? Experts share their views. For comments related to Southeast Europe, see the last section.

The global economy will see

1. A rise in skill demands

Technology, demography and globalization have been changing the way we work and affecting the relative importance of skills in the labor market. Evidence from the Great Recession (see for example Structural Increases in Demand for Skill after the Great Recession or Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings) suggests that the current COVID-19 crisis may accelerate these changes, raising skill demands across the board. The COVID-19 crisis may also accelerate the adoption of technology, hence have a further indirect effect on skill demand. In this context, expect skill profiling and adult learning to become even more important to help the unemployed reskill for jobs that will be in high demand in the post-COVID period. Online learning may also be here to stay. It has been extensively used during the crisis to complete training that was ongoing or to fill periods of inactivity under Short Time Work schemes. The trial exposed some weaknesses that need to be ironed out but the crisis has clearly underscored its potential.

Glenda Quintini, Senior Economist, Organisation for Economic Cooperation and Development (OECD)

More from this author: Shifting from Qualifications to Skill Upgrades

2. More unemployment – but not for jobs of the future

We will see a lot more unemployment post-COVID as many economies experience recession followed by a jobless recovery. There is likely to be growth in the “jobs of tomorrow,” such as in artificial intelligence, green economy, marketing and data (see our 2020 report for the full list). Large companies will be critically re-assessing the geography of jobs. We may see unexpected shifts in locations, e.g., re-distribution of functions to different locations, and value chain re-design – partly to cut costs, but also because COVID-19 has once more demonstrated that having a linear strategy is not as resilient during a crisis. On a more positive note, COVID-19 has spurred organizations to experiment with and refine remote working and online learning at scale. Using technology-enhanced, blended models to deliver training and education can accelerate the pace of reskilling and upskilling, as well as broaden education opportunities to more young people. However, we must make sure to provide better connectivity - or else we will end up with inequalities related to the digital divide.

Vesselina Stefanova Ratcheva, Data Lead, World Economic Forum

More from this author: Get Used to Change - The Future is Agile

3. More alternatives to five-days-a-week-9-to-5 schedule

"The foundations of the world of work have been shaken and all indications are that this disruption will continue in the future. Being used to a five-days-a-week-9-to-5 scheme at a centralized location, it can be a painful process for many employees to adapt to the new reality of flexible concepts of working time and space and to new ways of communicating digitally. For many young people in developing economies however, this is all they know. An increasing number of them works for remote clients from home, in loose co-working communities or cafés. Clients focusing on the quality of results instead of rigid structures. This is a huge opportunity for this otherwise often chanceless youth and now is the right time to further invest in them. Let’s make sure they are supported by relevant structures that increase their capacities and connect them directly to the global economy."

Niklaus Waldvogel, Project Manager at Swisscontact

4. A new role for social entrepreneurship

As COVID-19 is predicted to push dozens of millions of people into extreme poverty, we will need innovative and localized solutions to help the most vulnerable and excluded groups. Social entrepreneurship is a way for individuals and companies to address problems, either without profit at all or combining lucrative goals with a benefit for the society. In addition to helping the disadvantaged, social entrepreneurs can find their way into emerging & COVID-boosted sectors (healthcare, transport & logistics, industry & energy), jobs (caretakers for elderly, waste collectors, delivery services) and new business models (distance working, part-time work, work-per-hour, insourcing, decentralizations). Finally, the pandemic has shown that we should put the focus on prevention rather than mitigation. Social entrepreneurship is vital for creating a resilient social economic movement.

Igor Mishevski and Elena Ivanova, Founders, Impact Ventures (North Macedonia)

As a society, we will

5. Cooperate more

Even though our response to pandemic was to shut down national borders and impose lockdown measures, the only way to go back to normal and to protect ourselves from future threats is to cooperate and share information. Coronavirus illustrated what dramatic changes one local disruption can create. Dystopian scenes from far-distant Wuhan rapidly became a reality for almost 4 billion people. The profound sense of interconnectedness and interdependence is deepening among people, not only in relation to other countries and societies, but also in ways we interact with nature. In the post-COVID world, societies will take more interest in distant parts of the world.

Katarina Tadic, Project officer at WWF Adria

This author also contributed to Labeling the Balkans

6. Re-define social interactions

Even as the restrictions are gradually lifted in Switzerland and we increasingly meet outside of our homes, social interactions – where social distancing and sometimes masks have replaced handshakes and kiss greetings – can feel awkward and artificial. How much will our informal, everyday interactions change? To a certain extent we have to go through a process of ‘unlearning’ habits that have been part of our social fabric. Some cultures might find such changes easier than others. I spoke to a Chinese colleague recently, and she said that in her country, “things are back to normal”. How can that be, I asked, if everyone is wearing a mask? “That’s not really a big deal here,” she replied. Yet for me (and I think our culture at large), wearing masks is everything but normal.

Kimon Schneider, Senior Scientist at NADEL – Center for Development and Cooperation at ETH Zürich.

As development organizations, we will

7. Learn to be systemic

The COVID-19 crisis has shaken the institutions and governance systems, which were built during the 18th-century. They struggle at a time when crises like this are not only more likely but will also be more frequent. We live in “an age of ongoing shocks” (Guardian). This requires government institutions to foresee and respond to systemic risks rather than specific risks. And this requires global development initiatives to move from supporting a single project or program that addresses specific problems to a portfolio or network of innovation projects that learn from each other and that together accelerate transformational systemic changes.

Arnaldo Pellini, Research Associate, Overseas Development Institute (ODI)

8. Travel less and decentralize

Post-COVID, we will think twice about why and how to travel. I hope that discovering nearby places will become as rewarding as visiting a far-off land. But what would that mean for the development work? It aims to support people abroad, for less developed contexts to become better off. Traveling to the field provides a better understanding of these contexts. This travel will likely be restrained post-COVID to what is really needed. This is not necessarily a bad thing! It will hopefully lead to capacitating local partners to lead the development discourse in their countries, to take decisions on what the best course of action is and to become topical experts. This would require development actors, implementers and donors alike, to increasingly “decentralize” tasks and responsibility to local partners.

Katrin Ochsenbein, Regional Advisor Employment and Income for the Western Balkan, Swiss Development Cooperation (SDC)

More from this author: Going Beyond Numbers

9. Decolonize

Some see COVID-19 as an opportunity to further re-balance the power between North and South. Development cooperation, which has been designed and largely steered by experts from the North, must now be more reliant on Southern partners, and therefore be more flexible, inclusive, and trusting. Northern development organizations have to do a better job of listening to what their Southern partners say and think. COVID-19 provides an opportunity to loosen the old power structure, but that does not mean that the process of “decolonization” will simply end. As a social anthropologist, I believe that decolonization is not ‘only’ a historical phenomenon but also a deeply psychological issue, partly rooted in a seemingly ingrained human predisposition for domination, division and control over nature, and over humans. In this sense, decolonization will always be part of our lives, in one form or another.

Kimon Schneider, Senior Scientist at NADEL – Center for Development and Cooperation at ETH Zürich.

10. Monitor and evaluate better to stay afloat

The post-COVID economic recession is forecast to send millions into extreme poverty yet will also increase competition for development aid funding. Monitoring and Evaluation not only demonstrate the efficiency and effectiveness of the work done to the development partners but also help better allocate the scarce resources. I hope that evaluation will therefore play a more important role in decision-making. That decision-makers fully understand the need for reliable information, especially on what works and what doesn`t for the benefit of those in need. Monitoring & evaluation systems are in place and assess continuously the appropriateness of measures, and help to adapt the modalities of initiatives, projects, programs, etc. to the changed realities of post-COVID-19. The pandemic reminded us to think about what is of value for us, i.e. equality, sustainability, prosperity. Evaluations will help us to understand which measures serve those values best.

Stefanie Krapp, Head of the International Program for Development Evaluation Training, University of Bern

Southeast Europe must address

11. Disguised attacks on democracy

Many analysts believe that the greatest concern is the political impact of the COVID-19 crisis since several countries introduced “draconian measures that entail a further erosion of democracy”. The executive powers took over the supremacy in decision-making while the role of the parliaments was suppressed, and the participation of citizens absent due to the complete closure of the civic spaces and restriction of basic freedoms. There are fears that the authorities prohibited public gatherings for longer than necessary and that the temporary restrictive measures could become permanent. Consequently, this crisis bears significant risks of further strengthening of authoritarian regimes and democratic backsliding. Civil society has an important role in protecting democratic spaces and ensuring transparent decisions, including the oversight role in tracking coronavirus spending. However, the crisis also brings new opportunities - for embracing digital spaces for civic engagement and accountability.

Snezana Misic Mihajlovic, Consultant for Good Governance in the Western Balkans

12. Snowballing labor market issues

The COVID-19 crisis will exacerbate the labor market and social welfare issues that the Western Balkan economies are facing, at least in the short-to-medium term perspective. Despite the modest positive labor market trends in the past few years, these countries met the crisis with already high unemployment rates and a slow pace of job creation. For long-term unemployed, who comprise more than 2/3 of the unemployed, this crisis reduces chances for employment almost to zero. Recent and this-year graduates, who have just entered the labor market and are looking for the first employment, will face a tremendously difficult time due to the ongoing economic shocks, especially having in mind that education-to-employment transition is insufficiently supported by policy instruments in WB6 countries. Considering that initial evidence suggests that low-skilled labor force is the most vulnerable to this crisis, decision-makers must substantially rethink the existing approach to education policy and skill-enhancing measures and react quickly.

Amar Numanović, Policy Researcher and Impact Analyst @ MarketMakers

13. ‘Politike’ instead of ‘politika’

If there is one silver lining to COVID-19, it’s the return of the small ‘p’ in ‘politics’. The word play is even nicer in Serbocroatian/Macedonian/Bulgarian: citizens are finally talking about politike/politiki (policies), and not about Her Majesty politika (politics). Partisan bickering between career politicians is slowly – but noticeably – giving way to policy discussions among experts. When citizens are afraid for their lives, they lose their appetite for political bravado, preferring instead to listen to all sorts of academic notions. Comorbidity. Reproductive numbers. Exponential functions.

COVID-19 also reminds us of some unfortunate realities. To craft policies, you need to know how many people will benefit – and where they are located. North Macedonia, for instance, doesn’t have this luxury: the last time Macedonians counted themselves was in 2002. To move education online, your children need to have laptops, and your teachers need to be technologically literate. And to have doctors ready to fight a lethal virus, you can’t afford to keep losing the best and brightest of them to the West.

‘Every crisis is an opportunity’ sure sounds appealing to a Balkan ear.

Kristijan Fidanovski, Master of Arts in East European Studies, Georgetown University