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30 October 2020

Why economic long Covid means we must transform how we work

In a new era of permanent crisis, we should embrace Universal Basic Income and short-time working.

By James Meadway

The long-term economic and social impacts of Covid-19 are revealing themselves as the pandemic grinds on. For all the positive noises about a vaccine arriving imminently, the early evidence suggests that we have limited long-term immunity to this coronavirus – like the other seven humans are known to contract – while the logistical challenges of producing and distributing a vaccine at scale are immense. Nor will this be the last pandemic we face, with the climate crisis and the pressure we are placing on the environment driving outbreaks upwards. 

The immediate future is bleak, particularly in Britain. Having lost control, again, of the virus, the UK government is likely to have little choice but to impose what amounts to a second national lockdown, as France has just done. Chris Whitty and other government scientists were mocked by “lockdown sceptics” back in early September but official modelling presently suggests the second wave will be more deadly than the first. We cannot, to quote Michael Gove, “run this hot”. The government’s current policy fudge between the demands of public health and those of the free market – with its tiered control measures, imposed on local areas but (if need be) without local consent and proper local financial support – is not going to hold.

However, while “taking it on the chin” (to quote Boris Johnson in his earlier, libertarian phase) is no longer a remotely credible option, the social and economic costs of the last lockdown made clear that society-wide shutdowns cannot be imposed forever. Broadly, the left has supported lockdowns, correctly recognising the immediate public health need overrides wider considerations. But it should not get trapped into supporting lockdowns as a good in themselves – they aren’t. And it must recognise that we can’t hide away until all this blows over – it won’t.

Lockdown can break the transmission of the virus, but we have to then prepare for its long-term presence as we emerge on the other side. Part of that means getting the public health measures right – including, critically, suppressing cases of the virus to the point where test, trace and isolate can function, backed up with financial support. But because we are going to have to live with Covid-19 for the foreseeable future, and because we know it will not be the last disease we face, if we want at least some of what makes society liveable to continue, we will have to adapt.

[See also: Why Covid-19 means there will never be a return to economic normality]

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There are already some intimations of what that adaptation could look like. The emergence of so-called “Zoom towns” in the US has seen better-off professionals making use of extended working from home to decamp to their preferred holiday destinations – think ski slopes, the Hamptons, national parks – driving up house prices and straining local infrastructure. There is little point paying a premium to live in New York or London if you don’t need to work there, and much of what you value – the social spaces, the cultural life – is either closed, or just about to be. Falling city centre rents across the advanced economies suggest that many are taking the opportunity to look elsewhere. Sitting out the second wave – and the third, and the fourth, and so on – with a fast broadband connection in a bijou country location is nice work, if you can get it. 

But if we want this positive adaptation to be available to more of us than just upper-middle class Manhattanites – or their London equivalents – we will need to focus attention on the places that have lost out in the last 20 years or so, away from the big urban centres. There is an opportunity here for our smaller towns and cities to foster both their own economic revival, and a fair version of adaptation if we create the conditions for many more people to leave the cities. But it will require investment, and policy attention: fast, reliable broadband is an essential, as are improved local public services and environmentally-sensitive local planning to work around a growing population.

But thinking about where we live and work needs to fit in alongside how we do both. Covid-19 is uniquely disruptive to economies across the world because it strikes at the fundamental institution of capitalism – the labour market. It forcibly reorganises how and where and what sort of work can be performed. Anything we do to adapt to the “new normal” has to cut with the grain of that reorganisation, rather than flail against it. This is a challenge to how we think about social problems: conventional economics, in particular, tends to view work as a problem of quantity – how many jobs are there? – rather than quality – how is this work performed? Can it be performed?

[See also: What would Keynes do?]

By looking at the characteristics of jobs themselves, new research from the RSA indicates some answers to the latter question. The extra costs of protective equipment, additional cleaning, and social distancing measures themselves affect different jobs in different ways. For some kinds of jobs, such as retail and hospitality, the incentives to introduce automated processes (already high) are increased. 

Disturbingly, RSA figures suggest about 17 per cent of existing jobs are at high risk of automation and now at high risk from Covid-19. That suggests around 5.5 million people are at risk of not only losing their jobs today – but of seeing their jobs disappear permanently. Clearly not all of those jobs at risk will go; but similarly dramatic structural changes to the economy have happened in living memory. The dramatic decline of manufacturing in the early 1980s saw around two million jobs disappear, not to return, leaving a legacy of concentrated economic decline that persists to this day. Covid-19 at least threatens something on a similar scale. When the Chancellor, Rishi Sunak, talks about “non-viable” jobs, this is the potential for devastation that lurks behind his soundbites. 

This is not inevitable. The RSA suggests that targeted support for affected industries, and better training options would help, and both would. But confronted by the scale of Covid-19, we need to think beyond these more traditional measures: not just allocating people into work – suitably trained and supported – but thinking about how to allocate work to people; of redistributing not only income from work, as the tax system currently does, but creating a fairer distribution of work itself. 

Support for short-time working, deeply flawed as the government’s current implementation is, at least points towards a future where the five-day working week need no longer be the norm. Universal Basic Income, increasingly recognised as an essential insurance in a world of increasing insecurity, can also be the foundation for a society where paid employment no longer almost completely defines our lives and our society. It would take a leap of political imagination to shift how we think about work, but confronted with a crisis on this scale, that leap may now be necessary.

[See also: This is the moment for Universal Basic Income – here’s how it could work]

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