Economics and Work

Will there be renewed support for the multilateral system and its organizations?

The economic fallout is the top risk in the World Economic Forum’s COVID-19 Risks Outlook. Pascal Lamy and Eduardo Pedrosa warn that although it is too early and too much is unknown to realistically assess the economic impact, some steps can be taken now.

In their essay, “Trade and Connectivity in the Post COVID-19 World,” Lamy and Pedrosa argue that export restrictions should be lifted swiftly and governments need to separate their crisis response policies into those that stem the spread of the virus and those that bridge the gap between supply and demand of key products to fight the disease. If not, the pair foresee retaliatory trading practices disincentivizing private investment in productive capacity.

The pair also argue that, without rules, stimulus packages risk distorting the playing field and raise trade tensions. In light of this, there should be a review of the state aid guidance that the World Trade Organization (WTO) provides, an “honest conversation” on WTO reform and the Agreement on Subsidies and Countervailing Measures, and better alignment on the risks to supply chains in the aftermath of the pandemic.

In their opinion, what is needed now is an organization “in charge of precaution”, that moves us away from protectionism, and manages risk assessment, monitoring and notification.

The time is ripe for the creation of a new social contract based on equality, trust and sustainability.

Reflecting the economic fears surrounding the pandemic of prolonged global recession and bankruptcy, structural unemployment emerged as another significant risk.

In the face of this, Sharan Burrow, in her essay “The Pandemic that Stopped the World” argues that for the world this shows the need for a new social contract in which people and the planet are central to shared prosperity.

Burrow recognizes that the current global economic model of recent decades has created inequality and constrained development and calls for a new social contract founded on rights and inclusion.

Burrow suggests that democratic accountability be included as part of the contract to ensure prosperity and sustainability, and argues that it should also include a labour protection floor, involving rights such as collective bargaining, occupational health and safety, adequate minimum wage, maximum hours of work, and underpinned by universal social protection.

Couple this with a transformative agenda for gender equality, just transition measures to ensure trust in climate action, and corporate due diligence mandated via a UN treaty on Business and Human Rights, and the world, Burrow argues, will move towards a social contract born out of trust.