To protect jobs we have to protect people first

Within its first few months, COVID-19 exposed a fundamental flaw in the prevailing model of economic development: inequality.

The pandemic, through a combination of lockdowns, restrictions on being outdoors and social distancing, prevented many consumers and producers from engaging in their economic activities - resulting in significant hardship for those without alternative resources to draw upon. This was especially true in developing countries with less advanced digital economies.

A decade of inclusive growth reversed in just a few months

Deloitte’s experience has found that in most countries, "better off" households with electricity and connectivity at home, as well as office jobs that could be conducted remotely, were less impacted. Similarly, the largest enterprises were far more likely to have access to financial reserves and avenues to conduct digital business. Stronger economic actors also tended to be well-placed to receive and benefit from traditional stimulus policies.

In contrast, disadvantaged groups in developing economies, such as households without power and connectivity at home, women and minorities, people working in the informal economy without government IDs, and small enterprises without a digital business or a credit facility, were hit the hardest. Being less integrated into formal economic and government institutions, they were also less able to benefit from the first waves of support.

For example, in Bangladesh, the ready-made garment sector accounts for more than 80% percent of the country’s exports and is a key employer of women. As the pandemic caused consumption to fall, the industry was hit by the cancellation or postponement of several billion US dollars in orders from importing countries – and many women lost their jobs just as their families became even more dependent on them for support during the pandemic.

Non-profits and community organizations also experienced unprecedented stressors, with demand for their services higher than ever, while their own staff was also impacted and often donations and other resources slumped due to the economic slowdown.

While 88 to 115 million people across the developing world slipped back into extreme poverty, alarm bells rang that the world could be losing a decade of inclusive growth in mere months. Fortunately, in Deloitte’s work supporting developing countries across the world, we have seen private enterprises small and large forge a broad array of new collaborations with government and social organizations, helping to bring innovative solutions, at a pace rarely seen, in support of those in need. This offers a glimmer of hope for a new way of doing things.

The link between economic equity and resilience has become crystal clear

Perhaps the greatest cause for economic hope from the last year is that the link between economic equity and resilience became so clear that the calls to action could not be ignored. And the world responded.

When economic development includes a balanced and equitable growth in access to healthcare, education, power, connectivity, financial services, governance and the digital economy, then economic resilience also runs deeper because more people and businesses have access to these resources in times of need.

The role of the private sector, and of small growing businesses and social enterprises in particular, in spreading access to these capacities and bolstering social resilience is one that has evolved and has become ever more significant.

One striking trend has been the extent to which countries have embraced digital innovation to enable cooperation across sectors, to overcome data gaps, and to reach low-income households and marginalized populations with needed support. In Morocco, for example, where the smartphone penetration rate is 137.5%, the government was able to partner with cellphone businesses to provide funds to workers in the informal economy through monthly mobile payments. Small producers in Bangladesh’s food production chain also embraced new digital technologies – mobile phones, web-based messaging services, digital money, and online meeting platforms – to coordinate and help minimize disruptions in rural food supply chains, reducing waste and helping to avoid the worst shortages.

Another trend has been the growing partnerships between government and private enterprise to assist with the “last mile” delivery of assistance. Financial aid has been delivered via local banks and cell phone subscriptions, and private sector logistics companies have assisted with the distribution of aid and medical equipment. We have seen partnerships where governments have provided resources for local non-profits and social enterprises to distribute via their community networks. An example is the cooperation between the Singapore government and the NGO Hagar International, whose presence and network across multiple Asian countries enabled it to help the Singaporean government support its migrant community.

A dramatic acceleration of the global social enterprise pointing the way to a new economic model

A third trend is that an unprecedented number of private businesses and social enterprises have stepped up and played a key role in directly providing unmet social needs related to the pandemic. They have demonstrated myriad entrepreneurial and innovative approaches to solving society’s challenges, which over time can spread to the mainstream.

For example, a telecommunications corporation in Kenya provided discounted texting services to an education-based social enterprise – allowing them to grant access of their services to a wider audience. Alterna, a social impact accelerator based in Guatemala, is demonstrating to the private sector the value of persistently investing in women. By continuing to support women-owned and led businesses throughout the COVID-19 pandemic, Alterna has helped to support their roles as leaders of businesses, households and in their communities – and has thus helped to support women’s outsized contribution to social and economic cohesion through the last year.

As the pandemic has spurred the world to action, the pace and extent of these innovations has amounted to a dramatic acceleration of the global social enterprise. It points the way toward a more inclusive, resilient economic model where values-driven small and growing businesses and social enterprises are more deeply integrated into the economic fabric. They are an engine for jobs in the recovery, and a newly emerging central element of our economic and social resilience.

The COVID-19 pandemic is unlikely to be the last global crisis, and leaders in government, academia, business and beyond will benefit the world by acknowledging and supporting the central role that these enterprises have come to play.

This is part of a series of articles published by the World Economic Forum’s COVID Response Alliance for Social Entrepreneurs on the role of social business in responding to the COVID-19 pandemic. The Alliance is hosted by the Schwab Foundation for Social Entrepreneurship and includes 86 leaders in social entrepreneurship, including Deloitte, that collectively support an estimated 100,000 entrepreneurs and social innovators around the world. The article draws on lessons from Deloitte’s work assisting international development organizations, governments and private enterprises around the world in their response to the Covid-19 pandemic. Please see www.deloitte.com/about to learn more about Deloitte’s global network of member firms.