A Redesigned Social Contract for Altered Post Pandemic Realities

Context:  Covid induces economic crises has exposed the problems of inequalities and social divide, hence it requires reconfiguration of existing policies with productive sector at the heart of the new strategy to abandon the usual separation between pro-growth and social policies.

Common Agenda of Proposed Post Covid Policy Reforms

• Prepare technology efficient workforce 
• Enhance and integrate education and training programs with labour-market requirements.
• Social protection and social insurance for workers in the gig economy and in non-standard work arrangements.
• Social dialogue and cooperation between employers and employees for increasing workers’ bargaining power.
• Better-designed progressive taxation.
• Anti-monopoly policies to ensure greater competition, particularly for social media platforms.
• Climate change initiatives and push for new digital and green technologies.

Need for Reforms in Production Sector

• Common agenda of proposed post covid policy reforms fails to deal with the core economic problems (poverty, inequality, exclusion, and insecurity) that are reproduced and reinforced on a daily basis in the course of production, as an immediate by-product of firms’ decisions about employment, investment and innovation.

• Firms production decision are rife with positive(R$D) and negative (environmental pollution and greenhouse-gas emissions) externalities i.e they have consequences that spill over to other people, firms and parts of the economy.
• Shortage of good jobs as a result of firms production decision often carries high social and political costs: broken families, substance abuse, and crime. 
• Due to economic inefficiencies, productivity-enhancing technologies remain bottled up in a few firms and do not spread, contributing to anaemic overall wage growth.
• Automation of production line or outsource part of its production to another country, the local community suffers long-term damage that is not “internalized" by its managers or shareholders.
• The implicit assumption that middle-class “good jobs" will be available to all with adequate skills leads to idiosyncratic risks such as unemployment, illness and disability.
• Secular trends in technology and globalization is resulting into  more bad jobs that do not offer stability, sufficient pay, and career progression, and permanently depressed labour markets outside major metropolitan centres.

Way Forward

• Active labour-market policies should be broadened into partnerships with firms and explicitly target the creation of good jobs. 
• Industrial and regional policies (tax and subsidies based) must be replaced by customized business services and amenities to facilitate maximum employment creation.
• Redesign National innovation systems to orient investments in new technologies in a more employment-friendly direction.
• Climate change policies explicitly linked to job creation in lagging communities.
• Explicit quid pro quo between private firms and public authorities. 
• Firms need to internalize the various externalities their labour, investment and innovation decisions produce for their communities and societies. 
• Firms must rely on explicit regulatory and governance framework not on corporate social responsibility

New strategy must abandon the traditional separation between pro-growth policies and social policies.