By Seema Gail Parkash and Liana Tang
The World Health Organisation (WHO) declared COVID-19 to be a public health emergency of international concern almost six months ago. At the time, few could have imagined the immense toll of the disease, with more than 10 million confirmed cases and close to 500,000 fatalities globally to-date.[i] Even fewer could have imagined that the disease would up-end our ways of life so comprehensively or raise the spectre of a global depression. However, the driving forces reshaping our lives did not all emerge overnight — COVID-19 has accelerated many pre-existing trends. It has also introduced new ones. Some of these have resulted in shifts that may usher in great transformation. Here, we examine some of the ways in which COVID-19 is reshaping the world in the medium to long term and share five shifts in the environment that we are observing.
CSF has created an infographic providing a bird’s eye view of the five shifts discussed in this post.
Shift 1: Globalisation will be rewired
The notion that globalisation — cross-border flows of trade, investment, technology, data, information and people — is in retreat is not new. “Slowbalisation” or “deglobalisation” has been debated since the 2007–2009 Great Recession, particularly amidst the United States’ (US) “America First” policy and the US-China trade and technology conflict of recent years. While the pandemic appears to be accelerating this trend, perhaps what we are seeing is a rewiring of globalisation instead.
The pandemic has prompted governments and businesses to view the interdependence of global supply chains, particularly for critical supplies such as medical equipment, pharmaceuticals and food, as a vulnerability. Some countries and regional blocs, such as the US, European Union (EU), China and India, have enacted export prohibitions or restrictions on such supplies;[ii] and many countries are rethinking strategic autonomy. Businesses such as Google and Microsoft have accelerated efforts to diversify production from China to Southeast Asia.[iii] The context for reconfiguring supply chains is increasingly anchored on resilience, not “decoupling”.
However, the reconfiguration of supply chains has practical limitations given the significant cost of retreating from a free market strategy, the continued need for raw materials, governance and strategic policy capabilities, and countries’ unique demographic challenges. Taken together with travel restrictions, and the likelihood that short-haul travel will recover faster, we might see greater regionalisation of supply chains in the future, rather than a major shift towards on-shoring. Nevertheless, onshoring will continue in some areas as the world recovers and continues to compete in the development of emerging strategic technologies.
There is ample reason to believe that globalisation may be changing in nature rather than in retreat. China continues to push forward with the Belt and Road. The boost in cross-border e-commerce could expand export opportunities. New remote work models could spur the offshoring of more services helped by digitalisation.
Shift 2: The structure of economies could be fundamentally altered
The pandemic is not only reshaping supply chains. The need for social distancing to contain the spread of COVID-19 has dramatically accelerated digitalisation and has had far-reaching impacts on industries, employment and even economic mind-sets.
Globally, lockdowns have pushed more and more activities of daily life online, adding momentum to the digital transformation of industries — not least the retail industry. Even as many brick-and-mortar stores close, e-commerce platforms have seen global sales surge. At the height of the lockdowns, Amazon was reportedly earning USD 11,000 per second. In China, JD.com and Alibaba reported Q1 2020 year-on-year growth of 20 per cent and 22 per cent respectively.[iv] Jumia, one of Africa’s largest e-commerce operators, reported a four-fold increase in sales of groceries in the second half of March 2020, compared with the same period last year.[v]
This accelerated shift towards online retail could contribute to the consolidation of economic power by large businesses, as smaller businesses are less likely to establish and sustain a presence online. In addition, those industries that can capitalise on digitalisation — not least the tech giants — will emerge as “winners” from the crisis. For instance, industries that can shift entire jobs online could benefit from the best global talent even as they reduce overheads, thus enhancing their competitiveness.
Apart from digital transformation, the pandemic also appears to be accelerating the rise of precarious, short-term gig employment. Globally, unemployment has skyrocketed — projections forecast a drop in working hours equivalent to 305 million full-time jobs in Q2 2020.[vi] With the dire economic outlook, the unemployed and self-employed are turning to the gig economy and short-term contract employment — which lack comprehensive benefits and protection — to make a living.[vii] This trend could be exacerbated by a wave of defaults on household, corporate and government debt, given the massive accumulation of such debt in many economies and the acute shortage of US dollar funding brought about by the economic toll of the pandemic.
Nevertheless, it remains to be seen if the trend of a “contingent workforce” is temporary or more permanent. It also remains to be seen if such jobs will continue to lack comprehensive benefits and protection. The pandemic has demonstrated that many essential societal services are not well-paid nor valued, thus challenging the conception of (economic) value. This could lead to changes in how we remunerate “essential workers” such as cleaners, security guards and delivery people, who tend to be part of the contingent workforce.
Shift 3: New innovations and increasing digitalisation will birth unintended consequences
Despite the acceleration of digital transformation, “online” will not replace “offline” entirely. Remote work, e-learning and telemedicine may become more widespread, but many functions will still require a physical presence. There will be demand for innovations that facilitate safer interactions both offline and online; there will also be demand for innovations that circumvent supply chain or labour disruptions.
The pandemic has already sparked numerous product and process safety innovations. Product innovations in sanitation, such as anti-microbial self-disinfecting coating or Nippon anti-viral paint, if effective, would be a boon for high-traffic areas such as transport hubs and workplaces. Process innovations such as contactless options — for deliveries, orders at restaurants, payments, building entry — are also being introduced. Such innovations may be “high-tech” or “low-tech”. For example, Starship robots have delivered groceries in the UK.[viii] In other countries, including Singapore, contactless delivery may involve a person leaving groceries on the doorstep.
The pandemic has also seen innovations that circumvent supply chain or labour disruptions. These might involve a new twist on existing techniques. For example, faced with shortages of ventilators, doctors in the US successfully adopted “awake or self-proning” for deteriorating COVID-19 patients — getting them to lie on their stomachs or sides — to improve oxygen saturation levels, even though the proning technique was traditionally applied to sedated patients on ventilators.[ix] Innovations that circumvent supply chain or labour disruptions might also involve new or expanded applications of existing technologies/products. For example, the agricultural drone maker XAG mobilised drones for use by rice farmers in China facing rural worker shortages that were exacerbated by COVID-19.[x]
While it is uncertain if these innovations will endure post-pandemic, increased demand for safer interactions as well as digital platforms, software and hardware will certainly have unintended consequences. For instance, the emergency roll-out of new safety innovations without regulatory scrutiny, such as human disinfection tunnels, could harm the people who use them.[xi] As another example, new tech giants will almost certainly emerge amidst a world already unclear about how to deal with taxation, security and other regulatory issues vis-à-vis existing ones. Yet another unintended consequence could be a rise in carbon emissions as countries re-open. This could be a result of increased energy demand from widespread digital transformation, as well as delayed transitions to renewable energy amidst depressed oil prices and acute financial strain from the crisis.
Shift 4: Existing socio-economic inequalities will deepen and new ones will be created
We must not forget those who may be left behind, beyond vulnerable groups such as the elderly and the poor who may lack technological access or know-how. COVID-19 brought to the fore the vulnerabilities in many societies that had already been present for a long time, such as the fault-lines of race, migration status and income. In many cases, these divides influenced access to healthcare as well as decent living and working conditions — including adequate physical space for social distancing. Looking ahead, existing socio-economic and gender inequalities may deepen further. The crisis could also change the texture of existing fault-lines, while creating new ones.
With remote work largely limited to knowledge workers, divides between them and other gig, skilled and informal workers may deepen, even with government assistance to the latter. Moreover, increased automation for essential goods and services to reduce the risk of disruption in a crisis could lead to a further loss of stable but low-wage jobs, deepening the divide between rich and poor. These trends could be exacerbated by the absence of social levelling services, such as schools, child-care centres and workplaces, during extended or recurring lockdowns. For example, the quality of the e-learning experience is dependent on not just access to technology, but also the home environment — parents’ educational qualifications and technological know-how dictate the support they can provide, and the availability of a conducive physical space at home is crucial for learning. Similarly, working productively from home relies on adequate child- and elder-care, and the equitable distribution of caregiving responsibilities at home.
New fault-lines and challenges to the social status quo are also likely to emerge. Inter-generational inequity may widen. Retirees who work part-time, being particularly vulnerable to the virus, may be more cautious about social and economic activities even after lockdowns lift, and may be less likely to explore employment opportunities given the heightened risk of exposure. They may find themselves less able to contribute to the community and further withdraw from society. Youths, on the other hand, could be disproportionately impacted by protracted unemployment or under-employment due to lack of work experience. This could have several consequences, such as the rise of fragmented, generational politics, poor social cohesion, and a rise in migration or delinquency.
Intra-generational inequity may also widen. Unlike poorer youths, whose careers and ultimately wages and lifestyles have been set back, some youths from well-to-do families may be able to capitalise on their families’ social capital to land decent jobs. Others may ride on family wealth to emerge from the crisis with better credentials, such as higher degrees or unpaid internship experiences, which will position them well for high-paying jobs post-pandemic. New groups may also become vulnerable, when they were not before. These might include those earning high but unstable incomes prior to the pandemic, such as real estate agents.
It is also clear that the incidence of mental health issues will rise and psychological recovery will take a long time. Multiple groups will suffer from psychological trauma. Sufferers could include healthcare workers, recovered patients who spent weeks or months in isolation while sick, and children who endured confinement with their abusers. The elderly, the poor and those living with disabilities will likely also be affected disproportionately. Elderly loneliness could increase and mental acuity could decline during the crisis, due to the loss of daily routines, for instance. The jobless poor could suffer from high levels of anxiety and stress. There could, however, be psychological resilience “winners” — such as Generation Z and extreme introverts, who may thrive on digital platforms.
Shift 5: The relationships between governments, businesses and citizens will be reshaped
The pandemic has arguably ushered in the return of Big Government. At the same time, it requires governments to navigate new relationships with the private sector as well as the people sector, upon whom the success of measures depend. The pandemic also requires governance methods to evolve, but this may present new risks.
The pandemic seems to call for measures on a scale that only governments can institute and in other times would be deemed draconian; these include lockdowns, surveillance, movement control orders and border closures. The commensurate enforcement capabilities similarly call for large state machinery. It remains to be seen if Big Government will reinforce or restore public trust in state authority and infrastructure, as well as public service capability, or further erode it. The effect on public trust will likely depend on the extent to which the measures are seen to be successful in containing the spread of COVID-19.
However, even Big Government finds itself operating in a new era of private provision of public goods. Large private corporations have arguably provided essential infrastructure amidst the pandemic. For example, the Singapore government disseminates “Gov.sg” COVID-19 updates via the messaging platform WhatsApp. Governments will increasingly have to reconcile their conceptions of the public good with the interests of private corporations, taking into account the concerns of the public. The data governance debate triggered by track-and-trace solutions, such as the Apple and Google Exposure Notification (EN) API, is a good example of the tensions that might arise. While it is clear that new relationships are needed with the tech giants in particular, a healthy balance between cooperation and contention is uncertain.
The pandemic has also forced governments — which typically move fairly slowly — to move much more quickly. Rapid spread of COVID-19 has forced governments to institute and adjust policy measures and even legislation on a near-daily basis. It has also prompted the lifting of regulations in many areas in efforts to manage the crisis. These include de-regulation to expedite the development of vaccines and therapeutics, and the relaxation of regulatory vigilance around issues such as privacy. The pandemic has also led to active consideration or even implementation of hitherto unthinkable policy measures, such as unemployment insurance and “helicopter money”.
Even as governments develop the capacities to prototype and iterate in order to move faster, new risks loom large. If the government is too effective, this might reduce the private and people sectors’ drive to innovate, and increase unsustainable expectations of government. Avenues for abuse also open up. For example, harvesting biometric data en masse to better track and contain the pandemic could allow governments and corporate intermediaries to get to know citizens well enough to predict or manipulate citizens’ feelings to sell them anything, be it a product or a politician.[xii] Corporate giants that have facilitated pandemic management efforts may not be taken to task to surrender or protect citizen data post-COVID-19, and governments similarly may not introduce adequate safeguards. This may raise privacy concerns in the shorter term and fear of autocratic governments or unscrupulous powerful corporations in the longer term.
These are just some of the ways in which COVID-19 is reshaping the world. While the pandemic has emerged as a game-changer that will have a profound and complex effect on societies, economies and the environment, the trajectories of the trends are in many respects still uncertain and bear watching. Governments, corporations and citizens have the agency to influence the outcomes regardless of the degree of uncertainty, albeit to varying extents. It is timely to consider if existing strategies and practices are adequate for the challenges ahead.
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Seema Gail Parkash is Deputy Head at the Centre for Strategic Futures.
Liana Tang is Deputy Director (Special Projects) at the Centre for Strategic Futures.
The views expressed in this blog are those of the authors and do not reflect the official position of the Centre for Strategic Futures or any agency of the Government of Singapore.
[ii] Stormy-Annika Milder et al, “Export Controls and Export Bans over the Course of the COVID-19 pandemic”, 29 April 2020, https://www.wto.org/english/tratop_e/covid19_e/bdi_covid19_e.pdf
[iii] Ting-Fang Cheng and Lauly Li, “Google, Microsoft shift production from China faster due to virus”, Nikkei Asian Review, 26 February 2020, https://asia.nikkei.com/Spotlight/Coronavirus/Google-Microsoft-shift-production-from-China-faster-due-to-virus.
[iv] Charlie Humphreys, “E-commerce webinar: Is the Covid-19 boost a new normal?”, 15 June 2020, https://technode.com/2020/06/15/e-commerce-webinar-is-the-covid-19-boost-a-new-normal/.
[v] Neil Lewis, “The pandemic could be a turning point for online shopping in Africa”, 18 June 2020, https://edition.cnn.com/2020/06/18/tech/africa-ecommerce-covid-spc-intl/index.html.
[vi] International Labour Organisation, “As job losses escalate, nearly half of global workforce at risk of losing livelihoods”, ILO Press Release, 29 April 2020, https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_743036/lang--en/index.htm.
[vii] Alana Semuels, “’It’s a Race to the Bottom.’ The Coronavirus is Cutting into Gig Worker Incomes as the Newly Jobless Flood Apps”, TIME, 15 May 2020, https://time.com/5836868/gig-economy-coronavirus.
[viii] Estelle Shirbon, “These robots are delivering groceries to UK doorsteps in the pandemic”, 29 April 2020, https://www.weforum.org/agenda/2020/04/robots-united-kingdom-uk-coronavirus-covid19-ai/.
[ix] Pam Belluck, “Low-Tech Way to Help Some COVID Patients: Flip Them Over”, New York Times, 13 May 2020, https://www.nytimes.com/2020/05/13/health/coronavirus-proning-lungs.amp.html.
[x] Yujie Xue, “Drone maker XAG in drive to automate rice farming in China amid labour shortage, COVID-19”, South China Morning Post, 29 May 2020, https://amp.scmp.com/tech/gear/article/3086561/drone-maker-xag-drive-automate-rice-farming-china-amid-labour-shortage.
[xi] Salma Khalik, “Coronavirus: Experts caution against use of disinfection tunnels”, Straits Times, 21 May 2020, https://www.straitstimes.com/singapore/experts-caution-against-use-of-disinfection-tunnels.
[xii] Yuval Noah Harari, “The world after coronavirus”, Financial Times, 20 March 2020, https://amp.ft.com/content/19d90308-6858-11ea-a3c9-1fe6fedcca75.