Reshaping the social contract for our new global reality
Businesses, customers and governments alike must learn the moral lessons of the pandemic, says ICAS CEO Bruce Cartwright CA
COVID-19 has hit the global economy like nothing before. We have all experienced downturns in the past, but these were cyclical, not a sudden, widespread shutdown of demand. For businesses in some sectors, the customer has simply disappeared overnight.
This has meant the relationship between the public and private sectors is now more intertwined than ever before in our lifetime. Private businesses, which had been paying taxes and feeding back into society for generations, suddenly needed that relationship to reverse.
It is only right government has intervened in unprecedented fashion. The fundamental assumptions on which business operates have been pulled from underneath them, regardless of whether their underlying model is healthy or not. Take tourism: you could be a strong hotel but if your doors are shut there is no income. In this environment, it’s reasonable for the private sector to look to the state for a financial bridge because society needs these “good” businesses to survive. It is not a question of supporting a “failing” business, but helping a viable one to manage an impossible cashflow until some form of normality returns, and preserving the employment and all the positives that entails.
The social contract
The pandemic has also awakened the moral responsibilities of employers themselves. It has been heartening to see more than 80,000 businesses opting to return some £215m of furlough money, because it was either issued in error or they had no need for it. Consider also the voluntary extension of the Eat Out to Help Out scheme beyond August by some restaurants.
Those firms sent out the clear message they had an obligation to get people back to work. In the good times, businesses must survive by making a return on their assets, but the pandemic is once again challenging our understanding of what this return should look like. In other words, businesses have a direct, contractual moral obligation to their workforce, as well as wider obligations to society.
Similarly, customers have recognised the part they have to play in the survival of local business. Stuck at home during lockdown, the importance of businesses within walking distance was magnified. On the internet, we’re mainly price-driven consumers. But, locally, if we want our surrounding facilities to survive, we have to make use of them.
The lesson for CEOs, meanwhile, has been the clear reinforcement of the message that our job is all about our people. We must help everyone to perform their best, giving employees confidence to not only think outside the box, but to deliver outside it in difficult times. It is the job of the CEO to enable the team. Pre-Covid, I made a point of picking up conversations in the office about whatever was on people’s minds. Now you have to make the effort to somewhat formalise those interactions. It would be far too easy to get removed from the wider team while we’re physically separated. Bring a group of 10 employees together, chosen fairly randomly and with no agenda, and hear how they’re feeling.
Undoubtedly, the debt burden we have accumulated during the pandemic means a price will have to be paid for re-establishing stability. But it’s not the first time in history this has happened – think about the debt implications of the Second World War and how those payments ran in the background of growing economies for decades. At the moment, in particular, we’re benefiting from incredibly low interest rates. The generational consideration, however, is another matter altogether. If we are entering a new economic paradigm with more debt, then how will future generations, already under sustained pressure, pay for that debt? We’re yet to find a satisfying answer to that difficult question.
The pandemic has also brought into focus that none of us is immune to global issues. We are not defined by a country’s borders and we have never been more dependent on each other on a worldwide basis. It’s a philosophy that naturally extends to other pressing issues on the global stage, such as climate change. If anyone still believed that achieving a sustainable planet is a challenge for someone else, then COVID-19 is clearly demonstrating that it’s not.
No profession, business or country is an island.
Listen to Bruce Cartwright CA discuss sustainability on The CA Agenda podcast.