The Effect of COVID on Stakeholder Voices
The democratic imperative for all voices to be heard is at risk.
(This article was originally published in The Global Agenda magazine on April 14, 2021. Would you like a full copy, including perspectives from established and emerging diplomatic leaders from around the world? You can either purchase it here to support the Global Diplomatic Forum, or connect with me on LinkedIn to request a free copy — subject to editor approval.)
Smart diplomacy has the potential to significantly improve foreign relations, leveraging technology and independence in order to benefit from an array of stakeholders throughout society. However, the COVID-19 global pandemic has slowed many positive trends, reverting toward a steep imbalance between those who have a voice and those whose voices were weakened in 2020.
These stakeholders fall into three categories: Government, organizations, and citizens.
COVID-19 has accentuated the power, wealth, and voices of national governments, major corporations, wealthy schools and prestigious universities, and wealthy individuals. However, most citizens, smaller organizations, and local governments have a lower capacity to weather the storm, leaving them more vulnerable and less likely to recover quickly. As a result, this reduces the opportunity for their voices to be heard.
While regional differences exist, these parallel trends were nevertheless incited or accelerated by COVID-19.
Beyond this disparate impact, The Financial Times warned of a “K-shaped” recovery that could further widen the gap. Harvard’s Archon Fung states,
“If the future is this “K,” COVID will merely have accelerated the trends toward economic, social, political, and health inequities that have been widening in the United States for the past forty years: a quickening of the old normal.”
Thankfully, balancing forces have the ability to revive important stakeholder voices in our governments, economies, and societies.
Rising Disparity
In order to control the pandemic, national governments have seized greater power over citizens, organizations, and even local governments. While local governments have played a critical role in containing the spread of COVID-19, limited resources and declining revenues have limited their capacity to both respond and provide normal services.
Similarly, the role and resulting power of executive branches at each level of government has increased. The need for national coordination and executive action, bolstered by opportunism and the limited resources of local governments, has resulted in a disproportionate shift of power to national and executive offices.
As with local governments, small-and-medium-sized businesses (SMEs) have a lower financial threshold and have been particularly devastated. SMEs have been hit by falling revenues, which is delaying growth plans, creating payroll crises, and forcing businesses to close.
Yet, many larger corporations have survived and even thrived. These businesses often have the resources to maintain payroll and continue growth plans, increasing their market share. The ensuing effects will almost certainly include a K-shaped recovery for businesses.
Educational institutions are also experiencing this disproportionate impact and a K-shaped recovery. According to a recent study, many prestigious universities have experienced a rise in applications, while the majority of colleges and universities expect a decline. This affects university employees, and reveals the story of those hardest hit by the pandemic who must delay their higher education plans.
Perhaps most concerning is how primary education has suffered. A McKinsey study shows that achievement gaps among students at various socio-economic levels could grow even wider due to school closings and the ability of wealthier school districts to make a smoother transition to virtual learning.
The clearest effects of COVID-19 have been the disproportionate number of cases, deaths, and economic impact on those from certain social-economic backgrounds. Many wealthy people maintained and even increased their wealth in 2020, as stock markets continued to climb. Simultaneously, those with limited means or education could not take advantage of these gains, were more likely to see their income decline or lose their jobs, and had little or no savings to stay afloat.
Balancing Forces
While these trends are disheartening, there is hope for a flourishing democracy and diplomacy driven by a symphony of stakeholder voices. Local governments, small business owners, and people from all strata of society can have a voice due to the following counter-forces.
One advantage of democratic government is a separation of powers that places limits on any branch seizing too much control. Additionally, where federal forms of government exist, specific powers are ascribed to each level, ensuring some local control is retained. Of course, this requires each level and branch of government to exercise its voice in order to maintain the necessary balances of power.
Addressing the tilt toward corporate wealth over small business owners will also require intentionality. While many SMEs have been forced out of the market or will struggle to recover, the changes experienced in 2020 have created new opportunities that entrepreneurs are seizing. This has also accelerated a shift toward the digital and gig economies, as global gig-worker platforms have grown steadily.
As customers seek to purchase more goods online, and as data becomes increasingly accessible, visionary entrepreneurs in South Africa and elsewhere are finding ways to leverage these to create new kinds of value. Further, an Australian study demonstrated that prioritizing the growth of entrepreneurial ecosystems can hasten economic recovery, which includes creating new jobs. These opportunities provided by digitalization, the flexibility of the gig economy, and entrepreneurial ecosystems offer a path to rebalance the voice of business between wall street and main street.
Still, in order for these independent workers to truly have a voice, policy changes and evolving forms of collective bargaining are necessary to ensure their interests are well-represented, reducing their vulnerability to exploitation by employers.
Accelerated digital transformation also invites new opportunities for educational institutions to make learning available to those whose access is limited by geography, infrastructure, affordability, or the pandemic. According to the World Economic Forum, 57% of universities surveyed around the world are considering new platforms to attract learners. For example, an Accenture study in the United States shows that schools are adding more affordable online options and finding new ways to engage current and potential students. While this is encouraging, much more needs to be done, especially in order to address the widened achievement gap in primary education and the lack of educational infrastructure in developing countries.
When it comes to the direct impact of COVID-19 on people of different socio-economic classes, at least two forces are helping to balance the scales. Digital and social media platforms encourage democratic participation and offer potential to amplify these voices. As this Korean report describes, citizen-driven media allows important voices to be heard, which can lead to policy changes toward increased equity and inclusion in the public and private spheres.
However, this potential is mired by the tendency for self-selection, recommendation algorithms, and other social media pressure points to create echo chambers. This reduces idea exchange, which can lead to radicalization tendencies, poor policy thinking, and the perpetuation of larger voices dominating those that most need to be heard.
Further, international banks and foundations have played a key role in COVID resilience, supporting those who would otherwise be left behind. Latin America was deeply affected, since much of its population is particularly vulnerable to economic decline. Yet, economic impact on the region and its recovery projections are considerably better than they may have been. This is due to regional cooperation and smartly-targeted, accountable funding from remittances, government stimulus plans, and intervention by international organizations.
Takeaway
The direct effects of COVID have amplified disparities between levels and branches of government, sectors and sizes of businesses, and citizens of various economic means. However, balancing forces hold promise to redress the power, wealth, and ultimately stakeholder voices both within societies and in foreign relations.
Federalist government and democratic separation of powers keep government accountable. Accelerated digital transformation and the emergence of gig economy platforms are bolstering the entrepreneurial ecosystem toward a new wave of ingenuity and success. New forms of education are emerging to serve some of those with limited access. Digital media and smart funding are giving the marginalized a voice and hope for recovery.
Without these, we would likely see a boundless slide into an unrecoverable gap between who has a voice and who does not. Still, work is required to represent, protect, enable, and amplify these essential voices.
Therefore, while we can be grateful for these forces, we must also be intentional by promoting these balancing forces. We do this by supporting independent stakeholders and encouraging them to use their voice, providing increased opportunity for all. As Younes El Ghazi stated,
“Independence triggers stakeholders’ entrepreneurialism in global engagement and leads countries to increased opportunities.”
