The fallout of lockdowns aimed at reducing the spread of COVID-19 have not yet been as disastrous to European economies as we might have expected, but they have exacerbated and accelerated inequitable trends. In this opinion piece, Byron Murphy assesses how different groups have fared through the pandemic based on their profession, and their prospects for recovery long-term amidst the dual challenges of insecure work and escalating house prices.
Elegantly evading catastrophe
Not since the Second World War has such a vast array of new terms and phrases entered the common lexicon in such a short period of time. Socially distanced, Zoom fatigue, cocooning, support bubbles, self-isolation – on and on they go, each creepier than the last. One deserves a bit of reflection in particular: “non-essential work”. Now, I have no doubt that such a concept exists. If you ever visit Shanghai and await a metro, you’ll notice a security officer on every subway platform whose sole responsibility is blowing a whistle to inform you the train is approaching. You will likely already know the train is approaching – they are loud beasts and every platform is equipped with electronic signs telling you exactly when the next one is due. And there won’t be much risk if you do manage to miss all these indications, as the tracks are protected by glass screens from floor to ceiling with automatic doors smartly designed to line up with those on the train. Nonetheless, that security guard persists. If I was pressed, I could see a case for doubting the essential nature of his or her work, true enough. But employment at clothing stores, measuring children’s feet for their first school shoes? Hardware store workers providing advice on roofing, plastering and plumbing equipment? Personal trainers who help people keep their blood pressure and cardiovascular systems in good order, or recover from injuries? Hairdressers who prevent us from unwillingly cosplaying as members of the Beatles? No, in those contexts non-essential is a new concept.
To their credit, those whose work was deemed non-essential have for the most part taken the situation in their stride. Across Europe governments have engaged in employment retention schemes paying 70-90% of salaries to those whose employers could not operate as usual, and provided funding to business owners who were not allowed to open. This has prevented the financial devastation which would certainly have befell many industries where social contact is unavoidable, and the ramping up of Europe’s previously lacklustre vaccine strategy injects hope that the interruption to life is creeping towards a close.
On the whole, it could have been a whole lot worse. Prior to the pandemic it seemed unimaginable that huge swathes of the economy – travel, tourism, hospitality, high-street retail and more – could be placed on pause without driving us all to destitution. But in a positive sign for the resilience of our economies the toll has not been that bad. The Dutch GDP is expected to level out at -5.4% for 2020 before recovering 4% this year. Worse than the 2009 crash, but not an unfathomable disaster. In my home state of Ireland GDP is understood to have somehow risen by as much as 3.4% last year, and although the state deficit is starting to grow worrisome it is nothing compared to our dark 2008-2010 years. Inflation will be rough, but no worse than it was during the quantitative easing days. The big picture looks positive, but as ever the devil is in the details.
Working hard or hardly working
Thus far the effects to economic security on individuals have been highly dependent on the security and nature of employment. If you work in finance, technology, academia, consulting or similar sectors, this is likely to be quite a prosperous time. The benefits of working from home while unable to travel, socialize at a bar or eat at expensive restaurants are considerable. If you are working in aviation, as two million people across the EU do, things have not been so smooth. The industry has been burning cash reserves, cutting salaries and laying people off left right and center. If, for your sins, you are a self-employed small business owner then it’s probably even worse. Last year saw 20% more businesses close than 2019, with the bulk of the increase coming in the latter half of the year when restrictions were tightened. All of these people would usually be considered members of the middle-income class, but clearly one group has had better luck.
Compounding woes for those in the latter categories, the housing market is becoming fiercer amid shortages and low interest rates. Rabobank predicts an 8% rise in housing prices this year, with the average home rising from €365,000 in 2020 to €410,000 by the end of 2022. Job insecurity makes obtaining a mortgage even more difficult than it already is, and those who cannot do so will be faced with higher rents – albeit capped at 2.4% – and intense competition for the properties which are available. One section of the middle class will struggle to bounce back after this, while another already thrives.
There’s even more complexity in the lower-income bracket. Some essential occupations were unaffected, and the gig economy boomed like never before as people relied on supermarkets and food delivery while everything else was closed to them. Others spent large swathes of the year essentially redundant, or occasionally taking odd jobs even if it placed them in contravention of rules. Few had the luxury of working safely from home, with full salaries and drastically reduced expenditure. Digitalization will be a further worry for this group. In January of this year, for the first time, online retail accounted for more sales in Europe than any other retail sector – be it supermarkets, department stores, automotive fuel or otherwise. Of course, online shopping has been on a constant upward trend. But this has been just the shot in the arm it needed, as volumes have climbed 500% since March of last year. Little wonder, then, that Amazon stock reached an all time high in September last year and is not far from exceeding it again. It is not clear, as things stand, if the booming gig and logistics economies will fully provide for the jobs lost to retail and high-street employment in the coming years.
A return to aristocracy, clerisy, yeomanry and serfs
The reader of Joel Kotkin will see many of his observations in this outcome. Kotkin has spent much of the past decade detailing the accumulation of power and wealth within specific industries, and his most recent work The Coming of Neo-Feudalism: A Warning to the Global Middle Class is even more direct on the matter. He identifies four major groups or classes emerging, which he compares with the social structure of the feudal era: an “aristocracy” led by tech oligarchs with enormous economic production and wealth; a “secular clerisy” of those in media, academia, non-profits and think-tanks; an “embattled yeomanry” comprising the middle class who do not fall into those categories (mostly small business owners and middle managers); and, lastly, the growing class of “serfs” – the working class who will increasingly be unable to afford their own property and who are ever more unlikely to rise into the yeoman class, the “traditional” middle.
Even more so than his previous work in The New Class Conflict, the book is both controversial and bleak but raises points which deserve attention in the context of our present situation. As it points out, the rapid expansion of the tech sector brings both challenges and opportunities. Tech enterprises are the most scalable businesses the world has ever known. If somebody in Alaska and someone else in New Delhi need to find a nearby mechanic, they will use the exact same product built by the same company to find it. This is especially profitable because compared to almost any other industry, tech companies need fewer workers per million dollars in revenue. As post-industrial cities lean on the technology sector more and more, they reap the benefits of impressive GDP figures but lower overall meaningful employment, as traditional jobs are replaced by fewer, more efficient tech workers. This may be, and indeed Kotkin seems to believe it is, why tech execs publicly support schemes like Universal Basic Income (UBI).
It is hard to predict how disruptive digitalization will be in the coming decades. We might fairly resist alarmism: the same fears were raised during the Industrial and Technological Revolutions and did not come to fruition. We are crafty creatures, and in times of flux we have always created new jobs, became more efficient at producing resources and innovated our way out of trouble. Kotkin acknowledges that the real threat for the displacement of workers is not direct, as with self driving trucks for example, but indirect via more efficient and scalable industries rivalling the old giants – petroleum, gas, automobile, telecoms and others – but with far less direct employment and engagement with community than those businesses. There are proposals to mitigate this phenomenon through improved adult education, re-skilling, and more comprehensive benefits for redundant workers. All of these things take a considerable amount of time to strategize and bring to fruition, and we may not have helped our cause in that regard.
Winners and losers in post-pandemic feudalism
If we were to accept Kotkin’s collection of neo-feudal groups, it would be clear that the past 16 months have only strengthened the dividing lines between them. The tech oligarchy had its best year in history. As people turned to Zoom, Teams, UberEats and Deliveroo to replace the social interactions that were impossible or unsafe, they spent even more time and money in the ecosystem of the global tech giants. Their stock prices almost universally hit all time highs over the past year, and they will be extremely grateful for it. The clerisy, similarly, were protected from harm. Academics have been able to work remotely, but the media really thrived. They are, as they will no doubt be thrilled to affirm, considered essential. They had the critical job of relaying the danger of the virus and instructing citizens on how best to avoid it, and should therefore be forgiven for the rare occasions where they themselves broke lockdown rules. Experts and advisors to governments similarly rose in stature – perhaps most notably in the UK where the Scientific Advisory Group for Emergencies (SAGE) have not only become celebrities and household names, but now have near total control over the government’s health policy. None was more influential than epidemiologist and superstar modeller Neil Ferguson, whose Imperial College model was used as the catalyst for the first lockdown shortly before he was found to be breaking COVID protocols and reportedly, to put it politely, not socially distancing with a married woman. Who could resist such a powerful man?
Outside of these two groups results quickly decline. If Kotkin’s yeomanry were embattled before, they are now truly under siege. Across Europe, the business owners of different industries have had to constantly pressure governments for stimulus funding to keep themselves afloat, often in competition with each other, while their consumer base became more and more familiar with online shopping, food delivery services and other convenient tech-led solutions. They are now left wondering if that custom will return to them as they slowly resume operations, but that is far from certain. The group Kotkin (unflatteringly) describes as serfs are split into two categories: the non-essential workers who relied on government support, and the essential workers: store assistants, cleaners, delivery drivers and others who kept society going at greater risk to themselves. The essentials are unlikely to be rewarded for their sacrifices, and both groups will be the worst affected by rising house and rent prices.
A return to essential work
We do not need to rely on feudal descriptions of society to notice that a strong trend is emerging when it comes to the security and wellbeing of individuals in different professions. There is a real worry that non-essential work (or precarious work at best) becomes a more permanent state of affairs. UBI is touted as a solution – providing resources to people who do not or cannot work through the taxation of those who do. This is a trendy idea and trials are underway, with another announced in Wales last week. But is this really the answer? People in meaningful employment do better across all metrics, from economic security to mental health and even creativity. Could one be forgiven for asking the controversial question: what if work is essential for us?
If there is even the slightest chance of that being the case, we should look elsewhere. For far less investment efforts can be made to reinforce education, particularly in those fields more attractive to employment. Adult education can be made more feasible and rewarding, to the point where “upskilling” and “reskilling” become real phenomena, not just catchy buzzwords. The housing crisis can be addressed, both through investment and through changes to planning processes which, it is becoming clear, will absolutely have to be made. All of these things require resources, but far less than something as wildly imaginative as UBI and without the nasties attached to it – hyperinflation, worrying Laffer curves and loss of purpose. In the short term, however, businesses must be allowed to go back to plying their trade unrestricted, without the fear of interruption from arbitrary rules with minimal observable effect to public health. Business owners need confidence, employees need security and the public needs normality.
The ascendency of big tech and digitalization has been a long time coming, and it has made our lives better in many ways. There is no need for a modern-day Luddite movement, destroying self-driving vehicles or introducing bans on ATMs. Nevertheless it is in our interest to ensure disruptive effects are manageable, and to the benefit of all wherever possible. When governments do intervene they should not only have good reason for doing so, but also some understanding of likely consequences. That was not the case this past year, and as a result the need to aid and protect those worst impacted by lockdowns will persist beyond that long-awaited return to normal life. They sacrificed a great deal without any say in the matter, and should not suffer unjustly for it. The lockdowns, social distancing and curfew laws of the pandemic have been radical experiments, but there is a reason scientists use things like control groups, literary support and ethics boards before they embark on their experiments. The results turn out better that way.
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With a background in political theory, international relations and Chinese politics, Byron Murphy’s present research is focused on inclusive urban development and regeneration. His work concerns theoretical frameworks of inclusive development, as well as policy analyses of recent and ongoing regeneration projects at brownfield sites across several European cities. Prior to joining the initiative Byron completed a masters program in 2017 at Fudan University’s School of International Relations and Public Affairs in Shanghai. At DoIP, Byron will be working with Prof. Martin de Jong and Dr. Filippos Zisopoulos in the Inclusive Wise Waste Cities project.
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