Corona

COVID-19: A Global Stress Test for Governance and Resilience

We live in strange times. While probably half of the world—the US, over Europe to Asia—is in a lockdown, it is well worth giving a thought to what lessons this crisis can teach us. Every generation has its defining moments and for the 21st century, the current coronavirus crisis can be a major tipping point for the collective memory.

The coronavirus pandemic hammers home some powerful lessons. When times get rough, strengths and weaknesses come to light. Crises serve as drivers and accelerators of ongoing developments. Coronavirus is a textbook example of this in several ways.

Globalization

As nearly the whole world is confined to their homes, we suddenly realize that we are collectively responsible for this planet. There is no escape and we need to accept this responsibility. Discussing the pros and cons of ongoing trends like globalization will not serve any purpose. While it is true that modern mobility has accelerated the spread of the virus., viral diseases have always crossed over species and spread. This is part of nature. Recent epidemics like SARS and swine flu, and historic cases like the Black Death, a plague outbreak of the 1300s—which finished off around 60 per cent or approximately 50 million of Europe’s population in the 14th century—are testimonies to this fact. These historic figures outnumber by far the horrors of Second World War in scale, which cost around 15-20 million lives in Europe. Inevitably, these dramatic population losses of the Black Death had lasting impact on Europe’s development for centuries. While these examples show how epidemics can impact human development on a large scale, globalization must not be seen as a menace but as a hope for international cooperation.

Digitalization

Increasing international cooperation, scientific research and knowledge sharing will benefit people around the world. Thanks to modern communication, people and decision-makers share information about recent developments, treatments and measures to fight coronavirus and take adequate action practically in real time. The emergence of new technologies has been an ongoing trend for more than two decades. However, the spread of digital technologies has not been satisfactory everywhere. Geographically remote areas from urban clusters are seriously lagging with regards to access to 3G or 4G internet. The need for social distancing has brought a new urgency to digitalization as the means of keeping private and business communication afloat.

Good Governance

One might have thought that international multilateral organizations such as the UN or regional integration mechanisms like the EU, ASEAN or SAARC would be the ones to take the lead in fighting the coronavirus pandemic. This is however not the case. The first response came rather from the lowest level of government—the municipalities—since they faced the immediate consequences of local outbreaks and necessity of a rapid and determined first response to save their local population. Next in line were provincial and national governments. The complex decision-making mechanisms of supranational multilateral organizations rendered them quite helpless and ineffective in the initial phase of the pandemic, when a rapid response was necessary. The lesson learnt is that local governments need to be strengthened to be able to tackle such emergency situations in an appropriate manner and that the different tiers of government need clearly defined responsibilities for effective coordination.

Although the measures taken to slowdown the pandemic are more or less similar around the world, the way various national institutions cope and their effects are quite different. The differences are striking even amongst the allegedly strong and consolidated systems of the Western industrialized countries. While the health care systems in Spain, Italy and the US are clearly overwhelmed, countries like Austria, Germany and the Netherlands have managed to respond adequately to the situation so far, increasing the capacities of their health care systems in time. Germany has managed to provide emergency support to its neighbouring countries in the south and west.  

What distinguishes the former from the latter is the set-up of their social security systems and the guiding concept of a social market economy in the Central European countries.  This concept is based on the idea of a good quality social security system accessible for those in need, and labour market and economic policy tools, which allow businesses and employees to survive short-term crises. This public social security system is supported by contributions of employers and employees alike and is supposed to provide a safety net for major life risks such as illness, unemployment, accidents and old age retirement, especially for employees. Another important labour market policy tool is the ‘short-time allowance’, which is a public wage substitution scheme for the employees of companies that are going through a short-term crisis and cannot pay 100 per cent of the wages of their staff due to a slump in orders. This short-term scheme allows companies to keep their skilled workforce for maximum 12 months and kickstart their business activities once business is back to normal. In this way, in Germany, these companies do not need to lay off their workers, that is, lose skilled labour and recruit new people later. This was an important labour market policy tool that helped the German economy enormously gain a head start after the financial crisis of 2009. Now during the coronavirus crisis, a new record of 10 million workers have filed for short-term allowance but are ready to get back to work as soon as possible.

The unemployment rates in the US have skyrocketed to unprecedented levels and the US health care system is struggling to provide treatment to large numbers of patients.  However, the Central European countries can activate their necessary policy mechanisms to handle the situation for the time being. This is crucial for social peace and the general acceptance of the drastic measures that governments all over the world have taken to restrict the freedoms of their citizens. Currently, the German government still enjoys a very high approval rate for its handling of the crisis, although the discussion about easing the lockdown measures is gaining momentum and the first small demonstrations against the lockdown measures can be observed. Solid social and economic back-up system gives the German government a sound legitimacy with its citizens. However, this might change and turn into a broader social conflict, if the pandemic lasts too long . The coronavirus pandemic is a real stress test for the resilience of government institutions and social security systems.

The situation for emerging countries such as Pakistan and its South Asian neighbours is obviously very different. In countries, where most people work in the informal sector on daily wages and live in crammed conditions without basic standards of hygiene, social distancing is virtually impossible. The lockdown on people who depend on daily wages for their economic survival puts their livelihood at risk immediately. Pakistan’s Prime Minister Imran Khan has a point there, when he says, “It is either corona or hunger”. While social distancing can be observed in the well-to-do areas of the educated urban elites, the situation looks very different in the remote rural areas and crammed city quarters of informal workers. Dramatic scenes can be seen on the roads, where the jobless try to return home to their villages from the large cities, where they have suddenly lost their jobs. The weak health care systems are short of collapsing although overworked healthcare workers outdo themselves. Volunteers and private initiatives have sprung up, where government institutions have not been able to deliver and provide information and food to the people trapped in their homes.  The recent ease of lockdown restrictions announced in Pakistan are rather an acknowledgment of the realities of life for the majority of Pakistanis than a strategic reaction to the pandemic situation in the country. However, the rising figures of confirmed infections and the recent closure of some overburdened local hospitals, which cannot accept more covid19 patients, have raised a political discussion about tightening the lockdown measures again.

In South Asia COVID-19 is not only a pandemic, but also an immense social problem, which carries a dangerous potential of social unrest, especially if the dire consequences of the economic standstill cannot be mitigated quickly. The massive scale of this challenge is too big for the weak health care systems and public institutions of these struggling countries, but also for many of the better-off western countries. Here, the regional integration bodies such as the EU and international multilateral organizations like the UN, IMF or World Bank can play a vital role. While they were not suited to take the lead in a rapid first response to the pandemic, they have the means and mechanisms in place to support the mid-and-long-term recovery of the most vulnerable economies.  

The coronavirus is a major stress test for good governance on a global scale but is also carries the opportunity for improvement of governance and public service delivery. If we take these lessons seriously, we can make our societies fit for the challenges of the 21st century.