NOT ALL RECOVERIES ARE CREATED EQUAL: How consumer organisations can shape the post-pandemic economy
The economic fallout from the COVID-19 pandemic will be felt for many years to come. The World Economic Forum’s ‘Global Risks Report’, published in January, declares that ‘the global economy has now sunk to its deepest crisis in peacetime’. The disastrous impact on people’s livelihoods—rated the second-most pressing danger in the report’s 'Global Risks Perception Survey’—is only one aspect of the crisis, which will have knock-on effects for producers and consumers alike.
The greatest risks facing consumers following the pandemic were discussed in a global webinar convened by Consumers International. 25 of our members gathered online to discuss the report’s findings with the World Economic Forum’s Head of Global Risks and Geopolitical Agenda, Emilio Granados Franco.
"Building Back Better"
Consumer organisations have their work cut out if “building back better” is to become more than an empty catchphrase. There is no guarantee that the recovery will not in actual fact worsen existing trends towards inequality and youth disillusionment. Companies that succeeded during the pandemic will have more power to acquire small businesses downstream, leading to greater market concentration. Combined with the global trend towards protectionist policies, this may mean that consumers face less choice, higher prices and lower quality in the future. Notably, 2020 was an excellent year for stock markets, yielding gains that mostly benefit already wealthy individuals. Emilio therefore proposed that “an uneven recovery is a risk in itself”.
There are reasons to be hopeful amidst this bleak picture however. The first is a higher level of public scrutiny of governments and businesses. Businesses that are perceived to have been exploitative during the pandemic—for example, by re-hiring workers under worse conditions, or using fiscal stimuli for wealth creation—will be given short shrift. ‘Consumers and employees are now scrutinising corporate values more intensely’, according to the report. As for governments, the speed and scale of policy responses to the pandemic has shown, in Emilio’s words, that “action can be achieved when there’s political will”. The pandemic has created the political space for the consumer movement to advocate for an ethical and sustainable economic recovery.
The nature of the economic crisis also gives reason to think that consumer advocacy may have a newly shaping influence. Unlike the 2008 financial crisis, this crisis has been a demand shock. Pandemic containment measures have enforced minimum consumption, meaning that the recovery will largely depend on increased consumer expenditure. This offers our movement the unique opportunity to establish consumer protection and empowerment as a necessary precondition for future growth.
“The pandemic has hit older people particularly hard. This is the case not only in terms of health, but also finances, with the future funding of pensions being questioned thanks to the economic downturn. The role of consumer advocates is vital to prevent these groups of vulnerable consumers getting left behind in the recovery."
-Gilly Wong, Vice President, Consumers International
How can consumer organisations make the most of this opportunity and wield their power for the greatest impact with and for all consumers? Two ideas were discussed in the webinar:
1. Inform, educate and equip
Giving consumers access to important information, and equipping them with the skills to interpret it, lies at the heart of what our member organisations do. The importance of this role will increase in the coming years. The pandemic has revealed that governments are not always able to provide clear, consistent and evidence-based communication: mixed government messaging has in many countries made situations worse. Consumer organisations have the trust and the technical expertise to repackage information in a way that is credible and accessible for consumers; which will be fundamental as human activity becomes digitised faster than ever. They can act as “intermediate consumers” of information, Emilio suggests.
For instance, widespread global uptake of vaccines will be the keystone of any economic recovery from this crisis. Misinformation and fake news, especially about vaccine efficacy, has the potential to delay or even derail countries’ exit from pandemic restrictions. But misinformation is not only a short-term problem: according to the Global Risks Perception Survey, ‘backlash against science’ will heighten the risks of ‘climate action failure’ and ‘infectious diseases’ over the next decade. Consumer advocacy groups have a part to play in mitigating these risks, for instance by raising consumer awareness of greenwashing.
2. Be the bridge
The Global Risks Report sets out a shifting landscape of risks, not a timetable of predictions. For Emilio, the key question is not “what and when will the next crisis be?” but rather “how can we build resilience to any crisis?”. Global risks by definition have to be met by a global response. Consumers International, with its network of grassroots members and established partnerships with international institutions, embodies and enacts the multi-stakeholder approach that is required.
Businesses will need to look to deliver long-term societal benefits, beyond their current focus on keeping profits up during the crisis—but this is unlikely without government incentives and regulation. We cannot put everything on the shoulders of governments, however, since they have limited oversight of individuals. The wishes of individual consumers to act for the collective good, including that of future generations, needs to be translated into action. But they cannot do this if more sustainable products, for example, are not made available to them.
None of these changes can take place on their own. Civil society can “act as a bridge” between these three actors, Emilio says. Consumer organisations are the vital mediators between politics, consumer choice and profits.