Daily Coronavirus Webinar: Building an inclusive economy post-COVID-19

Overview:

"Building back better” is at the heart of the CBI’s approach to our emergence from the Covid-19 crisis. In today’s webinar, we were joined by expert panellists Belinda Parmar OBE, CEO of The Empathy Business, Sam Smethers, Chief Executive of The Fawcett Society and Rain Newton-Smith, CBI Chief Economist to discuss how businesses and policy-makers can build inclusivity into the post-Covid economy. 

Here are the five key topics we talked about:

• The latest on the economy 
• Covid-19’s uneven impact
• Inclusivity and resilience go hand-in-hand
• What can businesses do to be more inclusive?
• What can government do to make a more inclusive economy?

The latest on the economy 

“I’m a natural optimist at heart,” said Rain Newton-Smith, the CBI’s Chief Economist, “but we’re going to have to keep the best of our optimism with us as we see some pretty tough economic data that’s coming out.”

Last week saw the release of official data on GDP for March 2020, which recorded one of the “worst falls on record.” This fall was largely attributed to the lockdown measures in place, with a sharp decline in household spending.

Data on unemployment released by the ONS showed a rise in unemployment, but Rain noted that we can’t yet make a judgment on how high unemployment will rise. The ongoing job retention scheme (JRS) means that all furloughed workers are still counted as employees. Where the impact of the furlough scheme is really being felt is in the “hours worked” statistic, which fell by around 25 per cent.

Covid-19’s uneven impact

The coronavirus does not discriminate in terms of who it infects, but the impacts of the Covid-19 crisis differ for different members of society. “We are all in this together but the idea that it’s hitting us equally is not true,” said Rain. Women, young people, low-income families and BAME people have been disproportionately impacted by the effects of the lockdown on employment and the economy.

Much of the discussion in today’s session focussed on the impact of the Covid-19 crisis on women. “Women are finding themselves hard hit,” said Sam Smethers, Chief Executive of The Fawcett Society. Sam explained that women make up the majority of those who have lost their jobs and the majority of the labour force in sectors that have had to shut down. The closure of schools and childcare facilities has also had a big impact on women, as they are taking on more of the caring and home-schooling responsibilities than their partners.

Young people coming into the labour market in the autumn will also find this a challenging time. Many of the sectors that young workers would enter such as hospitality and retail have had to close their doors. Just as the global financial crisis affected the prospects of young people in 2008/2009, the knock-on effects of Covid-19 for employment going forward will have a “scarring effect” on this cohort of young workers for years to come.

Inclusivity and resilience go hand-in-hand

More diverse businesses outperform their rivals and are more resilient to shocks, said Rain. While Sam noted that employers who don’t think about inclusivity will end up excluding the best talent. Structural barriers to the progression of women and minorities cause waste and inefficiency in the labour market, she explained. Belinda Parmar OBE, CEO of The Empathy Business likewise pointed out that more empathic businesses – businesses that understand their impact on their people and on society – make more money and deliver more value to their shareholders. “Everyone benefits” from inclusivity, said Sam.

The upheaval of the Covid-19 crisis offers a unique opportunity for businesses to think carefully about how to build inclusivity into their plans for the return to work. “We have to see this as a moment to change things,” said Sam.

What can businesses do to be more inclusive?

The panellists had a range of ideas for how companies can be more inclusive going forward. Their suggestions fell under three broad areas:

1. Flexible working: As people adjust to working from home under lockdown, we are learning that a lot of jobs are more flexible than people thought, said Sam. Changes to working arrangements such as more flexible working and more work from home will be hugely beneficial for working parents and for people with disabilities, explained Rain: "I think it’s important we don’t slip back into this idea that you need to physically be in the office to communicate well with people, to be an engaged member of a team and to lead an organisation,” she said.
2. Role of leadership: Business leaders need to have “courage” and to take “calculated risks” going forward, said Belinda. Very few people want life to return to normal so leaders need to ask “difficult questions” about the future of the office and the talent pool to adjust to a post-Covid landscape. “We don’t need leaders who aren’t going to put their head above the parapet and do the same old,” she said, “the world has moved on and we need our leaders to move on with it.”
3. Value different metrics: Sam and Belinda both spoke about how businesses might measure different metrics for success to create a more inclusive workplace. Sam spoke about how businesses should benchmark themselves in terms of gender parity and racial pay gaps, while Belinda discussed the value of measuring emotional wellbeing for a more engaged workforce.

What can government do to make a more inclusive economy?

Businesses can do a great deal to make the workplace more inclusive, but they cannot act alone. They need the support of government policy and spending to make a more inclusive economy possible.

One of the major initiatives that would help make accessing work easier and more equal for women is government investment in what Sam called “social infrastructure.” Childcare and social care are enormously expensive in the UK and where families cannot afford to pay, it often falls to women to give up work to care for children and relatives. Sam noted that up to 10,000 nursery providers will have to close due to the Covid crisis, so government support and spending for childcare will be even more vital if we want to see greater equality when we return to work.

Key questions we answered:

1. Rain, could you give us the latest macro-economic outlook?

• Last week, we spoke about the Bank of England’s report on the economic impact of COVID-19. They sketched out a ‘V-shaped’ scenario.
• Some early official data Q1 GDP results from the ONS.
  • UK GDP fell by -2.0% in Q1 2020 (from 0.0% in Q4 2019).
  • This is the fastest fall since Q4 2008, driven by a sharp monthly decline in output of -5.8% in March.
  • The decline in consumer spending (-1.7%) was particularly noticeable in goods and services that require face-to-face interaction or are related to travel.
• These numbers offer a glimpse into what will no doubt be an even deeper downturn in Q2.
• This data is backed up by today’s labour market statistics. Hours worked were 25% below normal in the last week of March, and there were 450,000 fewer people on payroll. Unsurprisingly, there was a big drop in firms looking to hire, by 21%.
• Furloughed jobs are not counted as ‘unemployed’ – but they will show up in that drop in hours worked (since they are not working).
• So, these numbers may mask a longer-term impact.

2. What’s the thinking behind the idea of building an ‘inclusive economy’, as this crisis subsides?

• There are tough times ahead so inclusion, making the most of talent, and balancing risk are even more important.
• Inclusion is not only the right thing to do, but there’s also a strong business case:
  • Data suggests diverse firms are up to 35% more likely to outperform their rivals.
  • Research by McKinsey showed bridging the UK gender gap in workplaces could add £150 billion to business-as-usual GDP forecasts in 2025.
  • Full BAME representation in the labour market could add £24 billion to the economy per year (1.3% of UK GDP).
• The scale of the inequality problem is clear (pre-crisis):
  • Research shows that black male graduates earn (on average) 24% less per hour than their white counterparts.
  • And the gap between a new-born’s expected years of good health in our most and least deprived communities is a staggering 19 years.
  • Women are already bearing the brunt of the crisis – with many being disproportionately in caring jobs like nursing, childminding. Women are 77% of frontline workers and 69% of low paid workers.
  • BAME women are also disproportionately at risk.
• Businesses are clear that public health must come first. But reopening schools as soon as possible would benefit women and the poorest above all.
• This virus doesn’t discriminate between rich and poor, but the economic impact that follows certainly does. Public health must come first, and businesses will be led by scientific evidence – but lifting lockdown measures and re-opening the economy is starkly in the interest of the poorest above high earners.

3. Sam, when we talk about an inclusive workplace, what should we understand by that?

• An inclusive workplace is one that enables anyone and everyone to participate in the workplace. Nobody is excluded and therefore, all staff are enabled to fulfil their potential.
• This benefits individuals, organisations, and the economy as a whole.
• Not doing so constitutes waste in the labour market.

4. Belinda, what do we mean when we talk about the idea of an empathetic workplace?

• This relates to organisations that understand its impact on its people.
• When we assess how empathetic a company is, we look at the system, the way the leadership operates, how communications are written, and how meetings are conducted.

5. Is there a business case for an empathetic workplace?

• Only 1/10 people are engaged in their jobs. This means only 1 and 10 enjoy their jobs.
• We spend 50 years of our lives at work. More than we spend with our families.
• We know more empathetic businesses deliver more to shareholders.

6. How do you think people will come back to work after this subsides?

• It is better for employers to try to anticipate these changes and view them as an opportunity.
• The world of work wasn’t working for people before this virus.
• Internal empowerment scores, employee engagement scores, we are seeing them going up during this crisis. We need to ensure this isn’t a blip.
• This reconstruction phase, through the lens of empathy, is what we need to look for going forward.
• Anxiety creates cortisol which leads to worse judgement and worse decisions. We need to tackle this and view work through the lens of empathy.

7. Why should businesses care about inclusivity?

• If you don’t, you will undermine some of your best talent, undermine the performance of your best people and you will undermine your ability to deliver for your shareholders.
• Short-sighted employers don’t care about inclusivity, and they perform worse as a result.

8. How do employers make sure the benefits of the recovery are more equally shared this time than in 2008?

• Employers can control the way they design the work that is done in the organisation.
• This crisis has demonstrated that a lot of work is more flexible than people thought. People are more productive working from home.
• Trusting staff makes them feel better about their job, and makes them more likely to stay.
• Designing senior roles that can be part time or allow for working from home is one option.
• The balance between work and family life will be important for people going forward. A savvy employer will present that as an opportunity and a plus about their organisation going forward. Making them more attractive for job applicants.
• We need more investment in infrastructure like childcare and social care to ensure maximum flexibility in the workforce going forward.
• As we return to work, I want us to be making sure we don’t revert to a situation where being in the office physically means that you are more engaged, more dedicated employee. There are so many roles that can be done successfully from home.
• It is important for leaders to think about that. There will be some groups in your workforce who will relish the office reopening due to their own circumstances. But there are so many working parents where it is not possible to physically be at work until transport and schools are back up to capacity.
• This is also important in the context of disability, where really talented people may simply find it challenging to come into work. This change in working routine could unlock a whole swathe of opportunities for them.

9. We know that the majority of care responsibilities tend to be shouldered on women and working from home is has become prevalent. How should an employer think about ensuring that their female staff can be as productive as male staff, who aren’t having to shoulder those additional burdens?

• It is about providing the right flexibility.
• Your employees know about what kind of flexibility works for them. Trust your employees and have those conversations.
• What flexibility do they need? What support do they need? It could end up being a simple and practical conversation that results in beneficial results for your employee and you.
• This could be about ensuring you have the right technology to ensure your employees can stay connected wherever they are working from.