The foundational economy needs to be central to Covid-19 recovery plans, say Mat Johnson and Eva Herman.
For a brief window during the height of the pandemic it seemed as if politicians and the public were united in their gratitude and respect for the essential workers who risked their own safety to keep us protected, healthy, and fed while the rest of the economy ground to a halt.
But beneath the positive rhetoric of events such as ‘clap for carers’ the pandemic has highlighted the fundamental lack of decent work opportunities for many in essential and foundational roles, and the disproportionate effects on already marginalised groups such as women and migrant workers.
Today there are widespread reports of stress and burnout among frontline health, social care and education professionals, and the limited scope to work at home in essential services meant that many workers continued to travel to a physical place of work often without adequate PPE and testing facilities.
Similarly the lack of access of low paid workers to occupational sick pay meant that many could not afford to self-isolate. The rapid growth of third-party food delivery services helped some restaurants to maintain an income stream by supplying takeaways, but the highly insecure nature of work in the gig economy and the tight constraints placed on workers by platform algorithms are not a cause for celebration.
So how can we explain the low pay and precariousness faced by many of the ‘heroes’ that were applauded during the pandemic? And how might we address the gap between rhetoric and reality as we move into the recovery phase?
The role of the foundational economy
The pandemic has reminded us that the health and wellbeing of citizens is a collective endeavour, as is the distribution of the daily essentials that all households (no matter how rich or poor) cannot feasibly provide for themselves.
The foundational economy encompasses many of the frontline health, social care and emergency services that were rightly celebrated on the doorstep each week, along with education and childcare, retail, transport and haulage, the rapidly expanding home delivery sector, retail banking, energy, and utilities.
While the immediate policy focus is on safely reopening businesses and encouraging consumers back into city centres, the recovery phase is an important, but small, window of opportunity to reposition the foundational economy at the heart of more stable, inclusive and egalitarian local economies. This will require a bold new vision and the effective coordination of several policy strands around economic regeneration and decent work.
Time for a policy rethink
The first, and most fundamental, policy change is to see the foundational economy as an asset and not a liability in terms of the social function it provides for many deprived communities, and the job opportunities it creates for women, younger workers, and migrants.
Many of the everyday activities within the foundational economy are by their nature localised, stable, and sustainable, and can form a key part of local transitions to a low carbon economy, which in turn will be an important source of skilled jobs for young people in the future. This will require policymakers to move away from long-held assumptions about economic growth through agglomeration, and the assumed causal link between productivity and wages.
The second policy area is for local authorities and other public organisations such as universities and hospitals to be creative and bold in reshaping local economies. This involves the shortening of supply chains and leveraging public procurement to keep money circulating within local economies.
Rather than offering tax breaks and other relocation incentives to large multinationals to build offices and warehouses in less affluent areas, municipal authorities can choose to support smaller home-grown businesses through the provision of affordable finance, while also encouraging alternative democratic models of company ownership such as worker cooperatives.
Looking within and across sectors
The third area of policy change is increased sectoral coordination. In the vacuum left by the botched rebranding of the UK’s national industrial policy, there is a significant chance for local actors to develop tailored skills and workforce development programmes that reflect the underlying structure of regional economies, alongside a renewed commitment to adult education and lifelong learning.
Crucial to this approach is, rather than looking at individual sectors in isolation such as through sector skills councils, a greater recognition of the common issues faced by smaller businesses located in local communities such as skills development, job design and participatory management practices.
A number of accredited living wage firms are SMEs in low margin sectors and local ‘good employment’ charters are also increasingly focusing their attention on improving employment standards within SMEs (who make up close to 60% of the UK labour market). Increased support for mentoring and peer review would also allow SMEs to learn from other similar businesses regardless of sector or geographical location.
To ensure that promises of ‘building back better’ and ‘levelling up’ are not empty rhetoric it is paramount that local policymakers ensure that the foundational economy is central to Covid-19 recovery plans. If not, there is a real risk that the collective effort mobilised during the pandemic will be wasted, and the heroes we all relied on will be consigned to a future of low wages and precariousness.