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Pivoting from a service economy to a sustainable, equitable economy

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A supermarket checker works behind a plastic shield. Image: Russ Allison Loar​/Flickr

As Canadians seem to achieve success in flattening the pandemic curve, attention turns to the alarming headlines about the economy. Unemployment surges to 13 per cent! Army & Navy department stores to close doors permanently after 101 years in business! Housing prices could drop 14 per cent in Toronto! Interest on savings accounts drops to half of one per cent! JC Penney stores in the U.S. close, and Reitmans in Canada files for bankruptcy protection!

And that's the good news. The bad news is that the economy is in so much trouble because the North American economy is basically hollow. COVID-19 has highlighted  the fact that 70 per cent of Canada's GDP comes from the service sector -- 77 per cent in the U.S. That's why so many of the front-line workers couldn't work from home. Their jobs bring them closer to their clients than two metres.

Economists call service jobs "tertiary," at a third level from extracting raw natural material. A 2018 TD bank economist's report portrayed the service sector as a resilient and "stalwart" part of the Canadian economy, "largely due to its reliable nature ... Bumps on the road may bring the current streak to an end, but it takes more than monthly gyrations to hold back the service economy ... "

On the other hand, the pandemic has created another term for service jobs -- "non-essential." Governments shut down hotels, restaurants, retail, travel, dentists, hairstylists and dozens of other tertiary industries. So far, more than 7.8 million people who were suddenly left jobless have applied for Canadian Emergency Response Benefit (CERB) cheques.

As trade has superseded diplomacy in international agreements, and especially since the World Trade Organization organized international agreements that override some national labour and trade laws, the gap between rich and poor has ballooned. According to a 2011 OECD report, from 1979 to 2007, the top one per cent's earnings more than doubled from eight to 17 per cent, while the bottom 20 per cent lost ground, slipping from seven per cent to five per cent of the world's wealth.

Meanwhile, Canadian women's workforce participation rate went from about one third (37.1 per cent) in 1976 to almost half (47.7 per cent) of the workforce in 2018, according to Catalyst research. Often women ended up in retail sales or food service, the two fastest growing job categories. We also broke down barriers to the professions, especially in health care, where only seven per cent of doctors were women in 1970, compared to 40 per cent in 2017.    

When the pandemic hit, then, women bore the brunt, taking two-thirds of the job losses in March, in what economist Armine Yalnizyan has called "the first she-cession." A May 8 Marketplace report says that up to 40 per cent of lost jobs in the U.S. may never return, because of social distancing requirements. That is, up to two out of five of those non-essential service industry jobs may disappear forever.   

In addition, in Canada, decades of health-care cuts, especially to women's health and seniors health, meant "not only were women directly experiencing provincial cuts as patients but also dealing with the fallout as workers," reported the Canadian Centre for Policy Alternatives. "The system overhaul hurt women also caring for sick relatives as caregivers, a role dominated by women."

Some astonishing players are rising to acknowledge the double and triple work burdens that many women carry as the "carer" who takes care of others. "In the face of this unprecedented pandemic," writes the CEO of Merck Group in the World Economic Forum, "it is more important than ever to recognize and appropriately support the pivotal role of providing unpaid care for family members and loved ones, to remove barriers, protect the health and wellbeing of the carer and to promote gender equality."

"This crisis highlights the immense value of health care, the care economy, and women's intensified care work burden," says an April World Council of Churches statement. "While the care economy is now being valorised, care work in the current context of capitalism has often meant further oppression of women and migrant workers."

With 85 per cent of Canada's pandemic deaths linked to long-term care homes, Canadians are recognizing the value of care work. "When it comes to Canada's social safety net," the Broadbent Institute reported on a poll it commissioned, "a resounding 97% think that the long-term care system for ageing Canadians needs improvement."

Take personal support workers (PSWs), for example. Care homes (like most employers these days) scrimp on workers' hours to avoid paying for their benefits. Since most PSWs need at least two jobs to survive, they tend to work at more than one long-term care home -- a practice that some provinces have now forbidden to prevent cross-contamination. 

The Broadbent Institute found that most Canadians believe PSWs deserve, "Improvements to the availability of paid sick days and livable wages, as well as greater access to income supports and employment insurance [which] received broad support, 90% and 88% respectively."

"Canadians want a recovery that is fair, focused on people, and builds up our resilience for future challenges," said Rick Smith, executive director of the Broadbent Institute.

And, Two-to-one Canadians want the government to spend whatever it takes to get the economy moving again, the poll found. Seven in 10 want to strengthen the health-care system, including universal pharmacare, and eight in 10 say it's very or extremely important that Canada rebuilds its own industries in key areas such as food and medical supplies, instead of relying on global markets.

While Canadians may no longer be hewers of wood and drawers of water, neither does the service economy have much of a future in a post-COVID social-spacing world. Shopping, meetings, conferencing and even doctor visits can all happen online now. A Japanese company has produced a lifelike robot that can be a companion to seniors with dementia. As soon as autonomous cars take over driving jobs, most of the service industries will be automated.  

The problem is, "We need work," as Andrew Yang said during his campaign for the U.S. Democratic presidential nomination, "and a lot of work won't need us." Indeed, consumer dollars drive more than half of the GDP. Rather than promoting entrepreneurship and encouraging people to invest in marginal tertiary businesses, he proposed a Universal Basic Income.  

In Canada, 17 per cent of women and almost 15 per cent of men lost their jobs between February and April, and don't know whether their former workplaces will reopen. My very rough calculation shows that federal payments such as CERB, Old Age Security, Guaranteed Income Security (plus Canada Pension Plan), and the Canada Child Benefit provide at least minimal financial security to about one-third (12.4 million out of 37.5 million) of Canadians.

So nearly half of Canadians should have a financial cushion to soften the distress when the smoke clears and the public can see the economic damage -- how many businesses will never reopen, how many industries will have to be completely reconfigured. That should buy time to redesign workplaces to accommodate the continuing virus threat and to restructure the workforce more sustainably, equitably and efficiently.

We are watching the realization and destruction of the globalized economy that the November 1999 "battle in Seattle" was trying to prevent. On one side were corporations and national leaders who negotiated in hotels -- trade deals which overrode national laws.

On the other side were unions, the Council of Canadians and their global partners who held teach-ins in libraries, and took over the streets to oppose the Multilateral Agreement on Investing. They warned that letting big manufacturers move to developing countries would undercut all the advances workers had made towards safer workplaces, higher wages and stricter environmental standards.

The MAI failed, but all its provisions survived to affect all our lives in the World Trade Organization. Looking back, "On the 20th anniversary of the protests," wrote professor Deborah James in Al Jazeera:

"evidence of [globalization's] harm to workers, healthcare, farmers, and the environment -- and particularly to developing countries -- has proven its critics right ... Predictions of increased jobs and prosperity under the WTO system have failed abysmally. Inequalities have soared, leaving hundreds of millions impoverished while billionaires metastasize like cancer. This is because corporate elites hijacked 'trade' and rigged the rules to distribute income upwards, while reducing protections for people who work ... " 

They also hijacked our climate. All the extra shipping involved with globalization has accelerated global warming -- starting with "global value chain," where "raw materials and intermediate goods are shipped around the globe multiple times and then assembled in yet another location," as defined by the World Economic Forum. But, the WE warned, "COVID-19 has struck at the core of global value chain hub regions, including China, Europe and the US." 

Awkward, frightening, and punitive as the shutdown of non-essential services may seem, there is a silver lining. Without factories and traffic emissions, "We're seeing in some places the best air quality in decades," said Bill Magavern, the policy director for the U.S. Coalition for Clean Air. If the pandemic hadn't happened, globalization could have continued to produce ever more emissions, ever more plastic products. The pandemic is showing us all our weaknesses -- including an economy based on what Depression era folks called, "taking in each other's laundry" -- so we have time to correct them, before we destroy the planet in the endless pursuit of profit.

Award-winning author and journalist Penney Kome has published six non-fiction books and hundreds of periodical articles, as well as writing a national column for 12 years and a local column in Calgary for four years. She was editor of Straightgoods.com from 2004-2013.

Image: Russ Allison Loar​/Flickr

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