We are facing a global economic crisis across many parts of the lower half of our global economy. In 2017, the McKenzie Global Institute estimated that between 400 and 800million jobs would be lost due to automation, both digital and mechanical. This is largely as a result of big businesses becoming more and more efficient in their processes and cutting costs including unnecessary salaries. This is not entirely the fault of the big businesses; It is the nature of business to increase profit and eliminate expenses. However the result is often that those jobs that can be eliminated will be. This is also not a new trend. Historically large businesses shed more jobs than they create, and almost all new job creation is done by small and medium businesses (SMEs) and startups.
The Economic Devastation of COVID
This job-loss reality that the McKenzie Institute predicted has been sped up dramatically by COVID-19. The UN estimates that up to 400 million jobs will be lost due to this crisis, and that is in the “formal” economy (those that pay taxes, get regular paychecks, etc). Of the almost two billion people in the informal economy, which represents the most vulnerable workers in the labor market, nearly 1,600,000,000 (1.6billion) could “could see their livelihoods destroyed due to the continued decline in working hours brought on by lockdowns”. This is an unprecedented economic disaster, not simply for the developed world which has spent over $10trillion supporting workers and industry since the crisis began. For those in the developing world, this has become a cataclysmic loss of labor capacity.
Hope for the Future
But there is hope for those in the lower half of the world’s economy. It is not with large corporations, many of which have accelerated their efforts to automate processes and eliminate jobs in order to survive the crisis. Neither is it with charity relief, though that can provide some help in the immediate aftermath of the crisis. No, for those who have lost such jobs, their hopes lie in either the small business around them and/or in the chance to create their own businesses. In fact, crises can often provide tremendous possibilities for new growth. Almost 50% of Fortune 500 countries today were started in the midst of recession. This is the time to create and imagine, and we believe we have the path to do so.