The role of business in establishing a new social contract for economic prosperity

June 3, 2022 - 5 Minutes Read - By Raymond Obare

The time is now for the private sector to support economic prosperity and social mobility through a new social contract. An overhaul of the social contract will address 21st century realities and needs. A new social contract can deliver long-term value that enables economic security and mobility, is genuinely inclusive, and addresses challenges such as the transition to clean energy and the emergence of a digital world including providing social security floors for vulnerable communities.

The social contract—the relationship between individuals and institutions—needs an overhaul. For much of the second half of the 20th century, the roles and responsibilities of business, government, civil society, and people remained relatively constant. This social contract provided vital protections to support healthy and productive lives during and post the Covid-19 pandemic.

We are living in a time marked by undue income inequality, declining living standards for many, great anxiety over the changing nature of work, shifting needs for education and skill development, and unstable public benefit and social systems. Other structural changes include a rise in global competition, new business and employment models, technological advancements that create both untold opportunity and significant ethical dilemma, demographic changes, and new social and cultural norms.

Underpinning these changes is the escalating climate crisis and the need to shift to a net-zero greenhouse gas (GHG) emissions economy. These challenges come as we enter the decade of action in achieving the global goals (SDGs). The next eight years will be critical for business and society as we aim to deliver on the goals, and aim to peak emissions and become carbon neutral, in line with the Paris Agreement.

At the same time, criticism is on the rise over the value of capitalism and the purpose of business as more and more people recognize the link between our economic system, environmental degradation, and inequality. Moreover, governments around the world have intervened in the economy in ways unseen since the great depression. This reordering of the roles of the public and private sector will continue in the years ahead.

The Covid-19 pandemic is changing our world, and we have a unique opportunity to build a new social contract that supports a stable and thriving economy by enabling everyone to participate in and benefit from economic activity.

There is also an urgent need to ensure that new social contracts embrace diversity, equity, and inclusion (DEI). DEI approaches are critical to address both  inequities and the disproportionate impacts of Covid-19. Furthermore, there is a global call to address systemic discrimination, especially racial justice, as well as ensure women and historically marginalized genders are strategically positioned in business structures.

A long-standing structural barrier to participation in the economy can, for example, be addressed with heightened attention to diversifying corporate governance and leadership. Ensuring career pathways and skill development must consider populations that historically have been excluded from opportunities, may be most vulnerable to developments such as automation, and may be especially impacted by the economic dislocation which we are experiencing in 2020. A truly functioning and fair social safety net must address these challenges in a way that promotes fairness and a thriving economy that benefits from full participation.

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