Valdai Club

In early 2020, when the pandemic was still gaining momentum, it was very fashionable to repeat the popular notion that the world will never be the same again. In the Russian discourse of the future structure of social policy, it was often said that the pandemic would provide an opportunity for nullifying previous agreements and building a new, "better" world.

Nevertheless, if one looks at how countries organised the fight against the spread of coronavirus and provided support to their citizens, it becomes clear that the calculation was made amid a kind of blitzkrieg, after which life would return to its normal course.

The restriction of social contacts and economic activity has been massive, especially in the most developed countries (except Japan and South Korea). Incredibly generous social benefits were rolled out, following decades of government social spending cuts. However, these were carried out on the basis of existing social programmes: expandable, increased, sometimes modified, but hardly fundamentally new. Most of the social innovations were adopted in the least economically developed countries, where prior to the pandemic, government support for incomes was marginal or simply absent. 

This is not surprising: almost two hundred years of history has shown that force majeure has rarely become a source of systemic changes in social policy unless it entails a serious change in circumstances, when people’s well-being and their quality of life face deterioration or are at risk. A hundred years ago, the First World War and its aftermath were more important factors in the development of state welfare systems than the Spanish flu.

The Russian model of social response to the first wave of the pandemic was not much different from the response of most countries with an average or high level of economic development: the same restrictive measures introduced even at low incidence rates (albeit called "non-working days" rather than quarantine). Similar decisions were made on the re-equipment of hospitals, the development of telemedicine, and the introduction of increased payments to doctors working on the front line. Many administrative measures were introduced that simplify the procedure for obtaining or extending the validity of documents or benefits. Increased sick leave payments and sharply increased maximum (up to one minimum monthly wage) and minimum (for a shorter period) unemployment benefits were rolled out. A little later, decisions were made on the partial (also within the minimum wage) subsidising of wages to enterprises that retain employment, as well as direct and indirect support of personal incomes. Indirectly, enterprises were supported in the worst-hit sectors in the hope that this would help maintain employment.

However, this decision also had its own internal logic: some families with children faced a reduction in income from wages as the transition of schools, and sometimes kindergartens, to a remote format increased costs for families and the burden on parents. Finally, it was much easier to administer payments to families with children than to identify the hardest hit ones.
One can criticise the Russian leadership for being sluggish in making decisions on subsidising salaries or in relation to certain payments for children. But in general, it coped quite well with the support of the population during the first wave of the pandemic. According to expert estimates, the measures which were taken helped mitigate the impact of the pandemic on both the scale of general unemployment and the incomes of the population, preventing a significant increase in poverty. Russia’s more modest level of spending on anti-crisis support for the population than that provided by developed countries, nevertheless, turned out to be comparable to that of Russia’s peers in terms of economic development.

The problem is that the blitzkrieg approach did not work: in the fall, both Russia and many other countries faced a second wave of the pandemic, which is far from over. And this obviated the inequality between the rich countries, which could afford a second quarantine and the extension of generous support packages for business and the population, and the rest of the world, for which the mobilisation costs of the first wave turned out to be unbearable in the long run.  It is no coincidence that these countries are now reluctant to return to any decisions that would restrict economic activity.

On the one hand, economic inequality is closely related to inequalities in health and access to health services. This effect was most clearly manifested in the United States and Latin America, where mortality from coronavirus is higher in socially vulnerable segments of the population. In Russia, this is manifest in contrasts in the availability of medical services and social support from region to region. On the other hand, although the risks of job loss for the first time were associated not so much with the workers as with the sectors in which they worked, the ability to work remotely without a reduction wages is still a privilege available to few workers, particularly those with higher qualifications and with human capital. The quality of life in conditions of self-isolation amid restrictive measures turns out to be strongly associated with whether the family has a suburban home, extra computers, good Internet access, and their own car. Therefore, the pandemic and the crisis as a whole hit, of course, not the relatively stable middle class, but those who are poorer, but not poor enough to receive state support. 

In this regard, it seems risky that after the first wave, the support of the population in Russia was limited to a New Year's gift for families with children under seven years old. The fact is that personal incomes declined in Russia from 2015 to 2018, while growth in 2019 was very moderate. The 2020 crisis only exacerbated this trend. The lack of systemic support for income leads to the depletion of savings and an increase in the population's debt pressure, and creates risks of both a decrease in the quality of life and an increase in social tension.

At the same time, the pandemic hasn’t eliminated existing, well-known challenges to state welfare systems: despite the higher risks of dying from coronavirus at an older age, it is obvious that the aging population will remain with us after the pandemic. The speed and scale of changes in the nature of employment, associated not only with the development of the service sector, but also with technological changes, will obviously intensify under the influence of the pandemic. At the same time, the old models of social protection work poorly with non-standard forms of employment. Thus, in terms of social risks, the pandemic does not so much create a new world as it exposes the problems of the old one.

Therefore, ideally, the coming years should become a period of transformation of previous approaches to social policy. First of all, obviously, this relates to healthcare. In a state welfare system, special programmes are needed that will allow for the targeted support of the most needy - regardless of what impoverished them, but at the same time not eliminating the resources of the non-poor social strata, which have diminished due to the economic crisis. In most European countries, guaranteed minimum income programmes serve this purpose. Spain created such a programme during the pandemic. In Russia, where the effectiveness of social assistance programmes remains low, the economic crisis provoked by the pandemic may inspire the creation of such a programme. New approaches are also required to how to integrate new categories of workers into insured and non-insured social support programs - for example, those who work in the platform economy. An equally trivial task is how to balance personal and work life in the context of expanding distance employment in order to maintain the health and productivity of workers from home. And finally, a task that will take more than social policy to resolve - how to reduce excess inequality, both at the national and global levels.

However, the search for new institutional solutions in the social sphere is hardly possible in the context of the ongoing economic crisis, which exacerbates the struggle for budget resources. Therefore, the faster all countries, including Russia, recover from the current crisis, the more hope there is that the pandemic will become not a source of growing global social tension and new social problems, but rather an additional incentive to develop a new social model for the 21st century.