Diversity and Inclusion

How governments can push towards a better tomorrow

World leaders face six interconnected challenges, and although approaches and solutions will differ by country, taking key actions will benefit all.

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9 minute read     |     March 8, 2021     |     s+b, a PwC publication

The year 2020 was full of challenges for world leaders. No country was spared from the COVID-19 pandemic or the related economic, educational and national security crises. Issues of climate change became even more acute than they already were, with a record number of natural disasters, including fires, hurricanes and droughts. And geopolitical instability became a shared experience within and across nations, affecting countries that have been fragile for a long time and those that were previously viewed as stalwarts of democracy and stability. These challenges persist in 2021. 

Citizens and businesses are looking to their government leaders to help them navigate and emerge stronger from these large-scale, complex problems. Most stakeholders have accepted that going back to the way things were in 2019 is not an option—or even a goal. Thinking ahead to 2022, they want a better future, informed by the lessons of 2020 and now 2021.  

Although the challenges governments face are nearly universal, how leaders go about tackling them might vary significantly, depending on the government structure and ideology. Because the well-being of society as a whole is at stake, potential solutions to need to be inclusive of all. 

Six pressing challenges

Rising levels of inequality within and across countries have contributed to the severity of the COVID-19 crisis and created significant geopolitical unrest. Economic and social systems often increase inequality, which can then exacerbate societal polarisation and undermine national safety and security. To reinvent a future that is more sustainable, governments must address six core challenges, with a focus on reducing inequality and promoting shared prosperity. Although each challenge is discrete, together they have significant interdependencies, so a failure to address one is likely to have an adverse effect on others. This is why an executive-level, cross-ministerial, cross-agency plan will be critical to success. 

1. Economy. More than 493m full-time-equivalent jobs, most belonging to women and youth, were lost in 2020, and the global GDP declined by 4.3%. The International Monetary Fund noted that this crisis might have been much worse if not for strong government intervention. Governments have provided an unprecedented level of support to businesses and citizens through direct funding, investments, tax reductions and targeted distribution of goods. This level of support, however, has come at a cost of ballooning government debt.  

The World Bank is predicting a modest rebound in 2021, with 4% growth in global output, contingent upon broadscale COVID-19 vaccination success and government policies and programmes that promote private-sector growth and reduced public-sector debt.  

2. Healthcare. It’s counterintuitive, but global expenditure on healthcare was expected to fall by 1.1% in 2020, driven by delayed or cancelled care for non–COVID-19-related illnesses or treatments. Although patients initiated cancellations in some cases, capacity constraints have also been a big factor—and all of this deferred care is expected to increase healthcare challenges in 2021 and 2022. COVID-19 has highlighted hurdles in almost every element of the healthcare value chain, including supply chains, preventative medicine, primary care and in-patient treatment facilities.  

Over the next several months, public health officials must have a dual focus on surge response and vaccine distribution efforts. In the medium and long term, governments will need to assess ways in which they can make the healthcare system more resilient to reduce the impact of future adverse public health events.   

3. Education. Before the pandemic, education reform was on the agenda in most countries. It was estimated that 90% of students in low-income countries, 50% in middle-income countries and 30% in high-income countries left secondary school without necessary life skills for navigating work and life. Temporary closures in more than 180 countries at some point during the pandemic compounded the problem, keeping an estimated 1.6bn students out of schools. Most educators have worked tirelessly to deliver remote learning to students, but resources have been limited and results have been mixed. UNICEF estimates that as a result of school closures, 24m children have become dropout risks and many of the 370m children who rely on school meals could experience malnutrition.

In addition to transforming traditional education programmes to better serve all students, governments must determine how to pave the way to a better future via adult education, as well. Addressing unemployment and spurring economic recovery will rely in part on adult reskilling programmes, including digital upskilling. Government leaders must also determine how higher education should be financed if the shift to virtual learning continues.

Educational transformation at all levels will need to include a combination of digital enablement, curriculum revision, the use of new learning methods, upskilling of teachers and structural redesign.  

4. National safety and security. The mandate of defence and security forces has broadened and will continue to be critical. More than 91% of the world’s population has been under some form of lockdown and border restriction since the onset of the pandemic. Police and security agencies, technology and private contractors have been used to monitor and enforce restrictions. In addition, border management policies continue to shift based on new data on the virus and vaccines.  

Crime, including domestic violence, robberies and looting, has increased in many countries during the pandemic. So have political events, including rallies and protests. Researchers speculate that lockdown, unemployment and desperation among citizens have played a role in intensifying these crimes and events. Some rallies and protests have also been deemed “super-spreader” events, escalating COVID-19 transmission due to a lack of social distancing and mask wearing among participants.  

Digital security has emerged as a risk equal to or greater than physical security. Cybercrime has increased dramatically as governments and businesses race to become more digital. In a post-lockdown environment, governments must address risks associated with their digital agenda, in addition to security and stability challenges related to immigration, border management and political events.  

5. Climate. While the world has battled COVID-19, the war against climate change has continued. NASA officially ranked 2020 as tied for the hottest year on record, and the past seven years have been the warmest in human history. Extreme weather-related events, including hurricanes, wildfires, floods and heatwaves, were prolific in 2020.  

Governments have set ambitious climate agendas, with commitments to create policies, regulations and incentives to accelerate decarbonisation. But only two nations are currently meeting their Paris Agreement targets. Many might be able to make a positive impact through “green recovery” programmes and other related measures to direct stimulus funding to clean energy businesses, sustainable production and green infrastructure. Even governments that are not supporting a clean energy agenda must consider strategies for disaster preparedness and climate adaptation.  

6. Trust in government. Disinformation around the world costs an estimated US$78bn annually, not including societal impacts. In many countries, it erodes trust in government leaders and influences the course of elections. The lack of clear structures, roles and efficient responses to citizens’ pressing concerns and needs only compounds the loss of trust. Trust in governments rose at the beginning of the COVID-19 pandemic, but through the course of the response, governments have come to be perceived as the least ethical and least competent stakeholder, according to the 2021 Edelman Trust Barometer.  

Most governments did not pivot from traditional operating models to employ the agile, whole-of-government approach required for today’s interconnected, rapidly evolving agenda. Ministries and agencies must work together. The current crisis has also highlighted how a lack of clarity about the roles and responsibilities of national versus subnational governments leaves constituents feeling vulnerable. 

Although trust in government has fallen since the pandemic began, people recognise the need for government to help solve fundamental problems. 

Increased urgency for governments to address foundational problems1

Net change in importance
since last year2
Degree of importance
% of respondents
More Less
Improving our healthcare system
Addressing poverty in this country
Improving our education system
Addressing climate change
Finding ways to combat fake news
Protecting individual freedoms
Closing the economic/social divide
Addressing discrimination/racism

Governments must now urgently identify the combination of regulations, policies, organisational structures and skills required to create transparency and restore trust.

Three accelerators 

Although the challenges are daunting, they also represent opportunities. A famous world leader once proclaimed that one should never waste a good crisis—a philosophy many governments have embraced in 2021. Three key accelerators, when leveraged in addressing the six challenges, can help governments achieve a stronger, more resilient and more inclusive society for their citizens.  

1. Digital. Governments are driving a digital agenda to increase access to citizen services, education, healthcare and social safety nets. Digital platforms, if employed strategically, can serve as a great equaliser. In education, for example, Estonia, which has the top-ranked school system in Europe, had a mature digital component prior to COVID-19 and was able to move seamlessly to a remote-learning environment. Other countries are looking at how to replicate the universal access and success of this model. Similar case studies exist across almost all citizen services. 

2. Partnerships. Public–private partnerships have become a standard financing mechanism in the large-scale infrastructure sector but are often transactional in nature. A new form of partnership is emerging across the public, private and multilateral community, however, involving deep collaboration on design, development and financing of groundbreaking programmes. These types of long-term partnerships can significantly accelerate recovery, innovation and growth. The Accelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV) partnership, for example, established in April 2020 by the National Institutes for Health, includes more than a dozen leading biopharmaceutical companies and national health authorities, and has contributed to vaccine development in record time.  

3. Green programmes. Many governments are incorporating infrastructure into their economic stimulus packages. There is a good reason for this: a report by the Economic Policy Institute estimates that such investments are an economic multiplier, with each US$100bn put into infrastructure yielding as many as 1m full-time jobs, in addition to the benefit of the infrastructure itself. Forward-thinking countries are targeting such sustainable programmes that will help achieve the Paris Agreement’s net-zero targets while providing growth and future jobs. 

The path ahead

No matter which unique dimensions of the six challenges are present in different countries or what each government’s distinct approach is likely to be in seeking solutions, it is critical that all governments consider five key actions for sustainable success:

1. Listen to, and collaborate with, key stakeholders. Governments must take time to assess the sentiment of all stakeholders, including all citizens, businesses, partner countries and the global community. Each will bring a unique and important perspective when considering options.

2. Perform a clear analysis. Holistic and data-driven analyses will enable governments to make informed and defensible decisions for all constituents. A situational analysis must include country-specific qualitative and quantitative data, as well as global data. It must also consider historical and projected information under various scenarios.  

3. Explicitly manage priorities. With the crisis continuing alongside recovery, priorities will shift, often quickly. Government planning must be agile to accommodate those shifts in a structured and intentional manner.  

4. Prioritise solutions that promote equality. Inequality is both a cause and an effect of the six challenges described above. Governments must seek to repair societies and communities in an inclusive manner, reducing inequality and the underlying vulnerabilities.

5. Balance immediate and long-term needs. In challenging times, some governments will be tempted to address citizen challenges immediately, at the expense of long-term objectives and goals. When possible, decisions should be made for today and for the generations to come. 

Every government is searching for potential solutions to the challenges described above. Several factors—including the strength of the social systems and economy going into the crisis, economic diversity, culture, political system, and citizens’ opinion of and trust in the current government—will affect the options and decisions for each country.  

Over the next several weeks, PwC will share detailed perspectives on the spectrum of potential solutions to each of the six key challenges and will analyse the trade-offs and implications. We will also share a perspective on how the accelerators can help to build a more sustainable, inclusive future. Together, we’ll embark on the journey towards a better tomorrow.

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