ECOSOC Forum on Financing for Development

Financing COVID-19 recovery for a green, purple, and digital transition that leaves no one behind

Joint Side Event: Permanent Mission of Canada to the United Nations, Permanent Mission of Jamaica to the United Nations, ILO, UNCTAD and UNDP



Background
The 2021 UN ECOSOC Forum on Financing for Development (FfD) takes place at a time of growing concern about the lingering health and socioeconomic fallouts from the COVID-19 pandemic, alongside the pressing demands to tackle the climate crisis and bridge the digital divide – all of which require significant financial resources to ensure hard-won development gains are not permanently reversed. The pandemic poses existential challenges but it also offers significant opportunities to pursue new social and economic policies for sustainable development. Efforts are needed to encourage transformative policy shifts and stimulate the strategic investments required to finally get the world on to a more inclusive track to meet the SDGs.

As economies recover, there is an opportunity to develop more efficient and effective financing strategies and business models by targeting investments in key sectors that accelerate the transition to green, purple, and digital economy with decent work for all, including the right to social protection. Understanding the linkages between multiple development priorities and investment trade-offs is critical to leverage opportunities for maximum impact. In order to usher in more sustainable and equitable economies, public and private capital is required to reach people and societies most in need. Sustainable financing remains a key foundation of our collective success.

Impact of COVID-19 on Development
The pandemic has exacerbated existing inequalities displayed by rising poverty, job losses, huge gaps in social protection coverage and adequacy, with women and young people disproportionately impacted. National measures to contain the pandemic have required different types of workplace closures leading to high losses in working-hours. In 2020, 8.8 per cent of global working hours were lost relative to the fourth quarter of 2019, equivalent to 255 million full-time jobs. The working-hour losses are reflected in higher levels of unemployment and inactivity and have translated into substantial losses in labour income. The ILO estimates a global decline in labour income of 8.3 per cent in 2020, which amounts to US$3.7 trillion, or 4.4 per cent of GDP. The prospects for 2021 point to persistent decent work deficits. Importantly, the impact of COVID-19 is not gender neutral: women and youth are disproportionately affected. Only 46.9 per cent of the global population was effectively covered by at least one social protection benefit, when the crisis hit, while the remaining 53.1 per cent – more than 4 billion people – were left unprotected. A mere 18.6% of unemployed workers worldwide could rely upon unemployment benefits, as unemployment coverage remains the least developed branch of social protection.

Micro, small and medium enterprises, which account for two-thirds of jobs worldwide, are particularly in danger: they represent around 70 per cent of global employment in retail trade and almost 60 per cent in the accommodation and food services sector. And MSMES-owned by women are also 27% more likely to not survive the pandemic. For the workers in the informal economy, the impact of the crisis is even more intense. They have less access to social protection, health insurance, sick pay and do not benefit from income-smoothing mechanisms.

As countries move forward, investments should be targeted to sectors with the greatest potential for job creation and for improving people’s capabilities (including skills). This is a critical link for expanding fiscal space since decent work increases purchasing power, stimulates the economy and increases tax revenues which can then be reinvested into other sectors to create a virtuous cycle of productive growth. Investment also needs to be targeted to segments of the population, women and youth, as well as MSMEs. For example, the health and social sector must create 18 million health worker jobs by 2030, mostly in low- and lower-middle income countries, to meet population needs and achieve universal health coverage. Similarly, investment in the care or “purple economy” – in education and health providers for children, elderly, people with disabilities - would create 2.5 times more jobs than investment in physical infrastructure, create 30 times more jobs for women, and ease restriction on women’s time, and have greater and fiscal sustainability. A shift to a greener economy could create 24 million new jobs globally by 2030 and could lift millions out of poverty if the right policies are put in place.

The climate crisis is aggravating despite a short-lived dive in CO2 emissions in 2020. Last year tied with 2016 as the warmest since modern records are kept sustaining the long-term trend of warming. The Living Planning report estimates biodiversity loss of 68 per cent since 1970. The IPBES Global Assessment of biodiversity alerts that 1 million animal and plant species are threatened with extinction, many within decades. Unabated, climate change and biodiversity loss will have negative implications for economic growth, human health, employment and livelihoods. Poverty is converging with climate-related risks like flooding in places such as Sub-Saharan Africa where 132 million may fall into poverty by 2030 because of climate change. The financial system can work as a lever to support climate action and sustainable development, but alignment is not happening at the pace necessary. An analysis of the 35 leading global banks shows they fuelled $2.66 trillion into fossil fuels since the Paris Agreement. And 6.3 per cent of global GDP is spent by Governments around the world on fossil subsidies, as well as on unsustainable agriculture and fishery subsidies. These investment and spending choices accelerate climate change and biodiversity loss. The COVID-19 crisis offers an opportunity however, to change course, shift incentives and invest nature-based solutions for climate adaptation and mitigation and on protecting, restoring and sustainably using biodiversity and ecosystems. To facilitate labour market transitions from brown to green sectors for workers, we also need effective social protection and active labour market policies to help workers make the shift and provide income security for those who are not able to do so.

Advances in the digital economy, significantly accelerated by the COVID-19 pandemic, are creating unprecedented opportunities to build a more inclusive world of work. Changes brought about by the expanding digital economy could help many vulnerable workers gain access to the world of work or it could create a greater divide. Those left offline will be left behind. Digital barriers also threaten to aggravate existing inequalities and exclusion, unless they are countered with effective and targeted initiatives. The increase in digital work creates acute problems for those without the necessary skills, equipment or infrastructure and is a source of decent work deficits for many digital platform workers. Affordable and reliable access to technology quickly became the precondition for sustaining economic activity and jobs, exposing the urgency to bridge the digital divide. Reskilling and upskilling will be key to building an inclusive future of work, alongside initiatives to foster digital employment and support collaboration between relevant stakeholders.

Investing in the extension of social protection coverage is a significant factor in tackling persistent poverty, economic insecurity, growing levels of inequality and insufficient investment in human capabilities. Universal access to social protection systems, including by establishing and maintaining nationally determined social protection floors is not only an important means of assisting those living in or vulnerable to falling into poverty but also a factor that helps to stabilize the economy, maintain and promote employability, facilitate just transitions and enhance social cohesion.

Aim and Format of Side Event
The urgency to develop a coordinated response to enable ambitious financing solutions is the basis of the Initiative led by the UN Secretary-General and Prime Ministers of Canada and Jamaica on Financing for Development in the Era of COVID-19 and Beyond. The Menu of Policy Options aims to address the current emergency and to promote a swift and sustainable recovery to pave the way for a more inclusive, resilient development paradigm. UNDP, ILO and UNCTAD have been tasked to define the way forward to implement the Menu of Options for financing climate change, a socioeconomic recovery and technology.

The side event will provide an opportunity for the ILO, UNDP and UNCTAD to provide an updated on the work of the three cluster areas and will serve as an opportunity to provide inputs to a high-level event at the HLPF and a high-level meeting in September on Jobs, Social Protection and Poverty Eradication. The discussion will focus on public policies aimed at stimulating investments and employment opportunities for a green, purple, and digital recovery, in-line with the ongoing discussions on Financing for Development in the Era of COVID-19 and Beyond. Country examples will be shared to assess the initial impact of stimulus measures and financing gaps, and countries experiences in NDC and SDG-financing strategies such as through the Integrated National Financing Frameworks (INFF) integrating COVID-19 related impacts. Emphasis will be given to opportunities for expanding fiscal space in developing countries and the potential impact of targeting investments in specific sectors and related skills development.

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Programme

7:30 – 7:40 a.m.           Moderator: Mr. Marcos Neto, Director, Finance Sector
                                                              Hub, UNDP

                                        Opening Remarks
                                        H.E. Mr. Courtenay Rattray, Permanent Representative
                                        of Jamaica to the United Nations

                                        H.E. Mr. Robert Rae, Permanent Representative of
                                        Canada to the United Nations

7:40a.m. – 8:10 a.m.   Setting the Scene

                                        Moderator:  Ms. Chantal Line Carpentier, Chief,
                                                              New York Office, UNCTAD

                                        Panellists
                                        Mr. Marcos Neto, Director, Finance Sector Hub, UNDP
                                        Mr. Sangheon Lee, Director, Employment Policy
                                        Department, ILO
                                        Ms. Shamika Sirimanne, Director, Division on
                                        Technology and Logistics, UNCTAD

8:10 – 8:40 a.m.           Multi-stakeholder Perspectives

                                        Moderator: Ms. Shahra Razavi, Director, Social
                                                             Protection Department, ILO

                                        Panellists
                                        Dr. Gilson Pina, Director of National Planning, Ministry
                                        of Finance, Cabo Verde
                                        Ms. Sharan Burrow, General Secretary, International
                                        Trade Union Confederation (ITUC)
                                        Mr. Matthias Thorns, Deputy Secretary-General,
                                        International Organisation of Employers (IOE)

8:40 – 8:45 a.m.           Wrap up
                                        Mr. Marcos Neto, Director, Finance Sector Hub, UNDP
                                        Ms. Shamika Sirimanne, Director, Division on
                                        Technology and Logistics, UNCTAD
                                        Ms. Shahra Razavi, Director, Social Protection
                                        Department, ILO