Recovery tactics

Following the 2008 financial crisis, governments resorted to unprecedented reforms and interventions to rebuild and restructure after the devastation hit.

While reforms could have been bolder and more transformative, the crisis presented governments with both the impetus and public support to implement changes in how our financial systems are governed and regulated. The Great Depression and the Second World War similarly led to new forms of policy interventions and restructuring seldom seen before.

With Covid-19, the opportunity to take bold steps to rebuild, restructure and reimagine our economies is pressing, particularly in light of growing evidence about the disproportionate impact of the pandemic on women and minorities, and as we continue to suffer the devastating consequences of climate change.

The gender issue

According to the UN, before the pandemic, women were doing three times as much unpaid care and domestic work as their male counterparts. Covid-19 has exacerbated this: the evidence shows that women have undertaken 28% more domestic work compared with 16% of men, while women’s unpaid care work has increased 33% compared with 26% for men.

Ultimately, the pandemic has pushed women back into the stereotypical gender roles assigned to them centuries ago. The work done to improve gender equality in the household is being undermined and, as a result, women are dropping out of the paid economy at faster rates than men.

The race issue

Minorities and more marginalised communities have also suffered disproportionately – both from a health and economic perspective.

Data from the UK found that a quarter of patients who required intensive care were from a black or Asian background, and ethnic minorities had double the mortality risk from Covid-19 than white British patients. Ethnic minority communities are also twice as likely to have lost their jobs or have had difficulty paying their bills as a result of the pandemic.

Dual crisis

As the pandemic eases via the vaccine rollout, the crisis of climate change rages on. We are closely approaching the end of the time we have left to turn the catastrophe around, and short-term fixes will no longer do.

We will see more natural disasters, rising air-pollution levels and greater loss of life and biodiversity if this adjacent crisis is not dealt with at a similar level of urgency as we dealt with the virus.

Time to rethink

There are no quick-fix answers to these problems. However, there are some solutions already in existence that can be employed and ways that the public finance profession can promote and progress change in the right direction.

Governments should rethink how and what data is used when understanding the state of the economy. With traditional data sources – for example, the unemployment data collected by the UK’s Office for National Statistics (ONS) – it is critical that the data is interrogated along different indicators to get a better understanding of socioeconomic circumstances and demographic inequities.

It’s not enough to understand the unemployment levels in a given sector; we need to analyse them according to sex and race, too.

Some of this disaggregation already exists; the ONS data separates unemployment data by sex. But in some cases, greater work needs to take place to disaggregate official data by sex, race and other important indicators such as sexual orientation and age.

Governments should also be analysing less traditional forms of data such as time-use surveys to ensure that all forms of labour – both paid and unpaid – can be better accounted for in budgets and policies.

Civil society organisations, community leaders and academics may be better placed to collect some of this more qualitative data, particularly if they have better access to certain communities.

It will ultimately enhance the public sector’s understanding of these groups so that policies and budgets can be better targeted at them. (See, for example, ACCA’s recently launched project on gender-responsive budgeting as an example of how to do this).

Reimagining our roles

As finance professionals, it’s important to evaluate traditional forms of public financial management around, for example, budget type. Using more outcome-focused systems such as performance-based budgeting and longer-term budgets will enable governments to focus on both equality outcomes and consideration for longer term environmental sustainability.

Zero-based budgeting will enable a government to initiate a brand-new programme aimed at tackling some of the issues highlighted, as opposed to incremental budgeting better suited for a ‘business-as-usual’ era.

Finally, reimagining the role of the finance professional is key – not only to promote these changes but also in the way the profession supports and guides policymakers. The profession should promote the use of both disaggregated and qualitative data in decision-making as well as raising awareness of the importance of taking a longer term, more sustainable view of the economy.

Develop long-term skills

Professional accountants and auditors are central to every part of the policy cycle, so training current and future professionals with skills that promote long-term, sustainable financial planning will be vital.

Additionally, professional accountants can incorporate equity as the 'fourth E' of performance auditing (alongside ‘economy', 'efficiency' and 'effectiveness’). This will promote principles of environmental sustainability and inclusivity as central accounting principles, as well as supporting the production of non-financial reporting.

The public finance profession has always been adept at restructuring and reimagining when reacting to changing financial environments. ACCA’s own slogan encourages its members and partners to ‘Think Ahead’. Now is the time to capitalise on that central tenet of the profession and lead the way in rebuilding after the storm.