2022: a year in transition
"Show your warts, your problems, your challenges. Be a human being. This is the time for human beings, not human doing”
- Leena Nair, Chief Human Resource Officer, Unilever, October 2021
After the last two tumultuous years we’ve had, there's a lot of problems and challenges to show for it. So, what's 2022 going to be like?
What are the key global issues that decision makers and strategists in business, politics, NGOs and international organisations are likely to have to contend with over the coming 12 months?
My sense is that coming out of the many problems we have experienced, we have an opportunity as a society to get to what's real in 2022 and this will have implications for people, companies, governments and broader society operate, behave, survive and grow.
What were the pre-pandemic predictions?
An interesting first step in doing this is looking at what global executives and world leaders were predicting before the COVID-19 pandemic started.
If you agree with the proposition that the world is starting to transition out of the pandemic – and this very much depends on where you live and who you are – it can be informative to see what humanity was worried about before a little coronavirus distracted us for the last two years.
Well, the World Economic Forum’s 2020 Global Risks Landscape report, released in the first days the pandemic started in January 2020, provides the results of its 2019 global survey of senior executives about what they saw as the biggest risks facing the world.
Interestingly, climate change and environmental issues topped the list in terms of likelihood and impact.
Source: World Economic Forum. Global Risks Report 2020, https://www.weforum.org/reports/the-global-risks-report-2020, accessed 7/1/2022.
Technological risks such as cyberattacks, data theft and information infrastructure breakdown were seen as other significant risks.
Interestingly, infectious diseases were seen as a threat, but didn’t get the same high ranking as environmental and climate change risks facing the global community.
As the world starts to contemplate moving on from COVID-19 and/or living with it, revisiting the myriad of other global strategic risks and issues might be a timely exercise now.
So, given all this. What are the key issues facing the global community this year?
The International Monetary Fund projects the global economy to grow by 4.9% this year, down from 5.9% in 2021, due to supply disruptions and changing pandemic dynamics – it’s still unclear today how much the Omicron variant will affect global growth. Both inflation and interest rates are set to rise in 2022 as well - the first time we have seen that in a while, so it will colour economic, policy and business thinking going forward.
As the World Bank highlighted in June, the global economic recovery this year is going to be uneven. High-income countries with access to COVID vaccines and booster programs will see higher economic growth than low-income countries that have low vaccination rates. Expect this global inequality in vaccines and medicines to continue this year and for it to explain a lot of the economic differential between rich and poor countries. A key economic and political question this year is the extent to which this gets resolved and/or whether poor countries put up with this.
The US-China economic ‘decoupling’, together with China with the EU, is likely to be an issue that will extend to issues of cyber security and IT systems (that infernal question of whether organisations use Teams or Zoom will continue). Ironically, the US, China and Europe are all having to deal with the same issue of the growing power of tech companies in their respective jurisdictions.
The different growth patterns of the Chinese and US economies will have an impact on global trade, but perhaps in different ways from the past as they start to unwind their economic interconnectedness. While as much a geopolitical strategic question, the result is likely to be a poorer and more expensive global economy as a result. This will have knock-on effects to other countries that rely on free and open trade for growth.
There will be more debates about the resilience of democracy in the face of dissatisfaction from disgruntled parts of the community in democratic countries. Expect to see more retrospective accounts of the declines of democracies throughout history. There have been more books and articles written in the last few months about the supposed decline of the US economy and democracy than I can recall in recent memory. Plus there are a number of flashpoints emerging in the world, be it China-Taiwan, Russia-Ukraine, Iran nuclear negotiations.
This all comes at a time when 2022 will see several major democracies will have their first elections following the disruption of the last two years. Countries that are scheduled to have national elections this year include Australia, Brazil, France, Kenya, the Philippines, South Korea, the US Congressional mid-terms. Indian state elections are also worth watching. The results from a number of these could change the global political landscape. These will occur against the backdrop of trying to manage the pandemic and debates about a decline in democracy and even civil war in the US.
Some of these election results may bring interesting surprises. For example, last year's Edelman Trust Barometer found that two of the countries with the biggest gaps in trust in institutions between their elites and the rest of their populations were Australia and France. Both of these countries are going to the polls around April/May this year following a trust-based stoush between their leaders over a joint submarine deal gone bad.
Environment and climate change
After polling as some of the most important global risks in 2019, 2022 will mark the year where people will be looking for concrete progress on environmental and climate change issues from governments and countries alike.
De-carbonising the global economy, reducing destruction of habitat, heritage and biodiversity will take an increasingly important role in commercial decision making. We may see more extreme weather events this year against the backdrop of increasing difficulties in insurance and finance markets, the rise of renewable energy and the COP27 meeting in late 2022 in Sharm el-Sheik. At COP27 governments and companies will be pressured to follow-up on Glasgow’s COP26 meeting with concrete action plans on how to meet their ‘net zero’ carbon commitments.
The environment, social and governance (ESG) agenda in the private sector will continue gaining pace, but companies are going to be under more scrutiny about what they are actually doing about these issues and the extent to which they are being transparent about it. It’s possible the gloss may come off some of the initial ESG enthusiasm once people start to peel back the layers and see what companies are doing.
We might also see a refocus on other environmental issues like cleaning up plastics in the ocean (remember that?) as the distraction of the pandemic recedes.
If anything, the COVID pandemic has accelerated global inequity between rich and poor people both within countries and between countries. This was seen in different countries through high-income people keeping their jobs during the pandemic and having the flexibility to work-from-home compared to lower-income service and manual workers who lost their jobs or had to risk catching COVID as they went about their work. As the World Bank notes, during the pandemic all income groups around the world experienced falling incomes but the poorest 20% saw the steepest declines.
Source: Gopalakrishnan, V. et al. 2021. "2021 Year in Review in 11 Charts: The Inequality Pandemic", World Bank, December, https://www.worldbank.org/en/news/feature/2021/12/20/year-2021-in-review-the-inequality-pandemic?cid=ECR_TT_worldbank_EN_EXT, accessed 10/1/2022.
The Bank also notes that declines in global trade due to supply chain disruptions and trade barriers has especially increased poverty in low- and middle-income countries that tend to rely more on trade in goods for income. Because least developed countries have limited ability to use domestic fiscal stimulus to restart their economies, they tend to rely more on open trade with the rest of the world for income growth and poverty reduction.
Retreat to nationalism
At a time when the world is facing major collective global problems like climate change, economic decline and global pandemics, countries are increasingly retreating from globalisation and adopting nationalist, populist policies and/or regional/cultural trade groupings.
Despite early sentiments triggered in the initial COVID outbreaks such as ‘we’re all in this together’ and 'one world together', examples like vaccine nationalism and travel bans on countries like South Africa that warn the world of new variants showed that many governments, first and foremost, are worried about ensuring their own citizens’ safety and satisfaction before worrying about the broader global good. The shortfall in COVAX funding, in part due to governments not fulfilling their commitments to help fund vaccines for low-income countries, is a case in point, as is the world's preparedness to accept the risks of COVID variants like Omicron from not adopting a global approach to vaccination.
As one commentator put it, unfortunately during the pandemic it has been every country for itself. Hopefully, 2022 will be the start of doing things better for the future. Global problems deserve a global response.
Longer term trends that are affecting the global population will continue to affect many of these other changes. Generational change, ageing populations, the rise of non-Western nations and economies, and shrinking labour forces due to declining birth rates potentially triggering higher wages and inflation, will all continue to influence 2022. While Japan and western developed economies have faced these issues with increasing commonality, China’s ageing population is rapidly becoming an issue for that country and the world.
One question is whether the ‘younger’ nations – those with relatively less aged populations such as countries in South Asia and Sub-Saharan Africa – will take up the labour force slack either through creating employment in their own countries or through migration of their people to the older, ageing economies.
The gender divide
There’s a sense that in many countries the rise of the #MeToo movement and women’s rights more generally is shifting more fundamental frameworks across countries. More women are becoming world leaders at the same time that women have lost out more from the pandemic than men in terms of jobs, income, and safety.
Putting more women in charge might be one strategy to overcome some of the global issues we face. (C'mon guys, let's face it, women do represent 50% of the world's population .... ). There’s been a debate throughout 2021 whether female leaders have handled the COVID-19 pandemic better than male leaders, through a combination of better empathy, better communication, and less likely to talk about it as a ‘war’ and more about a problem we need to solve together.
Many of the challenges facing global society, be it the pandemic response (lockdowns and investing in healthcare), the lack of action on climate change, the changing way of working (more remote working, a focus on employer values as well as financial reward) and the rising cost of housing and financial assets, have all disproportionately affected younger generations more than older generations. The OECD has shown that today 35% of young people 18-24 feel left out of society, an increase on previous levels and the highest rate of any adult age group. Young people are particularly feeling more adverse mental health affects from the times.
Source: OECD. 2021. "The power of youth", https://www.oecd.org/coronavirus/en/youth, accessed 7/1/2022.
At a time when Baby Boomers are retiring and Generation X is taking on more senior leadership positions, Edelman global surveys are showing “higher rates of belief-driven buying and values-driven employment among the youngest respondents” in Generation Z.
Technology and tech sector
2022 started off demonstrating the highs and lows of the tech sector. Apple was the first company in history to reach a market valuation of US$ 3 billion on the back of surging sales and profits during the pandemic. All those people equipping their home offices with various devices and buying the latest iPhone during lockdowns boosted Apple’s sales substantially. Devices like those produced by Apple will have new applications in the pandemic (one of my Gen Z sons has proudly shown me how his Apple Watch has reminders and timers for hand washing ... ).
However, that same week in early January Elizabeth Holmes, the former CEO of Theranos, was found guilty in the US of conspiring to defraud investors in the failed blood-testing start-up. The conviction was highlighted as a watershed moment for Silicon Valley, signifying a new level of scrutiny of start-up tech companies’ credibility, viability and evidence base. Once the hip, free-wheeling, entrepreneurial part of the industrial sector, life sciences and the tech sectors are rapidly being caught up in the broader push for new ESG standards on transparency, credibility and ethics.
Developments in exchange-traded funds and Web 3.0 with the integration of blockchain and greater open source interconnectivity will also be things to watch this year, both in terms of their opportunities and issues.
After the worst global pandemic in a century, the health system will need to recover and rebuild. Better pandemic preparedness, better managing and treating non-communicable diseases, the difference in access to healthcare for people in high-income versus low-income countries, a global pandemic treaty, disruption in health systems, digital health, telemedicine, personal health data, vaccine resistance, health sector financing and the efficiency of spending, pricing reforms and just the sheer exhaustion and burnout of the healthcare workforce are going to be key issues going forward.
This is going to need governments, businesses, health care professionals, providers, NGOs and patient groups to think, discuss and learn how to adapt health systems for the 21st century.
So, what does it all mean?
Above all else, the advice for all should be ‘expect the unexpected’. This year is likely to be a continuation of uncertainty, but also the start of a transition out of the pandemic – barring any additional new COVID variants emerging – and the re-emergence of a number of strategic issues that the world has put on the backburner since the pandemic. In a way, COVID has muted some of these longer term trends and rapidly accelerated others.
Running through many of these themes are broader issues of truth, trust, data integrity and authenticity, with a dose of being open. This 'warts and all' approach to life is going to characterise more and more of the way people and organisations engage with issues and the community.
After two years of pandemic-induced disease, death and lockdowns, much of the world has had an epiphany about what really matters in life. 2022 is the year where this starts to be actioned.
The joy for decision makers in organisations is to work out how these broader trends affect them and how to address, respond and capitalise on these trends going forward.
Good luck to you in 2022!