Climate Change and New Poverty Profiles versus Sustainable Competitiveness

Hoy os dejamos un resumen del primer capítulo del libro «Competitiveness against Sustainable Development Goals«, coordinado por Sánchez Gutierrez, J. and González Alvarado, T., que lleva por título «Climate change and New Poverty Profiles versus Sustainable Competitiveness» escrito por Renata Kubus & Tania González Alvarado, vocal y socia de la Asociación Española para el Avance de la Ciencia (AEAC). Además, ambas son miembros muy activas de FuturoScopio, grupo de trabajo de la AEAC sobre El Futuro de Trabajo.

Climate Change and New Poverty Profiles versus Sustainable Competitiveness

Written by Renata Kubus & Tania González Alvarado, chair and member of Spanish Association for Science Advancement (AEAC). Both are active participants of FuturoScopio, AEAC working group on the Future of Work.

This is a resume of the first chapter titled: ‘Climate change and New Poverty Profiles versus Sustainable Competitiveness’ from the book: Sánchez Gutierrez, J. and González Alvarado, T. (coord.) (2019).: Competitiveness against Sustainable Development Goals.Universidad de Guadalajara, México.

The sustainable development theory announces the economic rationality limit, proclaiming the superiority of life values, social justice and commitment to future generations. In the world scenario, this imposes huge challenges, because the information and communication technologies together with financial internationalization make the uncertainty even greater. We need mechanisms to confront climate change and adapt the human activity to the new reality. The capacity for analysis and transformation in an ever-changing system is a decisive element in the 21st-century competitiveness.

Poverty and climate change are factors that require a change of the strategist perception on the construction of competitive advantages in order to fit the development synergy, generate social value and increase the population welfare. This can, in turn, contribute to the business or public programs’ suitability. In this way, expenses turn into investment, the system becomes dynamic and the population enters a virtuous circle of work-income-welfare.

There are strategy characteristics required for its sustainability: supportability (not exceeding the resources it requires with the available ones), robustness (maintaining global conditions in volatile environment), resilience (ability to recover from catastrophes maintaining its determining functions), and adaptability (evolution of novelty through learning).

A high degree of creativity and cooperation is needed in order to face the immense and multidimensional challenge of climate change. The effects of climate change are not only disproportionately greater in the sectors of the most vulnerable population, but they are also eminently unfair to those who have had little to do with the generation of the problem. A world with an «intelligent climate approach» is possible in our time, but, as maintained in the World Bank report from 2010, in order to achieve this transformation, we must act now, at once and in a new way. Clean Development Mechanism is oriented at dealing with change, together with technological innovation, as well as the transfer and generalized application of technologies.

Mitigation and adaptation have been the two mechanisms adopted against climate change. Mitigation reduces the speed and magnitude of climate change and its associated effects, while adaptation reduces the consequences of those effects by increasing the capacity of human beings or ecosystems to cope with changes. Most of the international measures have focused on mitigation, but the communities must have the capacity and resources to act as intermediaries and connect the processes.

Some strategies in search of competitiveness have undermined the welfare state, probably due to the lack of a more accurate reality vision. Most of the investment projects, export plans, and other planning exercises focus only on competitiveness and profitability, i.e. financial benefits and market expansion. They were implemented without including poverty mitigation as an element of their sustainability. This dynamic led to the creation of new poverty profiles.

Misleading assumption: it is comfortable to ignore poverty because it generates the perception of having eliminated it. Indeed, this ignorance does not eliminate it, what is more, it reproduces it and makes it more complex. The complexity level causes a higher cost to the system. Higher costs could be avoided by giving place to the poverty phenomenon inside the system. Finally, poverty is the system product and corrective mechanisms must be generated to mitigate it.

One way to alleviate poverty is to accept the relationship it has with strategies for competitiveness. The alleviation of poverty corresponds to all organizations, it is not up only to public bodies. Furthermore, mitigating poverty is profitable and competitive because it creates social value that can be then translated into economy.

Economic liberalization increased the attractiveness of emigrating to large cities. Also, social violence and climate change forced many to leave their homes to seek a new life in a high-income economy. The development policy in the big cities did not imply mechanisms for the absorption of migratory flows and expansion by overpopulation. The disproportionate and unplanned growth has resulted in human settlements in highly disadvantaged conditions.

These settlements lead to new reproductions of poverty with new profiles. To these nuclei are adding those poor people that arise in the same cities due to social fragmentation, the fall in wages and the economic crisis. New poor people even if with better preparation, are derived from prolonged unemployment and precarious jobs. It is also due to changes in the family structure (increase in single-parent households, family breakdowns), as well as the non-complete labour participation of all members.

The international economic context and financial crisis has resulted in a significant increase in unemployment and has put at risk of poverty people who had never thought they would be in that situation after the job loss. Although the fact of having paid employment is a key factor to avoid the poverty risk, in certain circumstances, it is insufficient to maintain a home, which can also lead to situations of poverty risk at work. Thus, to some part of population, integration in the labour market does not guarantee the way out of poverty. Working poor is an English term that refers to job precariousness. In 2003, a new indicator was included in the European list of social indicators: in-work poverty risk, especially relevant to vulnerable social groups caught in the alternation between low-skilled jobs and unemployment.

The impoverishment and precariousness of the living conditions of recent times have brought out the fragilities and deficits of social protection of the welfare model. Exclusion is the term that nowadays, is used to characterize the situation of people without access to centres of power or economic resources and, therefore, totally incapable of exerting any influence in the direction taken by the economy or of determining their own future in a meaningful way.

If the indicators on the new poverty profiles compiled in Europe were applied in Latin America, it would lead to exceptionally high numbers in terms of poverty. The Latin American society that inhabits the big cities has lost the memory about what the middle class implies, i.e. savings and family patrimony. This class has already practically disappeared, before the impoverishment of the population. This impoverishment has been slow, and it was the purchasing power that was mainly affected.

The point is that given the generalization and the slowness with which poverty has advanced, the majority of the population does not perceive itself as poor. The media and statistical data address extreme poverty, but not the new poverty profiles. This leads to the perception that the population situation «is bad, but it could be worse”.

The situation becomes even more critical when the shortage of jobs is combined with the transformation of the productive system and lifestyle due to climate change. A transformation that has been reactive and not proactive in the face of the new reality that the global environment shows and that is beyond the human being control. The adaptation has been slow and less oriented to the creation of new jobs; it has rather focused on the reduction of pollutants and the containment of migration.

Despite the efforts, the poorest and most vulnerable continue to suffer (what they must?). Gender inequality still persists. There are large gaps between the poorest and the richest households, and between rural and urban areas. Climate change and environmental degradation undermine the progress made.

The global system is committed to achieving the Sustainable Development Goals through market mechanisms. The SDGs, as well as the process of building them, are a window into that misalignment in between the short and long-term visions, and at the same time, in between the generation of social and economic values.

Inclusive growth in the short term, as well as sustainable growth in the long term, require effective coordination of policies at the national, regional and global levels. Although it may seem ambitious, given the degree of financial deregulation that characterizes many countries, it is critical for policymakers to ensure that the financial sector stimulates and promotes long-term productive investments, breaking the vicious circle of weak aggregate demand, low investment, low productivity and growth below the potential of the world economy. While reducing excessive dependence on monetary policy, policymakers will have to implement fiscal policies aimed at stimulating aggregate demand, investment, and growth. Tax evasion and fraud and illicit financial flows have become an important difficulty for efficient mobilization of resources. They can only be addressed through greater efforts towards international tax cooperation.

Currently the financial system is not stable or efficient in allocating credits where they are needed to achieve inclusive and supportable growth, and the loans granting is not aimed at creating a social or environmental impact. This is a great challenge because the international financial system has favoured speculative rather than productive investment. The financial instruments and the mechanisms for the allocation of resources are oriented to satisfy the needs of the financial market, dissociating themselves from the sectors dedicated to production. In other words, we are witnessing the persecution of the SDGs with a divorce between the productive sector and the financial sector. Hence, much of what is achieved will depend more on cooperation for development and international agreements.

The sustainability implies that something reaches continuity by itself but also in relation to its surroundings. Understanding the new poverty profiles and climate change allows linking the SDGs with competitiveness, and not interpreting them as independent and unrelated. It also facilitates the implementation of strategies in organizations that entail several of these objectives, while at the same time contributing to greater competitiveness and profitability of the organization.