Partner Content?Zurich
share icon
Blue Zurich logo

Building a better social contract

What Covid-19 tells us about collective responsibility and managing risk in a changing world.


When John Donne said ‘No man is an island’, he expressed the essence of the social contract –
a concept that reaches back centuries through the teachings of philosophers and political thinkers and is the foundation for governments, businesses, employees and citizens to cooperate for mutual benefit. Today, Covid-19 is testing the concept as never before.

Even without the challenge of Covid-19, the social contract has been found wanting. New technologies, demographic shifts, political and economic instability, and climate change are just some of the forces reshaping our world. Such rapid and far-reaching changes must be accompanied by revisions to the social contract so that we maintain robust welfare and protection systems.

Covid-19 has exposed – or more accurately, underlined – an acknowledged truth: that the social contract is no longer fit for purpose. Some of the weaknesses had already been highlighted by research into workforce protection and income protection gaps, jointly conducted by Zurich Insurance Group (Zurich) and the Smith School of Enterprise and the Environment at the University of Oxford.

For example, in a survey spanning 16 countries, 36 percent of people said they did not have any term life insurance, personal pension products, or income protection insurance – something that will be felt acutely as the effects of the pandemic deepen.

Covid-19 adds a new dimension to our understanding of risk and resilience, with mental resilience now a key factor as the crisis deepens, reinforcing the need to protect the vulnerable. The solution is for all the stakeholders in the social contract to provide flexible worker protection, tailored to individual career paths.

In our increasingly fragile and fragmented world, the traditional safety nets are inadequate. We are struggling in lockdown, working remotely in greater numbers and relying more heavily on technology. Many jobs are on hold, and some will be lost for good.

According to the International Labor Organization, Covid-19 is expected to wipe out 6.7% of working hours across the world during the second quarter of 2020, which the UN agency says is equivalent to 195 million jobs worldwide.

In the United States alone, a staggering 26 million people registered unemployment claims over a five-week period at the start of the crisis. Many more millions are now unemployed, and the figure is continuing to rise. Wherever we live, all our lives have been compromised to some degree, jeopardizing mental health, physical health, and long-term financial security.

If Covid-19 has laid bare and compounded the shortcomings of the current social contract, the risk was foreshadowed in the World Economic Forum’s 2020 Global Risks Report, of which Zurich is a contributor, and it has been a feature of these annual reports for several years.

The report warns that “no country is fully prepared to handle an epidemic or pandemic – and so it has proved. For instance, only a tremendous effort in the UK prevented the NHS from being overwhelmed, while many other health systems have been severely stretched, and a shortage of personal protection equipment is a common problem.

Based on previous research and the clear and present danger we now face; how should we redraw the social contract?

Through the Perceptions on Protection studies, Zurich-Oxford have counselled governments and employers on the need for wider protection. That means creating flexible and innovative ways to keep protection relevant as lives and livelihoods become more diverse and unpredictable.

One of the most significant conclusions from the studies is that it is in everyone's interest to have better and more robust workforce protection and social welfare schemes. Covid-19 makes this self-evident and urgent. Without a healthy and productive workforce, no business can hope to succeed.

Reskilling and career development are also important. We should have the opportunity to acquire new skills and knowledge in response to changes in the marketplace and labor requirements. The marketplace is now more fluid and there is a premium on those that can adapt and meet the challenges associated with the technological revolution.

David Henderson, chief human resources officer at Zurich, says that employers’ duty of care is vital to the success of the social contract and that companies who protect their workforce – physically, mentally, financially – will be applauded in the post-Covid-19 era. He calls this a “moment of truth” for all businesses. Employees may even question their loyalty to companies that fall short in this time of need, and, in consequence, seek other employers who provide better security and healthcare.

Henderson explains that Zurich is leading by example with a highly developed care culture for its global workforce of approximately 55,000. “We’ve done a few things that are ground-breaking and speak well of the social contract,” he says. “In particular, we have a Covid-19 hospitalization benefit that extends to all members of an employee’s household.”

Zurich is also strongly committed to youth employment and development, which will increase sustainability by building more secure futures for younger generations. It is also reskilling workers to create a resilient and adaptable workforce. This obligation to young people, and the need to redress imbalances, is one of the key lessons of Covid-19.

The point is made forcefully by Professor Gordon Clark, Co-Director of the Zurich-Oxford research program on agile workforce protection. Clark says the balance sheet is now weighted in favor of the young – those who are in the front line in the fight against Covid-19. The older generation has a debt to pay to the young, and this is one way we will create a more equitable social contract.

“We must re-draw the contract,” says Clark, “so we compensate for the sacrifices made by the young on behalf of a relatively small group of much older people. And I think that probably means higher taxes on the retired and better-off members of society. Making good the social contract is an inter-generational responsibility, in the sense that it links the prospects of older people with younger people.”

Of course, the obligation remains to protect all members of society whatever their stage in life or their individual circumstances. People are living longer and must prepare for a future where long-term healthcare and financial security become more important.

Stefan Kröpfl, global head of life business analysis at Zurich, says we should be alert to all the imbalances and shortfalls. “Covid-19 may exacerbate the national and societal differences that we revealed through our research across numerous countries,” he says.

The research shows that differences span age, gender, occupation, nationality, knowledge of insurance and other variables. A new social contract must promote greater equality and wider opportunities for all members of society, and it must increase collective action to protect those who become victims of change. At the same time, we must strengthen the individual resilience of those who are able to afford better insurance.

Our focus must embrace whole-of-life planning, not least because the Zurich-Oxford research identified retirement as the greatest financial worry for workers, with 44 percent of those surveyed saying it was their principal concern. And we must raise awareness of insurance as the vital glue in the social contract, as the same research reveals that more than 50 percent of the workforce lack insurance knowledge.

Covid-19 is sure to bring many life-altering challenges, amplifying the worrying trends revealed in Zurich-Oxford research
Zurich-Oxford research. Short-term, our focus is quite rightly on saving lives, but once the immediate crisis is over, we must rebuild our societies and recognize that we cannot individually manage our lives and careers without a realistic 21st-century social contract.

Looking ahead, Covid-19 should be seen as a warning of the greater threat posed by climate change, which has dominated the annual Global Risks Report in recent years. All the more reason, then, for a new social contract that will help us to create a secure and sustainable future.

Related Links:

WEF COVID-19 Risks Outlook Full Report (PDF)

WEF COVID-19 Risks Outlook Report: Societal anxieties chapter (PDF)

Learn more on the Zurich Knowledge Hub