Culture, creative sector and pandemic

By Gouranga G. Das and Sugata Marjit

Gouranga G. Das

Sugata Marjit

Creativity suffers under crisis. Cultural activities are important aspects of a society for their contributions to inclusiveness, cultural democracy and nation-building. Performing arts are one such thing. The role of culture in promoting creative wealth, human capital and hence welfare has been discussed at length. However, the severe jolt by the COVID-19 pandemic has been an equalizer in terms of the unfolding of impacts and its precarity in several aspects across all the developed and developing world.

As fears of contagion spread, spatial disparities in human interaction were quite vivid. Lockdowns, spatial distancing and adopting health standards were quintessential imperatives with similar policy regulations in practice, as the uncertainty of contagion, apprehension of the spread of disease and possibility of close contact among customers, firms and service providers and between different groups of people loomed large.

As Homo Economicus, we took recourse to work-from-home to avoid contact. Why? Because of the fear of infection due to intense interaction or contact. Thus, contact-intensity played a crucial role in switching to solely online or virtual, or hybrid modes of organizing activities.

However, the production of any tangible products or services needs close interaction, and apart from traditional factors like labor and capital, we need learning by interacting together. With the emergence of virtual activities and the gig economy, offline activities suffered a lot, and people hardly interacted in proximity or without a reasonably safe physical distance.

Some sectors had relatively more contact-intensity (CI) than the others. Opera and entertainment are one such non-essential CI sector and hence are expected to suffer from a decline in activities. CI is less where production is less labor-intensive. The entertainment sector has high CI, while manufacturing has much less CI and the online sector has the least CI.

Thus, cultural, leisure and hospitality along with other services and retail trade have contracted due to "consumer wariness" (risk of infection and voluntary spatial distancing) where CI of final demand is high in airports, cinemas, opera, entertainment and shopping malls. CI of services differs across groups with high CI of final demand in trade, tourism, etc.

Manufacturing, on the contrary, has a low CI of final demand (6 percent), but CI of supply chains is high for labor-intensive production such as textile manufacturing and food. For India, contact-intensive tourism, aviation, hospitality, trade, hotels, transport, communication and services contracted by 31.5 percent in 2020-21, with an overall contraction of 16 percent only in the first half of 2020-21. Thanks to digitization, intensity of contact is much less for organizing production remotely, and virtual trade.

In Korea's case, this has been a serious issue as studies showed that COVID-19 reduced the employment rate by 0.82 percentage points and increased unemployment by 0.29 percentage points, which are much larger orders of magnitude than the adverse impact of the 2008 financial crisis. Several areas, in healthcare, entertainment and the virtual economy, can be highlighted for the emergence of the "untact" and "ontact" economy (portmanteaus of un- and contact, and online plus contact).

The pandemic in South Korea has paved widespread adoption of digital services ― spanning online streaming to work-from-home policies. Untact for promoting contactless digital services includes fintech, e-commerce and remote work platforms, and has evolved as a key growth enhancer for economic activities.

Online sales, in general, have increased by 41 percent as compared to previous years. This kind of digitization-enhanced activity nudged a broader shift in behavioral attitudes towards these services, speeding up the momentum for a nationwide positive response to digitalization. This is a glaring example of the proliferation of such activities to balance public health and the economy. A three-tier policy embracing three main pillars or themes ― of data infrastructure, untact services and the digitalization of social overhead capital, or mainly government-provided capital goods available for all ― was instrumental for the successful efforts.

The arts and culture sector has suffered worldwide as performing arts professionals suffered from cancellations due to a lack of audiences. Also, the rise of the gig economy has led to the switching of economic activities by performers to delivery personnel due to basic survival needs. High-wage workers switched to different occupations as the pandemic triggered closures of some professions. As unemployment in the entertainment industry rises, this results in "forced" reallocation to the casual sector. Skill-switching from artist to different professions is hard.

Only superstars with extraordinary talent could survive, while those in the middle will be on the brink of collapse. Probably, high-end sophisticated entertainers will survive with the highest wages, giving rise to intra-group inequality. Thus, there's a need for cultural policy molded by socio-economic factors, institutional arrangements and history and traditions.

Although due patronage to cultural activities is promoted in South Korea and India without overt economization of culture, a new form of culture-crisis now necessitates novel ways of developing cultural policy, such as social safety, job concerns, artists' employment insurance and national pension for a more suitable cultural economy. As the performing arts and exhibition sectors lost about 265 billion won during the first three quarters of 2020 and the film industry lost 995 billion won, it is necessary to look at how struggling artists, performers and organizations could survive.

Closing down the sectors prone to contact-intensive activities is effective only as long as affected workers are taken care of without dampening the demand. We must remember: "Life is a shipwreck, but we must not forget to sing in the lifeboats," as expounded by Voltaire. It's important to rescue this sector. The time has come now as the pandemic intensity has fallen due to the boons of vaccination and the development of herd immunity.

Declines in contagion and severity of infection will enable us to regain normalcy beyond the virtual world where some human interaction is conducive beyond the internet-based mechanization. Active support to the artists who lost their livelihoods is essential to rejuvenate the economy. The necessity for active government policy cannot be overlooked. After the pandemic, only then, the sonatas of Mozart, Bach's symphony as well as classical Ragas of doyens of Indian classical could uplift our souls.

Gouranga G. Das is a professor of economics at Hanyang University. Sugata Marjit is a distinguished professor at the Indian Institute of Foreign Trade, Kolkata, and former vice chancellor at the University of Calcutta.