So many unknowns
“We have engaged with our KPMG partners in Asia and Europe who are sharing their experiences on returning post- COVID-19 … we cannot risk another outbreak that shuts us down all over again,” spokesperson Kevin Dove said.
Of course, working from home isn’t an option for many blue- collar workers and those who directly interact with customers, so redesigning workplaces, if even possible, to build in physical distancing is only the beginning of the headaches of reopening.
“The financial struggle is going to be real,” said Leesa Berry, owner of Klute Hair Salon in Toronto. “We are not going to take in as many clients every day, because the space is too small. We are going to have to purchase a lot of disposable things. For instance, capes would have to be thrown out after each client uses it. We need tons of disposable masks, because we have to provide them to clients.”
Berry hasn’t had any revenue since her salon closed down in mid- March, and is operating on savings and a federal loan for small businesses, so she will not be able to renovate her salon to space out workstations.
“Our workstations will have to be six feet apart from each other, so we can’t use all of them obviously, and only one of our shampoo stations can be in operation at any given time,” she said.
Of course, those issues become moot if customers won’t venture outside as long as the threat of infection remains.
Cafes and retail stores reopened in Germany last week, but foot traffic was so low that some shops began shutting down again, leading the head of the Berlin-brandenburg Trade Association, Nils Busch-petersen, to characterize this interim period until things become fully normal again as one that would be even worse than the shutdown.
“At least when shops were shut they were entitled to government aid,” he told the Financial Times. “Now they’re on their own.”
A similar scenario could very easily happen in Canada. An Angus Reid poll conducted in the third week of April showed that 43 per cent of Canadians said that they wouldn’t return to regular routines until no new cases were reported in their region for two weeks in a row. Only one in 10 said they would resume their former lives immediately.
“We just don’t know where the psychology of customers is going to be as we are reopening,” said Janet De Silva, chief executive of the Toronto Board of Trade. “The business owners we talk to want to be back in business, but the public needs to be confident with the guidelines on recovery that are to come.”
Caution is the watchword. Take Starbucks Canada. It announced this week that it would resume operations at as many stores as possible by the end of May, but will only choose select stores for walk- in services, based on the health situation in those communities. Certain stores that remained open for delivery, curbside pickup and drive-thru services will act as test cases for the remaining stores.
All employees and store owners, according to a statement put out by Starbucks, will be required to wear facial coverings and take their temperatures at the start of each shift.
There will also be provincial guidelines to follow. The Ontario government is recommending retailers control how many customers are in the store at one time, install barriers between cashiers and customers, introduce floor markings to show where people should stand and not accept paper money or coins.
Of course, social distancing becomes even more difficult at factories, where workers toil side by side. Volkswagen AG provided an inkling of what manufacturers might have to do when it reopened the world’s biggest car factory on Monday.
Volkswagen made 100 changes to the way its plants operate, including spacing vehicles further apart to reduce employee interaction. Workers will have to wear masks where it’s not possible to keep them 1.5 metres apart and are expected to avail themselves of hundreds of new handwashing stations.
But that’s just the start. Employees are expected to check their own temperature before each shift, change into their work clothes at home rather than on site, and use their elbows to open doors. The tools they use will be disinfected after each shift and cannot be passed from one person to another.
Air conditioners are even set up high to circulate as much fresh air as possible. The company did not release a cost estimate of all these changes, but production is starting slowly to
“Now it is up to line managers to make sure that all employees are fully informed about the prescribed measures before they start work,” Bernd Osterloh, chairman of the General and Group Works Councils of Volkswagen, said in a release. “All colleagues must know what to do to best protect themselves and others.”
Simultaneously considering economic and health concerns is why Toronto’s Recovery and Rebuild Strategy is being led by Saad Rafi, former CEO of the Pan Am Games, and Dr. David Mowat, Ontario’s former chief medical officer.
“What we have got right now is a recovery framework that will look at expected stages of recovery, how each sector has been impacted and how to support them through the fiscal challenge of opening up,” said De Silva who is working closely with the new office of recovery.
That recovery will be slow. More than 55 per cent of economists polled by Reuters this week concluded that the pandemic would result in a U- shaped recovery, rather than an immediate V-shaped one, which should dampen anyone’s enthusiasm about the kind of economy we will have once most industries and sectors reopen.
“While the ‘ restart playbook’ should be the immediate priority, governments must also identify and address sources of ‘ systemic risk’ to the economy and potential ‘ scarring’ that could impair economic recovery,” said a recent communiqué released by a C. D. Howe Institute working group on the post- COVID-19 environment.
The group suggested that prolonging the Canada Emergency Response Benefit program, for example, could have the adverse effect of discouraging workers to seek new work or return to the workforce, potentially deepening the economic crisis.
“I did have clients express these concerns about employees not wanting to return to work,” said LaiKing Hum, a labour and employment lawyer in Toronto representing both employers and employees. “But it was because they did not feel it was safe to do so.”
Hum said that from a legal standpoint, if an employer has adequately taken the right health and safety measures to protect employees, they have to return to work.
“But the issue under the current circumstances, I don’t think the employer will actually take action and fire the employee if he or she chooses not to,” she said. “It very well could be an anxiety issue that could be justified in these times.”
Companies will also have to consider reviewing and updating their employee agreements and HR policies, as well as navigate possibly tricky privacy concerns related to testing employees and collecting data.
“Proper policies and procedures, particularly with regard to employee consent and notifications, the types of data that will be collected, how the data is collected, and the purposes for which it will be used, etc., will need to be in place and communicated to employees in order to respect privacy rights and minimize associated risks,” warns a recent report by Borden Ladner Gervais LLP.
Pearlstein, the public affairs professor at George Mason, said mitigating a prolonged recession should start with measures to address the heart of this economic crisis: a cash squeeze.
“We have a liquidity problem,” he said. “Individuals have a limited amount of cash, and businesses have a limited amount of cash.”
Pearlstein suggests that one method large companies could adopt is to make sure lower- wage employees get paid most of what they would normally would, but higher-wage employees defer some of their compensation.
“If you have an employee that makes $250,000, for example, there’s no need right now to provide that employee with that entire amount of cash,” he said. “You could say, ‘ Hey I’m going to pay you now at an annual rate of $ 100,000,’ and give the employee an IOU in some form at a later date, in order to preserve jobs of low-wage employees.”
Pearlstein said his argument is not rooted in a sense of fairness and justice as much as it is just good business sense.
“If you start having a large number of companies or a large number of households go bankrupt, or if businesses start defaulting on their debt, which triggers all kinds of legal stuff, then you make the recession worse,” he said.
The issue, though, is which company is willing to take the plunge first and adopt such a radical compensation strategy.
“Again, this is a collective action issue. It would be good if everyone does it, but it is in no one person’s interest to do it himself or herself,” Pearlstein said.
“That’s the thing about how we’re going to navigate the coming years of reopening the economy. Government guidelines will be issued, but we will interpret them in ways that make sense of us as individuals, companies and regions. If you’re looking for a one-size fits all solution here, that would be the wrong way to go.”