Business finding new ways to work in midst of a crisis
ALMOST on a daily basis, the world is having to react at speed to the dangers posed by Covid-19. What we are witnessing is unprecedented change that few of us would have predicted even a couple of weeks ago.
Governments from every continent are trying to minimise the disruption and potential financial downturn by direct intervention. This may signal a different approach over the next decade as to the future role of the public sector in supporting economies and businesses. The UK Government had already signalled its intention to borrow heavily to support the NHS and develop new infrastructure projects, and businesses may now expect a more interventionist approach by politicians.
One of the few silver linings of this very dark cloud is the way that it is has reawakened the spirit of community, with businesses supporting each other in difficult circumstances.
The leisure, hospitality and retail industry will be hardest hit, but these sectors are not going down without a fight and are adjusting their business models to ensure that they can survive the next few months.
Consumers are also doing their part by using new takeaway services offered by local restaurants, coffee shops or pubs, asking for deliveries from local shops, buying gift cards from businesses or rescheduling appointments rather than cancelling.
This social dimension may inspire people to have a very different view of their lives, especially with regard to work. Technological advances have enabled firms and organisations to switch large numbers of their workforces to safely working at home and away from possible infection – something that would not have been possible a decade ago.
In terms of the economy, the UK is fortunate that it is in a relatively healthy position. Financial institutions are strong, employment is at a record high, the corporate sector is estimated to be sitting on a cash mountain of around £775bn and interest rates are at a historic low.
With expectations that there will be a deep fall in economic output over the next six months, analysts predict the worst will be over by the end of the summer and that economies as well as stock markets around the world will bounce back quickly.
This impact on the level of GDP will be a one-off steep fall and it is imperative that the UK Government deals with this short pause in economic activity and minimises job losses.
Suggestions include the German system of short-term working, where firms place employees on less hours and the government pays 65% of the wages, thus preventing redundancy. Another potential solution from the
USA would be to provide an employment loan equivalent to the tax to be paid by companies over the next six months, conditional on them paying and keeping their staff over the same period.
No-one can really predict what will happen over the next six months. However, I hope we will get through this quickly and that over the next few years, the UK economy will recover and become even stronger. Whether it does or not, the Covid-19 virus has ensured that nothing will ever really be the same again.