A McKinsey & Company study has revealed that the shock to lives and livelihoods from COVID-19 suppression efforts could be the biggest of the past 100 years!
As we deal with the deadly virus, a silver lining has appeared. Few economies have finally started easing COVID-19-related restrictions, on the back of confirmed cases declining gradually, testing pace ramping up, probable vaccines in pre-clinical and clinical trials, and government stimulus packages being injected to aid economies heal from the treacherous virus repercussions.
While this seems to be a slight milestone as we continue dealing with the pandemic and what experts are deeming to be the Global Virus Crisis (rings a bell to the debacle of 2008?), it has brought along a new challenge- now that people are going back to work, what will be their “new normal”? And is the workforce safe? Is there enough efficiency in financial systems and businesses to meet the needs of already-ailing employees? Does being back to work welcome the dreaded second wave of the novel coronavirus? Can returning to work after COVID-19 emerge as the toughest challenge for managements of our age?
Challenges on Being Back to Work
Stay-at-home orders, lockdowns and quarantine restrictions have altered the global economy and the face of productivity in the past few months.
Majority of companies are now entering the strategic planning phase to prepare for a restart of business activities. Australia, some states in the US, Spain, India and China are few economies that have started calling their workforce back to offices, so that activities can resume to ensure economic recovery and make up for losses that the COVID-19 brought along. But this is happening in an environment that is already financially crippled, facing employment crunches.
For instance, the world’s biggest economy, United States, lost a record 20 million plus jobs in April 2020. Adding on to this edginess is majority of Americans who when surveyed lately, reported that they are extremely worried about losing their jobs.
Australia too shed over 594k jobs last month and the unemployment rate jumped to 6.2%. The central bank, RBA, has forecast that unemployment will increase to 10% by mid-2020 and by year end, the rate could be around 9%.
Another instance is from the world’s second biggest economy, China, which did show signs of recovery and the number of new daily infections appeared to have stabilised, but a second infection wave is being sporadically reported once normalcy was resumed in the country.
As the pandemic begins to ebb, these are few challenges that can persist, and for a long time-
Virus’ Undefined Timeline
Experts opine that with a lot still unknown about the novel coronavirus and its contiguous pace of spreading, there are indications that it might not go away in the foreseeable future and continue to remain a threat. We are still learning a lot about the virus, including its transmission, fatality rate and immunity after exposure. This poses the challenge to find ways to live with the novel coronavirus.
It has been well acknowledged that the coronavirus is first and foremost a threat to global health. Calling workforce back in office premises/ onsite might welcome an exposure that health experts are dreading- more confirmed cases. The pressure will not alone be on health, but on the company, health care systems and overall economy.
Businesses’ Anti-viral Measures
As the virus’ timeline remains undefined presently, businesses have the pressure to think about ways to incorporate efficient physical distancing, manage requests for sick days for those who feel ill and adhere to all government norms. This can come at a cost of finance as well as time and human effort.
Restructure of workforces
Employees being either ill, laid off or few working from home with commute issues demand a restructure of the complete workforce to ensure that work remains unaffected. This is another challenge to the Management and cross-functional task force teams, and new processes might also be required. It also puts Managements’ leadership skills, adaptability, and judgement to test.
Government Challenge- getting unemployed, underemployed, disengaged workers back into jobs
While we discuss challenges from employees and business point of view, one cannot ignore that amid this pandemic, governments have the challenge to get jobs for unemployed, underemployed, and disengaged population. Job placement services need to ensure that they return potential employees to the workforce as quickly as possible for the economy to pick up the lost pace.
Latest Fletcher Building Limited (ASX:FBU) Fiasco- Workforce Reduction
A manufacturer, home builder, and partner on major construction and infrastructure projects, FBU employs over 16,000 people in New Zealand, Australia, and the South Pacific.
In its recent update on trading and organisation reset, Fletcher Building CEO Ross Taylor stated that given the uncertainty over the economic outlook, the Company expects market downturn and COVID-19 leading to a sharp downturn in FY21 and potentially beyond. Consequently, the Company has made some very difficult decisions, including reviewing the number of people it employs. FBU acknowledges that the Company needs to reduce spending to better combat tough times and the first goal has been to device cost-saving measures to facilitate employee retention.
However, the Company is looking at reducing the number of people employed by approximately 10%, which equates to around 1,000 positions across New Zealand. Moreover, its comprehensive review of operations is likely to result in a workforce reduction of 500 in Australia.
Mr Taylor states that- ““As a major employer, we need to ensure our business is resilient and can support economic growth in the longer term, just as we have done for more than 100 years.”
What Should Businesses Do?
According to the World Economic Forum, upskilling in preparation for changes in an after-COVID-19 world should form a crucial part of both response as well as recovery. To prepare for tomorrow, workers and businesses should take the following steps-
- Sectors that can should digitalise and transition to a platform model, as linear models are not agile or resilient enough to withstand major disruptions like COVID-19
- Push people to learn digital skills, improve auxiliary skills like collaboration, creative problem-solving and openness to new ideas
- Begin thinking about where demand for work will exist and how best to prepare for those spaces
Undeniably, the COVID-19 pandemic continues to threaten not only health care systems, but also the livelihoods of citizens and the stability of economies. So far, most governments, businesses, and inhabitants have correctly focused on saving lives. Now with economies easing restrictions and businesses opening, vigilance is key to achieve the goal of flattening the curve, reducing the speed of transmission, and eventually eradicating the invisible enemy.