These days when I start reading the news, I wonder if anything is happening in the world other than coronavirus. Surely there is something else to write about. So I am going to write about something else …. sort of.
What I want to look at is the past and the future. How did we get to this point with coronavirus, and where might it lead us.
Looking at those impacted, there is a thread through many of them. A hundred years ago, and even fifty years ago, companies worked like this. An employee was often an employee for life. They started at the bottom and learnt the business. As they gained experience, they moved up to the next job. It was the exception rather than the rule that you were fired. Redundancy was not a word.
Along came the drive to make companies more efficient in order to cater to the ups and downs of business. Casuals were increasingly employed. They were the buffer that kept labour costs down and gave shareholders a greater return. Not only that, we got cheaper goods.
Forget the insecurity of those who had no expectation of a regular income. It was all about flexibility. Employers and governments emphasised the jobs available to students and mothers wanting to work part-time. They ignored those who were on limited shifts and could barely get enough to live on in a normal week. Those who were constantly juggling multiple casual jobs to afford a roof and food.
Now with the excuse of a virus, it is easy to get rid of casuals. Who will end up supporting them? Us consumers who wanted cheaper goods and pushed manufacturers to cut costs to become more “efficient”.
A key economic measure is productivity. Is better productivity really a good thing when it means more flexibility in labour usage through casual work? Maybe we need to re-think that measure.
A second aspect is the impact when people work their whole life in one organisation. A part of this is loyalty to the company. If staff turn over regularly, there is no loyalty to the company. The company only feels limited loyalty to the employees. The spiral descends to the point where there is no regret in employees leaving or employers cutting staff numbers. Who wins when there is no sense of obligation on either side?
A third aspect is the embedded knowledge. If a company has to make rapid changes, for example, ramp up production of face masks or medical supplies, you want people who have been around for decades to work out how to do it?
In the reverse situation, if you have to contract quickly, it is useful to have people who may have had to respond to a contraction in the organisation in the past. People who are invested. A person with limited experience in the organisation will take ages to work out what to do.
There is the contra-argument that says people changing companies cross-fertilise businesses with new ideas and ways of doing things. It could also be argued that we are actually making all companies the same. In one multinational company, I worked in the marketing director insisted some of the product managers had not attended university to get a marketing degree. His argument was that if all companies had product managers educated in the same way, there was no competitive advantage. They would all think the same way and make the same marketing decisions.
So is this current crisis going to change the way companies employ casuals? Maybe when the dust settles, and people see the impact, it may stabilise employment. Others perhaps will move the other way and say we should have had more of our workforce as casuals so we could have dumped them with less fuss.
On the other side, the employee’s side, it will make them even more aware of the precarious position they are in. It may strengthen unions or change laws around what constitutes casual employment. What it might lead to is only guesswork.
The mantra from companies has always been “maximise profits” and “minimise costs”. Globalisation covers both those bases. Sell overseas, and also buy from the cheapest source. It worked fine until China shut down. Suddenly China was not buying, and the components from China were not forthcoming. Local component supply suddenly looks very attractive. Home markets have their attraction again.
I wrote an article some time ago about the sale of food-producing agricultural land to overseas companies. The term food security has been a nebulous phrase until now. The penny has finally dropped that there is not an unlimited supply of the consumer staples we have grown used to. From toilet rolls to pasta to fresh food, supply is designed for steady, predictable demand.
While there is irrational panic involved, it is teaching us something. We were wrong to believe that we can always rely on food and personal items to be available when and where we want them.
In Australia, we have not reached the point where an overseas-owned food producer has said they were diverting all their production to the country of the owner, but it could happen. Imagine one of the Chinese owned or even NZ owned milk producers in Australia saying all their production was diverted to China or NZ.
What will be the outcome when the pandemic is over? Maybe more food in the pantry. Perhaps a tighter framework for export of food products. Could be a buy-back of foreign-owned food producers. In any case, it is unlikely we will return to business as usual.
Small businesses do not have the resources or access to capital that big businesses have. It is likely that many will not survive. So a likely outcome is the consolidation of businesses. In twelve months time, we will likely find many industries have less competition. Where there had been ten players, there might only be five. The price flexibility brought about by multiple sources will not exist.
If we are forced into personal isolation, we are in fact being driven to exist in a web-based world. We can expect the share of purchases online to jump and the upward trend to continue as people become more comfortable buying from online sources.
Today I was setting up an appointment with a legal firm. They said they would do it as a teleconference rather than face to face. I use Zoom and Skype regularly for international meetings but this surprised me. If we have more business done routinely this way because of our coronavirus separation at the moment, it has a myriad of implications. It could warrant a whole new article. Just think of a few impacts. Location of businesses, transport, quality of internet, time flexibility and cost of office space.
We had SARS in 2003. We had MERS in 2012. That was a gap of 9 years. We have Corona in 2019, a gap of 7 years. Does anyone not think we are going to have more of these in the coming decades?
The problem is the rate of spread. Take this example. In Australia the number of reported cases doubled to 500 in the last 3 days – Between Saturday and Tuesday. If it were to continue at that rate, this would be the numbers.
So if the rate continues doubling every 3 days, in forty-seven days the whole population of 25m could be infected. We are talking end of May. It is not as simple as this, but you get the picture.
Trump has resisted testing because he does not want the true numbers published. Read this article to see how FDA stalled testing. Other countries including Australia, have restricted testing due to the availability of test kits. We have no idea what the real numbers are as many show no symptoms. Instead of 500 today, Australia may be up to day 12 or day 15.
Governments have cut back worldwide on the funding of medical research. All done in the name of capitalism. Leave it to the drug companies to invest in research and let them make the mega-profits. The drug companies are not going to work on something that is not a recognised need. Maybe we need to start investing in something like immunology that puts us in a better position when the next outbreak of a new disease hits us. Imagine having a process to develop a vaccine in a few weeks rather than a few years. Is it possible? Maybe if we fund someone like WHO to investigate, it might be. Drug companies respond to what is in front of them. We need to be ready for something we have not seen yet.
Finally one implication I read about recently. With so many people self-isolating, there are only so many books you can read or series to binge-watch. Anticipate a baby boom around Christmas.
Our world is going to change in many ways after this pandemic. I have touched on a few. Many of those changes will be for the better. The silver lining I guess.