Economic and work changes due to the pandemic
The virus could recur, and severity could wax and wane, if predictions that it will follow the influenza virus pattern is something to go by. Also, how long will it be before everyone gets vaccinated? Future pandemics cannot be ruled out. Strategists will be worrying about these now. There is already a thinking that dangers from climate change could be worse and irreversible compared to this pandemic. It would be much harder to invent a cure and get back to normal. But for now, with the given virus, change will happen to some extent even if a vaccine is soon found, and in a couple of years things might return to normal; though investors and planners will certainly keep this crisis in mind and make course correction. But if the cure tales longer, changes will be more drastic. This is all conjecture.
First there certainly might arise a new department in charge of risk planning, scenarios, and real business contingency. BCP was in vogue many years ago, but all caution got thrown to the winds. In the last couple of months, Directors, VPs, heads of teams risked their way to the office just to make sure office desktops/assets are delivered to lower level staff, and keep the companies working. So, anticipation, building resilience and detailed planning are going to be critical.
There was the realization of supply chain weakness – like they say when the tide disappears, those swimming naked are exposed. But then, this global supply chain was more by design and no one expected the tide to reverse and nor did they intentionally swim naked. Total Globalization as we saw in the last decade could be a thing of the past. With the rise of protectionism, China is perhaps the only country that benefited from the past two decades of globalization, and they got rich, moved to another orbit. Apart from the Info-comm sector and perhaps around 3 million people in the sector, India did not benefit from this, and we perhaps missed the bus.
Supply chains will be shortened and re-imagined. Some manufacturing and jobs may return back to developed economies. But Developed economies are more investment driven and the focus could be on automation and robotics. While productivity and costs may increase, reskilling will be a concern. Developing economies like ours are more consumption driven. We cannot afford to be investment driven and cannot really let automation drive industry to the extreme. We need to keep people employed because our median age is perhaps around 27. So, a consumption driven economy needs to produce and manufacture, and if supply chains shorten, a lot of industrial activity can unfold in India. This is opportunity for economic growth in the next two decades. Our industry may look more inwards now. It has to be Jobs – Infrastructure- Production – Consumption – Investment and the whole cycle. But certainly, there could new opportunities thrown up in the global supply chain reconfiguration.
Foreign travel will surely be cut. Hospitality and tourism will be definitely affected. What will the numerous workers depending on this service industry do? Out of India’s 400 million workforce, perhaps 4 million work in the software industry, maybe another couple of million in the knowledge sector and other support services/office work – they can WFM (work from home) immediately. But then most of the paper pushers/approvers in government can also WFM too. This will be a huge change and decongestion of roads. High quality info-comm technologies will be the focus and the most innovative ones will succeed. I am already wondering why does one have to constantly think what the other side has (zoom, or meet or teams?), and consider only using mutually common applications, why can’t there be universal applications that can talk to each other? On the fip side, would such technologies preclude the elderly and bottom-of-the-pyramid population from active engagement and future opportunities? How can the playing field be evened out here? Or would everyone be able to come online without getting left out?
Anyway, bulk of us, like those working in manufacturing, customer facing sectors, warehousing etc., will still need to travel to work. The upwardly mobile might choose to take personal transport and will be uncomfortable with mass transport. Those of us who can afford, would surely say a prayer and think twice before sitting in an aircon taxi every day, given the hygiene levels maintained by operators who are already highly stressed and disgruntled making ends meet, and hygiene would be last on their mind. But then maybe the long-term future looks bright for driverless small personal cars. That would certainly be a timesaver.
So, what will the ridership for MRT, public buses be like when things reopen? Usually they get so crowded that we are bang in each other’s faces during rush hour. Well these were the first to shut down when the virus struck. But people are largely dependant on it. Once things reopen, some of these people will surely migrate to two wheelers. So, there could be a two-wheeler boom for sure. Would it lead to a dent in ride sharing taxis? possibly. All said and done, Buses and Metros will still have to be used by the majority. So, there need to be systems to manage this better. Maybe, contactless systems that allow metered number of people to pass through and keep the bus/train from getting overcrowded. Scope for a lot of innovation here.
WFH can affect real estate. Commercial real estate can get affected, with companies trying use the opportunity to trim real estate expenses. But on the flip side, given the new distancing norms that are essential, more real estate space is necessary. So, it could be 24×7 offices, only 25% of staff in office on a rotational basis etc. All leading to complex HR scheduling activities. In fact, Some of the FMCG companies like Nestle, ITC etc. had their old plants deep in the hinterland, closer to where raw materials were available. These were the first to reopen and maintain the production of biscuits, packed wheat and rice flour, Maggie etc. So, companies will rethink urban strategies and there could be a move to rural areas for many such companies whose supply chains are short, especially farm to packed food. So, again supply chain rethink.
With the IT workforce having and ability to work from anywhere, many may choose the comfort of their hometowns rather than metros like Bangalore, Mumbai, Delhi. Besides more than 50% of them are worried about their job prospects, so chances of plonking in for large home loans are ruled out. All this will have an impact on residential real estate in metro cities for sure.
But what about the rest? Jobs in the regular economy (agriculture and industry) need to be created., But at the same time, many of us will evaluate closely the feasibility of adopting automation and going digital versus using human resources. So, huge ramifications for the educated workers going ahead, and calls for a serious rethink on reskilling and upgrading. Those resources who are more into manual or semi-manual labour need to be taken care of until we can really afford to move on the AI-automation and robotics orbit. So, owners need to be mindful of what is automated and digitalized, and it is all with reference to local contexts. But surely, all firms will be wanting to go an a structure that is more flexible on the human resource front, perhaps a move to contract hiring and temporary, especially since during this crisis, contract staff were easily let go and companies could conserve financial resources. So, for individual, opportunities for the enterprising among us, and mostly challenging otherwise. Hope we can come out a happier and more contented society on the other side.