The world is shutting down. Places that were once the hub of activity have now become ‘ghost towns’ with stringent restrictions on movements.
Major events such as The Indian Premier League and the World Athletics Indoor Championships stand canceled. The Tokyo Olympics has been postponed to July 2021.
Meanwhile, the IMF has declared a global economic recession, as bad or worse than in 2009 .
The world is wondering what next and bracing for impact.
Business tycoon and Chairman of Mahindra Group, Anand Mahindra, tweets, “The Corona crisis will pass, but I think it’s making the world press a permanent ‘Reset’ button.”
Business in the post-Covid age
During the 1918 Spanish flu, businesses were severely hit across the US and Europe, especially service providers and entertainment. In 2020, the coronavirus seems to have a ripple effect in the global economy, where the total loss is estimated to be USD 1 trillion.
The world has realised how much it depends on China. From an impoverished nation just four decades ago, today China has become an integral part of the modern global industrial machine. It accounts for roughly one-sixth of global economic output.
The world post-Covid will de-globalise and a lot of manufacturing will return close to where it is consumed. It will provincialize.
Recalibration of the Indian economy
The Indian economy is likely to see a complete recalibration as a fallout of the Covid-19 pandemic.
The benchmark for aspects like employees’ salaries and rent for commercial premises will have to be redrawn.
Loan structures for Indian MSMEs, too small in size to have enough cushion to last through a pandemic, will need to be reworked.
The wage loss for the blue-collar labourers will need urgent attention.
Kosh, a Y Combinator-backed startup (W20), is beginning to tackle this challenge. It groups three or as many as ten blue-collar workers and gives them a loan. According to The Quint, post Covid, the only way to ensure their security is to give them daily cash, directly to their jan dhan accounts, until the economy gets back on its feet.
Tom feels there will be a snapback effect that will carry beyond previous norms. “For example, there might be a consumer spending bump driven by cheap credit, maintained by governments around the world to jumpstart economies.”
Work from home will be the ‘new normal’
Businesses around the world have moved to homes .
The forced quarantines in many parts of the world is expected to lead to behavioural changes resulting in higher adoption of remote working tools in the long term. About six months ago, Microsoft trialed a four-day work-week in Japan and found a circa 40% increase in productivity. It is a golden opportunity for all the companies to test it out during these times.
“Whenever any of this happens, it will not be business as usual. The virus has caught everyone with guards down, and I don’t think any sane company will forget the lesson. Work will be more flexible, and companies will scramble to test their defenses. It will be a better opportunity to lead with a “work-from-home unless necessary” style of operation going forward,” says Anand.
Anand expects people to learn the difference between cost of lifestyle from the cost of living. “Expect somewhat short-hand at discretionary spending for some time, which will beget more offers and discounts to attract customers. Nonetheless, you will see that better sense will prevail, and people will be more cautious this time.”
According to Mint, post-Covid, Indians may move away from ride-hailing services, and buy their individual cars due to fear of hygiene issues.
Contrary to general perception that post-Covid, student numbers will see a fall, a recession would make education more attractive, due to underemployment & unemployment. Having more skills might just be seen as the life jacket to keep afloat in a falling and changing job market.
The travelers will have greater awareness, sense of responsibility and appreciation for all that was taken for granted. Some profess that private vacation companies like Airbnb are likely to thrive in a post-Covid world, compared to large chain hotels, which have large common areas with too many touch points for the Covid-wary traveller. While others prophesy that large hotels will do better compared to Airbnbs since they follow higher sanitation protocols.
Physical travel may also give way to the Experience Economy, wherein immersive new technologies will enable virtual experiences from your couch. Museums around the world, for instance, are partnering with Google Street View for free virtual tours.
Will the world press the reset button?
Post-Covid, organizations which have maintained their efficiency levels will promote WFH. Governments will concentrate on health and bridging the deeper inequalities which Covid will leave behind. Citizens who have got used to consuming less, may continue with their spartan lives at least for some time.
Tom ends on a prolific note,“People will revel in human contact again: there’s likely to be a population spike during lockdown and perhaps another one when it ends.”
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