OPINION: How COVID-19 should change our ways of working
The COVID–19 virus has caused quite a stir across the world.
Many of us would have been even more alarmed at the World Health Organization’s (WHO) declaration of the disease as a pandemic, a declaration which was last used during the 2009 outbreak of the H1N1 Virus, popularly referred to as the swine flu.
By declaring COVID-19 as a pandemic, the WHO has confirmed that it is a global crisis with potentially devastating effects.
This causes a lot of concern and panic among people and businesses – panic is never good, especially not for businesses whose profitability is dependent on an environment that is driven by certainty, stability and consumer confidence.
For entrepreneurs who run businesses that are part of global value chains that depend on people, the coronavirus presents a worrying set of challenges for business across the world and South Africa, in particular, where we operate.
Upon reflecting on this situation, I think it is important for us to get a clearer understanding of the impact of the virus and why businesses must focus on people, operations and mitigation of damage beyond the current point.
Central to the productivity of any value chain is its people. They are the workers who operate the machinery in factories, the consultants who visit client sites, the domestic workers who ensure that our homes are kept clean.
These people are also customers who buy from different businesses that depend on their patronage. Understanding the importance of human capital across all sectors means panic is undesirable.
When consumers and workers fear contracting a potentially deadly virus, they will stay away from work, from public spaces and will limit movement.
The global travel sector has already lost $860 billion in travel revenues in the past two quarters alone.
With the spread of COVID-19, consumers have begun buying of sanitisers and toilet paper en masse. These purchasing patterns are unsustainable and are no doubt prompted by a large-scale panic.
The second consideration is the impact of the virus on global value chains and the potential of disrupting operations.
The world has developed large inter-dependence which has seen trade and cooperation reach levels never seen before. This interdependence has seen companies in the electronic and automotive industries outsource pivotal parts of their value chains to locations like China and South Korea.
The proliferation of the disease has seen feeder industries in these countries grind to a halt due to the attempt to prevent the illness within Chinese and Korean factories. This does not bode well for the businesses that are dependent on the operations of these factories.
The impact of this is further felt in the oil sector which exports 20% of the world’s global crude to China and is at a complete standstill due to the lack of consumption within the country.
With the above context and factors in mind, the picture for the South African economy is a worrying one. It is worth noting that all the relevant economic indicators are pointing in the wrong direction; GDP contracted by 0.8% in the third quarter of 2019 and the unemployment rate stands at 30% (dependent on the definition you follow).
As a country, we have not had to contend with the full effects of a widespread coronavirus infection (touch wood), but we are suffering from sentiments of investors.
It is, however, important to highlight that we are not insulated from the exogenous impact this virus is having on the global economy.
I believe it is imperative for businesses to look into the following sectors to prepare for possible large-scale losses as a result of the COVID-19 disease:
The mining sector contributes 1.8% to the GDP of South Africa. This is an industry that employs 456,438 people and in terms of risk of mass exposure to the disease, this sector runs the risk of losing productive labour in the case of illness and general fear of contracting the disease.
Mine workers are particularly vulnerable because the disease results in fibrosis of the lungs, which places those with respiratory problems at a higher risk of deterioration from the infection.
On top of that, it is an industry that is dependent on exporting raw materials to China which consumes 85% of all exports. A Chinese shutdown in production will have devastating effects on the sector.
The South African tourism and hospitality sector will record further losses on top of the 7.2% contraction we saw in that industry in the third quarter of the last calendar year.
This, of course, is caused by the substantial drop in tourist arrivals to South Africa and the concomitant spending at most of our destinations.
Travel bans in many countries will contribute to a drop in tourist numbers. Lesotho is the first of our neighbours to ban travel which will affect local economies at the border. Other neighbours could follow suit affecting tourism even more.
In addition to these industries, employers across the board will have to think creatively about the ways of work.
Our employment structures are built on the foundation of stability and the assumption that all workers are healthy and have the ability to travel to work. This assumption is the basis for the structure of leave within the South African labour force.
COVID-19 forces us to think differently about this. What happens in the case of an infected worker? Does that person get quarantined? Is that quarantine period more than the leave days set aside? Do we make the leave unpaid for the worker, even if contracting the disease was not of their doing? These are the difficult questions that businesses must consider.
Additional examples of complex business problems across the world are playing out in the suspension of mortgage payments in Italy due to the inability of citizens to generate an income, the Irish government is providing people with an allowance, while New York State government employees are being paid sick leave while in quarantine.
Businesses will be subject to government decisions, ones which they will not be able to veto, but must be prepared for.
The picture is looking more dire by the passing day. There will be losses of jobs, and leaders of companies will have to make difficult decisions.
However, this landscape presents the unforeseen opportunity for companies to go back to basics, redefine their value propositions and focus on the fundamentals of their businesses to ensure that they are able to ride out the storm.
It is important for business leaders to communicate with their staff. Such conversations must be open, honest and sincere about the state of the landscape to ensure a buy-in by all stakeholders during this difficult time.
The COVID-19 disease, like its predecessors, will no doubt disrupt socioeconomic patterns and interactions.
It is now up to the business leaders, organisations, and employees to take a cue from this pandemic as a signal to transform the current business models and adopt new, efficient and innovative ones.
Miyelani Holeni is the chief group advisor at Ntiyiso Consulting.