As Millions Lose Their Jobs, a Coronavirus Recession Looms
In the last few months, the global economy has taken a tremendous hit and the biggest casualty amid the coronavirus crisis is jobs. Since February, companies around the world have been freezing or cutting pay and laying off staff at an unprecedented rate, in an attempt to stay afloat. To prevent the virus from taking hold, governments are forcing businesses to close and urging citizens to stay at home for an extended period of time. Sooner or later, this may trigger another financial meltdown.
To date, nearly 10 million Americans have been retrenched. Many economists are predicting a continual decline in gross domestic product that could rival that of the Great Depression of 1929. Apart from the US, many of the world’s economies like Europe, Canada, Japan, Brazil and Mexico are at risk of a recession.
Non-essential businesses across Canada have been forced to shutter; pushing the unemployment rate up to 7.8 per cent, with a record-breaking loss of one million jobs. Prime Minister Justin Trudeau said that it would be near impossible for the economy to recover fully until a vaccine was discovered, which could take as long as a year or two. Mexico’s Labour Department said the country has lost 346,748 jobs since March, and the biggest job losses (almost 64,000 jobs) were seen in the tourism-dependent Caribbean coastal state of Quintana Roo. Even the International Labour Organization noted a 5.7 per cent decrease in the number of hours worked in Latin America.
While many industries have been adversely impacted by the virus such as tourism, travel, F&B, retail and hospitality, Felina Tan, an education consultant and private tutor in Singapore, thought that her industry was immune to a downturn. But as schools shifted to online learning, her business began to dry up and she saw a 40 per cent drop in her earnings. With all tuition and enrichment centres being forced to close till May 4th, the take-up rate for online learning hasn’t been high as many parents are not convinced of the efficacy of virtual lessons. Since April, many enrichment centres and dance studios have seen the number of inquiries drop drastically, with practically zero new sign-ups.
Gig economy workers have not been spared either. Lynette Tay, who does events on a freelance project basis, has had many event cancellations since the outbreak, causing her to lose at least S$10,000 in income. Currently, her take-home is next to nothing as Tay gets paid only after a project has been completed.
In the healthcare sector, Dr Sanjeev Shankar, an emergency medicine specialist in Singapore, thinks that people have a serious misconception that doctors are profiteering from this pandemic. “People assume that with an increased demand for healthcare, those in this industry stand to profit. This could not be further from the truth. There have been strict restrictions placed on healthcare workers limiting the number of medical facilities that they are allowed to practise—and this has led to a loss of income for many,” he says.
Dr Shankar also believes that the latest circuit breaker measures have put a strain on certain segments of the industry, such as other “non-essential” services like aesthetic medicine & surgery, counselling, physiotherapy & rehabilitation and health screening. As a result, many practitioners have no choice but to go on no-pay leave.
Certain fields like legal have not felt the full impact of the coronavirus outbreak yet. Keith Tnee, a partner at Tan Kok Quan Partnership, feels fairly unaffected by the recent bout of events as he deems the demand for legal expertise to be fairly inelastic. “I don’t think the legal profession will face mass retrenchment,’’ he says. “But lawyers will see, and have been seeing, a slowdown in work recently given the measures implemented globally. Going forward, companies will find that more of their debtors will have difficulties paying their debts, or may themselves face financial difficulties.’’
For many companies in Singapore, retrenchment and dwindling profits may have brought commerce to a screeching halt but it does not spell the end of the road. With the government rolling out three rounds of stimulus packages (the latest amounting to S$5.1 billion), others are trying to keep their heads above water in these murky times. Diego Dultzin Lacoste, co-founder of an online shopping platform OnTheList, holds the view that while tough times don’t last, tough teams do and is unfazed by the recession ahead. “This Covid-19 situation has made our team stronger and more resilient. As a start-up, it is important to be flexible and adaptable to change. This explains why we are able to keep our business going even in times like this, bringing exciting online flash sales to our members,” he declares. Carlotta Wong, co-founder and managing director of Lexington Limited, agrees that it’s important to keep one’s chin up and find ways to be resourceful. “Especially during this uncertain Covid-19 period, we must always look at the long-term road ahead. By doing so, businesses will retain the loyalty of their staff, and be ready to bounce back stronger,” she says.
Recession or not, perhaps this period may be the time for active job seekers to upgrade their skills and for companies to learn how to be lean and effective, even in the face of disruption. In the wise words of Nelson Mandela, “The greatest glory in living lies not in never failing, but in rising every time we fail.”