Adapting to the New Economic Normal

By 1 September 2020 December 1st, 2023 No Comments
COVID19 Economy

Adapting to the New Economic Normal:

The list of jobs cuts which have been announced in the UK since the onset of the Coronavirus pandemic is staggering, with City AM calculating that major firms are already planning to axe 106,319 UK jobs this year as a direct or indirect result of COVID-19. These include massive high street retailers such as Debenhams, Pizza Express, Pret A Manger, Boots and Burger King. High street retailers are joined by banks, the aviation and travel industry, engineering and energy providers, all sectors which were hit particularly hard by travel restrictions and reduced demands for oil and heavy machinery. At first glance, this all seems to be very bad news, especially for those now out of work in uncertain times. Yet while the pandemic has caused financial woes for some, it is creating opportunities for others – Tesco has announced it will create 16,000 permanent jobs owing to massive growth in its online sales and delivery-based business model.

So, has Coronavirus killed these jobs, or were they already dead?

Tesco’s growth is telling about the new economic normal to come. While the Coronavirus can be blamed for job losses, there is an uncomfortable elephant in the room: many of these jobs may have been lost regardless. The Coronavirus pandemic for some sectors such as aviation came as a disaster out of the blue, and while the industry could perhaps have learned lessons from the 2010 Icelandic volcanic eruptions, it would have taken incredible foresight to prepare for an event such as this. However, for many other sectors the Coronavirus has not been a dramatic break, but simply an accelerator of trends that have already long been underway. There is much talk now about the rise of a contact-free economy in which e-Commerce, telemedicine and automation create an on-demand systematised world largely free from person to person contact. To some this may sound like a nightmare, and yearning for an ‘analogue renaissance’ is certainly a real phenomenon as people are burned out by screens and conference calls. But the current remains firmly flowing towards a digital future.

Teladoc Health, the largest independent US provider of telemedicine is adding thousands of doctors to its books, while European counterparts are doing the same. Italy saw e-commerce transactions rise 81% in March, while the unstoppable march of automation from driverless trucks to ordering screens at McDonald’s has long been underway. All of these trends will cause job losses, from retail assistants to hauliers, yet the restructuring and profits from these new business models and industries will also inevitably create growth and jobs as well. The bottom line may be that while it is painful, some of these job losses were inevitable, or perhaps even necessary as the world shifts into a new long-term economic paradigm.

This does not mean however that governments can renege on their duty to help those who face losing their job through no fault of their own. Companies need to be given lifelines to re-orient themselves, and with billions earmarked in loans, grants, and other financial packages this is already underway. But it is likely that increased public spending will create increased scrutiny on how these formerly fully private companies are run and create a general atmosphere of risky aversion in the short to medium term. In short, companies that were ailing before the pandemic cannot be propped up indefinitely with taxpayer money – at a certain point, the invisible hand of the free market must once again be allowed to take its course.

Adapt or fade away:

Many high street retailers have simply failed to adapt, innovate, and make themselves resilient in the face of changing consumer habits. The writing has been on the wall for a long time for those who want to fight the rise of the digital and contactless economy, and for those who refuse to diversify their income streams. Resiliency in itself has become prized by investors, as Apple tops 2 trillion in value, largely because investors see it as a port in the storm in uncertain times, rather than because of any particular new products.

For smaller businesses, adapting and bolstering resiliency can be as simple as ensuring that your organisation can accept card payments and has e-Commerce functionality. Rather than trying to ignore or fight the fundamental truths Coronavirus has laid bare, it is time to embrace it as an opportunity to future proof your business. So, in a climate where all savings count, there has never been a better time to take a look at our great range of card terminals as well as our online payment gateway.