tag:theconversation.com,2011:/es/topics/coronavirus-and-the-economy-84942/articlesCoronavirus and the economy – The Conversation2020-08-10T20:08:29Ztag:theconversation.com,2011:article/1427072020-08-10T20:08:29Z2020-08-10T20:08:29ZThe S&P 500 nears its all-time high. Here’s why stock markets are defying economic reality<figure><img src="https://images.theconversation.com/files/351870/original/file-20200810-22-11801h8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> </figcaption></figure><p>The stock market is not the economy.</p>
<p>This old and playful maxim is typically not true: often the stock market is a good proxy for the economy and a very good indication of what will happen to it. </p>
<p>But it aptly captures the current divergence between stock markets and the worst economic crisis in a century.</p>
<p>In the United States the NASDAQ (which include tech stocks such as Amazon, Apple, eBay, Microsoft and Google’s parent company Alphabet Inc) is now 10% higher than before COVID-19 fears crashed global markets between late February and late March. </p>
<p>The benchmark <a href="https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview">S&P 500 index</a> is now on the verge of an all-time high. Last week it closed at 3,349 points, just 1% lower than its February 19 high of 3,386. </p>
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<a href="https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="S&P 500 index, year to August 7, 2020." src="https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/351881/original/file-20200810-22-1fcexje.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>Compare this reversal of fotune to the S&P 500’s trajectory after the Global Financial Crisis of 2007-8. Then it took about five years for the index to claw back its losses. </p>
<p>And this despite the US economy now being in a much worse position than during the GFC, with an unemployment rate <a href="https://www.bloomberg.com/news/articles/2020-08-07/employment-in-u-s-increased-by-more-than-forecast-in-july">of more than 10%</a>, a muddled federal government response and Congress unable to agree on a new economic stimulus package.</p>
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Read more:
<a href="https://theconversation.com/will-the-gop-let-congress-send-money-to-states-and-cities-reeling-from-the-pandemic-4-essential-reads-on-the-economic-crisis-143934">Will the GOP let Congress send money to states and cities reeling from the pandemic? 4 essential reads on the economic crisis</a>
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<p>Other national stock markets have had similar if less exuberant rebounds. From their pre-COVID highs, Britain’s FTSE 100 is still down about 20%, Japan’s Nikkei 225 about 6.5% and Australia’s S&P/ASX 200 index about 15%. Nonetheless their recoveries are still remarkable. </p>
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<a href="https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Australia's S&P/ASX 200 index, year to August 7 2020." src="https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/351884/original/file-20200810-22-wtbctx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<h2>The least worst best</h2>
<p>Normally stock markets tell us a lot about the economy. Buying and selling shares is a near-instant response to new information. The aggregation of those best guesses is generally an accurate indicator of the way things are going. </p>
<p>This time there might be a structural reason why the markets appear divorced from reality. </p>
<p>Investors could be bidding up stock prices because they have to put their money somewhere, and stocks are the least worst bet.</p>
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Read more:
<a href="https://theconversation.com/blue-chip-volatile-high-risk-retail-investors-are-buying-while-professionals-are-selling-142985">Blue-chip, volatile, high-risk: retail investors are buying while professionals are selling</a>
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<p>Broadly speaking, investors can put money to work in five places: stocks; property; commodities; bonds or money in the bank.</p>
<p>Property investment has become extremely risky. Values remain high due to temporary support schemes, and significant falls are likely.</p>
<p>Commodities are generic tradeable items such as oil, wheat and coffee beans. </p>
<p>Like all tradeable items, their prices rise and fall, and the pandemic has been driving them down. In April the World Bank’s <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/33624/CMO-April-2020.pdf?sequence=9&isAllowed=y">Commodity Markets Outlook</a> warned the risks to forecasts were “large in both directions”. </p>
<h2>Bonds are paying less and less</h2>
<p>What about <a href="https://theconversation.com/the-government-has-just-sold-15-billion-of-31-year-bonds-but-what-actually-is-a-bond-143598">bonds</a> – the ultrasafe investment offered by governments? </p>
<p>Their attractiveness depends on the interest they pay, and that depends on <a href="https://theconversation.com/guaranteed-to-lose-money-welcome-to-the-bizarro-world-of-negative-interest-rates-119994">expectations</a> about interest rates and inflation. </p>
<p>Both were going downhill before the pandemic, and COVID-19 has pushed them down further. In March the US Federal Reserve cut its interest-rate target range to <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm">0-0.25%</a>. The Reserve Bank of Australia cut its target to <a href="https://www.rba.gov.au/media-releases/2020/mr-20-08.html">0.25%</a> but has <a href="https://www.rba.gov.au/speeches/2020/sp-dg-2020-06-30.html">in practice</a> been prepared to accept a cash rate <a href="https://www.rba.gov.au/speeches/2020/images/sp-dg-2020-06-30-graph03.gif">closer to zero</a>.</p>
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Read more:
<a href="https://theconversation.com/weve-just-sold-15-billion-31-year-bonds-whats-a-bond-143598">We've just sold $15 billion 31-year bonds. What's a bond?</a>
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<p>The interest rates that influence bonds also affect returns on bank deposits.</p>
<p>That leaves stocks. </p>
<p>A notable feature of the stock market’s buoyancy has been the influx of retail (at the expense of professional or institutional) investors. </p>
<p>Since the market peaked in late February they have become net buyers of stocks, while professional institutional investors have become net sellers. </p>
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<p><strong>Cumulative net buying (A$ billion)</strong></p>
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<a href="https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=301&fit=crop&dpr=1 600w, https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=301&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=301&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=378&fit=crop&dpr=1 754w, https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=378&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/352836/original/file-20200813-22-9yrufh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=378&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">S&P/ASX 300, January to mid-May 2020.</span>
<span class="attribution"><a class="source" href="https://theconversation.com/blue-chip-volatile-high-risk-retail-investors-are-buying-while-professionals-are-selling-142985">Carole Comerton-Forde and Zhuo Zhong</a></span>
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<p>Researchers Carole Comerton-Forde and Zhuo Zhong suggest this might be due to people having <a href="https://theconversation.com/blue-chip-volatile-high-risk-retail-investors-are-buying-while-professionals-are-selling-142985">fewer other spending opportunities</a>, and more time on their hands – the so-called <a href="https://www.bloomberg.com/opinion/articles/2020-06-09/the-bad-stocks-are-the-most-fun">boredom markets hypothesis</a>.</p>
<p>Governments have helped with programs to prop up businesses, among them the US$659 billion <a href="https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program">Paycheck Protection Program</a> and Australia’s A$86 bllion <a href="https://budget.gov.au/2020-efu/downloads/JEFU2020.pdf">JobKeeper</a> and A$40 billion <a href="https://treasury.gov.au/coronavirus/sme-guarantee-scheme">Coronavirus Small and Medium Enterprises Guarantee</a> programs. </p>
<p>In April and May this year Australian government spending <a href="https://www.finance.gov.au/publications/commonwealth-monthly-financial-statements">jumped 11%</a> on the same months last year. In April, May and June US government spending <a href="https://www.cbo.gov/system/files/2020-07/56458-CBO-MBR.pdf">more than doubled</a>. It’s likely some of that money has flowed thorough to people who have used it to play the stock market.</p>
<h2>Detached from reality</h2>
<p>In the past the stock markets have fallen just before unemployment rose, heralding what was to come. </p>
<p>This happened in the US recession at the start of the 2000s and the <a href="https://www.investopedia.com/terms/g/great-recession.asp">Great Recession</a> during in the Global Financial Crisis, as the following graph shows. </p>
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<p><strong>US unemployment rate and S&P 500</strong></p>
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<a href="https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=285&fit=crop&dpr=1 600w, https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=285&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=285&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=358&fit=crop&dpr=1 754w, https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=358&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/351087/original/file-20200804-14-qc106s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=358&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>What’s notable is that the stock market didn’t fall just before unemployment rate climbed this time.</p>
<p>Now, more than ever before, the stock market tells us little about where the economy is heading.</p><img src="https://counter.theconversation.com/content/142707/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Doran does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Normally stock markets tell us a lot about the economy. In 2020 that’s no longer the case.James Doran, Associate professor/Deputy head of school, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1429432020-07-21T11:08:56Z2020-07-21T11:08:56ZCoronavirus is hurting airlines but they shouldn’t rush to cut jobs<figure><img src="https://images.theconversation.com/files/348441/original/file-20200720-133010-s9ljg7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the firing line.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-united-kingdom-circa-may-2018-1121002661">pio3 / Shutterstock.com</a></span></figcaption></figure><p>The coronavirus pandemic has been especially cruel to the aviation industry. COVID-19 had an immediate and severe impact on aviation that is unlike any other shock in the industry’s history. Whereas the 9/11 terrorist attack on the twin towers undermined confidence <a href="https://apex.aero/2020/06/10/aftershocks-coronavirus-impact">and disrupted passenger flights</a> and the <a href="https://www.iata.org/en/pressroom/pr/2008-09-03-01/">financial crisis was hard on airlines</a>, neither of these events come close to the damage inflicted on airlines from global lockdowns. </p>
<p>When airlines don’t fly, they incur <a href="https://www.ilo.org/sector/activities/topics/crisis-recovery/WCMS_161566/lang--en/index.htm">heavy losses</a>. The health of the passenger airline industry is measured in revenue passenger kilometres (RPK). This represents the number of kilometres travelled by paying passengers. As data <a href="https://www.icao.int/sustainability/Pages/Facts-Figures_WorldEconomyData.aspx">presented by the International Civil Aviation Organisation</a> show, passenger traffic drops sharply after a crisis, but it usually only takes a couple of years before there is significant growth.</p>
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<a href="https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing growth of airline revenue, 1950-2012." src="https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/348434/original/file-20200720-63094-1694t56.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Revenue passenger kilometres (RPK), 1950-2012.</span>
<span class="attribution"><a class="source" href="https://www.icao.int/sustainability/Pages/Facts-Figures_WorldEconomyData.aspx">Data: International Civil Aviation Organization</a></span>
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<p>While the losses of airlines worldwide stood at <a href="https://www.statista.com/statistics/232513/net-profit-of-commercial-airlines-worldwide/">US$26.1 billion (£20.5 billion) in 2008</a>, the following year losses were just US$4.6 billion and in 2010 the airline industry was back in the black with net profits of US$17.3 billion. Predictions for 2020 and 2021 follow a similar but more severe pattern of minus US$84 billion and minus US$15 billion, respectively. </p>
<h2>Bearing the brunt</h2>
<p>Perhaps unsurprisingly, several airlines have announced sizeable redundancy programmes as a result. British Airways says it plans to make <a href="https://www.theguardian.com/business/2020/apr/28/british-airways-plans-to-make-up-to-12000-staff-redundant">up to 12,000 staff redundant</a> and reduce the terms and conditions of 30,000 others. Meanwhile easyJet announced cuts of <a href="https://www.theguardian.com/business/2020/jun/15/easyjet-flights-return-amid-concerns-over-physical-distancing">4,500</a> jobs in June and Ryanair of <a href="https://www.theguardian.com/business/2020/may/01/ryanair-cut-jobs-coronavirus-grounds-flights-restructuring">3,000</a> in May.</p>
<p>Asking the workforce to bear the brunt of falling demand may save the airline in the short-run but it will hurt relationships in the long-run. In fact, relationships have soured already as job cuts come on the back of very healthy pre-tax profits in 2019. IAG, the parent company of British Airways, posted pre-tax results of <a href="https://www.independent.co.uk/news/business/news/ba-profits-british-airways-iberia-sale-iag-a8800876.html">£2.6 billion</a>, easyJet <a href="https://www.theguardian.com/business/2019/oct/08/easyjet-ba-ryanair-strikes-profits">£0.4 billion</a>, and Ryanair <a href="https://www.independent.co.uk/travel/news-and-advice/ryanair-profits-boeing-737-max-airline-budget-a8921336.html">£0.9 billion</a>. </p>
<p>Moreover, these airlines have also taken loans from the UK government’s coronavirus fund: <a href="https://www.aljazeera.com/ajimpact/british-airways-parent-iag-taps-uk-government-funds-200507080916710.html">British Airways £300 million</a>, <a href="https://www.theguardian.com/business/2020/apr/06/easyjet-secures-600m-coronavirus-loan-from-uk-treasury-and-bank">easyJet £600 million</a> and <a href="https://www.thetimes.co.uk/edition/business/michael-olearys-optimism-gives-way-to-anger-at-quarantine-plan-g0zwz3r39">Ryanair £600 million</a>.</p>
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<img alt="British Airways Boeing 787-9 Dreamliner." src="https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/348438/original/file-20200720-18366-qeyk6a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">British Airways had healthy pre-tax profits in 2019.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/heathrow-london-united-kingdom-july-7-692006812">shutterstock.com</a></span>
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<p>Terms and conditions of employment in the airline industry in Europe have deteriorated in recent years. This has been the result of intensified competition within Europe’s single market for aviation services, most notably as a result of the increasing market share of <a href="https://www.researchgate.net/publication/299599038_Evolution_of_the_Labour_Market_in_the_Airline_Industry_due_to_the_Development_of_the_Low_Fares_Airlines_LFAs">low-cost airlines</a> such as Ryanair, easyJet and Wizz.</p>
<p>As labour represents one of the few variable cost that airlines have immediate control over – unlike fuel, aircraft, landing charges and the like – many, but by no means all, tend to move quickly to <a href="https://www.ilo.org/sector/activities/topics/crisis-recovery/WCMS_161566/lang--en/index.htm">reduce these costs</a> in the event of a sudden downturn. This was certainly the case after <a href="http://www.ilo.org/public/libdoc/ilo/2002/102B09_516_engl.pdf">9/11</a> and the <a href="https://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---sector/documents/publication/wcms_161566.pdf">financial crisis</a>. </p>
<p>Airlines regard this as good business, especially when they can either hire new staff on inferior terms and conditions or <a href="https://www.theguardian.com/business/2020/jul/17/ba-begins-to-carry-out-its-fire-and-rehire-threat-to-jobs">fire and rehire</a> the same staff on lower terms and conditions, without incurring training costs. Trade unions regard this as <a href="http://www.ilo.org/public/libdoc/ilo/2002/102B09_516_engl.pdf">simple opportunism</a>: in the eyes of aviation unions and aircrew, job cuts not only constitute a cynical (short-term) policy to cut labour costs but a longer term strategy to further undermine terms and conditions of employment.</p>
<p>The new redundancy plans may not come to fruition. They might be used instead to browbeat staff and <a href="https://books.google.co.uk/books?id=VslyzYwG10EC&pg=PA118&lpg=PA118&dq=doganis+and+labour+is+the+key&source=bl&ots=5FYbnV3m5F&sig=ACfU3U12d12LlARhRyvhVEM-1PYxw_1EcQ&hl=en&sa=X&ved=2ahUKEwjZu8C22brqAhXAQUEAHcBBAKQQ6AEwAHoECAgQAQ#v=onepage&q=doganis%20and%20labour%20is%20the%20key&f=false">secure further concessions from them</a>, as has happened in the past. Pilots at Ryanair, for example, recently voted in favour of a <a href="https://www.balpa.org/Media-Centre/Press-Releases/Ryanair-pilots-vote-to-accept-temporary-pay-cuts-t">20% pay cut</a> in order to save 260 pilot jobs at the airline, which were part of the cuts it announced in May. The pilots have negotiated that pay will be restored to pre-COVID-19 levels within four years (which would still constitute a pay cut due to inflation). </p>
<h2>There is an alternative</h2>
<p>Previous crises show that there are viable alternatives to job cuts. Following the 2008 financial crisis airlines like Southwest adopted a wider range of measures including <a href="https://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---sector/documents/publication/wcms_161566.pdf">work-sharing, temporary pay cuts and furlough</a>. As a result, they were less likely to experience industrial strife and the business recovered more quickly. </p>
<p>Airline staff today are certainly willing to negotiate alternatives, as demonstrated at Ryanair. COVID-19 might hit harder and last longer than previous crises, but the industry will not disappear. Indeed, the majority of participants in a <a href="https://www.forbes.com/sites/gabrielleigh/2020/07/14/how-top-aviation-leaders-see-the-future-of-the-airline-industry/#2e75627e7b85">recent poll</a> of aviation professionals predicted a return to 2019 levels of revenue within three years. </p>
<p>The big question is what the recovery will look like for the workforce. Will the European aviation sector continue to offer decent work for the <a href="https://ec.europa.eu/transport/modes/air/news/2019-03-01-social-standards-air-transport_en">2 million</a> people who currently work in it, or will jobs in this sector go the same way as precarious gig work, which now characterises so many other sectors of the economy?</p><img src="https://counter.theconversation.com/content/142943/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geraint Harvey has received funding from the European Transport Workers’ Federation in conjunction with the European Commission (DG Employment), project number: VS/2011/0182 and the European Transport Workers’ Federation in conjunction with the European Commission (DG Employment, Social Affairs and Inclusion), project number: VS/2013/0184.</span></em></p><p class="fine-print"><em><span>Peter Turnbull has received funding from the European Transport Workers’ Federation in conjunction with the European Commission (DG Employment), project number: VS/2011/0182 and the European Transport Workers’ Federation in conjunction with the European Commission (DG Employment, Social Affairs and Inclusion), project number: VS/2013/0184.</span></em></p><p class="fine-print"><em><span>Daniel Wintersberger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Past crises show airlines are well placed to bounce back from the coronavirus pandemic.Geraint Harvey, Professor in People & Organisation, Swansea UniversityDaniel Wintersberger, Lecturer in Human Resource Management, University of BirminghamPeter Turnbull, Professor of Management, University of BristolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1412282020-06-30T14:06:52Z2020-06-30T14:06:52ZA post-pandemic world is unlikely to focus on meeting need over human greed<figure><img src="https://images.theconversation.com/files/344102/original/file-20200625-33557-140vli2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">VW Pics/Getty Images</span></span></figcaption></figure><p>How often has it been said that ‘the world will never be the <a href="https://theconversation.com/the-world-before-this-coronavirus-and-after-cannot-be-the-same-134905">same again</a> after the COVID-19 pandemic’? If so, the question is, how might it change? Might it not change much at all? The questions have given rise to speculative debate, with optimists and pessimists offering their predictions.</p>
<p>On what grounds do the optimists look to a future in which social justice, environmental sustainability, and reduced inequality are prioritised?</p>
<p>First, it is argued that the pandemic has exposed neoliberalism’s failure to provide an adequate response to the twin health and economic crises. During this pandemic governments pursuing neoliberal policies have departed from norms, making interventions in the economy and healthcare in order to limit the dire human and economic consequences of COVID-19. This, say the optimists, is a lesson for the future – the market shown to be an inadequate mechanism for tackling the most fundamental problems facing humankind.</p>
<p>Second, the pandemic has highlighted the need for greater international cooperation in addressing global crises. The optimists say that the pandemic has revealed the necessity for a global response, and that in the future such a response should extend to address other crises, particularly climate change and inequality.</p>
<p>Third, the pandemic has starkly exposed the failures of elected right-wing governments to tackle the pandemic – the US, UK and Brazil being the most obvious examples. Opinion polls have shown the approval ratings of these governments to be falling significantly. Surely, therefore, voters will punish them at the polls and opt for alternatives with social democratic inclinations?</p>
<p>The overall optimist view has been stated pithily by one analyst – there can be no return to normality after the pandemic, because normality has long been the problem. Before the pandemic Nobel laureate in economics <a href="https://www.theguardian.com/commentisfree/2019/nov/24/metrics-gdp-economic-performance-social-progress">Joseph Stiglitz</a> offered a sharp assessment of what is wrong, pointing to three major crises in the world: inequality, climate change, and the crisis of democracy. The latter crisis, he argued, is that democracies are not tackling the other two crises. The optimists hope the pandemic will force a more concerted attempt to address these global challenges.</p>
<p>The pessimists, on the other hand, hold out little hope for a more progressive, internationalist, post-pandemic future.</p>
<p>First, they see corporate power being little diminished. They recall how optimists believed that the 2008-2009 financial crisis would bring fundamental change in its wake, but in the event the neoliberal order survived. Surely, say the pessimists, the same will happen again?</p>
<p>The continuing power of the market is shown up in two recent, telling US economic indicators, which viewed together seem utterly <a href="https://theconversation.com/why-stocks-are-soaring-even-as-coronavirus-cases-surge-at-least-20-million-remain-unemployed-and-the-us-sinks-into-recession-140395">bizarre</a>. In April the US stock market recorded its biggest monthly gains since 1987. In the same month US unemployment rose by over 20 million – the largest monthly rise since the 1930s. It is estimated that during the months of the pandemic the wealth of US billionaires has grown by a staggering $565 billion, while the total number of unemployed in the country rose above 42 million during the same period – bearing out French economist <a href="https://www.theguardian.com/world/2020/may/12/will-coronavirus-lead-to-fairer-societies-thomas-piketty-explores-the-prospect">Thomas Piketty</a>’s view that the surest means of accumulating ever greater wealth is to possess wealth in the first place. If this trend can occur during the height of the pandemic is it not likely to continue in its aftermath? The free market is geared to profit-making, not to confronting human tragedy.</p>
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Read more:
<a href="https://theconversation.com/coronavirus-what-are-the-chances-well-change-our-behaviour-in-the-aftermath-134991">Coronavirus: what are the chances we'll change our behaviour in the aftermath?</a>
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<p>Second, pessimists foresee the continuing rise of right-wing, populist nationalism in more parts of the world, as currently evident in countries such as the US, Brazil and India – a trend characterised by xenophobia, racism, and the scapegoating of those deemed responsible for the pandemic. </p>
<p>Third, with the rise of <a href="https://theconversation.com/white-nationalism-born-in-the-usa-is-now-a-global-terror-threat-113825">nationalism</a> will come anti-internationalism. Trump is showing the way with his scorn for international organisations like the World Health Organisation. Some observers fear what is being called ‘vaccine nationalism’ – the country that first develops an effective COVID-19 vaccine denying access to it for perceived enemies or rivals.</p>
<h2>Which is more likely?</h2>
<p>Which is the more likely: the optimistic or the pessimistic scenario? Any firm prediction is clearly impossible. There are variables to be considered, the chief one being the length of time it takes to bring COVID-19 under control. The longer it takes, the more far-reaching the economic devastation. </p>
<p>The overall death count will not itself be a major driver of change. An underlying, callous ageism may give rise to the view, not openly articulated of course, that the vast majority of those who have died have been the aged and infirm, doomed to die anyway in the near future. The loss of this cohort would have a minimal economic impact – in cold, materialistic terms such people are expendable. This kind of thinking is probably already guiding Trump’s cavalier approach to the pandemic.</p>
<p>A full-blown economic depression, however, would have far-reaching consequences, bringing massive unemployment and social discontent, bankruptcy, and heavy government indebtedness. In such a context the predictions of the optimists and the pessimists become possible – a government response along the lines of Roosevelt’s <a href="https://www.britannica.com/event/New-Deal">New Deal</a>, or a slide into fascism? Maybe one or the other in different parts of the world? Or perhaps neither? Will there be austerity programmes, with cutbacks in social security prioritised? Might there be a progressive approach, with heavy taxes on wealth and a clampdown on tax havens, as recommended by the likes of Stiglitz and Piketty? Will countries wholly prioritise their own recoveries, neglecting the plight of poor countries?</p>
<p>The likelihood is that there will be a drive on the part of political and economic power-holders to return to normality. While they largely succeeded following the 2008-2009 financial crisis, it will be more difficult to do so in the post-pandemic world. Welfare cutbacks are harder to implement in a context of widespread poverty. At the same time, corporations, backed by media allies, will surely resist tax increases for big business and wealthy individuals. While such increases may become unavoidable if the pandemic is not soon brought under control, one should expect austerity measures to take precedence, placing the greatest burden on the poor and working-class during the recovery period.</p>
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<strong>
Read more:
<a href="https://theconversation.com/what-will-the-world-be-like-after-coronavirus-four-possible-futures-134085">What will the world be like after coronavirus? Four possible futures</a>
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<p>The pandemic has given rise to a polarisation in public opinion in many parts of the world, especially in the US, where a vocal right-wing minority resents lockdown measures that restrict their ‘freedoms’ (including their freedom to infect others), while also showing themselves to be receptive to conspiracy theories, disinformation, and anti-scientific ideas. At the other pole are those who adopt a humanist perspective and bow to science.</p>
<p>This polarisation will likely continue in the post-pandemic world. Online media will persist in feeding nationalist, populist sentiment with ideas and disinformation directed against targeted scapegoats, including foreigners, immigrants, racial and religious ‘others’, and liberal elites. At the other pole, progressive opinion will continue to push for policies and practices that make for a more sustainable, egalitarian future.</p>
<p>Which pole is likely to prevail? Outcomes will likely vary in different parts of the world, but it is quite probable that for the most part neither will predominate. Expect the centre-right (as embodied in a figure like Joe Biden) to prevail. It is hard to envisage fascist regimes emerging as in the 1930s. Nor is there enough high-level support for a progressive agenda. Democratically elected governments tend to think short-term, afraid to bear the economic disruption accompanying a radical socio-economic and environmental transformation – costs that could endanger a ruling party’s electoral prospects.</p>
<p>The eventual outcome will depend on the extent to which the pandemic makes ‘business as usual’ an impossible eventuality. Be sure, though, that political and economic power-holders will strive for just such a return to pre-pandemic ‘normality’. The prospect of a political economy geared towards meeting human need, rather than feeding human greed, looks to be as remote as ever.</p><img src="https://counter.theconversation.com/content/141228/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Maylam does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Political and economic power-holders will strive for a return to pre-pandemic ‘normality’.Paul Maylam, Emeritus Professor, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1381832020-05-27T16:41:32Z2020-05-27T16:41:32ZCoronavirus recovery: Small businesses must focus on easing employee, customer fears<figure><img src="https://images.theconversation.com/files/337664/original/file-20200526-106862-19osnmy.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3000%2C1854&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A boutique owner in Montréal arranges clothes at her store on May 24, 2020 as she prepares to reopen amid the COVID-19 pandemic.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Graham Hughes</span></span></figcaption></figure><p>A small business has been <a href="https://www.cbc.ca/news/business/covid-surcharge-retail-1.5580307">given the green light to reopen amid the COVID-19 pandemic</a>. What does it need to consider for employees and customers? </p>
<p>Small business owners are reorganizing physical space to account for continued distancing requirements and rethinking supply chains to deliver products and services in new ways to meet changing demand patterns. </p>
<p>But they must not forget the hearts and minds of employees and customers.</p>
<p>That doesn’t mean replacing a focus on the bottom line, but it helps address the need for a new set of expectations and ways of communicating in terms of product or service offerings, delivery methods and real-time feedback. </p>
<p>Based on our expertise in organizational behaviour and past research we’ve conducted, we provide a set of recommendations to help small businesses thrive in our new COVID-19 economy by looking after the hearts and minds of the people most important to businesses — employees and customers. </p>
<h2>Fear, anxiety</h2>
<p>One of the biggest outcomes of living amid the COVID pandemic is the fear, anger, sadness and vulnerability many people are feeling. Even very loyal customers may have suddenly short fuses when a favourite product or service is delayed. </p>
<p>Both old and new customers may feel hesitant to enter shops or restaurants, unsure of how to engage with employees safely and afraid of unknowingly getting infected or infecting others. </p>
<p>Employees, although likely relieved to be able to earn a pay cheque, may have similar fears, and wonder how to control potentially unsafe situations or customers who aren’t adhering to social distancing protocols. </p>
<p>Overall, engaging the hearts and mind of both employees and customers means recognizing that they’re probably feeling emotions differently than they were before COVID-19. In particular, they may experience more ambivalence — a mix of emotions that can feel uncomfortable or even alien — as they grapple with discovering, experimenting and understanding what a “new normal” means.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&rect=332%2C691%2C5299%2C3323&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=403&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=403&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=403&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=506&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=506&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337222/original/file-20200524-124855-5is5v7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=506&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Owner Rosanna Petan wears a face shield and Jack Willis wears a face mask as she cuts his hair at Frank’s Barbershop, in Vancouver, on May 19, 2020.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
</figcaption>
</figure>
<p><a href="https://doi.org/10.5465/annals.2014.0066">Research</a> shows this kind of emotional complexity can lead to a host of outcomes, including vacillation, disengagement and even paralysis — at least partly explaining why employees and customers may seem like deer in headlights during the first days of a business reopening. </p>
<p>Yet <a href="https://doi.org/10.1016/j.jesp.2012.12.017">our previous research</a> shows that ambivalence can actually be helpful, increasing people’s problem-solving abilities by opening their thinking to alternative perspectives. </p>
<h2>Redirecting emotions</h2>
<p>That means rather than avoiding ambivalence because it feels uncomfortable, small businesses must help their employees redirect these feelings into brainstorming creative solutions for engaging customers, updating websites and soliciting and incorporating customer feedback. </p>
<p>Doing so will have the added benefit of helping employees and customers feel more in control over the situation — a basic human need that has been drastically reduced during the pandemic.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=435&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=435&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=435&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=547&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=547&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337224/original/file-20200524-124840-wv2nbv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=547&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Grounds crew do maintenance as they prepare to open Piper’s Heath Golf Club during the COVID-19 pandemic in Milton, Ont., on May 13, 2020.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Nathan Denette</span></span>
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<p>Coupled with emotional complexity is the loss of beloved everyday rituals, from shaking hands to being able to stand close to help a customer decide on a haircut, new clothes or specific menu items.</p>
<p>As businesses reopen, addressing this loss of tradition and predictability in employees’ and customers’ minds will be crucial. </p>
<p><a href="https://doi.org/10.5465/amj.2010.57318388">Our research</a> on
the role of rituals in institutional maintenance shows that common rituals bind people together, anchoring our sense of identity and structuring our lives in comfortable and predictable ways. </p>
<p>In short, rituals create the sense of normalcy that is now lost. </p>
<p>But to form new rituals and traditions, businesses must first re-establish trust. When trust is fragile and old rituals must be abandoned to make way for new practices, business leaders need to consider multiple approaches in how to work and interact with employees and customers. </p>
<h2>Start a dialogue</h2>
<p>The first approach is to engage in dialogue.</p>
<p>Reopening costs do not solely pertain to sanitizing workplaces and providing personal protection equipment, but also to the amount of time it takes to discuss and address concerns. </p>
<p>Important questions to employees and customers include: </p>
<ul>
<li><p>What are your concerns about being here? What can we do to make things safer? </p></li>
<li><p>What do I need to know about you that could help me work with and serve you better? </p></li>
</ul>
<p>Companies should use this feedback to create new rituals and workplace norms together with employees and customers. </p>
<p>Customization, in fact, will be increasingly important as both employees and customers have unique needs and circumstances. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&rect=0%2C89%2C3988%2C2119&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337223/original/file-20200524-124855-18idi05.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Two women have drinks on the patio of a restaurant in Vancouver, on May 19, 2020. British Columbia has begun reopening its economy.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
</figcaption>
</figure>
<p>According to local small business owner Lisa Arbo of Salon 296 in Kingston, Ont.: “A large part of success going forward will be about being sensitive to everyone’s reality.” This type of empathetic co-creation is likely to reduce uncertainty and give everyone a healthier sense of emotional and physical comfort and control. </p>
<h2>Manage perceptions</h2>
<p>The second approach is to manage perceptions. Small business owners are <a href="https://doi.org/10.5465/annals.2016.0122">the custodians</a> of the trusted relationships between their companies, employees and customers.</p>
<p>Even as business owners adapt to this new, emotionally complex and less predictable world, their employees and customers are looking for them to communicate clearly, succinctly and often about what is both possible and not possible, and what the new expectations are at all levels of the social contract. That includes everything from physical distancing rules to standards for customer satisfaction. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=529&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=529&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337225/original/file-20200524-124855-s7486x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=529&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">People wait in a line for the cashiers, separated by their carts and a corral made of tape to allow for physical distancing, at a garden centre in Ottawa on May 23, 2020.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span>
</figcaption>
</figure>
<p>By recognizing and finding ways to incorporate employees’ and customers’ emotional complexity and sense of loss for beloved traditions, small businesses can actually make this challenging time an unexpected opportunity to thrive. </p>
<p>Uncertainty, change and customization are key elements of the new business reality and embracing them, while difficult, will yield success. Businesses that excel will be the ones that effectively learn to engage the hearts and minds of their employees and customers.</p><img src="https://counter.theconversation.com/content/138183/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>M. Tina Dacin receives funding from the Social Sciences Humanities and Research Council of Canada. </span></em></p><p class="fine-print"><em><span>Laura Rees does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As small businesses reopen, they’ll need to engage the hearts and minds of both employees and customers by recognizing that they feel emotions differently than they did before COVID-19.M. Tina Dacin, Stephen J.R. Smith Chaired Professor of Strategy & Organizational Behavior, Queen's University, OntarioLaura Rees, Assistant Professor of Organizational Behaviour, Queen's University, OntarioLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1387822020-05-22T12:20:47Z2020-05-22T12:20:47ZShould you fly yet? An epidemiologist and an exposure scientist walk you through the decision process<figure><img src="https://images.theconversation.com/files/336862/original/file-20200521-102657-1m2nnw0.jpg?ixlib=rb-1.1.0&rect=0%2C57%2C7660%2C4869&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Passengers onboard an American Airlines flight to Charlotte, North Carolina, from San Diego, California. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/passengers-onboard-an-american-airlines-flight-to-charlotte-news-photo/1214261343?adppopup=true">Sandy Huffaker/Getty Images</a></span></figcaption></figure><p>We don’t know about you, but we’re ready to travel. And that typically means flying.</p>
<p>We have been thinking through this issue as moms and as an <a href="https://scholar.google.com/citations?user=y5vhLKcAAAAJ&hl=en">exposure scientist</a> and <a href="https://scholar.google.com/citations?user=KpMOLOAAAAAJ&hl=en">infectious disease epidemiologist</a>. While we’ve decided personally that we’re not going to fly right now, we will walk you through our thought process on what to consider and how to minimize your risks. </p>
<h2>Why the fear of flying?</h2>
<p>The primary concern with flying – or traveling by bus or train – is sitting within six feet of an infected person. Remember: Even asymptomatic people can transmit. Your risk of infection directly corresponds to your <a href="https://www.cdc.gov/coronavirus/2019-ncov/php/public-health-recommendations.html">dose of exposure</a>, which is determined by <a href="https://theconversation.com/what-we-do-and-do-not-know-about-covid-19s-infectious-dose-and-viral-load-135991">your duration of time</a> exposed and the amount of <a href="https://theconversation.com/coronavirus-drifts-through-the-air-in-microscopic-droplets-heres-the-science-of-infectious-aerosols-136663">virus-contaminated droplets in the air</a>. </p>
<p>A secondary concern is contact with contaminated surfaces. When an infected person contaminates a shared armrest, airport restroom handle, seat tray or other item, the virus can survive for hours though it degrades <a href="https://wwwnc.cdc.gov/eid/article/26/9/20-1435_article">over time</a>. If you touch that surface and then touch your mouth or nose, you put yourself at risk of infection. </p>
<h2>Before you book, think</h2>
<p>While there is no way to make air travel 100% safe, there are ways to make it safer. It’s important to think through the particulars for each trip. </p>
<p>One approach to your decision-making is to use what occupational health experts call the <a href="https://www.cdc.gov/niosh/topics/hierarchy/default.html">hierarchy of controls</a>. This approach does two things. It focuses on strategies to control exposures close to the source. Second, it minimizes how much you have to rely on individual human behavior to control exposure. It’s important to remember you may be infectious and everyone around you may also be infectious. </p>
<p>The best way to control exposure is to eliminate the hazard. Since we cannot eliminate the new coronavirus, ask yourself if you can eliminate the trip. Think extra hard if you are <a href="https://www.cdc.gov/coronavirus/2019-ncov/need-extra-precautions/people-at-higher-risk.html">older or have preexisting conditions</a>, or if you are going to visit someone in that position. </p>
<p>If you are healthy and those you visit are healthy, think about ways to substitute the hazard. Is it possible to drive? This would allow you to have more control over minimizing your exposures, particularly if the distance is less than a day of travel. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1259165939037331456"}"></div></p>
<h2>You’re going, now what?</h2>
<p>If you choose to fly, check out airlines’ policies on seating and boarding. Some are <a href="https://www.marketwatch.com/story/in-effort-to-restore-confidence-united-airlines-unveils-coronavirus-safety-guide-after-backlash-for-flying-a-packed-flight-2020-05-20">minimizing capacity and spacing passengers</a> by not using middle seats and having empty rows. Others are boarding from the back of the plane. <a href="https://www.washingtonpost.com/travel/2020/05/11/viral-photo-crowded-united-flight-shows-potential-risk-flying-right-now/">Some that were criticized</a> for filling their planes to capacity have announced plans to allow customers to cancel their flights if the flight goes over 70% passenger seating capacity. </p>
<p>Federal and state guidance is changing constantly, so make sure you look up the most recent guidance from government agencies and the airlines and airport you are using for additional advice, and current policies or restrictions.</p>
<p>While this may sound counterintuitive, consider booking multiple, shorter flights. This will decrease the likelihood of having to use the lavatory and the duration of exposure to an infectious person on the plane.</p>
<p>After you book, select a window seat if possible. If you consider the six-foot radius circle around you, having a wall on one side would directly <a href="https://www.pnas.org/content/115/14/3623">reduce the number of people you are exposed </a>to during the flight in half, not to mention all the people going up and down the aisle. </p>
<p>Also, check out your airline to see their engineering controls that are designed or put into practice to isolate hazards. These include ventilation systems, on-board barriers and electrostatic disinfectant sprays on flights. </p>
<p>When the ventilation system on planes is operating, planes have a <a href="https://www.ashrae.org/file%20library/technical%20resources/covid-19/si_a19_ch13.pdf">very high ratio of outside fresh air to recirculated air</a> – about 10 times higher than most commercial buildings. Plus, most planes’ <a href="https://www.washingtonpost.com/opinions/2020/05/18/airplanes-dont-make-you-sick-really/">ventilation systems have HEPA filters</a>. These are at least 99.9% effective at removing particles that are 0.3 microns in diameter and more efficient at removing both smaller and larger particles. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=509&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=509&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336856/original/file-20200521-102647-14up1l7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=509&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A passenger at Pittsburgh International Airport travels through security on May 7, 2020.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/travelers-make-their-way-through-ticketing-and-tsa-news-photo/1212133737?adppopup=true">Jeff Swensen/Getty Images</a></span>
</figcaption>
</figure>
<h2>How to be safe from shuttle to seat</h2>
<p>From checking in, to going through security to boarding, you will be touching many surfaces. To minimize risk: </p>
<ul>
<li><p>Bring hand wipes to disinfect surfaces such as your seat belt and your personal belongings, like your passport. If you cannot find hand wipes, bring a small washcloth soaked in a bleach solution in a zip bag. This would probably freak TSA out less than your personal spray bottle, and viruses are not likely to grow on a cloth with a bleach solution. But remember: More bleach is not better and can be unsafe. You only need one tablespoon in four cups of water to be effective. </p></li>
<li><p>Bring plastic zip bags for personal items that others may handle, such as your ID. Bring extra bags so you can put these things in a new bag after you get the chance to disinfect them.</p></li>
<li><p>Wash your hands or use hand sanitizer as often as you can. While soap and water is most effective, hand sanitizer is helpful after you wash to get any parts you may have missed. </p></li>
<li><p>Once you get to your window seat, stay put. </p></li>
<li><p>Wear a mask. If you already have an N95 respirator, consider using it but others can also provide protection. We do not recommend purchasing N95 until health care workers have an adequate supply. Technically, it should also be tested to make sure you have a good fit. We do not recommend the use of gloves, as that can lead to a false sense of security and has been associated with reduced <a href="https://pubmed.ncbi.nlm.nih.gov/22080658/">hand hygiene practices</a>.</p></li>
</ul>
<p>If you are thinking about flying with kids, there are special considerations. Getting a young child to adhere to wearing a mask and maintaining good hygiene behaviors at home is hard enough; it may be impossible to do so when flying. Children under 2 should not wear a mask.</p>
<p>Each day, we are all constantly faced with decisions about our own personal comfort with risk. Arming yourself with specific knowledge about your airport and airline, and maximizing your use of protective measures that you have control over, can reduce your risk. A good analogy might be that every time you get in the car to drive somewhere there is risk of an accident, but there is a big difference between driving the speed limit with your seat belt on and driving blindfolded, 60 miles an hour through the middle of town. </p>
<hr>
<p><em>You might also be interested in other parts of this series:</em></p>
<ul>
<li><a href="https://theconversation.com/how-do-you-stay-safe-now-that-states-are-reopening-an-expert-explains-how-to-assess-risk-when-reconnecting-with-friends-and-family-138518">How do you stay safe now that states are reopening? An expert explains how to assess risk when reconnecting with friends and family</a></li>
<li><a href="https://theconversation.com/heres-how-to-stay-safe-while-buying-groceries-amid-the-coronavirus-pandemic-138683">Here’s how to stay safe while buying groceries amid the coronavirus pandemic</a></li>
<li><a href="https://theconversation.com/how-can-you-be-safe-at-a-pool-the-beach-or-a-park-a-doctor-offers-guidance-as-coronavirus-distancing-measures-lifted-138771">How can you be safe at pools, beaches or parks? A doctor offers guidance as coronavirus distancing measures lifted</a></li>
<li><a href="https://theconversation.com/how-to-lower-your-coronavirus-risk-while-eating-out-restaurant-advice-from-an-infectious-disease-expert-138925">How to lower your coronavirus risk while eating out: Restaurant advice from an infectious disease expert</a></li>
</ul><img src="https://counter.theconversation.com/content/138782/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kacey Ernst receives funding from CDC, NIH, NSF, NASA, Gates Foundation, Arizona Department of Health Services, and Skoll Global Threats. She is affiliated with the American Meteorological Society and the American Society for Tropical Medicine and Hygiene. </span></em></p><p class="fine-print"><em><span>Paloma Beamer is President of the International Society of Exposure Science, a not-for-profit organization and receives funding from NIH, EPA, Agricola Alta Pozo Manuel and the Pima County Health Department.</span></em></p>Fear of flying means something altogether different in the age of the new coronavirus. Now the biggest concern is how to keep from becoming infected. If you must fly, here are some things to consider.Kacey Ernst, Associate Professor of Epidemiology and Biostatistics, University of ArizonaPaloma Beamer, Associate Professor of Environmental Health Sciences, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1390272020-05-21T05:17:00Z2020-05-21T05:17:00ZChildcare is critical for COVID-19 recovery. We can’t just snap back to ‘normal’ funding arrangements<figure><img src="https://images.theconversation.com/files/336423/original/file-20200520-152302-4ix6ux.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>This week, the federal government released <a href="https://www.dese.gov.au/system/files/doc/other/ecec_relief_package_four_week_review_summary_report_0.pdf">a review of a relief package</a> it put in place in April to ensure the early childhood education and care sector remained financially viable and children of essential workers, as well as vulnerable children, could continue to attend. </p>
<p>The review said in the week the relief package was announced</p>
<blockquote>
<p>30% of providers faced closure due to a massive, shock withdrawal of families and another 25% of providers were not sure they could ever recover, even once the virus crisis has passed.</p>
</blockquote>
<p>Under the emergency arrangements, <a href="https://www.pm.gov.au/media/early-childhood-education-and-care-relief-package">the government</a> is paying 50% of a childcare provider’s fee revenue up to the existing hourly rate cap, based on the enrolment numbers before parents started withdrawing their children because of the COVID-19 pandemic. </p>
<p>Childcare centres are prohibited from charging families an out-of-pocket fee, with the rest of their costs expected to be recouped through JobKeeper. Or they can limit costs by restricting the number of children in care, while prioritising children of essential workers.</p>
<p>On the release of the review of the scheme – due to end on June 28 – education minister Dan Tehan said the plan had “<a href="https://www.theguardian.com/australia-news/2020/may/19/its-done-its-job-dan-tehan-flags-end-of-free-childcare-under-weight-of-increasing-demand">done its job</a>” with <a href="https://www.dese.gov.au/system/files/doc/other/ecec_relief_package_four_week_review_summary_report_0.pdf">99% of services remaining open</a>, and most providers saying the emergency response has helped with financial viability. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/morrison-has-rescued-childcare-from-covid-19-collapse-but-the-details-are-still-murky-134798">Morrison has rescued childcare from COVID-19 collapse – but the details are still murky</a>
</strong>
</em>
</p>
<hr>
<p>The package is far from perfect, and has helped most early childhood services but not all. The review reports a survey of around 54% of providers found the new payment had “at least to some extent” helped 86% of them stay open and retain staff and 76% to “remain financially viable”. </p>
<p>In early May, one provider of aged, disability and early childhood services, <a href="https://www.smh.com.au/politics/federal/childcare-scheme-is-crippling-centres-and-frustrating-parents-20200503-p54pdh.html">Uniting NSW and ACT, reported</a> it was losing A$1 million a month under the scheme. </p>
<p>Other centres reporting heavy losses include those with high numbers of children attending already, and those where a <a href="https://www.theguardian.com/australia-news/2020/may/18/a-quarter-of-all-childcare-centres-say-free-scheme-wont-help-them-remain-viable?utm_term=RWRpdG9yaWFsX01vcm5pbmdNYWlsQVVTLTIwMDUxOA%3D%3D&utm_source=esp&utm_medium=Email&utm_campaign=MorningMailAUS&CMP=morningmailau_email">high number of staff aren’t eligible</a> for JobKeeper, such as if they are casuals or on temporary visas.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=500&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=500&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336621/original/file-20200521-102682-10xfkwy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=500&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">The Conversation/AAP</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Some who are unhappy with the current arrangements want to <a href="https://www.afr.com/politics/federal/downside-of-free-childcare-proves-costly-for-sector-20200422-p54m6x">revert to the previous system now</a>. Others say a <a href="https://womensagenda.com.au/latest/why-im-fronting-a-campaign-asking-the-prime-minister-to-extend-free-childcare-past-june-28/">preemptive snap-back would be a big mistake</a>, risking a second existential threat to the sector. </p>
<p>Dan Tehan has said <a href="https://www.theguardian.com/australia-news/2020/may/19/its-done-its-job-dan-tehan-flags-end-of-free-childcare-under-weight-of-increasing-demand">the government is working on a transition back to the old system</a> which “was working effectively”.</p>
<p>As we navigate uncharted territories over the coming months, the needs and vulnerabilities of children, families and the early childhood education and care workforce must also be at the forefront of our thinking.</p>
<h2>Why we can’t just ‘snap back’</h2>
<p><a href="https://ministers.dese.gov.au/tehan/minister-education-dan-tehan-interview-nadia-mitsopoulos-and-russell-woolf-abc-radio-perth-0">One of the main arguments for snapping back</a> to the old system is based on increasing demand for services over the past month. But what if this demand is driven by childcare being free, and withers away once fees are reintroduced, when families are forced to cut costs?</p>
<p>COVID-19 restrictions have resulted in <a href="https://theconversation.com/were-it-not-for-jobkeeper-unemployment-would-be-11-7-up-from-5-2-in-one-month-heres-how-the-numbers-pan-out-138268">skyrocketing unemployment and underemployment</a>. For many families, the transition back to work may be irregular and unpredictable. A sharp ending of the emergency measures may leave many families unable to access care when they need to get back to work.</p>
<p>On top of this, children’s routines have been disrupted, increasing levels of isolation and anxiety. Many <a href="https://www.dese.gov.au/system/files/doc/other/learning_at_home_during_covid_30042020.pdf">children not previously considered vulnerable will now fall into this category</a>, or become potentially vulnerable. </p>
<p>High quality early childhood education can help <a href="https://www.ucl.ac.uk/ioe/research-projects/2019/mar/effective-pre-school-primary-and-secondary-education-project-eppse">reduce the risk of vulnerability</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/1-in-5-kids-start-school-with-health-or-emotional-difficulties-that-challenge-their-learning-131134">1 in 5 kids start school with health or emotional difficulties that challenge their learning</a>
</strong>
</em>
</p>
<hr>
<p>Meanwhile, early childhood providers are <a href="https://thesector.com.au/2020/04/26/paul-mondo-aca-president-shares-his-covid-experience-and-highlights-full-range-of-support-available/">navigating rapid changes to attendance, staffing, funding and revenue</a>. Under current arrangements, they are managing a steady growth in demand and a known stream of income. Reverting to the previous system will introduce a high degree of uncertainty. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1261204178073866240"}"></div></p>
<p>It will also take time and careful planning to define a way forward for the complex diversity of early childhood services. The report on the rescue package highlights how different types of services have <a href="https://www.dese.gov.au/system/files/doc/other/ecec_relief_package_four_week_review_summary_report_0.pdf">experienced COVID-19 in different ways</a>: while 80% of centre-based child care services reported steep declines in attendance, only around half of home-based family day care services did so. </p>
<p>Early childhood educators are also in a tenuous position. They are <a href="https://theconversation.com/low-paid-womens-work-why-early-childhood-educators-are-walking-out-91402">among the lowest-paid Australians</a>, with high levels of casual employment. <a href="https://theconversation.com/one-in-five-early-childhood-educators-plan-to-leave-the-profession-61279">Staff turnover is high</a>, which undermines delivery of quality education, given the critical <a href="https://education.unimelb.edu.au/__data/assets/pdf_file/0006/2929452/E4Kids-Report-3.0_WEB.pdf">importance of secure relationships</a> to children’s early learning and development. </p>
<p>Funding certainty in the coming months will support job security, which benefits children as well as workers. </p>
<h2>A slow transition is the best</h2>
<p>Governments’ short-term focus must be on balancing the needs of children and families with economic recovery. This may begin with a gradual return to something like the previous system, adjusted to meet our changed needs. </p>
<p>The current arrangements could be continued until September, followed by <a href="https://www.smh.com.au/national/replace-free-childcare-scheme-with-tax-deductions-to-kickstart-economy-20200518-p54tyg.html">a gradual reduction</a>, rather than a rapid rollback. After that we need some simple changes at a minimum:</p>
<ol>
<li><p>suspend the activity test, to remove the link between parents’ work or study situation and children’s access, so all families and children can access early childhood services</p></li>
<li><p>allow increased absences, so families have the flexibility to keep their children home when they are unwell</p></li>
<li><p>improve affordability, with increases to childcare subsidy rates at all income levels to a cap</p></li>
<li><p>prioritise the needs of children most at risk, to ensure access for the most vulnerable children. </p></li>
</ol>
<p>We must also plan for longer-term reform to build a more stable and sustainable early childhood sector for all Australian children, which is less likely to need rescuing in the event of future shocks. With the rescue package generating calls <a href="https://www.theguardian.com/commentisfree/2020/may/20/snapping-back-to-the-childcare-subsidy-method-is-nuts-it-should-not-be-a-system-that-profits">to permanently remove fees for early childhood services</a>, governments need to remain open to more ambitious reforms in future.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/quality-childcare-has-become-a-necessity-for-australian-families-and-for-society-its-time-the-government-paid-up-131748">Quality childcare has become a necessity for Australian families, and for society. It's time the government paid up</a>
</strong>
</em>
</p>
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<img src="https://counter.theconversation.com/content/139027/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jen Jackson has previously received funding from the Australian Research Council for research on the Australian early childhood workforce.</span></em></p><p class="fine-print"><em><span>Kate Noble and Sarah Pilcher do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government’s emergency relief package for childcare centres has kept many from collapsing financially due to COVID-19. The transition to other arrangements must be slow and carefully managed.Kate Noble, Education Policy Fellow, Mitchell Institute, Victoria UniversityJen Jackson, Education Policy Lead, Mitchell Institute, Victoria UniversitySarah Pilcher, Policy Fellow, Mitchell Institute, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1378512020-05-06T12:54:16Z2020-05-06T12:54:16ZWhy April was Wall Street’s best month in decades – despite dismal mainstreet news<figure><img src="https://images.theconversation.com/files/332719/original/file-20200505-83725-6t24hs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's a bull market – for now.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/bull-market-artwork-icon-business-concept-1029670141">Shutterstock</a></span></figcaption></figure><p>At times the contrast between the real economy and the stock market is striking. For US stocks, April was their <a href="https://www.nytimes.com/2020/04/30/business/stock-market-today-coronavirus.html">best month since 1987</a>, while at the same time real economic indicators – such as employment, manufacturing, services, trade, commodities and GDP – tanked. It seems that in April, the stock market caught the tail end of spring break spirit. </p>
<p>Some suggest this shows investor sentiment is free of any anchor in the real economy. Either this or rampant speculative flows “buying the bottom” have become a self-fulfilling force. I argue that market sentiment in April was informed by twin-howitzer policy deployments of overriding force and clarity, but which are ultimately of finite holding power. </p>
<p>During economic contractions, stock prices generally react negatively to unanticipated increases in unemployment. Research shows that a rise in unemployment portends <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2005.00742.x">reduced earnings and dividend growth</a> for companies. This relationship is especially strong during economic contractions. So when unemployment increases unexpectedly, stock prices fall – usually.</p>
<p>Yet the big step-change increase in initial jobless claims <a href="https://theconversation.com/economic-effects-of-coronavirus-lockdowns-are-staggering-but-health-recovery-must-be-prioritised-135341">in the week ending March 21</a> coincided with an extraordinary sequence of dramatic response measures by the US central bank, the Federal Reserve. The stock market’s bounce began on the following Monday and continued throughout April, despite mounting unemployment-insurance claims, which have now crossed the <a href="https://fred.stlouisfed.org/series/ICSA">30 million mark</a>.</p>
<p>One particularly cynical reason for this is that furloughed and laid-off employees relieve businesses of costs. Of course, the wider economy is deprived of their spending as well. But from the third week of March, the trajectories for unemployment and spending were firmly set and known to market participants. </p>
<p>From that time onward, the subsequent rise of unemployment and the associated fall in spending were no longer “unanticipated”. The cascade of furloughs and lay-offs were <a href="https://www.ft.com/content/c12a0bf6-f6d4-48ff-990b-13bc9bae4679">predictable</a> and so this information was built into both sentiment and stock prices at the time. Hence, the weeks of increasingly dire real-economy figures didn’t move the market in a big way. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=311&fit=crop&dpr=1 600w, https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=311&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=311&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=391&fit=crop&dpr=1 754w, https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=391&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/332696/original/file-20200505-83745-1aafjuj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=391&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Jobless claims tracked with the S&P 500 stock index.</span>
<span class="attribution"><span class="source">Kim Kaivanto</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Government intervention</h2>
<p>But the more important factor for this month-long rise of the US stock market in the face of consistently dismal real-economy news was the unprecedentedly large, double-barrelled federal response – of financial-sector liquidity programmes and real-sector stimulus programmes – which was also emulated by governments around the world. </p>
<p>The US Federal Reserve’s <a href="https://uk.reuters.com/article/us-usa-fed-repo/fed-provides-massive-liquidity-injection-to-calm-markets-amid-signs-of-stress-idUKKBN20Z31H">extraordinary policy measures</a> – and subsequently the nearly <a href="https://www.marketwatch.com/story/the-us-treasury-plans-to-borrow-a-record-3-trillion-in-the-second-quarter-to-fight-coronavirusmore-than-twice-what-it-borrowed-in-all-of-fiscal-2019-2020-05-04">US$3 trillion authorised by the US Congress</a> in the form of the CARES Act – provides firms and markets with emergency liquidity support to stave off an avalanche of defaults. Despite curtailed consumer and business spending, these government programmes offer businesses a means of avoiding immediate defaults – hopefully until the lockdown policies can be lifted. Think of this as an emergency transfusion and cauterisation of the wound. </p>
<p>The economic historian Niall Ferguson <a href="https://finance.yahoo.com/news/market-signals-distorted-coronavirus-stimulus-says-author-niall-ferguson-210117471.html">has suggested</a> that the sheer scale of this state intervention is distorting the signals we are getting from the financial markets. But the breadth and scale of the intervention has an effect of its own, which is just as important as the support itself. It sends a credible signal that under the Trump administration, business will get all the support it needs to weather this pandemic. The US president sees buoyant markets as the <a href="https://uk.reuters.com/article/uk-usa-trump-speech-stocks-analysis/trump-touts-stock-markets-record-run-but-who-benefits-idUKKBN1ZZ1AT">key to his re-election</a>, and he is dedicated to using all means at his disposal to that end.</p>
<h2>Long-term debt issues</h2>
<p>Buried in the weeds of this global crisis, seeds of destruction are sprouting. Much of the <a href="https://www.shearman.com/perspectives/2020/03/congress-passes-largest-ever-economic-stimulus-package-key-provisions-of-cares-act-covid-19">CARES Act</a> emergency support for business consists of lending programmes. Of this, the US <a href="https://www.shearman.com/perspectives/2020/03/congress-passes-largest-ever-economic-stimulus-package-key-provisions-of-cares-act-covid-19">treasury received US$500 billion</a> to support hard-hit big businesses like airlines, as well as states and cities – with loans, loan guarantees, and other investments. </p>
<p>But already in the autumn of 2019, the debt burden of US corporates <a href="https://markets.businessinsider.com/news/stocks/us-corporate-debt-10-trillion-record-percentage-economy-expert-warnings-2019-12-1028731031">approached a whopping US$10 trillion</a>. As a ratio of GDP, the debt of nonfinancial firms in the US is at an <a href="https://www.jpmorgan.com/country/US/en/research/cares-act">all-time high</a>. Some calculations place the proportion of “zombie firms” – companies whose earnings are so low that they must issue new debt just to cover the interest-payment obligations on their existing debt – <a href="https://ruchirsharma.com/wp-content/uploads/2020/04/12_Sharma-FA-Comeback.pdf">at 16% among US public companies</a>. Not only is lockdown pushing this figure higher, but so are the very loan programmes which were created to serve as emergency lifelines.</p>
<p>For large firms, refinancing continues to be viable, albeit with shortened maturities. <a href="https://www.ft.com/content/0aad151d-4ae5-4e24-996c-92c6aeb4fad5">Stress-test analysis</a> of S&P 500 firms reveals a shift: fewer strong firms and more weak and vulnerable ones. So even with further top-ups to CARES Act programmes, the eventual recovery is likely to be subdued, at least until an effective COVID-19 vaccine becomes widely available.</p><img src="https://counter.theconversation.com/content/137851/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kim Kaivanto does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The contrast between the real economy and the stock market is striking. How long will it last?Kim Kaivanto, Senior Lecturer in Economics, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1375532020-05-04T14:04:59Z2020-05-04T14:04:59ZEnding lockdown won’t save the economy – here’s how the government can aid recovery<figure><img src="https://images.theconversation.com/files/331747/original/file-20200430-42946-h76fqd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/banknotes-5-british-pounds-winston-churchill-1681025983">Shutterstock</a></span></figcaption></figure><p>Many opponents of the prolonged lockdown <a href="https://www.adamsmith.org/research/reopening-britain-the-economic-urgency">argue</a> that as it is severely damaging the economy, ending it is the only way to bring the economy back to life. But the economy is already being damaged by this virulent, fast-spreading virus, to which there is no cure and currently no vaccine. Historical evidence from the <a href="https://www.history.com/topics/world-war-i/1918-flu-pandemic">1918 flu</a> <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561560">shows that</a> extending public health measures to prevent the spread of a virus does less economic damage in the long run than letting it ravage the entire population. </p>
<p>History also shows that pandemics have a <a href="https://www.frbsf.org/economic-research/files/wp2020-09.pdf">long-lasting and severe effect</a> on the economy. Looking at 15 major pandemics in Europe, from the <a href="https://www.history.com/topics/middle-ages/black-death">Black Death</a> in 1347 to the 1918 flu, researchers found that interest rates – and therefore investment – was depressed for between 30 and 50 years following an outbreak. This suggests that a <a href="https://www.bloomberg.com/opinion/articles/2020-04-28/v-shaped-economic-recovery-from-coronavirus-is-not-happening">“V-shaped” recovery</a> – where economic growth returns to its previous level by the autumn – is highly unlikely. </p>
<figure>
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<p>Already the coronavirus has reduced economic activity by 30%, more than in the 1930s <a href="https://www.history.com/topics/great-depression">great depression</a>, with unemployment rising to levels last seen in the 1980s <a href="https://www.economicshelp.org/macroeconomics/economic-growth/uk-recession-1981/">during the Thatcher years</a>. The cost to the government of preventing a deep depression will far exceed the already <a href="https://cdn.obr.uk/Coronavirus_reference_scenario_commentary.pdf">unprecedented sums</a> it is currently spending on providing short-term relief.</p>
<h2>A decade of despair</h2>
<p>The government has exceeded its expectations in changing our behaviour. It is the fear of the pandemic that has made the lockdown successful. Lifting it will not remove that fear, which will continue to have a <a href="https://www.theguardian.com/business/2020/apr/23/coronavirus-lockdown-tips-uk-economy-into-biggest-slump-on-record">profound effect</a> on consumer and business confidence, and economic output across the whole economy.</p>
<p>People will be <a href="https://yougov.co.uk/topics/economy/articles-reports/2020/03/30/more-half-britons-expect-recession-within-year">reluctant to return to work</a> or go shopping while the virus is still around. They will also hesitate to take on major financial commitments, such as <a href="https://www.theguardian.com/business/2020/apr/20/coronavirus-outbreak-will-halt-520000-uk-house-sales-in-2020">buying a house</a>. And businesses will be reluctant to make major investments, or even re-employ all their <a href="https://www.bbc.co.uk/news/explainers-52135342">furloughed</a> workers while the <a href="https://www.ft.com/content/46b262ab-20e5-4ef4-b31e-edbb5106d232">economic outlook is so uncertain</a>.</p>
<p>The pandemic has administered a severe <a href="https://www.nber.org/papers/w26918">supply-side shock</a> to a major part of the economy, with thousands of firms in the retail, travel and hospitality sectors, including British Airways and Debenhams, either <a href="https://www.employment-studies.co.uk/system/files/resources/files/547.pdf">laying off thousands of staff</a> or going bankrupt. The <a href="https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm">collapse of global supply chains</a> has also hit manufacturing. And our exports will be damaged by the <a href="https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020">global recession</a>.</p>
<p>The millions of workers who will be permanently laid off in these industries will reinforce the downward spiral, reducing demand for goods and services across the whole economy. It will also <a href="https://www.ifs.org.uk/publications/14799">negatively affect people’s health</a>. And the lack of jobs will mean dire prospects for young people who are just starting out.</p>
<h2>Long-term measures</h2>
<p>Only the government can prevent this spiral of despair, by restoring business and consumer confidence, providing <a href="https://www.resolutionfoundation.org/app/uploads/2020/04/No-work-no-pay.pdf">income support to prevent mass poverty</a>, and directly intervening to revive industry.</p>
<p>The government will need to take centre stage in restructuring our crippled companies. It must take a strategic role, using its leverage to back those sectors that will improve productivity, if necessary by taking strategic stakes in vital industries like transport and utilities. We must not repeat the mistakes of the 2008 bailout, where banks prospered while <a href="https://www.ifs.org.uk/publications/14769">real incomes for the majority stagnated</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/331759/original/file-20200430-42908-2i99at.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The government will need to increase benefits for the thousands left unemployed due to the coronavirus lockdown.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/vancouver-canada-april-07-2020-downtown-1702150498">Shutterstock</a></span>
</figcaption>
</figure>
<p>To boost demand, the government will have to provide higher – and unconditional – benefits for the millions who will be unemployed, maybe moving towards a <a href="https://neweconomics.org/2020/03/building-a-minimum-income-protection">minimum income guarantee</a>. It might also provide temporary government jobs to improve our social and physical infrastructure, such as happened in the <a href="https://www.history.com/topics/great-depression/new-deal">New Deal</a> in 1930s America, which improved schools and hospitals, built national parks and planted trees, and took plays around the country. </p>
<p>With industry on its knees, the government must play a bigger role in increasing investment to boost demand and ensure that our economy becomes more productive and more resilient in the long term. This must include major investments in our run-down public services, especially research and education, health, and the tottering under-funded social care system.</p>
<p>And the government will have to take a much more active role in the labour market, heavily subsidising jobs and training to <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/briefingnote/wcms_738753.pdf">encourage growth</a> in the key sectors needed in the future.</p>
<p>It has already abandoned economic orthodoxy in the face of the crisis with its programme of temporary relief. But it must go much further, accepting a level of government debt that would be unimaginable before the crisis, and a level of intervention in the economy that is incompatible with its belief in untrammelled free enterprise.</p>
<p>It would be inconceivable if the UK government sought to manage that debt by a <a href="https://www.economist.com/briefing/2020/04/23/the-pandemic-will-leave-the-rich-world-deep-in-debt-and-force-some-hard-choices">return to austerity</a>. In the long term, the debt will be diminished by economic growth and modest inflation, while the recent drop in interest rates has reduced the cost of servicing it.</p>
<p>Over time, these measures could ensure not just an economic recovery, but also a society that is more resilient, fairer and more cohesive than what we have seen since the <a href="https://www.bbc.co.uk/news/business-40873568">last financial crisis in 2008</a>. Unless the government succeeds in reviving the economy as well as defeating the virus, it risks losing any newfound trust in its ability to govern.</p><img src="https://counter.theconversation.com/content/137553/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steve Schifferes does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The UK must look now to a package of long-term measures that includes investment in industry and public services, increased unemployment benefits and universal basic income.Steve Schifferes, Honorary Research Fellow, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1369392020-04-22T18:58:12Z2020-04-22T18:58:12ZHere’s how I cracked Roll up the Rim and won (almost) every time<figure><img src="https://images.theconversation.com/files/329840/original/file-20200422-47841-lf3smn.jpg?ixlib=rb-1.1.0&rect=0%2C10%2C1435%2C885&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A statistics professor used his expertise in calculating probabilities to come up with a 98 winning percentage for Tim Hortons popular Roll up the Rim contest.</span> <span class="attribution"><span class="source">(Photo Illustration/The Conversation)</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>In 2003, geological statistician Mohan Srivastava cracked a Canadian lottery game. After getting a scratch-off ticket as a gift, he spotted a flaw in the game. Putting his probability skills to work, <a href="https://www.wired.com/2011/01/ff-lottery">he figured out how to identify winning tickets prior to purchase</a>. It didn’t make him rich — “beating the game wasn’t worth my time,” he said — but Srivastava’s experience showed it’s very hard to make a truly random game. </p>
<p>Tim Hortons launched its annual <a href="https://www.timhortons.ca/roll-up-the-rim-to-win">Roll up the Rim promotion</a> in mid-March. Due to the coronavirus pandemic, the contest’s iconic physical cups were replaced by a digital game on the company’s loyalty app. This change had major implications for how prizes were awarded. It also created an opportunity to shift the odds heavily in your favour.</p>
<p>Under the old format, the mechanics of the game were simple. Tim Hortons would print millions of promotional cups and about one out of every six cups had a prize under its paper rim. If the company expected to sell 180 million coffees during the contest period, then they’d print 180 million promotional cups and make about 30 million of them winners. Stores would then sell the cups until supplies ran out.</p>
<p>This meant that while Tim Hortons couldn’t perfectly predict how many coffees they’d sell during the contest period, the odds remained the same. If sales were unexpectedly high, the cups would simply run out sooner. If sales were low, the game would last a little longer. Either way, the number of prizes and the number of cups given out — the numerator and denominator of our probability equation — were fixed.</p>
<h2>‘Digital rolls’ changed the odds</h2>
<p>This year, the digital game changed all that. Instead of physical cups, players earned “digital rolls” with their purchases. These could be rolled at any time by tapping a virtual coffee cup on the app.</p>
<p>Unlike the physical cups however, Tim Hortons couldn’t control how many digital rolls were given out. It depended on their actual sales during the four-week contest period. The number of prizes (the numerator) was still fixed, but the number of entries (the denominator) was out of their hands. They had to find a new way to distribute the prizes.</p>
<p>The solution, <a href="https://theconversation.com/roll-up-the-rim-how-covid-19-has-changed-the-contest-and-maybe-your-odds-of-winning-133134">as I wrote about before the start of the contest</a>, meant Roll up the Rim became a bit like a slot machine. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/329851/original/file-20200422-47820-rftjsb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Changes to Roll up the Rim contest made the game more like a slot machine.</span>
<span class="attribution"><span class="source">(Photo Illustration/The Conversation)</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Each prize — from a coffee to a car — was assigned a “winning timeframe,” a short period of time during which it could be won. If you were the first player to tap your app during that timeframe, you won the prize. Tim Hortons could then distribute all the advertised prizes across the contest period and every single one — at least in theory — could be won.</p>
<p>With some of these winning timeframes as short as 0.1 seconds though, it was certainly possible some would pass with no one playing a roll. Anticipating this, Tim Hortons <a href="https://www.timhortons.ca/rutr-rules">included a rule</a> where any unclaimed prizes were rolled over to another day of the contest, right up until the final day. A prize would only go unclaimed if it wasn’t won by the digital roll deadline at midnight on April 21. Although the in-store contest ended April 7, players had an additional two weeks to use their digital rolls.</p>
<h2>Prizes rolled over</h2>
<p>This new game format meant your odds of winning depended not only on how many digital rolls you earned, but also how many others were playing. If sales were low, then fewer people would play — and more of those winning timeframes would pass without the prize being claimed. Those unclaimed prizes would roll over — and keep rolling over — until the contest deadline.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=547&fit=crop&dpr=1 754w, https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=547&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/329853/original/file-20200422-47847-3f41gk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=547&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">It’s not known whether social isolation had an impact on the number of people who played Roll up the Rim this year.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Nathan Denette</span></span>
</figcaption>
</figure>
<p>We don’t know for sure because Tim Hortons hasn’t announced its sales figures during the contest, but it’s reasonable to assume that <a href="https://www.reuters.com/article/us-health-coronavirus-starbucks/starbucks-sees-47-drop-in-second-quarter-earnings-on-coronavirus-hit-idUSKCN21Q3BG">fewer coffees have been sold during the coronavirus pandemic lockdown</a>. Lower sales could theoretically increase the odds of winning a prize through the app, but only if you knew when to play.</p>
<p>As a statistics professor, it seemed appropriate to conduct a small experiment. I knew there was little chance of winning a big prize — over 99 per cent of the contest’s prizes are coffee or doughnuts — but I was statistically curious. </p>
<p>There were other factors to consider. How randomly were the prizes distributed? Were they more likely to be won during the start of the contest? What times of day did people play? Was I more likely to win in the middle of the night? There was no way to know for sure, but I made some guesses and got to work.</p>
<h2>An avalanche of unclaimed prizes</h2>
<p>Taking advantage of the various ways to earn bonus rolls (such as owning a reusable cup or making a purchase through the app), I racked up 96 entries. I then waited until the very last day of the contest to play them. If my theory was correct, based on statistical models I had calculated before playing, there would be an avalanche of unclaimed prizes waiting to be won.</p>
<p>Waking up at 5 a.m. — I wanted to minimize the chance I was playing at the same time as someone else — I was finally ready to roll.</p>
<p>On my first play, I won a free coffee. A good start, but maybe I’d just gotten lucky.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1192&fit=crop&dpr=1 600w, https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1192&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1192&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/329854/original/file-20200422-47784-j7cfr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Author Michael Wallace won 67 coffees and 27 donuts within a few minutes by calculating the best time to play Roll up the Rim.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>I played again. Another coffee. Then a doughnut. Then another coffee. It took nearly 15 minutes to play my 96 rolls.</p>
<p>I lost twice.</p>
<p>I didn’t win a car or a TV or even a $25 Tim Hortons gift card, but I didn’t expect to. I won 67 coffees and 27 doughnuts — my statistical models predicted I’d win 66 and 28.</p>
<p>With 94 wins out of 96 entries, I had a 98 per cent success rate. Before the contest, Tim Hortons estimated a player’s chances were just 1-in-9, or about 11 per cent. By finding predictable elements in a seemingly random process, I was able to dramatically shift those odds. I’ll be telling my probability students about this for years.</p>
<p>Like Mohan Srivastava, I knew this wasn’t a get-rich-quick scheme. Your odds of landing a big prize — even when almost every roll is a winner — are still incredibly small.</p>
<p>The contest rules suggest the value of my prizes if I buy the most expensive coffees and doughnuts possible is about $500. Not a bad return on investment, but I’m going to see if Tim Hortons can donate the prizes to my local hospital instead.</p><img src="https://counter.theconversation.com/content/136939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Wallace does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tim Hortons changed Roll up the Rim to include a digital element. A statistician correctly predicted that playing on the last day of the contest would dramatically increase the odds of winning.Michael Wallace, Assistant Professor, Department of Statistics and Actuarial Science, University of WaterlooLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1359642020-04-16T13:12:09Z2020-04-16T13:12:09ZFive ways businesses can contribute to a more balanced post-coronavirus future<figure><img src="https://images.theconversation.com/files/328354/original/file-20200416-192689-bqeeii.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/woman-hanging-open-sign-by-glass-634282571">Shutterstock</a></span></figcaption></figure><p>The coronavirus pandemic highlights the very real imperfections in coordination among global governments and international organisations, many of which were already suffering from <a href="https://www.oecd.org/gov/trust-in-government.htm">low levels of public trust</a>. Responsible leadership from the private sector is needed more than ever. The way that business leaders respond will have an important influence on the state of our post-coronavirus world. </p>
<p>Employers are the most trusted institutions over government and media during this crisis, according to the 2020 <a href="https://www.edelman.com/research/edelman-trust-covid-19-demonstrates-essential-role-of-private-sector">Edelman Trust Barometer</a>. The majority of the public expect business to adapt operations to protect their employees and the local community. And, with many governments providing significant support to businesses, now is the time for their leaders to step up and act responsibly. </p>
<p>In a world where short-term market performance often drives decision making, some businesses have already committed to a new way of doing things. By moving <a href="https://theconversation.com/the-rise-fall-and-rise-again-of-businesses-serving-more-than-just-their-shareholders-124618">beyond shareholder primacy</a>, they are addressing imbalances in our economies by involving all stakeholders in potential solutions: suppliers, partners, employees and regulators. For example, BlackRock, the world’s largest investment manager has <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter">switched to this approach</a> and put sustainability at the centre of its business.</p>
<p>Here are five ways responsible business executives can join them and contribute to a more balanced post-COVID world.</p>
<h2>1. Make supply chains more local</h2>
<p>In recent decades businesses have focused on maximising efficiency. To save costs and be more streamlined, manufacturers have concentrated their operations on a handful of suppliers in a few countries. These global supply chains created savings and boosted profits when all was running smoothly. But the disruption from the coronavirus pandemic has been immense.</p>
<p>For instance in the healthcare industry, <a href="https://www.finance.senate.gov/chairmans-news/grassley-urges-hhs-fda-to-implement-unannounced-inspections-of-foreign-drug-manufacturing-facilities">about 80%</a> of the basic components used in US drugs <a href="https://www.cfr.org/in-brief/coronavirus-disrupt-us-drug-supply-shortages-fda">come from China and India</a>. The impact of supply chain disruptions is evident in the gruelling <a href="https://theconversation.com/homemade-hand-sanitiser-recipes-that-could-help-protect-against-coronavirus-133668">lack of hand sanitiser</a> and <a href="https://www.nytimes.com/2020/03/25/opinion/coronavirus-face-mask.html">face masks</a>, including for health staff. Europe faces <a href="https://euobserver.com/coronavirus/147958">similar issues</a>. </p>
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<em>
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Read more:
<a href="https://theconversation.com/coronavirus-inside-story-of-how-mercedes-f1-and-academics-fast-tracked-life-saving-breathing-aid-136028">Coronavirus: inside story of how Mercedes F1 and academics fast-tracked life saving breathing aid</a>
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<p>Future markets will benefit from rebalancing their operations by bringing those that had previously been moved overseas nearer to home. Resilience will trump efficiency through a model where manufacturing is brought closer to places of consumption instead of relying on global shipments. </p>
<p>By digitising other processes companies can harness the opportunities that come from economies of knowledge, compensating for those lost in scale.</p>
<h2>2. Collaborate internationally</h2>
<p>More regional and local autonomy should not mean the end of international collaboration. In systemic challenges, collaboration is the best approach to avoid unintended consequences. </p>
<p>As countries seemingly engage in a zero-sum game that reflects the rise of populism and authoritarianism around the world, businesses should step in and call their governments to collective action and collaborative leadership through public-private partnerships. Indeed, according to <a href="https://www.edelman.com/research/edelman-trust-covid-19-demonstrates-essential-role-of-private-sector">Edelman</a>, citizens expect businesses and states to collaborate to stem the crisis and limit its health and economic impacts.</p>
<h2>3. Pivot and demonstrate societal purpose</h2>
<p>A number of companies are demonstrating their value to society by switching their operations to provide much-needed medical equipment. <a href="https://www.vogue.com/article/lvmh-to-produce-hand-sanitizer-coronavirus">LVMH</a>, the luxury conglomerate that owns brands like Louis Vuitton and Christian Dior, has adapted some of its cosmetics manufacturing facilities to produce hand sanitiser for French hospitals with resource constraints. Clothes retailer Zara is using its factories <a href="https://www.theguardian.com/business/2020/mar/21/europes-companies-retool-production-to-fight-coronavirus-fallout">to make masks and hospital gowns</a>. Cosmetics firm Nivea is turning to medical-grade disinfectants. </p>
<p>These moves testify to the ability of companies to improvise fast because they are in tune with the society around them.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hand sanitiser and face masks are in high demand.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/asian-people-using-alcohol-antiseptic-gel-1662324127">Shutterstock</a></span>
</figcaption>
</figure>
<h2>4. Protect their people</h2>
<p>Businesses can soften the economic blow of coronavirus pandemic for their most vulnerable employees and suppliers. For example, <a href="https://www.businessinsider.com/coronavirus-google-creates-fund-for-contractor-sick-pay-2020-3?r=US&IR=T">Google</a> established a global <a href="https://www.forbes.com/sites/shamahyder/2020/03/15/coronavirus-champions-a-running-list-of-brands-getting-it-right/">COVID-19 fund</a> that enables all temporary staff and vendors to take paid sick leave if they have any symptoms, or can’t come into work because they’re quarantined. <a href="https://www.fastcompany.com/90476917/starbucks-employees-in-the-u-s-can-get-up-to-20-therapy-sessions">Starbucks</a> has extended its <a href="https://www.forbes.com/sites/aliciakelso/2020/03/17/restaurants-will-lose-business-because-of-the-coronavirus-but-theyre-stepping-up-to-help-anyway/#32563f4d15f5">mental health benefits</a> offering staff personalised, confidential mental health care. <a href="https://www.vfc.com/news/press-release/1713/vf-corporation-provides-update-on-global-business-impact-of">VF Corp</a>, the clothes retailer behind Vans, North Face and others, is continuing to pay employees while closing all stores temporarily. </p>
<p>Companies that can afford to keep their staff during the crisis will be ready to bounce back faster once things subside.</p>
<h2>5. Promote a green recovery</h2>
<p>Instead of reverting back to business as usual, companies should consider other potential health crises in the future that could result from our continuous interference with ecosystems, or from climate change. A crisis is an opportunity to rethink things rather than patch up previous ways. </p>
<p>In the aftermath of the pandemic, growth might be relaunched by a decisive reinvention of our economies around green technology, renewable energy and natural infrastructure to develop more efficient and resilient low-carbon economies.</p>
<p>While the movement towards a multi-stakeholder approach to business has increased in recent years, the coronavirus pandemic creates an opportunity for a conscious mindset change. Responsible business leaders will recognise this moment as an opportunity to use a societal lens that contributes to stability and makes everyone better off in the long term.</p><img src="https://counter.theconversation.com/content/135964/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Responsible leadership from the private sector is needed more than ever.Stéphane J. G. Girod, Professor of Strategy & Organizational Design, International Institute for Management Development (IMD)Natalia Olynec, Head of Sustainability, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1355162020-04-15T18:36:48Z2020-04-15T18:36:48ZCoronavirus disruption: A chance for businesses to adapt and renew<figure><img src="https://images.theconversation.com/files/327854/original/file-20200414-117578-qv0a73.jpg?ixlib=rb-1.1.0&rect=0%2C491%2C5760%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Business has been disrupted by the coronavirus pandemic. How can business leaders react to the challenges, reassess what they do and reconfigure their companies? </span> <span class="attribution"><span class="source">(AP Photo/Richard Drew)</span></span></figcaption></figure><p>2020 was doomed to become shaky.</p>
<p>No one fully foresaw the extent of the COVID-19 crisis. Business has been disrupted and will not necessarily go back to normal. Instead, the current disruption has changed and continues to change the business landscape as we know it.</p>
<p>How can business leaders react to the challenges, reassess what they do, reconfigure their companies and reinvent their activities to adapt to the disruption and prepare for the new normal?</p>
<p>The implications of climate change, new technologies, digitalization, demographic changes, artificial intelligence, and financial and political uncertainties have moved many of us. We saw a significant event coming, but the pandemic has likely taken it at least one level up from our expectations. </p>
<p>Some companies may have advanced their digitalization capabilities in the past few years. These companies are likely experiencing, at least in the short term, only a moderate impact due to the global pandemic. By shifting their operations <a href="https://zapier.com/blog/companies-hiring-remote-workers/">to remote work</a> via online conferencing and communication tools <a href="https://glg.it/articles/zoom-microsoft-teams-and-slack-have-exploded-due-to-the-covid-19-pandemic-can-they-hold-onto-this-growth/">like Zoom and Slack</a>, most projects continue. </p>
<p>Companies in industries heavily affected by the restriction of physical movement (hotels, airlines), however, and <a href="https://www.forbes.com/sites/pamdanziger/2020/04/03/retail-companies-on-death-watch-is-growing-fast-as-covid-19-puts-non-essential-retailers-on-life-support/#ca9160425ea9">those less prepared for technological changes</a> (many retailers, for example) are seeing their operations shattered.</p>
<h2>Reacting to the crisis</h2>
<p>When crises first hit, companies need to react to immediate challenges and threats. At that point, it’s important not to lose sight of doing the right thing. Businesses must remain true to their vision, be empathetic to stakeholders, make quick decisions and adjust those decisions, if necessary, frequently and transparently on the basis of new information in order to adapt quickly.</p>
<p>The actions by Air Canada illustrate this principle very well. Air Canada <a href="https://globalnews.ca/news/6752715/coronavirus-air-canada-lay-offs-memo/">laid off 16,500 employees</a> as a fast and direct response to a reduction of their flight schedule due to the decline of demand <a href="https://globalnews.ca/news/6711194/canada-us-border-closes/">and border closures for non-residents</a>. Recently, the federal government <a href="https://www.benefitscanada.com/news/feds-introduce-75-wage-subsidy-to-help-employers-keep-staff-during-coronavirus-144488">communicated the details of a wage subsidy package</a>. Right after, Air Canada announced it was immediately <a href="https://www.cbc.ca/news/business/air-canada-hiring-wage-subsidy-1.5525926">rehiring most of their people</a> based on the 75 per cent wage subsidies promised by the government.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=490&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=490&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327856/original/file-20200414-117558-b9x2zl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=490&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Air Canada initially laid off thousands of employees when business dried up as a result of the coronavirus pandemic, but then hired them back when the Canadian government announced a wage subsidy program.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Paul Chiasson</span></span>
</figcaption>
</figure>
<p>In disruption, operational challenges need solutions, cash management and liquidity need to be adjusted for the changes in demand and communications and leadership must be expanded into the digital space.</p>
<p>If companies haven’t been online before, they likely are now. In a fast-changing marketplace, aggressively pushing new solutions into the market may help some companies. Many business issues resulting from disruption due to worldwide efforts to contain the spread of COVID-19 will need quick fixes and solutions. They are also the beginning of new problems.</p>
<h2>Reassessing long-term plans</h2>
<p>Next, businesses must reassess not only their plans for the year, but also on a longer-term basis. The exercise may reveal important insights. Resilience is valuable in crisis. However, just bouncing back from such a consequential worldwide event is not enough. We will likely see long-lasting changes on both the demand and supply side. </p>
<p>Short term, we may see the <a href="https://nowtoronto.com/news/toronto-gin-distilleries-hand-sanitizer-covid-19/">gin distillery in town producing hand sanitizers</a> as is happening in Toronto or <a href="https://www.uoguelph.ca/lang/news/2020/03/u-g%E2%80%99s-wood-centre-teams-local-business-develop-medical-equipment">the maker-space at the local university 3D-printing protective equipment as we’re doing at the University of Guelph</a>. This is a good moment for businesses to assess their capabilities and how they can be used to meet immediate needs or can be leveraged, upgraded or complemented with new technologies or partners.</p>
<p>Over the long term, finding and pursuing new opportunities will drive change. Companies may now serve new, different customers. They may need to get out of their comfort zones and learn new skills. </p>
<p>And in an online world, data strategies and analytics matter. Writing skills are as important as presentation skills. Cybersecurity becomes a strategic concern. Whatever the changes needed, change will become the new normal. </p>
<h2>Reconfiguring and reinventing</h2>
<p>It’s critical that companies continuously move in the right direction as the pandemic shutdowns continue. Businesses that have change ingrained in their culture are likely to do better in uncertain times. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327859/original/file-20200414-117549-1j0lj5i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Changing consumption patterns as a result of the pandemic will make home fitness programs more popular in the future.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>A crisis like this brings new opportunities and should be a trigger to explore new directions. <a href="http://ftp.zew.de/pub/zew-docs/dp/dp20018.pdf">A recent study</a> shows that sustaining innovations developed during a crisis often yields a positive impact in the long run as opposed to organizations that cut back innovation budgets. </p>
<p>Government will invest more over the coming years to help mitigate the impact of COVID-19. How they direct this spending, whether it’s aimed at restoring the old economy or triggering market changes, will have an impact on a business’s outlook as well. </p>
<p>We are likely entering a time in which people change consumption patterns. Fitness solutions for home, home entertainment, people-tracking and data security, new health-care equipment and online education solutions, to name just a few, will be in higher demand. </p>
<p>All of these developments create many new opportunities for businesses.</p><img src="https://counter.theconversation.com/content/135516/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Felix Arndt does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Many businesses have been rocked by the financial fallout from the coronavirus. Bouncing back from such a consequential event is not enough. Companies must adapt to the disruption.Felix Arndt, John F. Wood Chair in Entrepreneurship, University of GuelphLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1359052020-04-14T13:43:20Z2020-04-14T13:43:20ZCoronavirus shows we can – and must – change how we work<figure><img src="https://images.theconversation.com/files/327677/original/file-20200414-117558-e40su0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/overworked-tired-employee-workplace-office-being-552087472">Shutterstock</a></span></figcaption></figure><p>The coronavirus pandemic has exposed the deep-seated problems of how and why we all work. It has shown how many of us perform jobs that are not essential. Lists of “<a href="https://www.bbc.co.uk/news/uk-51972793">key workers</a>”, from cleaners to nurses and delivery drivers, shows society can get by without corporate lawyers, lobbyists and telemarketers. </p>
<p>But the crisis has also revealed the pressing need most of us face to work. We might not carry out work that is necessary but we still need to work in order to live. Work remains an obligation in society and something the majority of us have to do, whether the work we do is vital or not.</p>
<p>The question for the present is whether people can survive the loss of work, as the economy contracts. The alleviation of unemployment must be a priority in the short term.</p>
<p>Yet, there is a deeper question at stake. This question is whether we can fashion a system that reduces our dependency on work and creates the freedom for us to live without the constant pressure to work.</p>
<p>Beyond the crisis, there must be a <a href="https://theconversation.com/what-will-the-world-be-like-after-coronavirus-four-possible-futures-134085?utm_source=twitter&utm_medium=bylinetwitterbutton">vision of a better future</a> where our lives are less defined by work and where our freedom to live well is extended.</p>
<h2>Problems of work</h2>
<p>The coronavirus pandemic throws up three key problems relating to work. One is the shortage of work itself. The <a href="https://www.theguardian.com/world/2020/apr/03/coronavirus-uk-business-activity-plunges-to-lowest-ebb-since-records-began">prospect of mass unemployment</a> – on a scale not witnessed since the 1930s – is a real one, as many businesses will not survive lockdown measures.</p>
<p>There is a question mark over how governments are responding to the crisis, given that their focus is on keeping workers in work. <a href="https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses">Job-retention schemes</a> as implemented in the UK, for example, do not address <a href="https://www.theguardian.com/commentisfree/2020/mar/26/rishi-sunak-welfare-state-chancellor-self-employed-benefits-system">the needs of those already without work</a> and those set to lose their jobs. As <a href="https://www.ft.com/content/927d28e0-6847-11ea-a6ac-9122541af204">critics have argued</a>, more radical policies are clearly needed, not least an income guarantee that offers income, independent of work.</p>
<p>For others, the problem is an increase in work. The enforcement of home working coupled with school closures has meant combining work with childcare and caring responsibilities for many. Here a full day’s work has meant longer hours, both paid and unpaid.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327680/original/file-20200414-117593-as5m83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Key workers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/medical-staff-working-hospital-doctor-nurse-772546597">Shutterstock</a></span>
</figcaption>
</figure>
<p>The third problem relates to those still required to work outside of the home. Here the problem is overwork, as well as exposure to disease. NHS workers, without the proper protection, have raised concerns over their <a href="https://www.bbc.co.uk/news/uk-england-essex-52118437">health and safety</a>. <a href="https://www.bbc.co.uk/news/business-52096273">Amazon workers</a>, on the other hand, have taken strike action against the unsafe and unhealthy conditions they face. Generally, for frontline workers, the crisis has brought an increase in the intensity and pressure of work.</p>
<h2>The value of work</h2>
<p>The above problems highlight a further issue – the value of work and its distribution in society. </p>
<p>The economic response to coronavirus focuses on restoring work, not on changing or curtailing it in any way. This is understandable given the negative effects of unemployment on income <a href="https://www.jstor.org/stable/2234639?seq=1">and well-being</a>. But there is no wider sense of the need to promote a different future where our need for work is lessened. </p>
<p>In the UK, for example, there is no talk of cutting work hours and redistributing work. Rather the goal is to maintain normal working patterns, with the standard five-day working week and established holiday entitlement. More widely, there is a concern to keep the same economic growth model, not change it. The restoration of growth is put before the reduction of work.</p>
<p>The present crisis has also highlighted what work is necessary for society to meet its needs. Conversely, it has exposed some work as superfluous and even pointless, from a social perspective. While work might be important for the purposes of creating profit for some individuals, it need not be seen as vital for creating the opportunity for the majority in society to live healthy and meaningful lives. Health provision, for example, has an essential quality that is lacking in the practice of stockbroking.</p>
<p>It is the obsession with economic growth which demands that more work is created, including more <a href="https://www.strike.coop/bullshit-jobs/">pointless jobs</a>. The view that growth counts above everything else also leads to a devaluation of necessary work – carers, for instance, get paid pitifully less than stockbrokers even though they have more social value. Here the reason for the difference in pay reflects the influence of power and status, rather than the provision of real needs.</p>
<p>On pay, it is clear that without a radical <a href="https://www.ft.com/content/2b34269a-73f8-11ea-95fe-fcd274e920ca">revaluation of work</a>, then workers such as carers will continue to be underpaid. It is evident too that without some kind of <a href="https://theconversation.com/coronavirus-why-the-uk-needs-a-basic-income-for-all-workers-134257">basic income</a> there will be no escape from the discipline of work. More generally, there will be no way to stop work being the centre of human life, without overcoming the obsession with higher growth.</p>
<h2>Reimagining the future</h2>
<p>This crisis must be an opportunity to reimagine how we work and how we live.</p>
<p>There must be a recognition of the failure of the system as it exists now. Given the present policy focus, we face the prospect of returning to work and being denied the freedom to work less. We also face the possibility of restoring jobs that serve no social purpose and that exist merely to maintain growth that benefits only a few in society. </p>
<p>Further, we risk undervaluing the essential work that keeps us healthy. If the crisis is to serve any purpose, then it must be used as a reminder that the present system is moribund. </p>
<p>It is also important we seek change beyond the present. The restrictions of work must become a focus for resistance and transformation. We must see the endless pursuit of work as anathema to our well-being and instead come to embrace the idea of working less. Our goal should be to broaden the realm of freedom beyond work. There is simply no other way for us to thrive.</p><img src="https://counter.theconversation.com/content/135905/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Spencer has received funding from ESRC, the EU, and EPSRC.</span></em></p>Lockdown throws our relationship with work into the spotlight.David Spencer, Professor of Economics and Political Economy, University of LeedsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1361062020-04-13T12:16:44Z2020-04-13T12:16:44ZWhat is the SBA? An unheralded agency faces the unprecedented task of saving America’s small businesses<figure><img src="https://images.theconversation.com/files/327341/original/file-20200412-123487-1amps0y.jpg?ixlib=rb-1.1.0&rect=57%2C0%2C4181%2C2644&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Most small businesses in New York have closed during the crisis.</span> <span class="attribution"><span class="source">AP Photo/Mark Lennihan</span></span></figcaption></figure><p>The coronavirus pandemic is devastating small businesses across the U.S. because of shelter-in-place orders that have <a href="https://www.uschamber.com/series/above-the-fold/new-poll-says-1-4-small-businesses-brink-of-permanent-closure">forced millions to temporarily close</a>. </p>
<p>So far, Congress has devoted more than US$375 billion to helping restaurants, retailers and other small companies endure the crisis, and lawmakers are currently <a href="https://thehill.com/homenews/senate/488810-small-business-rescue-package-expect-to-swell-to-350-billion-or-more">discussing spending hundreds of billions more</a>. </p>
<p>The Small Business Administration is at the center of these efforts. But early reports suggest the agency is struggling with the flood of requests it’s received for loans – more than 70% of U.S. small businesses <a href="https://www.washingtonpost.com/business/2020/04/09/small-business-coronavirus-emergency-loan/">have reportedly already applied</a> for assistance – leading to a lot of frustration among owners desperate for support. </p>
<p>From 2010 through 2014, <a href="https://www.american.edu/kogod/faculty/cbruck.cfm">I worked as general and then-chief counsel</a> to the U.S. Senate Committee on Small Business and Entrepreneurship, where I helped write laws to aid small businesses recover from the Great Recession. </p>
<p>Congress’ quick actions are encouraging, but I believe the SBA needs to do more to ensure aid goes to those most in need – including the more than 13 million small businesses owned by women that have <a href="https://cdn.www.nwbc.gov/wp-content/uploads/2019/12/20204228/NWBC-2019-Annual-Report-508compliant.pdf">challenges accessing capital even under normal circumstances</a>. </p>
<h2>An advocate for small business</h2>
<p>The Small Business Administration <a href="https://www.sba.gov/about-sba/organization">was established in 1953</a> as an independent agency dedicated to counseling and advocating for small businesses. It replaced existing lending and contracting programs established during the Great Depression and World War II. </p>
<p>At the time, there were <a href="https://crsreports.congress.gov/product/pdf/RL/RL33243">allegations of cronyism and political favoritism</a> that made it harder for smaller companies to compete for lucrative government contracts. The SBA was meant to help small businesses bid for more contracts and access capital, as well as <a href="https://www.govinfo.gov/content/pkg/STATUTE-67/pdf/STATUTE-67-Pg230.pdf#page=6">provide aid after a disaster</a>. </p>
<p>Over time, the SBA’s mission has grown to include a suite of lending programs, contracting and entrepreneurial development initiatives. </p>
<p>Its roots in helping small businesses compete for government contracts has resulted in a range of definitions as to what constitutes a small business. <a href="https://www.sba.gov/document/support--table-size-standards">SBA itself has different definitions</a> depending on industry, which can range from 100 to 1,500 employees or $750,000 to $38.5 million in annual sales. </p>
<p>The more than <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2019/09/24153946/Frequently-Asked-Questions-Small-Business-2019-1.pdf">30 million small businesses the SBA counts today</a> are vital to the U.S. economy. They <a href="https://advocacy.sba.gov/2018/12/19/advocacy-releases-small-business-gdp-1998-2014/">create two-thirds of net new jobs</a> and employ almost half of all private sector employees. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327466/original/file-20200413-32369-friw35.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Jovita Carranza, administrator of the Small Business Administration, is responsible for ensuring her agency distributions hundreds of billions of dollars to small businesses.</span>
<span class="attribution"><span class="source">AP Photo/Alex Brandon</span></span>
</figcaption>
</figure>
<h2>Providing aid in a crisis</h2>
<p>One of the SBA’s main duties is providing aid to small businesses to help them recover following natural disasters such as hurricanes or tornadoes and other crises.</p>
<p>For example, the <a href="https://crsreports.congress.gov/product/pdf/RL/RL33243">SBA dispensed $3.59 billion</a> in disaster loan assistance in fiscal year 2018 following the devastation caused by hurricanes Harvey, Irma and Maria in 2017. </p>
<p>But the SBA has never done anything on the scale it’s being asked to do to help small businesses survive the coronavirus pandemic. </p>
<p>The <a href="https://www.congress.gov/116/plaws/publ123/PLAW-116publ123.pdf">first piece of legislation</a> Congress passed in response to the crisis in early March included $20 million in emergency supplemental funding for SBA’s economic injury disaster loan program, which offers loans of up to $2 million. </p>
<p>Realizing that small businesses that were being forced to shut down in droves would need significantly more aid, Congress added hundreds of billions more funding in the $2 trillion <a href="https://www.congress.gov/bill/116th-congress/house-bill/748/text">CARES Act</a>, which was signed into law on March 27. </p>
<p>The law gave $10 billion more to the SBA’s Economic Injury Disaster Loan Program to allow the SBA to hand out up to $10,000 grants immediately to applicants who are eligible for the program – even if they are ultimately denied.</p>
<p>In addition, it created the $349 billion paycheck protection program in an effort to encourage companies to continue to employ their workers during the pandemic. The program allows companies with fewer than 500 employees to receive as much as $10 million. <a href="https://www.law.berkeley.edu/research/business/cares-act-and-small-businesses/">Money used for “allowable” expenses</a> such as payroll and rent doesn’t have to be paid back as long as a few other conditions are met.</p>
<p>Lawmakers <a href="https://www.vox.com/2020/4/9/21214800/senate-democrats-block-small-business-funding-paycheck-protection-program">are considering ways</a> to provide small businesses with more support – perhaps another $250 billion or more – in another bailout package. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327463/original/file-20200413-36910-g0xq60.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lauren Friel, owner of Rebel Rebel Wine Bar in Somerville, Mass.,worries there will be less stimulus money for smaller businesses like hers.</span>
<span class="attribution"><span class="source">AP Photo/Steven Senne</span></span>
</figcaption>
</figure>
<h2>Unprecedented need</h2>
<p>But the unprecedented size of the need has led to many stumbling blocks in rolling out the programs. </p>
<p><a href="https://www.nytimes.com/2020/04/09/business/smallbusiness/small-business-disaster-loans-coronavirus.html">The New York Times reported</a> that applicants are waiting weeks for approval, while others are being told they will get a fraction of what they expected. </p>
<p>In addition, <a href="https://www.forbes.com/sites/allbusiness/2020/04/12/10-frequently-asked-questions-about-cares-act-loans/#6fda2faf5f8b">other reports</a> have found that the $10,000 emergency grants that were supposed to be available within three days haven’t gone out to at least some applicants. An SBA official said the agency <a href="https://www.washingtonpost.com/business/2020/04/08/video-sba-official-blasts-big-banks-over-failure-quickly-distribute-loans/">has already received</a> over 3 million applications for the grants, which would cost $30 billion, triple the amount originally set aside.</p>
<p>And there was confusion over the rules companies must follow. On April 3, the SBA <a href="https://www.sba.gov/sites/default/files/2020-04/PPP--IFRN%20FINAL_0.pdf">issued an interim final rule</a> that said 75% of the proceeds of the paycheck protection program loan must go to payroll costs, which wasn’t in the CARES Act. Retailers, restaurants and other companies <a href="https://www.cnbc.com/2020/04/07/this-part-of-paycheck-protection-program-could-reduce-forgivable-loans.html">with high rents and other overhead complain</a> that they won’t be able to meet that threshold. </p>
<h2>Challenges for women-owned businesses</h2>
<p>The situation is urgent as research shows that about half of small businesses <a href="https://institute.jpmorganchase.com/institute/research/small-business/small-business-cash-liquidity-in-25-metro-areas">typically have cash on hand to last 15 days</a>. At the same time, loans are distributed on a “first-come, first-serve” basis.</p>
<p>And for businesses owned by people of color or women, things can be even more acute. <a href="https://www.american.edu/kogod/research/publications/blindspot.cfm">My own research</a>, for example, found that <a href="https://theconversation.com/how-the-us-tax-code-bypasses-women-entrepreneurs-86039">women-owned businesses tend to lack access</a> to capital and often don’t benefit from tax breaks and other support intended for small companies. And because they <a href="https://www.sbc.senate.gov/public/_cache/files/c/c/cc4de80f-0976-448f-84bb-53af12e7570b/A52BA87EE1DEC7D97F3CC7ABA94D9EBF.ppp-implementation-underserved.pdf">are less likely to have banking relationships</a> with the lenders the SBA traditionally works with, women business owners may need special attention to ensure they get the support they need to weather this crisis. </p>
<p>While getting money out the door fast is critical, it’s equally important it gets to the companies that need it most.</p>
<p>[<em>You need to understand the coronavirus pandemic, and we can help.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=upper-coronavirus-help">Read The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/136106/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caroline Bruckner does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Small Business Administration is the agency tasked with distributing hundreds of billions of dollars to keep millions of companies alive.Caroline Bruckner, Executive in Residence, Department of Accounting and Taxation, American University Kogod School of BusinessLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1355082020-04-03T12:43:29Z2020-04-03T12:43:29ZHow high will unemployment go? During the Great Depression, 1 in 4 Americans were out of work<figure><img src="https://images.theconversation.com/files/325092/original/file-20200402-74858-1w0mc7.jpg?ixlib=rb-1.1.0&rect=0%2C71%2C3000%2C2187&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Unemployed people wait outside a government office in NYC in 1933. </span> <span class="attribution"><span class="source">AP Photo</span></span></figcaption></figure><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/325072/original/file-20200402-74900-10fregb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>The <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">U.S. unemployment rate climbed</a> from a half-century low of 3.5% to 4.4% in March – and is expected to go a lot higher.</p>
<p>But could the rate, as <a href="https://www.usnews.com/news/economy/articles/2020-03-23/fed-official-unemployment-could-hit-30-as-coronavirus-slams-economy">some predict</a>, surpass the 25% joblessness the U.S. experienced at the peak of the Great Depression? </p>
<p>As a <a href="http://businessmacroeconomics.com/">macroeconomist</a> who has tracked the labor force for decades, I’ve been wondering about this myself. </p>
<p>There are actually two figures the Bureau of Labor Statistics uses to estimate employment levels in the U.S. </p>
<p>One is the unemployment rate, which comes from the Current Population Survey. The U.S. Census Bureau contacts about <a href="https://www.bls.gov/opub/hom/cps/data.htm">60,000 randomly selected households</a> every month to get an estimate of this rate.</p>
<p>The other is an estimate of how many nonfarm jobs were lost or created in the month. The Bureau of Labor Statistics creates these figures by asking more than <a href="https://www.bls.gov/opub/hom/pdf/ces-20110307.pdf">140,000 private businesses</a>, nonprofits and various state and local governments how many people were on their payroll at any time during the week containing the 12th of the month.</p>
<p>The latest data show the economy lost 701,000 jobs in March. </p>
<p>But these are just very early estimates of the impact from the coronavirus. It will get a lot worse before it gets better. <a href="https://www.bloomberg.com/news/articles/2020-04-16/u-s-jobless-claims-total-5-25-million-in-week-four-of-lockdown?srnd=premium">About 22 million people have applied for employment benefits</a> over the past month – out of a <a href="http://www.dlt.ri.gov/lmi/laus/us/usadj.htm">total workforce of around 160 million</a>. </p>
<p>The employment surveys – single-week snapshots – were both taken in mid-March, around the time the <a href="https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html">U.S. first began to experience a sharp uptick</a> in cases, and some states, such as New York and California, ordered businesses to close. Both surveys likely only reflect the very early effects of the pandemic.</p>
<p>In addition, they consider <a href="https://www.bls.gov/opub/hom/cps/concepts.htm">someone employed</a> even if they worked only part of that week. Starting off the week employed and ending the week laid off means a person is still considered “working.” </p>
<p>So we won’t begin to see the full scale of the jobs impact until early May, when the April data are released. </p>
<p>So how high could joblessness get? </p>
<p>The record unemployment rate came in 1933, when a <a href="https://www2.census.gov/library/publications/1975/compendia/hist_stats_colonial-1970/hist_stats_colonial-1970p1-chD.pdf#">quarter of adults</a> who wanted to work couldn’t find a job. </p>
<p>Back then, the U.S. only estimated annual labor market data. More precise monthly data <a href="https://www.census.gov/programs-surveys/cps/about/history-of-the-cps.html">didn’t begin until 1948</a>. Since then, the highest monthly unemployment rate ever recorded was <a href="https://www.nytimes.com/1982/12/05/business/week-in-business-us-unemployment-shoots-up-to-10.8.html">10.8% in December 1982</a> as a result of the <a href="https://www.federalreservehistory.org/essays/recession_of_1981_82">Federal Reserve increasing borrowing costs</a> to fight inflation. </p>
<p>If unemployment in the U.S. does reach 25%, the country would hardly be alone in the world. In fact, before the pandemic, 22 countries including South Africa and Kenya were <a href="https://www.cia.gov/library/publications/resources/the-world-factbook/fields/220rank.html">experiencing estimated unemployment rates</a> over 25%, according to the CIA, which tracks data like this because high unemployment sometimes lead to social instability and government collapse. Burkina Faso, a small country in West Africa, had unemployment north of 75%. </p>
<p>With governments <a href="https://www.latimes.com/politics/story/2020-03-31/political-squabbling-4th-coronavirus-bailout-bill-underway-but-passage-is-weeks-away">continuing to work</a> on bailout and stimulus programs aimed at mitigating the pandemic’s impact on the economy, it’s impossible to really know how high joblessness will get. These efforts may prevent the worst.</p>
<p>In my view, however, I do believe that no matter what, it will be short-lived. The economy will rebound when life – and our pent-up desire to eat out, shop and spend – returns to normal, eventually.</p>
<p><em>This article was updated with new data.</em></p>
<p>[<em>Get facts about coronavirus and the latest research.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=upper-coronavirus-facts">Sign up for The Conversation’s newsletter.</a>]</p><img src="https://counter.theconversation.com/content/135508/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some economists are predicting joblessness to surpass the record level experienced at the height of the Great Depression as 22 million people file for unemployment benefits.Jay L. Zagorsky, Senior Lecturer, Questrom School of Business, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1342232020-03-22T12:21:15Z2020-03-22T12:21:15ZKeep on trucking: Trucks must keep moving across Canada-U.S. border amid coronavirus<figure><img src="https://images.theconversation.com/files/322045/original/file-20200320-22622-so3gla.jpg?ixlib=rb-1.1.0&rect=0%2C35%2C4799%2C2650&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Canada-U.S. border will be closed to most people because of the coronavirus, but trucks will still be able to make the trip over crossings like the Ambassador Bridge between Detroit and Windsor, Ont. </span> <span class="attribution"><span class="source">(AP Photo/Paul Sancya)</span></span></figcaption></figure><p><a href="https://www.canada.ca/en/public-safety-canada/news/2020/03/us-canada-joint-initiative-temporary-restriction-of-travelers-crossing-the-us-canada-border-for-non-essential-purposes.html">Canada and the United States have agreed</a> to restrict non-essential trips across their common border, while leaving it open for the movement to freight in trucks. While the justification of banning crossings by “non-essential” people is <a href="https://theconversation.com/coronavirus-canada-u-s-border-closure-other-travel-restrictions-undermine-our-values-133428">open to question</a>, the economic arguments for preserving the movement of trucks are clear.</p>
<p>On an average day, about <a href="https://www.tc.gc.ca/eng/policy/transportation-canada-2018.html#item-10">30,000 trucks roll across the Canada-U.S. border</a>, carrying more than $1 billion in trade. If truck movements were banned, critical supplies of food and medicine would be interrupted and production at some of the largest manufacturing plants in both countries would cease, idling thousands of workers. </p>
<p>The economic damage from interrupting the flow of trucks would be both direct and indirect.</p>
<p>The direct damage would come when needed goods are cut off. For example, pharmaceuticals are a major export from Ontario to the U.S. and thousands of truckloads of agri-food products, from live animals to processed food, are shipped in both directions. The indirect damage would come when supply chains that straddle the border break down, making it impossible for factories and other economic activities to keep operating. </p>
<p>The automotive sector is a good example. Tariff-free trade in cars and parts dates to <a href="https://www.nber.org/papers/w1953">a Canada-U.S. agreement in the 1960s</a>, long before NAFTA. This industry has more than 50 years of evolution based on cross-border supply chains.</p>
<h2>A complicated supply chain</h2>
<p>Production of cars and SUVs depends on parts from hundreds of different factories being passed up through several “tiers” of suppliers and gradually combined into larger components before they ultimately arrive at the final assembly plant. Nearly all these factory-to-factory movements are made in trucks, many of which cross the Canada-U.S. border.</p>
<p>As the border constrictions in the wake of the 9/11 attacks demonstrated, when the trucks stop crossing the border, the automotive production system shuts down. A border shutdown during the COVID-19 crisis would be more complete and much longer than the slowdown that followed 9/11.</p>
<p>The movement of trucks and the movement of people are not independent issues. Beyond just the truck drivers, there are many people involved in maintenance, repair, training, marketing and other occupations who regularly move across the border in support of binational production systems. The inclusion of these people in the “essential” category will help ensure the smooth functioning of cross-border supply chains.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/322047/original/file-20200320-22610-sqjb6e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Many car and SUV parts cross the Canada-U.S. border several times before finally ending up on the line at factories like Chrysler’s Windsor Assembly Plant.</span>
<span class="attribution"><span class="source">(AP Photo/Carlos Osorio)</span></span>
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<p>Since cars and SUVs are not staple commodities, why should we worry if their production pauses during the crisis? For one thing, a similar story of dependence on cross-border supply chains could be told for food processing, medical devices and other things we cannot do without. Plans for the automotive and other industries to <a href="https://www.ctvnews.ca/health/coronavirus/trudeau-unveils-new-measures-to-mobilize-industry-in-covid-19-fight-bring-canadians-home-1.4861302">re-purpose parts of their production assets</a> to make desperately needed medical devices will also depend on cross-border supply chains.</p>
<h2>Deeper crisis than 2008</h2>
<p>More generally, it is important that economic activities which can be done safely carry on during the crisis. We are about to experience the <a href="https://www.pbs.org/newshour/show/economist-ken-rogoff-on-whether-the-u-s-has-ever-experienced-a-crisis-like-this-one">deepest global economic contraction of our times</a> — potentially much deeper than the crisis of 2008. How long it will last is still unclear, but it will be months or perhaps years rather than weeks.</p>
<p>At this early stage, public attention is rightly focused on protecting people from infection. This means all work environments and processes must be assessed to ensure that employees are not at risk. For example, the major automotive companies are <a href="https://www.theglobeandmail.com/business/article-ford-general-motors-closing-all-north-american-factories-due-to/">currently shutting down plants</a> for sanitation and to institute new safety measures.</p>
<p>As the regional effects of the pandemic subside, more attention will be given to speeding up the economic recovery. If the economic contraction during the crisis is any greater than what is required to protect the public, there will be more missed paycheques, more debt and more companies lost to bankruptcy. Keeping the trucks moving across the border now could pay off in a faster return to economic vitality in the aftermath of the crisis.</p>
<p>The COVID-19 crisis is a critical test of the resilience of cross-border supply chains. The outcome of this test will have big implications for the future of the Canadian economy, especially the manufacturing sector.</p>
<p>From our consultation at the Cross Border Institute with private-sector players who use the border intensively, we know that the threat of major delays and interruptions is one of the downsides of linking production facilities on opposite sides of the border. If the risk of interruptions becomes too great, a reasonable strategy is to consolidate the supply chain in one country.</p>
<h2>The future of cross-border supply chains?</h2>
<p>For some industries, such as food production, <a href="https://theconversation.com/coronavirus-the-perils-of-our-just-enough-just-in-time-food-system-133724">there is an argument </a> for a shift to separate domestic supply chains.</p>
<p>But for industries where scale is important — automotive, aerospace, defence and industrial machinery — such consolidation systematically works against Canada. In those industries, supply chains will not be duplicated in each country, but rather concentrated in the country with the largest market — which is generally the United States. Demonstrating that cross-border logistics can function in a crisis would be beneficial for business investment in Canada.</p>
<p>The COVID-19 crisis is a time for bold action. But it’s also a time to resist taking actions that cause economic harm without protecting public health. The co-ordinated decision by the governments of Canada and the United States to keep the border open to trucking makes sense.</p><img src="https://counter.theconversation.com/content/134223/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Anderson has led research projects funded by government agencies and crown corporations with responsibilities for freight transportation and infrastructure, including Transport Canada, The Windsor-Detroit Bridge Authority and the U.S. Federal Highway Administration.</span></em></p><p class="fine-print"><em><span>Marta Leardi-Anderson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Canada and the United States have opted to keep its border open to commercial trucking during the coronavirus pandemic. The decision is important to the economies of both countries.William Anderson, Director, Cross Border Institute, University of WindsorMarta Leardi-Anderson, Executive Director, Cross Border Institute, University of WindsorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1325492020-02-26T20:16:24Z2020-02-26T20:16:24ZHow can we prepare for the coronavirus? 3 questions answered<figure><img src="https://images.theconversation.com/files/317408/original/file-20200226-24701-1lyc8d8.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3752%2C2660&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Alex Azar, secretary for US Health and Human Services, spoke with senators about the coronavirus on Feb. 25.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Virus-Outbreak-White-House/629fae473cbf4189b5b3cad64e1ee664/4/0">AP Photo/J. Scott Applewhite</a></span></figcaption></figure><p><em>Editor’s note: Public health officials in the U.S. warned that the coronavirus, which has in large part spared the U.S., is coming and that <a href="https://www.cdc.gov/coronavirus/2019-nCoV/summary.html">the country needs to be prepared</a>. But just what does this mean for you, as well as for public health officials? Aubree Gordon, public health scholar at the University of Michigan, explains.</em></p>
<h2>1. How do we prepare for something we can’t predict?</h2>
<p>First and foremost, people need to be prepared for their daily life to be affected by public health measures that are put into place to try to limit the spread of the virus.</p>
<p>This could be anything from relatively benign social distancing measures, such as canceling large gatherings, to measures that may have a larger impact on day-to-day life, such as school and business closures. It is also possible that people may be asked to remain in their homes for an extended period of time if there is a large outbreak in their local area, such as <a href="https://www.npr.org/2020/02/24/808995258/china-has-built-over-20-mass-quarantine-centers-for-coronavirus-patients-in-wuha">what has occurred in China</a>. </p>
<p>To prepare for this, it is best to have a two-week supply of food, personal hygiene items and sufficient supplies of any required prescription or nonprescription drugs. It is also important to keep copies of medical records for reference.</p>
<h2>2. The US has only 57 cases so far. Why might that increase?</h2>
<p>So far, all cases in the U.S. <a href="https://khn.org/morning-breakout/coronavirus-in-u-s-cases-climb-but-all-still-linked-to-travel-abroad-white-house-seeks-emergency-funding-cities-balk-at-hosting-patients/">have been imported or directly connected to travel</a>. That is, either someone came to the U.S. who was infected or had contact with someone who had recently traveled out of the country. </p>
<p>To track down these cases, public health officials have been testing all travelers who present symptoms that have recently been to China, have been in contact with a recent traveler from China, where the outbreak started, or had contact with a confirmed case. <a href="https://www.npr.org/sections/health-shots/2020/02/03/802178957/u-s-imposes-controversial-restrictions-as-nations-coronavirus-cases-rise-to-11">People who tested positive</a> have been isolated. In addition, travelers returning from locations of outbreaks <a href="https://www.nbcnews.com/health/health-news/thousands-americans-voluntarily-self-quarantine-after-returning-china-n1138731">have been asked to quarantine themselves</a> in their houses or have been quarantined by the U.S. government for 14 days in order to prevent onward transmission in the event that they were infected but not yet showing symptoms. </p>
<p>However, as the virus establishes itself in multiple countries, the U.S. will have more introductions, meaning that travelers will bring it into the U.S. from other countries. It is inevitable that we will miss some cases, which will result in community transmission in the U.S. </p>
<p>In addition, right now public health systems are concentrating on testing individuals with connections to known outbreak locations or confirmed cases. Public health officials and medical personnel are looking for the cases in the most likely places, but that means that we may not detect cases early where we are not expecting them. U.S. officials will know this has happened if they detect a cluster of severe cases, at which point there likely will have been multiple rounds of transmission, and an outbreak will have begun.</p>
<h2>3. What has changed to make public health officials more worried?</h2>
<p>The <a href="https://www.nytimes.com/2020/02/26/world/asia/coronavirus-news.html">outbreaks are now occurring in multiple countries</a>. Also, the fact that there are multiple, concurrent outbreaks – and that public health officials do not know the scope of those outbreaks – is worrisome. </p>
<p>As the virus spreads into more countries, particularly those with weaker health systems, it will become much harder to control the spread worldwide. As the number of cases increases in a location, the likelihood that someone who is traveling from that location is infected increases. And, this in turn, increases the probability of the virus being introduced into another location.</p>
<p>For example, there had been very few cases of <a href="https://www.cnn.com/2020/02/25/europe/italy-coronavirus-backfoot-intl/index.html">COVID-19 detected in Italy</a> until Feb. 22, 2020, and they were all related to travel. However, a few days later, <a href="https://www.wsj.com/articles/coronavirus-infections-increase-in-italy-11582632278">officials detected a cluster of COVID-19 cases</a>. There was no clear link to travel in the confirmed cases, indicating that community transmission was occurring. Now, cases imported from Italy, either by Italian tourists or by citizens returning from Italy, have been detected in multiple countries. Likewise, <a href="https://www.nbcnews.com/health/health-news/why-iran-s-reported-mortality-rate-coronavirus-higher-other-countries-n1142646">Iran now has community transmission</a> and has exported cases to multiple countries. </p>
<p>In the coming weeks and months, this pattern will likely repeat itself in multiple locations.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/132549/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Aubree Gordon receives funding from the U.S. National Institutes of Health. </span></em></p>With the coronavirus spreading to more countries, public health officials in the US are warning Americans that coronavirus will become a problem in the US, too. What does this mean for you?Aubree Gordon, Professor of Public Health, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1313602020-02-07T13:50:08Z2020-02-07T13:50:08ZAs China suffers from coronavirus, some wonder: Is it really that serious? 3 questions answered<figure><img src="https://images.theconversation.com/files/314045/original/file-20200206-43128-1m66x0j.jpg?ixlib=rb-1.1.0&rect=18%2C12%2C3405%2C2309&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A women wearing a protective face mask delivers a leaflet on coronavirus, in Hong Kong, Friday, Jan 24, 2020. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Hong-Kong-China-Outbreak/822e7ec9c03642ff9ee024704d48efc1/74/0">AP Photo.Achmad Ibrahim</a></span></figcaption></figure><p><em>Editor’s Note: The coronavirus outbreak continues to worsen in China, with 28,200 confirmed cases as of Feb. 6, 2020. The Chinese government has announced even stricter measures to stop the spread of the disease, <a href="https://www.nytimes.com/2020/02/06/world/asia/coronavirus-china.html">including the rounding up of people in Wuhan</a>, the city where the outbreak began, for mass quarantine. And the <a href="https://www.theguardian.com/world/2020/feb/06/whistleblower-chinese-doctor-dies-from-coronavirus">doctor who warned authorities about the disease</a> has died. Just how bad might this outbreak become? Virologist and public health expert John A. Lednicky explains.</em> </p>
<h2>1. Is this outbreak really that serious?</h2>
<p><a href="https://www.who.int/csr/disease/ebola/ebola-6-months/myths/en/">Epidemics are spreading more quickly and farther</a> in the 21st century than in previous centuries due to globalization and air travel. When outbreaks occur, there is a predictable pattern that can be summarized as: (a) There is a delay in recognizing that an outbreak is occurring; (b) a <a href="https://doi.org/%2010.1596/978-1-4648-0527-1/pt5.ch17">significant impact on trade and travel</a> typically occurs due to quarantine measures; (c) the public panics due to misinformation and fear of the unknown, and this can be exacerbated by media coverage. </p>
<p>This outbreak is serious to China, to millions of people there, to its economy and potentially to the world’s economy. China’s main concern is for its own citizens. It has experience controlling outbreaks of different types of <a href="https://www.nytimes.com/2020/02/03/world/asia/coronavirus-deaths-sars.html">influenza viruses, SARS coronavirus</a>, and so on, and the resources to effectively deal with large outbreaks.</p>
<p>China’s government can exert stringent outbreak control measures, such as shutting down public transportation, and take unprecedented moves, such as imposing a citywide quarantine, which would not be easy to do in other countries. Because it is a wealthy country, China is also able to respond to large areas affected by an outbreak, whereas many countries would not be able to afford to do this.</p>
<p>Unlike country-specific responses to outbreaks, the <a href="https://www.who.int/csr/disease/epidemic-focus/global-epidemic-response/en/">World Health Organization</a> provides guidance on how to control outbreaks worldwide. Its stated primary purpose is to direct international health within the United Nations’ system and to lead partners in global health responses. </p>
<p>The WHO does not have the financial resources to cover all the expenses of a public health response to an epidemic or pandemic. It does provide a limited supply of materials needed for the performance of diagnostic tests to qualified laboratories. The major benefit to the world community is that the WHO releases information regarding the status and severity of an outbreak, and guidance on how to control the outbreak. </p>
<p>The manner in which individual countries respond to outbreaks, whether epidemic or pandemic, is less predictable, especially for those that lack the resources, infrastructure and trained personnel needed for an adequate response.</p>
<p>If the outbreaks are effectively controlled and people remain quarantined for the near-term, the major impacts to the people of China will revolve around issues related to loss of wages, and quality of life issues, such as obtaining sufficient food. If the outbreaks are not controlled, the consequences will be severe. Businesses and school systems will be adversely impacted, and public attitudes toward the government could lead to general discontent and civil disorder.</p>
<h2>2. Have there been previous quarantines on this scale?</h2>
<p>Small-scale quarantine has been practiced since <a href="https://theconversation.com/quarantines-have-tried-to-keep-out-disease-for-thousands-of-years-130680">ancient times</a>, exemplified by the Israelites’ confinement of lepers to specific living areas, onto the present, such as some of the quarantine measures undertaken to control <a href="https://doi.org/10.1056/NEJMe1413139">Ebola outbreaks</a>. The quarantine procedures being imposed in China in response to the new coronavirus are unprecedented in scale and complexity. They will be intensively analyzed by scientists and epidemiologists, and will inform the next generation of infection control practitioners.</p>
<h2>3. Is there an end in sight?</h2>
<p>It is too early to predict an end in sight. Many public health specialists are optimistic that the outbreak will burn out as a consequence of stringent infection control and quarantine practices. And as that happens, the hope is that the virus will be eradicated, as was the case for <a href="https://emedicine.medscape.com/article/237755-overview">SARS coronavirus</a>. We also hope that the virus does not mutate to a form that is well-adapted to complete its life cycle in humans; that is, that it does not become a common human respiratory virus such as what is thought to have occurred with <a href="https://doi.org/10.1164/rccm.201506-1239LE">human coronavirus NL63</a>, a virus that appears to have jumped species from bats to humans. </p>
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<p class="fine-print"><em><span>John A. Lednicky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The coronavirus is still spreading in China, and the doctor who warned Chinese officials early on about a possible outbreak is now dead. But in the US, some think the outbreak is exaggerated. Is it?John A. Lednicky, Research Professor, Environmental and Global Health, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1312042020-02-07T02:36:07Z2020-02-07T02:36:07ZWhy New Zealand is more exposed than others to the economic chills of China’s coronavirus outbreak<p>The economic repercussions of the coronavirus outbreak worldwide and for New Zealand are beginning to emerge – and it is already clear that the coronavirus will have a <a href="https://www.bloomberg.com/news/articles/2020-01-31/the-coronavirus-is-more-dangerous-for-the-economy-than-sars">worse impact</a> than the severe acute respiratory syndrome (<a href="https://www.who.int/csr/sars/en/">SARS</a>) outbreak in 2003. </p>
<p>The estimated costs of SARS to the global economy was about <a href="https://www.bloomberg.com/news/articles/2020-01-30/economist-who-said-sars-cost-40-billion-sees-bigger-hit-now">US$40 billion</a>. China’s share in world GDP at that time was 4%, significantly lower than the <a href="https://www.theglobaleconomy.com/China/gdp_share/">current estimate of 17%</a>. </p>
<p>This four-fold increase in economic dependence on China worldwide, primarily because of its status as a manufacturing hub and a key node for production networks in Asia and globally, means that the outbreak is likely to have a <a href="https://www.westpac.co.nz/assets/Business/Economic-Updates/2020/Bulletins-2020/Coronavirus-Bulletin-February-2020-Westpac-NZ.pdf">bigger global impact on trade</a>, at least in the current quarter. </p>
<p>But over the same period since 2003, New Zealand has become even more economically dependent on China. This is particularly so in trade in commercial services (both exports and imports), with a 12-fold jump in China’s share, based on comparisons between historical and the latest <a href="https://www.stats.govt.nz/information-releases/goods-and-services-trade-by-country-year-ended-september-2019">Stats NZ data</a>.</p>
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<h2>Slumping exports and cancelled events</h2>
<p>In 2003, New Zealand’s goods exports to China constituted about 5% of the total, based on historical data from the <a href="https://comtrade.un.org/">United Nations</a>. Today, <a href="https://www.stats.govt.nz/information-releases/goods-and-services-trade-by-country-year-ended-september-2019">it is about 26%</a>. Any slump in export demand from China in the current quarter will have a much stronger direct impact on New Zealand exporters’ earnings, for both trade in goods and commercial services, than for many other countries.</p>
<p>This is already evident. Food exporters are facing declining demand for <a href="https://www.scoop.co.nz/stories/BU2002/S00020/coronavirus-generates-a-perfect-storm-for-meat-exporters.htm">meat products</a>, <a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12305292">forestry</a>, <a href="https://www.rnz.co.nz/news/wuhan-coronavirus/408548/coronavirus-nz-businesses-exporting-to-china-take-a-hit">flower</a> and <a href="https://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid=12304225">seafood products</a> from consumers in China. The outbreak could also disrupt supply chains of intermediate products New Zealand imports from China and the rest of Asia for agricultural and food production.</p>
<p>As of 2019, China was New Zealand’s <a href="https://www.stats.govt.nz/information-releases/goods-and-services-trade-by-country-year-ended-september-2019">fourth largest service export destination</a>, constituting 13% of the country’s total exports of commercial services, which includes primarily education and tourism. In 2003, this figure was less than 2%. </p>
<p>Around 87% of New Zealand’s service export earnings from China came from education-related travel and personal tourism. These exports are expected to decline sharply with the <a href="https://www.beehive.govt.nz/release/new-zealand-restrict-travel-china-protect-against-coronavirus">temporary ban on foreign travellers from mainland China</a>.</p>
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<p>New Zealand’s summer season is a busy time for Chinese visitors and international students studying in New Zealand. This has already cost the local economy of Auckland as several tourism events, including the annual Lantern Festival, <a href="https://www.beehive.govt.nz/release/new-zealand-restrict-travel-china-protect-against-coronavirus">have been cancelled</a>. </p>
<h2>Uncertainty shrouds estimated impact</h2>
<p>A “worst case” scenario would look like this: zero visitor arrivals from China until March 2020, followed by an increase by at least 50% the following month, accompanied by a 20% decline in overall arrivals from Asia (whether for tourism or education). It is estimated that this itself would result in <a href="https://www.interest.co.nz/news/103471/westpac-economists-say-damage-our-economy-will-not-result-directly-coronavirus-measures">at least a 0.4% decline in GDP</a> in the first quarter of 2020. </p>
<p>The above is a conservative estimate. It assumes that the coronavirus outbreak is contained quickly and will not affect the second quarter of the year. The SARS outbreak took about <a href="https://en.wikipedia.org/wiki/Timeline_of_the_SARS_outbreak">eight months to contain</a>, so it is reasonable to assume that travel and education exports from New Zealand may veer off their normal trajectory at least until mid-2020.</p>
<p>While the indirect impact of the coronavirus on New Zealand consumers remains unclear, the direction is likely to be negative. One obvious channel is the disruptions to the supply chains of major consumer goods globally because of China’s role as a manufacturing hub. </p>
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<p>There are already reports of <a href="https://www.thedrive.com/news/32022/toyota-tesla-other-automakers-shut-down-factories-over-coronavirus">factories closing in China</a> or facing temporary shutdowns in high-tech manufacturing, including cars, semiconductors and telecommunications. For example, Qualcomm expects negative impacts on demand and supply in the <a href="https://edition.cnn.com/2020/02/05/tech/qualcomm-earnings-guidance-coronavirus/index.html">mobile phone industry</a>. These will raise production costs when made in China, and therefore prices for the global consumer. </p>
<h2>A more open economy can come with costs</h2>
<p>It is more difficult to quantify indirect effects on New Zealand’s trade with other trading partners where coronavirus cases have been confirmed, and among those who also share a close economic relationship with both New Zealand and China. Australia, the US and Japan all fit into this category. </p>
<p>In the short term, New Zealand may receive fewer tourists from these countries, including both air and <a href="https://edition.cnn.com/2020/02/05/asia/coronavirus-cruise-quarantines-intl-hnk/index.html">sea travel</a>. Business-related travel disruptions are also likely to have an indirect negative impact on investment decisions. The longer the uncertainty around the outbreak remains, the greater the downward spiral of investor confidence.</p>
<p>Finally, New Zealand has to prepare for the likelihood of a confirmed case. If that happens, there will be additional costs from managing the uncertainties for domestic businesses. As a small open economy, New Zealand has enjoyed the benefits of globalisation, but now it must face the negative costs it can also bring.</p><img src="https://counter.theconversation.com/content/131204/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rahul Sen is a Senior Lecturer in Economics at AUT Business School specializing in International Economics. The views expressed here are personal.</span></em></p>New Zealand has become more economically dependent on China than many nations in the past generation, with a 12-fold jump in trade in commercial services.Rahul Sen, Senior Lecturer, School of Economics, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.