Effects of COVID-19: Cities
I’m watching and learning from global reaction to the spread of the COVID-19 pandemic. There’s no doubt that some countries have handled it better than others. Some have also had some “nasty surprises” …
You either love or hate cities. Some people couldn’t live anywhere else except, say, London. Others would far rather live in the countryside. Economists see cities as huge contributors to national budgets and economies. They’re where people can be close to other people with skills, ideas, finance, all the tools necessary to start a business, finance it, trade one’s goods or services abroad and seek professional advice. This is where people learn to live in a modern, open society and where citizens are created (think of it: “citizen” is a combination of “denizen” and “city”).
Cities survive. For example, in the more recent past they have survived a dotcom crash, a financial crisis, terrorist attacks and political populism. London alone has survived the Bubonic Plague, Great Fire, the “blitz” of WWII and terror attacks. Now cities face a massive challenge to what they thrive on - their busy offices, streets, restaurants and theatres. These are quiet or closed - a loss for urban consumers and a catastrophe for the many people who sell services there. Even in London during the “blitz”, life carried on. With COVID-19, businesses are closed, and people are obliged to self-isolate (although restrictions are now being loosened).
The initial effects will be a weakening in property markets (both commercial and residential) as jobs move out of cities, even if only part-time. As it is, we see more cases of working from home forced on us by self-isolation rules; both businesses and individuals are finding that, depending on the job one has, a lot of the work can actually be done from home.
Any business relying on people to come in (e.g. high-street shops, cafés) will suffer or even go under as they adjust. Indeed, the likes of H&M have refused to pay rent due to the fall in office workers, tourists and students coming through their doors.
Due to plummeting activity, cities will suffer financially as income from the likes of taxes on hotels, restaurants, businesses, transport vanishes.
COVID-19 has hit hardest the world’s most exciting cities - the ones we see on the sides of souvenir shopping bags. These also contain high concentrations of infections. As an example, New York, with 3% of America’s population, has seen 19% of deaths attributable to the disease. One in four deaths in France occurred in Paris and its region. Even as lockdowns lift, international travel restrictions and fear of infection will linger: London is only 15% as busy as normal.
The virus has attacked the very essence of what makes cities vibrant and successful. They prosper not necessarily because of what they do for businesses, but because they bring together talented people bursting with ideas. Americans in cities with more than 1m people are 50% more productive than those elsewhere.
Cities remain invaluable as places where people can build networks and learn how to collaborate. The workers now logging into Zoom meetings from commuter towns and country cottages can do their jobs because they formed relationships and absorbed corporate cultures in corporate offices. Spiritually, they’re still in the city, even if they aren’t physically. Even a socially distanced, half-full office is essential for teaching new hires how a company works. If offices facilitate chit-chat and gossip, they are functioning well. Answering emails can be done from home.
Cities need to look to how they function after COVID-19. They are struggling with how to move millions of people when nobody wants to cram into crowded buses and trains. Some are looking at expanding their network of bike paths and have erected plastic barriers to enforce social distancing. This is encouraging. But cities that fear commuters will drop trains and buses for private cars, clogging the roads, would do even better to manage demand by pricing driving and parking more highly (as London is doing now).
Cities will need the independence to “manage their own show”. An example is Seoul’s virus-busting response organised mainly by the metropolitan government and by local officials. London’s mayor who begged for the government to insist on face masks on public transport saw them agree too late.
The best-placed to manage cities are the cities themselves. They should be allowed to impose their own measures on the understanding that, if they get it wrong, national government will intervene.
I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Crisis Management, Leadership, Social, Strategy
Effects of COVID-19: Economic Fallout
I’m watching and learning from global reaction to the spread of the COVID-19 pandemic. There’s no doubt that some countries have handled it better than others. Some have also had some “nasty surprises” …
The time for “blame games” and recriminations will come later; let’s first learn from the different types of “fallout” we’ve seen. My first article was on “Social Fallout”. After that I wrote about “Supply Chain Fallout”. Travel & Tourism came next, followed by a closer look at the Garment Industry. Then Leadership & Administration, followed by IT and Security implications. Academic fallout came next, so this week is the turn of Economic fallout.
There is little doubt that the world economy is experiencing a shock that few anticipated in terms of suddenness and severity. About one in five people in the United States have lost working hours or jobs. No country has been totally immune. Some reacted faster than others and have recovered faster; others didn’t see the train coming until it hit them. Some, even if they had been able to react, couldn’t.
We’ve seen supplies of raw materials dry up due to a combination of problems in supplier countries and/or availability of cargo space on ships, aircraft and road vehicles as lockdown measures were implemented, as well as falling demand due to the lockdowns and social distancing rules imposed by many governments. Manufacturing and any other activity that involved dealing with people in close proximity was a risk. China first started seeing this as its factories came back online.
Following from this, naturally, any people-centred businesses (restaurants, tourist sites, movie theatres, stores) were hard-hit. Many may go out of business.
Landlords of buildings of affected clients started giving discounts on rent or (in the case of H&M + Adidas) saw tenants simply refuse to pay rent.
Inequalities widened, with daily workers being hardest hit by workplace closures meaning furloughs or even unemployment. Overseas workers remittances dried up as workers either didn’t work due to social distancing or didn’t head overseas, as the Philippines found out. In the case of Singapore, a massive increase in cases amongst its huge foreign labour force caused significant embarrassment for the government.
Many businesses and households have limited savings, rendering them vulnerable to a long shock. Governments found that they needed to rescue small, medium AND large businesses, or risk having no economy to restart when things finally improved. They may well be faced with continuing mass joblessness and the corresponding social costs. You can close an economy for a week, maybe two, but up to three months is asking for trouble.
Consumer spending amounts to roughly two-thirds of economic activity worldwide. However, households, judging by what has already happened, may remain risk averse and cautious in their spending. With this combination of worry and reluctance to spend, expansion will be limited.
Industry will be weaker due to significant numbers of bankruptcies (some declared, I suspect, as a protective measure against creditors?) and there will be a dearth of investment and innovation.
The global supply chains that dominated the world will be unpicked as people realise that these were partly the cause of a lack of protective equipment and vaccines. The manufacture of “vital” and “strategic” goods will probably be re-onshored or fragmented, even if this means a loss in economies of scale and higher prices.
The use of data and IT services will grow. The Philippines is seeing increased interest in “online only” banking and payment services. Coupled with a surge in delivery services and e-commerce, the traditional “High Street” and out-of-town hypermarkets will see drastic changes.
Some predict that a consolidation of economic power into large corporations will happen. This may be the case if one is looking at economies of scale, but the downside is that they too will be subject to global lockdowns unless they can be split into smaller, independent “federal” units that vertically integrate R&D, production and delivery.
What is likely is that all of these will move faster and go further than predicted before.
Global liquidity will suffer with the drying-up of markets. Countries that can’t sell their goods (China) can’t then invest back overseas or in the local economy. Jobs won’t be created as fast in certain industries (although new ones may take their place). Interest rates may rise to attract investment, increasing the final cost of goods to consumers.
In all, the global economy will change, and things will be very different. Our question is, how do we as businesses respond?
I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Crisis Management, Productivity, Social, Strategy
Effects of COVID-19: Academic Fallout
I’m watching and learning from global reaction to the spread of the COVID-19 pandemic. There’s no doubt that some countries have handled it better than others. Some have also had some “nasty surprises” …
For any parent and teacher, the fallout in the academic world has been plain. We’ve seen:
- Schools closed
- Exams cancelled
- Remote teaching and learning instituted
- University admissions criteria overhauled
Working in the education industry myself, I’ve seen a remarkable resilience in younger people who don’t want to compromise their future and have been prepared to “do what it takes” to make sure they stay up to date with their education.
Teachers unfamiliar (or indeed uncomfortable with) the role of IT in teaching have suddenly found themselves obliged to master new techniques to prepare and deliver classes online. They have delivered.
As schools now start to open, they’ve had to adopt new social distancing measures, including smaller classes, wider separation of students, “one-way” systems and staggered arrival and departure times. Given the circumstances, I would say the industry has shown itself amazingly resilient and adaptable in extremely challenging conditions.
That there are challenges is undeniable. For example, to engage in remote teaching and learning depends on availability of bandwidth, familiarity of teachers with remote teaching devices and systems, along with student access to PCs and a robust internet service. We’ve heard stories of overloaded systems unable to cope.
Schools have lost at least one full term of face-to-face teaching. Vital exams such as A-Levels and International Baccalaureate have been cancelled, forcing university admissions teams to rely on teachers’ assessments of student ability to decide whether to grant a place at university.
Some universities are receiving students on campus for their start in October, others are waiting until January 2021. Teaching will be a mixture of face-to-face (for small groups such as tutorials where there may be up to three present) and remote (for large lectures).
Some courses don’t lend themselves well to remote teaching: medical studies, for example, rely on students being able to dissect cadavers to learn the intricacies of the human body and to accompany qualified doctors on hospital rounds.
One advantage of remote learning as it has been practiced is that, assuming that students do have access to reliable broadband internet services, the excuse for not attending school due to being “snowed in” or otherwise physically prevented from coming to school may no longer be irrelevant. Every cloud has a silver lining…
On the potential downside, will school closures and the resulting “online education” change the way we educate our children? How much will it depend on access to technology and knowledge of specialist educational websites. Does this risk breeding a new class of “educationally disadvantaged” children who have no access to technology?
Will the interactive aspect of working and socialising with others also be compromised? This teaches vital social and teamworking skills for life.
Another consideration is whether universities in the UK, US Canada and Australia – all favourite destinations of international students – will be able to continue attracting them in the same numbers as before. There’s money to be made in having international students on campus, not only from the considerably higher fees they pay, but also from ancillary services such as accommodation, dining and catering, shopping, leisure activities to name a few. Will more international students choose to study at home?
Will online courses and lectures hold the same “prestige”, or will students still prefer face-to-face teaching, especially at “ivy league” institutions? Will some universities cease to teach as a result?
How will the teaching profession as we know it change to meet this challenge?
I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.Labels: Crisis Management, Leadership, Strategy, Teamwork
