Coronavirus: An economic evolution, not revolution
The COVID-19 pandemic is the defining event for a generation and though its long-term effects remain uncertain, it is fair to say the ‘new normal’ we will return to will be significantly different to that we left.
However, change was afoot long before the pandemic altered the way companies think, assess risk and manage their workforce. COVID-19 is merely accelerating this. Entrepreneurs and investors are problem-solvers and they have already applied their ideas and skills to the aid of society and economic recovery.
Take the gig economy: in recent years, it has revolutionised how people live their lives – how we eat, travel and source handymen to help around the house (well, at least in the days before isolation).
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For gig workers, while they have reaped the benefits of on-demand work, they now face the prospect of volatile earnings, along with an absence of benefits, such as sick pay and paid annual leave.
In response to these systemic challenges, start-ups exist that provide gig workers with a means of topping up their pay on an interest rate free basis where they’ve earned less than their average salary. This solution, designed to meet the challenges of an expanding gig economy, has proven its worth in the current climate when many face a prolonged income uncertainty.
Similarly, much has been made of the challenges that small businesses will face and whether the government is doing enough to support them. However, many of these problems aren’t new. SMEs have long been vulnerable to disrupted cashflows, especially if they are not yet profit-making and larger corporations are frequently guilty of leaving smaller companies in the lurch by failing to pay invoices in a timely fashion.
Indeed, 88% of SMEs in Europe report frequent late payments. And once again, the pandemic has exacerbated this problem across all levels of the economy.
In response, AI-driven payment platforms are ensuring smaller suppliers are paid instantly. In response to coronavirus, some have made their technology available at zero margin for the next year to facilitate the support of providers.
Although clearly a reflection of the ongoing crisis, it represents an acceleration in the direction of travel unlikely to be reversed as we enter a recovery period.
An area where businesses first felt the effects of COVID-19 was the demand made by Prime Minister Boris Johnson that unless a key worker, all employees should work remotely.
While flexible working and working-from-home (WFH) culture has seen ever-increasing take-up in recent years, a 2019 survey by the Office of National Statistics found that less than 30% of the workforce had worked from home. Fast forward to lockdown, and in little over a month, WFH has gone from being a perk to a public health requirement – and now is fast becoming the ‘new normal’.
Yet until recently, establishing full-scale remote working arrangements would have seemed an unlikely development for many businesses offering support services. Take call centres, for example. Companies of all sizes and services are now facing unprecedented levels of inbound enquiries about their health, banking and online purchases; overnight the need to keep call centres operating at full capacity has skyrocketed.
To meet this demand, provide flexibility and, most importantly keep employees safe, on-demand providers are outsourcing and establishing remote call centres to support sales or customer service functions. They do this by allowing operators to answer calls from their own homes at a time which suits them.
Measures like these have become critical to ensure survival short-term, however, as before, it is again unlikely that we will see companies return to a higher-cost, less-flexible model, even when normality resumes.
What these examples all share is that they existed before the first reported case of COVID-19. While all are doing their bit to help workers and companies alike meet challenges in the short-term, they were created to tackle issues in existence long before life on lockdown.
A clear direction of travel existed before the pandemic. This crisis is accelerating the transition towards a new way of working for both employees and employers. Many entrepreneurs and investors saw this and are likely to benefit in the longer term, even if now their priorities are rightly focused on managing the fallout from coronavirus.
Dominic Perks is an entrepreneur and the CEO and Co-Founder of venture capital firm Hambro Perks