‘Corona financial crises’ explained – Workforce mobility impact
Opinion, Personal Finance, Strategy

A financial crisis, according to the Oxford dictionary of economics is the collapse or potential collapse of a financial institution that threatens the stability of the financial system. The key feature is systemic meaning the collapse of one major Government, financial or business institution collapse threatens other institutions. A financial crisis has similar characteristics almost every time, the points we should focus on are unemployment (low productivity), inflation, and interest rates (liquidity). Here’s why the coronavirus has staged a global financial crisis. In this brief which shall talk about unemployment first concerning productivity

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Unemployment & Productivity

The numbers tell it all. With high unemployment, the only way to contain or control the virus is to avoid human interaction and contact as much as possible. This means people are staying home and avoiding unnecessary movements. So tourism and entertainment industries have been hit hard following the closure of major hotels, night clubs, restaurants, sports, and concerts. This means people in these industries aren’t working (producing goods and services).

Yes, people who have employment contracts provided they work in an environment with good labour laws are still getting paid to work at home, while others are getting paid to stay at home and do nothing. But still, this poses new challenges especially if your jobs required you to report at the office or do physical work, now you are asked to work online? Job mobility questions arise which may inadvertently lead to a huge drop in productivity for jobs that are immobile.

The informal employment sector has been hit harder. Think of those people who work on-demand on short, informal and roughly verbal agreements based on the business’s performance. Unfortunately, these have been sent packing because the business models are motivated by demand and profit. Massive layoffs are happening all over the world and this may slowly creep into Zambia.

The modern-day global economy now boasts of a nexus of transactions which connects trade from Africa to Asia, The Americas to Europe, therefore the disruption in cash flows and goods and services has slowly spread across the globe. We have seen massive stimulus packages from the United States and China gearing up. This has the hallmarks of what can be described as the era of the Corona Financial Crisis.

Let’s get prepared. We as humans always hope something as terrible as a financial crisis or disease to never happen again (how naïve). Just in the same way that pandemics in the past have ravaged the working economy, the same is happening today. However, from the financial crisis point of view, call it the dot com bubble or the mortgage crisis we have been there. One thing is for certain, we as humans together will overcome and adapt as always.

Joshua Mwangu

Now is the time that astute leadership in organizations must step up. The old normal of business as usual is thing of the past. It is time for leadership in the era of business unusual that can inspire a disoriented workforce that is desperately searching for answers to how they can continue to contribute to productivity in the time of Corona. A leadership that can address a workforce whose fears of being replaced by automation can be comforted.

Look out for the next brief on inflation.

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