The Taplow firms have been active throughout the pandemic, this is the seventh in our Business Updates series from our partners around the world. The situation is showing clear signs of recovery although nuances exist in every country and region.
Key Findings:
Business Leaders: Have multi strategies in place dealing with the pandemic, near future and long-term strategies whilst many are dealing with local, regional, and international regulations and economies.
Employees: Uncertainty has heightened employees mental health issues, going back to work does not ease those worries employees feel, and clear and regular communication is required from employers to minimise employee welfare issues.
Companies:Are experiencing differing effects, there is a dichotomy of pandemic effects even within companies in the same market sectors.
AFRICA:
South Africa:
• The coronavirus pandemic is accelerating in Africa, the World Health Organization (WHO) says.
• The WHO's Africa regional director Matshidiso Moeti said it was spreading beyond capital cities and that a lack of tests and other supplies was hampering responses.
• South Africa is experiencing difficulties controlling the pandemic with over 420,000 cases and may head back into a national lockdown.
ASIA:
Australia:
• Recent reporting internationally has included Australia with an increase in community transmission of COVID-19. The situation is that in six (6) of the eight (8) Australian states and territories there are no cases of transmission and there have not been for many weeks and months.
• The Australian international border remains closed and many internal state borders remain closed. The Australian circumstances are not unique. The Australian Strategy is suppression of COVID-19 not an elimination strategy. It is targeted at reducing community transmission while international borders are closed. There are four (4) COVID-19 vaccines in human trials in Australia.
• The economic update this week advised the Australian Government has committed 14.6% of GDP in economic support. Unemployment is likely to rise to 9.25% in the December quarter 2020. The effective unemployment rate however is falling, and this is a positive sign. Youth unemployment is at its highest rate in 20years. The Job Keeper payment due to expire at the end of September 2020 has been extended with revised conditions.
• The equities market has continued to recover to pre COVID-19 levels.
India:
• India has further upped the ante against China by restricting bidders from countries with which it shares land border from participating in tenders for government procurement without approval from competent authorities on the ground of defence and national security.
• According to HSBC's Navigator report, almost half (46 percent) of Indian businesses covered under a survey felt 'very strong’ impacted under the Covid-19 impact, yet 54% said they were well prepared as they possibly be.
• The survey was conducted on more than 2,600 companies across 14 global markets, including 200 firms in India. Despite the high level of impact faced by Indian businesses, more than a quarter (29%) of those surveyed said they are operating as normal, and this level was second highest across all markets behind Mainland China.
• In Indian automotive industry- 2Wheeler demand has reached July 2019 levels, 4wheeler demand is yet to pick up.
• Mukesh Ambani’s Reliance breaks into top 50 most valued firms globally, ranks 48- Globally, Saudi Aramco is the company with the highest market cap of USD 1.7 trillion, followed by Apple, Microsoft, Amazon, and Alphabet.
• Amazon to Offer Car, Two-Wheeler Insurance in India- Amazon's service will compete with local rivals including Paytm and insurance aggregator Policybazar, which is backed by SoftBank.
• Intel to acquire 0.39% stake in Jio Platforms for Rs 1,895 CR; will be 12th firm to invest in Reliance Industries' digital arm. The Intel deal values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.
• E-commerce major Flipkart Group has acquired 100% stake in Walmart India Pvt Ltd, which operates the Best Price cash-and-carry business, and has launched Flipkart Wholesale, a new digital marketplace.: The announcement comes a week after Flipkart said that it had raised $1.2 billion in funding from a Walmart-led investor group.
Singapore:
• Singapore announces new cabinet effective on Monday 27 July. Mr Lee continues as Prime Minister, saying that he intends to see Singapore through the COVID-19 pandemic as its leader and that the timeline for succession depends on the situation. Mr Lee said the new Cabinet seeks to balance continuity, exposure, and renewal, and be a team that leads Singapore through the current public health and economic crisis and into the future.
• The layoffs at Resort World Sentosa last week has shone the spotlight on the rise in retrenchments amid the COVID-19 pandemic. Job losses arising from economic contraction is expected to affect middle-aged and older Singapore workers more adversely. They are usually the first to be retrenched during an economic crisis. Once they lose their jobs, they will likely have difficulty finding another. Today, six in 10 of the Singaporean workforces are 40 years or older. Despite an ageing workforce, Singapore’s productivity has increased by about 30 per cent over the past decade. This has been attributed to Singapore’s march towards automation and digitalisation efforts.
• The setting up of the National Jobs Council, plus the various schemes such as SG United Jobs and Skills Package, and Skills Future are all steps in the right direction to help the unemployed find jobs and upskill. The Fair Consideration Framework by Singapore’s Ministry of Manpower for employers to avoid discriminatory hiring practices also signals the Government’s stance on ageism. Five employers were recently penalised in March for age discrimination in hiring.
New Zealand:
• The New Zealand economy faces up to two years of consolidation following the COVID-19 pandemic, according to latest economic forecasts.
• There is a widespread view that New Zealand’s borders are likely to be effectively closed for the next 12 months which will see the disappearance of international tourism. This alone will knock 5.2% off GDP according to economists.
• Domestic travel continues to lift with the national airline back to 70% of the domestic routes it was flying pre Covid1-19. Economists have stated that even if domestic travel restrictions were lifted and Kiwis spent all their overseas holiday money in New Zealand, it would not make up for half of the GDP drop.
• It has been reported that 1.5m workers, or 57% of the country’s workforce, are being supported by the government’s wage subsidy scheme which will come to an end on 1st September 2020. This highlights the pressure businesses are under. The sudden loss of key sectors, along with lower spending by firms and households, could potentially have a devastating effect on businesses.
• The wage subsidy will limit the immediate rise in the unemployment rate, but a leading economist forecasts that it will still threaten double digits. It will take considerable time for these workers and other resources to be redeployed into other businesses, particularly in an environment where firms will be extremely cautious about hiring.
EUROPE:
The EU has agreed a 1€ Trillion recovery fund for its 26 member states, a mixture of loans and grants will be offered to European Countries. This is an important step for the EU as it is the first time the EU has sought to borrow as a bloc. Intensive negotiations resulted in an agreement where countries would not have to start paying back loans until 2028, indeed that is the time the EU will start to work on a process for repayments, many are predicting these loans may not be paid for a decade or longer or never at all.
France:
• Hiring declarations have been on the decline since April, in the face of the Covid-19 crisis. But statistics also show that the situation began to improve between May and the end of June.
• In detail, this "historic" drop in recruitment concerns three major sectors in particular: services (-45.2% year-on-year), industry (-40.8%) and construction (-29.3%). In addition, the decline in recruitment declarations applies to all regions of France. Even though Île-de-France (- 50.6 %), Corsica (- 49.8 %) and Alsace (- 47.0 %) show the most marked falls. There has been a clear improvement in the situation since the end of the lockdown and in the last weeks of the second quarter. Thus, in June 2020, the level of hiring of more than one month was only 9% lower than a year ago, compared to - 49.5% in May and - 72.2% last April.
• While economists fear an explosion in unemployment, and the Banque de France is expecting the loss of a million jobs in 2020, lay-offs are already multiplying. Despite the generalization of short-time working during the lockdown period and transformation into a long-term partial activity, lay-offs are multiplying in particular in construction, trade and automobile repair, manufacturing industry and accommodation and catering, according to the Ministry of Labour.
• Two months after the end of the lockdown on 11 May, the French economy has recovered sharply. In June, activity closed 3/5 of the gap that separated it, at the bottom of the lockdown, from its pre-crisis level. Household consumption is now only 3 percentage points from its normal level. While the first steps of the recovery have been climbing quickly since May, it is the last ones that are likely to be the most difficult. Thus, fears "remain strong" about a possible second epidemic wave in France, but also about world trade, the epidemic remains highly active in many countries.
• The French economy should rebound in the second half of the year. However, industrial companies' order books are still thin, which is not a good sign for an immediate return to normal. France's GDP is expected to fall by 9% in 2020.
Sweden:
• During the spring, several of our customers paused their recruitments due to Covid-19, but in May and June we are happy that the vast majority have been started up again and our customers are looking brighter in the autumn.
• We can see that covid-19 has made several interesting and successful candidates now more open to listening and accepting new challenges in the business world.
• Interim is hot, when there is great uncertainty among companies, it is easier and faster to bring in a leader or specialist on Interim assignments.
• Sweden has not had the decline in industry that can be seen in big part of Europe. The number of new customers has given us the confidence before the summer to start up new projects, which we are incredibly grateful and proud of. The capacity is high internally with us and we work hard to find the perfect match.
UK:
• The UK government announced a reduction to the pandemic risk, this now sees gyms, leisure centres and many indoor activities reopen on the 25th July.
• Retail sector has seen turnover return in June 2020 to pre lockdown levels.
• Separately, a closely watched survey showed that activity in the UK's services and manufacturing sectors returned to growth last month.
• The UK government committed to introducing “local lockdowns” where Covid infection spikes are seen, the government now is giving local authorities the data to make informed decisions on the pandemic.
AMERICAS:
The Americas have seen a surge of Covid-19 cases, the worry is that this is occurring in the Summer months and will exacerbate healthcare’s ability to deal with cases as the flu season approaches. Canada is the only country seeing a reduction in cases and significant amount of lockdown rules being eased.
Brazil:
• According to CEPAL, the UN Economic Commission for Latin America and the Caribbean, pre-pandemic 2020 Latin America economy forecast had shown a modest 1.3% growth for the region, versus current -9.1% estimate. 18 million jobs will have disappeared in the area because of the pandemic. Prior to Covid-19, Argentina’s economy had been severely affected and saw significant decrease in its exports to China and to other countries.
• Brazil continues to see an important recovery in the consumer/retail and essential services sectors, having achieved a 14% growth from April 2020 to the present, although that month is considered a low basis. Those sectors are still 7% below February 2019. Other economic sectors performing above expectations are the agribusiness – current grain super crop records, which represents about 35% of total economy, and the real estate industry in the lower level niches. Interest rates are now in better shape. Brazil expects to see a better second semester this year.
• Following last year’s new Social Security Law in place, Tax reform is now on the go; it is expected that discussions in the Congress will start in the third quarter of this year.
• Although Covid-19 still remain active in higher levels than predicted, the Northern and Northeastern areas of the country seem to be well under control now; States of São Paulo and Rio seem to have reached a still high plateau, but disease seem to be under control; the worse areas now are the South and Central states and the Interior of the State of São Paulo. The recovery plans for the Greater São Paulo and Greater Rio de Janeiro areas are being gradually executed. Essentially all states in Brazil are enforcing the use of face masks and other pertinent precaution measures, now determined by law. We reached the second millionth infected case and about 77 thousand deaths in the country. Fortunately, there are no panic or critical/hospitality collapsing situations.
USA:
• Unemployment, Pandemic and Political strife continue to dominate the news in the Americas. Medical experts insist we are not having a second wave of the virus, but the first wave is still uncontained. Continued increases in virus infections are occurring in several state who have tried “re-opening” and have been mixed with some states not having experienced much in the way of the early stage (Arizona) and others pounded by the first wave (California).
. Business has adjusted to the new normal of working from home and a surprising number of firms have reported that they will make no effort to fully re-open until next year – prepared for less than 100% of employees willing or able to return. We are not aware of any clients who have experienced enough personnel losses due to the pandemic to put their business at risk although we know of smaller firms who are contemplating how to proceed due to staff losses to the virus.