BRUCE WHITFIELD’S LOCKDOWN DIARY: The slow death of the gig economy
But here’s how you can help people restart their businesses with greater certainty
It’s Monday and SA has survived a second weekend of lockdown. By the time you read this, we will be past the halfway mark of the 21-day government-imposed attempt at curbing the spread of Covid-19. Sure, it’s likely to be extended, but let’s work with the timeframe we have.
As it is, we haven’t had quite enough proactive testing to be certain that we are on top of the health crisis. But what we do know is that its economic consequences will be dire, with a growing number of forecasters pointing to an annual contraction of about 5% of GDP for SA this year.
But don’t be fooled: this lockdown is not the cause. Rather, it’s just the arsenic-laced icing atop the toxic layer cake of a decade of economic mismanagement, rampant looting and a self-made fiscal cliff that has now led to a disturbing escalation of ratings downgrades, spelling serious long-term harm for the economy.
There will be bankruptcies aplenty emerging from this, and no real safety net for the casualties that stem from the fallout. More and more people are going to be forced to live by their wits and, if you are in the fortunate position to return to your normal life once freedom of movement is restored, you’ll be able to help them get back to theirs.
Not that long ago, the “gig economy” seemed like such a good idea. Everyone could be their own boss. Everyone could determine what they did and when, away from the shackles of the 9-to-5. They could wait tables at night, drive an Uber in the morning rush and run errands for busy executives up until lunchtime, then take a restorative afternoon nap before heading back to hustling tables. Sensibly, they were diversifying income streams, without the schlep of a full-time job.
Until it all stopped. Dead.
Assuming the government sticks to its timeline and lifts its embargo on human movement on Thursday April 16, all of us are going to have to figure out how we exit this period of isolation. There is no doubt that the virus will still be with us, and the threat of contagion will be present for months ahead – but at some point, countries are going to look at trade-offs.
Just as 17th-century physicist Sir Isaac Newton discovered when defining his laws of motion – that for every action there is an equal and opposite reaction – we have a similar rule of consequence in economics.
The difference in economics is that the consequence is sometimes disproportionate to the action. Economists want governments to maximise the benefit of every decision they take, with minimum downside risk. It is an art of trade-offs, rather than a science.
If you shut down a country for three weeks, you slow the spread of a pandemic to the extent that your health system might just be able to cope with a steady stream of patients that your actions seek to help. But that decision will have devastating economic consequences for millions of others whose incomes dry up in that time. There’s no certainty that the businesses they once worked for will reopen.
It means the businesses that came to a sudden stop on Friday March 27 will want to lift the shutters as soon as possible after the lockdown ends.
Ask what you can do for your country …
Actually, at this point, here’s how you can help them restart their businesses with greater certainty.
If, despite the lockdown, you still can’t do DIY and no number of YouTube videos improved your skills or if you simply need someone to fix the mess you made, then book a handyman. You will be giving them hope that there is light at the end of the tunnel. Unlike you, who might have an income through the lockdown and who could work from home courtesy of connectivity and job that doesn’t require you to be physically present at the office, people who do physical labour need to know that there is something waiting on the other side of the stoppage.
Contact your hairdresser, beautician, dentist or favourite restaurant and set up those appointments. It doesn’t mean you have to visit them all on April 17 – there’s going to be a lot to do once this is all over – but give your favourite suppliers the comfort of knowing that once there is an outbreak of normalcy, you will still be their customer.
It will give them the confidence to start operating again. It’ll give them the confidence to contact the people who worked for them, who might have been laid off, and invite them back. Sure, you might not be ready for someone to do your facial just yet – but you might have enough confidence in a hairdresser with a fresh pair of rubber gloves and a face mask giving you a quick trim. Or a nail technician restoring your pedicure. Or having someone bring you a cup of coffee while you read a newspaper. You’ll also leave a bigger tip than you used to, because they have had it far harder than you in recent weeks.
Some people have got very creative during the lockdown. Dineplan, which has some 2,000 restaurants on its booking engine, has launched a voucher service to help its customers find some cash flow during the lockdown. It’s a smart idea: you pay now, in return for a better deal in the future, and the cash you provide that business is like life-giving oxygen.
“When the government announced the lockdown measures in response to the Covid-19 pandemic, we saw first-hand the effect it had on our business, our restaurant clients, and the staff at those restaurants,” said Dineplan director Greg Whitfield (no relation to the writer).
“We wanted to use our expertise and resources to help our restaurant clients in any way that we could and decided a voucher platform would be the most effective solution to help our restaurants, and other small businesses, generate cash flow during the shutdown to hopefully survive.”
Of course, even if you buy a voucher, there is no guarantee that the business you choose to support will reopen. There is a significant amount of trust involved. But it’s a put option: an expression of faith, which gives them a higher chance of reopening than might otherwise have been the case.
And some bets are worth taking. The odds of getting a return are a whole lot higher than in that gambling game that keeps coming up on your phone as you seek distraction from the daily reality of Covid-19.