COVID Blog 5:
We
are in a deep crisis. For many of us it is a déjà vu back to 2008.
As with 12 years ago we were initially shocked and bewildered by what
was happening to the world: shocked by its scale and bewildered
because its causes and consequences were difficult to fathom. How to
deal with that crisis was not clear and individual countries pursued
different policies in spite of global efforts to coordinate
solutions.
The
current global shock has consequences whose enormity is still waiting
to be fully revealed. What is different is that the current crisis is
not only financial, though the enormity of the financial implications
is becoming more evident. It is also of course a crisis of physical
and mental health. We are suffering new anxieties about infection,
hospitalisation, and death; also new restrictions and wariness of
human contact, even when we are allowed out.
In
2008 what was being done about the crisis was confined to financial
measures and directly involved only the banks. Now daily coronavirus
reports, however infused with ‘we are doing the best we can’
statements, give us a detailed window onto government policy in many
areas. Interestingly politicians, who only a few years ago were
saying we have had enough of experts, are now diverting awkward
questions by claiming to be following expert advice and with
representatives of various health professions standing side to side
with government ministers during updates.
Willingness
to open state coffers is stronger and money has been distributed far
more widely. However it has still been focused on areas which are
most obvious to policy-makers: save the NHS, support retail and
hospitality industries, ensure key (large) companies do not go under
to save jobs. This has left non-standard organisations; professional
bodies and those in the gig economy, with little substantive support.
In
2008 the crisis prompted professional bodies to introduce initiatives
they had been contemplating for some time, but advanced by the
crisis. PARN ran an Ask the Network Survey in October 2008 exploring
the effects of the crisis and charting supporting strategies being
pursued.
Of
the 20 respondents only three reported that the recession was
affecting them in terms of membership numbers, though some were
anticipating problems ahead. One was budgeting a 5% decrease in
renewals for 2009. Whilst two expected that the recession would boost
their membership because the crisis was expected to make
professionals more competitive in the job market. Echoes perhaps of
what is happening today.
On
the other hand 13 respondents reported effects of the 2008 crisis on
other income sources; mainly falling value of their investment
portfolio, advertising revenues, income from training and conference
attendance due, they thought, from lack of employer sponsorship of
individual member conference fees. The situation today seems to be
worse in terms of both advertising and sponsorship. However the
reduction in investment portfolio returns has not been so marked, in
part because interest rates have simply not recovered since the 2008
crisis.
Strategies
to deal with the 2008 crisis led to more conservative budgeting and
caution with investments, changing banks to get better deals,
reducing staff benefits and changing from a final salary pension
scheme to a money-purchase pension scheme.
The
majority (15) were providing additional support to members. The list
was extensive suggesting no agreed single strategy. The policy
variations included:
-
Creating of an economic crisis working party/Economic impact
assessment group to provide advice/strategies (one organisation has
created a “business toolkit”
-
Encouraging members to pursue professional qualifications, to seek
full Chartered registration or to upgrade to the professional grades
of membership
-
Exporting qualifications overseas
-
Putting on more CPD events
-
Building links with recruitment firms
-
Offering a recruitment service (help with CVS, interview technique
etc) for members seeking employment
-
Offering staged payments for membership renewals
-
Waiving membership renewal fees for 2009 for members made redundant
-
Offering members who have been made redundant the opportunity to
upskill in other market sectors free of charge
-
Providing business advice on how to survive a recession for members
who are in private practice
-
Developing a training programme to assist members in diversifying
their skill
These
policies were advanced by responders in addition to support for the
income base, ranging from general cost cutting measures and using
reserves, to recruitment freezes and forecasting a downturn in
volunteer input, as well as introducing new income streams.
Many
of the responses to the 2008 recession became incorporated into
normal practice. It seems almost certain that this strategy will also
follow the COVID-19 crisis.
The
fundamental difference is the likely change to online working and the
likely de-investment in physical office space and own provision of
training and conference venues.
Government
has now been spending great amounts on individuals and individual
firms. This support has come to be applied to professional bodies,
but only after a lag and not yet matching the level of support for
other sectors, particularly concerning business rates relief.
The
consequent level of government debt this second time has occurred on
top of the 2008 efforts, leading to likely greater national debt and
potentially greater international financial instability following
this COVID crisis. Policies of governments to reduce debt in the
coming year may well lead to even greater political disruption than
in the aftermath of the 2008 crisis.
Andy
Friedman
22 June 2020