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

 

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