Paying business to keep employees on the job is the right move
Published:20 May 2020
CQUniversity Economist, Professor John Rolfe.
The Australian Government’s decision to pay businesses to keep employees on the job during COVID-19 will allow for a quick recovery, according to CQUniversity Economist, Professor John Rolfe.
“This was an important decision because what usually tends to happen during a recession – take the 1992-1993 recession for example – is that people get laid off and find it difficult to renter the workforce,” he said.
“Trying to maintain people in the workforce now will allow businesses to recover quickly and help to minimise the many personal impacts, that we would usually see during a recession period.”
Prof Rolfe said the problem with making stimulus predictions, during the COVID-19 epidemic, was that no-one really knew how long control measures would be in place.
“If this was something that went on for only one or two months, it’d be like a long Christmas holiday – it’d hurt, but people would come back to their jobs, and businesses would resume as normal,” he said.
“If we were to experience a lot of disruption, over the course of between six to 12 months, then I believe the impacts would be much deeper and be experienced for much longer.”
Prof Rolfe said a disruption like this would bring about sharp changes in the economy.
“Businesses that do well now, will be doing this differently in the future. This sort of crisis will force businesses to think of ways to interact with their consumer, other than through face-to-face contact,” he said.
“It’s called the burning bridge syndrome (innovating out of disruption). When you’re desperate to achieve something or make something work, you come up with novel solutions, but you don’t do it when times are good.
Prof Rolfe discusses the burning bridge syndrome and much more during the latest episode of CQUniversity Commentary, a new podcast series produced by CQUniversity.
“Right now, we’re also experiencing a lot of businesses trying to service consumers from a distance.
“As a result, I expect technology will become much more important in a lot of sectors. We’ve seen technology play its part in the tourism and mining sectors, but we haven’t seen much of it used within the health sector.
“Post COVID-19, we could potentially see a lot more automation being delivered throughout our health care system, similar to what we engage with and experience at a bank.”
Prof Rolfe said that given the current and future impacts on the tourism sector; many people would not be spending money on international travel.
“Instead, people will be trying to find other ways to still enjoy themselves. Smart businesses will need to find a niche to satisfy consumer demands for relaxation to snap up some of those tourism dollars,” he said
Prof Rolfe also said that although we were experiencing tough times, the Australian economy was strong.
“It’s important to remember that two-thirds of the Australian economy is ticking over as per normal, with COVID-19 impacting roughly 23 percent,” he said.
“While this is expensive and painful, it’s still a relatively short-term problem. In five to 10 years, we will look back and we’ll remember COVID-19, but it won’t be a huge scar on the landscape.”