June 12, 2020
A social currency could express how business builds new connections with customers and society in the post Covid-19 era.
The pandemic forced us to focus on local and more basic activities. Working from home, making sure you and those around you stay healthy and accepting restrictions on mobility for the greater good, have become the ‘next normal’. Boot camps in parks became an alternative for the gym and a small trip to the countryside has replaced air travel. Access to nature, parks in cities and clean air became precious goods that many of us will want to keep. With these changes, new values are being assigned to things that matter most.
In our book “Flex or Fail – the future of work and pay”, we described how disruptions in technology and culture affect our expectations around work and pay, and what actions people and organisations need to take to stay afloat. Let’s take a look at where jobs have disappeared and what has replaced them.
How work has changed
Although the first round of lay-offs mostly touched people in the flexible layer, the coming tsunami of lay-offs will affect those working on fixed contracts. Most companies are now making long-term adjustments to their cost-structure. Business models and product/service designs are being evaluated with the aim to align them with new customer behaviours.
We estimate that one in five jobs could be lost in the aftermath of Covid-19, with wide variations between industry sectors. Once governmental subsidy programs wear off, we expect companies will adjust the size of their employee-base to the next normal. Demand for products and services will be different based on changed customer behaviour. New cultural values also means new monetary value is being assigned to existing products and services. Since flying and travel are severely restricted it is logical that airlines and aircraft builders are hit especially hard. You can witness the onslaught of job-loss in the table below.
|Airlines / aircraft Sector||Jobs lost||Total # of Employees||% jobs lost|
|Boeing (aiming for 10% job reduction)||12,000||161,000||7%|
|Easyjet (aiming for 30% job reduction)||3,000||15,000||20%|
|American Airlines (expected jobcuts)||35,000||129,000||27%|
|KLM / Air France (expected jobcuts)||4,000||35,000||11%|
|Average first round job-loss total||140,000||577,000||24%|
All numbers in this article have been reported by companies to financial media such as Bloomberg, The Economist, Financiele Dagblad and The Guardian in 2020.
The baseline scenario for most businesses seems to be that revenue will be under pressure for a number of years and that profits will fall unless costs are brought under control. In order to stay competitive, automation will be brought forward. However, companies need to be aware that customers will look at brands through the lens of responsible behaviour. How you treat workers (on fixed or flex contracts), what your stance is on discrimination (#BLM), the dividend policy and how much your CEO is paid, add to this what CO2 emission levels your business has, all of which will influence the customers’ buying decision.
A large number of carbuilders have announced job cuts and some accepted governmental support in return for a strategic shift towards electric cars and lower emissions. The shock of the pandemic has made it clear that lower emissions and a positive contribution to climate change are high on the list.
|Automobile Sector||Jobs lost||Total # of Employees||% jobs lost|
|Average first round job-loss total||56,200||546,500||10%|
The Oil & Gas sector was caught in a perfect storm whereby oversupply and a sudden drop in demand caused lower and in some cases even negative prices. Clear blue skies have delighted most people and the absence of jet-exhaust stripes in the air reminded most of us of a world we once had. The need to travel to work or holiday destinations disappeared for a large part. As a result, people may become more selective about mobility.
A greener, cleaner world where we only use carbon-based fuels when absolutely no other alternative is available might be conceivable. If this comes true, the Oil & Gas Sector needs to radically adjust. Zero-emission mission statements can be expected from more companies in this sector and investments in wind, solar and bio-fuels could be stepped up.
|Oil & Gas Sector||Estimated Job disappearance||Total # of Employees||% jobs lost|
|Shell (voluntary redundancies)||8,200||82,000||10%|
|Chevron (voluntary redundancies)||5,200||52,000||10%|
|Halliburton (voluntary redundancies)||5,500||55,000||10%|
|Average first round job-loss total||29,200||266,000||11%|
How pay has changed
Lost jobs increase inequality. The knee-jerk reaction of most businesses when Covid-19 hit was to lay-off low-skilled flex workers. This explains the instant peak of unemployment that we have seen in March and April in the US. These people often only have a single source of income and are extremely vulnerable in terms of income and health.
Governments around the world have used financial support packages to save jobs. This has cost an unfathomable amount of money and current economic thinking is challenged to come up with new solutions for unseen levels of national debt, inflation and interest rates.
For governments, job-loss reduces the number of people which can be taxed based on their income. Most governments depend to a large degree on ‘tax on labor’ and are addicted to this source of funding. It is likely that governments will seek means to raise additional taxes on profit, wealth and dividends. You can expect measures that target companies and high net-worth individuals, and since the sympathy of the electorate is not with these groups, politicians might move fast to impose new ways to redistribute wealth as well as pay down debt levels.
How expectations of life and equality have changed
The call for a more just and equal economic system is growing louder by the day. The current growth- and market driven mechanics are thought to be responsible for the undesirable outcomes such as climate change, income inequality, risks to health and discrimination. Shareholder capitalism is built on consumption, growth, debt, globalisation and carbon-based energy. In this system, money or profits equal professional and personal success and these deliver status, influence and power to the winners. But what about the losers?
The past year already showed social unrest in places ranging from Quito (Ecuador) to Santiago (Chile) and Hong Kong (China). Institutionalised discrimination practices have been exposed by the murder of George Floyd in Minneapolis (USA), followed up by mass demonstrations in cities around the world. The Covid-19 pandemic is not reducing the income or health inequality between people, but is instead creating a bigger gap. There are groups within society that simply have had enough. At the same time, economic policies and political leadership are intertwined and have created a corrupt loop. One could argue that the world’s political systems need an update as well, since strong-man leadership has not delivered health-protection for the world’s population.
Covid-19 has shown that the globally connected economy is not able to protect itself well against a virus, and a second wave or a new future pandemic is thought to be likely by some. What new system will take the place of shareholder capitalism? It is likely that values such as equality, inclusion, the right-to-work, zero emissions, affordable education, access to healthcare and recognition of a positive contribution to society will become part of the blueprint. What should be the role of business to deliver ‘good’?
Is it time for a new Social Currency?
The importance to society of healthcare workers, doctors, teachers, garbagemen, delivery couriers and social workers (to name just a few of the essential jobs) became even more clear during the pandemic. People who look after grandparents or shop for neighbours have delivered value to our communities.
Traditionally, these activities are seen as volunteering work and are not rewarded. In a world where jobs are becoming scarce, it would be wise to deliver monetary recognition to these unpaid tasks. Although universal basic income experiments have shown there is little impact on new job creation, those who participated in these programs did report a higher level of wellbeing. Maybe the time has come to redefine work as we know it, and recognise new categories of activities such as taking care of each other.
Time to get out of your bubble
The world needs new and innovative products and services. The fact that most workers are spending more time at home means they experience everyday streetlife in their communities. That is a wonderful opportunity for your business, because through your employees you are present where your corporate reputation is being created. Visiting the supermarket at 11.00 in the morning will make it clear there are socially vulnerable people around us. We don’t get to meet these people in the office environment, but they count. So what could your business do for them? Which core competency of your company can be leveraged to make a positive change?
If companies want to re-imagine their future, society is an excellent ‘living-lab’ for testing out new ideas. Suppose you allow one day per week for your employees to set-up local teams with diverse residents from outside the company bubble to start experimenting with activities that contribute in a positive way to society as a whole.
There is the example of a garden maintenance company, which ‘blitzed’ together 20 people to clean up the neglected garden of a care-home for the elderly which was reopening for visitors. Experiments like this reduce the detachment of business from society. The phrase “the poor is another country” is a cynical expression of the stratification which is taking place – we could simply use the fact that working from our neighbourhoods is the next normal, and use this as a tool to break down the company walls.
We think those activities could be rewarded with a new kind of money – one we would coin as ”social currency” in this article. Look upon it as a social salary, expressed in a technologically enabled currency. Could this be a use case for blockchain and tokens? We will further explore this topic in our next article, which you can find on our blog at www.flexorfail.org and on our linkedin accounts.
Humanity excels at being able to adapt and one could say we are the best equipped species to adjust to the next normal. The world has changed around us and there is the need and opportunity to redefine your business. Now is the time to show that we can come up with a better version of ourselves and our organisations.
Dr Tony Felton, Robby Mol, Professor Arturo Bris
Please contact us at email@example.com if you wish to be amongst a core group of innovative companies that are pioneers in the future of work and pay.