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11 August 2022

Opinion from Adrian Leopard & Co

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Redundancies set to follow as businesses decide how they will be able to operate post-lockdown
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Redundancies set to follow as businesses decide how they will be able to operate post-lockdown

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Time is passing – start your planning as soon as possible.

Those who think that the lockdown was merely a temporary blip with everything going back to normal after it is over are in for a shock. Indeed they should already be braced for an enormous change.

Economies and businesses take decades to create and build, a bit like good reputations which can then be smashed with one single incident. The coronavirus is not itself the “incident”, but the result of its effects is. For the UK and no doubt just about everywhere else, the result is a collapsing economy, the decimation of businesses the country over and a building realisation of just how bad this is going to be.

Now that the lockdown is gradually being unpicked, companies are having to put their minds to how they will restructure their businesses once they are able to operate again. It is a progressive process – businesses are opening at different times, depending on what they do, and they will have to try and work out the impossible, namely just how much business they will be able to conduct in a society which will have some elements of continuing lockdown for many months to come.

What is slowly becoming clear is that business just about everywhere is having to downsize. The trouble is, it is not going to be “just like it was” before the pandemic, even for the businesses which have kept going. Massive redundancies are now being anticipated – redundancies for people who were on furlough and who may justifiably have felt that their jobs would be there for them when they went back. Very sadly, these people are going to be very disappointed. With so many losing their jobs, spending power to restart the economy is going to be seriously depleted and of course with spending comes profit and without it, a business will have to find a way to curb its costs and generally speaking the easiest and most significant way is to reduce the wages bill. It is the usual vicious circle.

As we know, the areas which seem to be the hardest hit are aviation and hospitality, in fact tourism generally. One hears terrible stories about businesses with animals, zoos mainly, talking about having to have the animals put down because there is no money to feed them. This is horrendous and if there was ever a good cause for charitable funds it is to feed the animals. Apparently a zoo in Germany has said that if they cannot feed the animals, they will feed the animals to each other! This is all wrong for so many reasons.

There are already considerable redundancies in the pipeline for the hospitality industry as well as other solutions such as reducing hours and reducing hourly rates. The latest significant company to announce redundancies is IHG, holder of groups like Holiday Inn, Crowne Plaza and others. Many of the hotels under one of the IHG brands are in fact privately owned and operating under licence but IHG does have a number of managed properties and IHG say that they cannot rule out the possibility of redundancies.

In terms of dining, in a recent survey a third of diners said they would spend less once restaurants get opened again.

Redundancy too does not come without a cost to the employer and some may find they cannot meet the redundancy costs, thereby precipitating insolvency. For some it is going to be difficult to know which way to turn. Either way, the sooner forward planning is put in hand, the better. For example, if furloughing takes an employee’s service to over two years, a new potential redundancy liability clicks in.

As the rate of unemployment increases, other questions start to be raised, notably does the country need the influx of foreign workers or might we see immigration on the downturn? This all remains to be seen as we slowly move back towards some degree of normality, but it will be a new normality the like of which we have not seen in the country for decades and it may remain with us for the foreseeable future.

Adrian Leopard 05-06-20

Photo Clem Onojeghuo

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