#WhatNow is a biweekly show on WAYA that tries to make sense of what is happening in the world. We follow how people’s lives and businesses are affected by current events, advancement in technology, and global politics. The show hosts different stakeholders from the entrepreneurship ecosystem and industry leaders to help answer some of the most pressing questions on people’s minds.
Every episode is dedicated to a particular market or sector. Because there couldn’t be a more relevant time to bring this up, in the first episode of #WhatNow, we tackle the job market.
COVID-19 has swept many business owners off their cash flows, sent workers around the world to either work from home or not work at all. Rather indirectly, on the other hand, the pandemic also pushed other businesses to expand and quadruple in operations. So… what now?
Immediate changes in the job market
“First of all, a lot of the hiring activities froze, literally,” Omar Khalifa, Shaghalni’s CEO tells us. In a recent study they found that 39% of companies paid full salaries, however 61% either gave them holidays with no pay or paid 70% or 50% of the salaries.
Amazon has just hired a hundred thousand workers in the US, these are huge numbers, but at the same time almost 13 million or more people in the US lost their jobs.
The government is taking very good steps to secure the people and that’s the top priority, however I think moving forward we’ll have to learn how to live with the virus. I don’t think it’s going to be over soon. I think it’s going to take longer, however I think people will have to go back to work, with certain precautions and yeah.. Because for how long can you stay like this.Omar Khalifa, CEO, Shaghalni
Is now a good time to talk about robotic intervention in factories?
According to the Industrial D Authority, there’s around 50,000 factories across Egypt, that translates to more than 5 million jobs at risk, if not already lost…
In Europe, for every 10,000 workers there’s 106 robots and that number is 91 in the Americas and 75 in Asia, according to the International Federation of Robotics.
Luna has a density of 650 workers in its two branches and factory. While they’re working on a lot of automated solutions, but robotics seem like a far-fetched idea, almost fictional.
Even the providers do not exist in Egypt. Or around the world in this industry, yes, you have particular things, but still very expensive. The development of our production lines helped us not to become dependent on workers. But in the end, there’s someone who places an item in a box, another one carries the box and pushes it to the logistics, and then it moves outside. We still have a long way to go.Rania George, CEO, Luna Cosmetics
What Rania did with her team was study the daily routine of Luna’s workers, where they commute from every day. They made sure that from the moment they step inside their bus, they have their masks on. When they arrive at the factory, they enter from one gate, and they are received by a personnel that takes their temperature. Twice a day, the whole space is disinfected. We also disinfect the busses before workers go home.
In the end you have to protect your employees so you can protect your business later on. Without protecting your employees, your business is at risk.
How will the pandemic change the face of the job market?
Zooming out to the macro level, the pandemic could be powerful enough to change the job market as we know it. On March 30th, the International Monetary Fund announced that the coronavirus has succeeded at bringing the global economy to a recession.
I think the recession will change the job market for good. However, I think it’s going to change it in the positive way. People are going to be more independent, companies will have to pay better salaries, there will be more competition.Omar Khalifa, CEO, Shaghalni
But what is a recession? A recession is a period of declining economic performance across an entire economy that lasts for several months. The last recession happened between December 2007 and June 2009 when the U.S. housing market went from boom to bust, and large amounts of mortgage-backed securities and derivatives lost significant value – which spiralled into a global financial crisis.
On the other hand though, during that time many people lost their jobs to become entrepreneurs. The last recession gave birth to more than 50 startups such as Uber, Facebook, Dropbox, and Airbnb, that later grew into unicorns.
We see an entrepreneurial boom, so people would think about going private anyway because this old thing of the corporate stable job and all this, I think it’s dead.
However, this recession will be a tad different. People don’t want to sign up for long-term commitments, and that won’t change anytime soon. Khalifa predicts that this coming era will witness a golden age for the gig economy. So many companies will ditch the long payrolls and look for freelancers instead.
But this brings us to a very important matter…
What in the world will happen to job security?
The majority of non-farming jobs fall under the informal sector, which gives no security to its workers. In fact, 15.7% of young workers have not signed contracts and 14.8% have no social insurance benefits.
An employee who is not feeling secure will be always worried and that will affect his productivity and take its toll on the entire culture of any company, according to the American Chamber’s Chairman of HR Core Committee, Emad Nasr. He explains that companies usually choose the easier way to the parallel economy and leave their employees without job security due to the high cost of registration.
The laws are now modified to be more appealing to employers. So, the percentages for example of social insurance is decreased and this will encourage employers to subscribe all their employees to social insurance. The government also made the sanctions and penalties more aggressive to push employers to come and comply with the law.
I believe that the auditors will be visiting the companies more frequently and try to encourage and push companies to comply.Emad Nasr, Chairman of HR Core Committee, American Chamber
Tragic as this pandemic may be, one thing becomes clear: the universal foundation of job security must change. Will this crisis force governments to protect their people to maintain their economy?