Impact of COVID-19 & Lock-down -
Seems many changes are in the offing - thanks to COVID-19 & Lock-down following that - be it work practices, human behaviors, consumption patterns, spending habits, attitude towards personal finances... Just to name a few...
Recent movement of few lakhs of migrants from metro cities back to remote area of the country and their difficulties of the last few weeks may result into a very slow reversal of labour movement back to metros. There could be an acute shortage of labourers to many industries and trades. Such trades and industries which are largely dependent on such labourers (for loading, unloading, weight carrying, skill based - carpentry, electrical works, , etc.) are likely to get paralyzed. Good number of metros are currently in RED ZONE, which will invariably face such consequences. With the shortage of labourers, few businesses may need to spend more just "to be in business" - possibility of cost-push inflation. Though it could be for few months, before labourers start coming back to work in metros. One needs to see whether such cost push inflation is temporary or relatively permanent.
Second major impact across industries could be TRAVELLING & COMMUTING. Specifically for service industry wherever tasks / meetings can be done online, the same shall shift to online mode. This will slow-down vehicle requirement, traffic, pollution, etc. Affluent people will refrain from stepping out. Social distancing norms will reduce turn-out at shopping malls, multiplexes, restaurants, etc. Consumption pattern also may undergo massive changes. Considering focus on individual immunity, craving for fast-food is likely to be replaced by healthy and home-made food. There could be a change in format of QSR & restaurant menus. Multiplexes demand may get replaced by OTT (Over The Top) platforms.
Thirdly, there could be more penetration of health insurance and life insurance products as people realize more need of such products in uncertain world. Preference to overall hygiene and safety will change the customer behavior thereby causing less proliferation of diseases caused by contact, creating accelerated demand for pharmaceutical products and devices. Also, with uncertainty over salary or business cash-flow, financial prudence may take priority. Aggressive expansion plans for many businesses may get reviewed.
Are these impacts going to be felt over medium term or near terms? Please share your thoughts . . . .
Director - Business Operations at Effex Business Solutions Pvt. Ltd.
4yMy take is, while labour will not return to the cities in the short-run, gradually and eventually they will migrate to where there are means of livelihood n therefore a better chance of upgrading standard of living or let’s say, even for sake of sustainability. Whether metro cities lose labour to second or third tier cities remains to be seen, as it will purely depend on what opportunities arise where or rather, which cities pick what opportunities.
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4yThe more impact will be seen on the non organised segment. Low cost labour which is an important determinant of cost of production will also take a shot in the arm. Displacement of migrant has two impact, states which previously witnessed shortage of labour such as West Bengal will see its production curve move up. The influx of labor should be positive there. While Maharashtra which in Dharavi itself has 7 lakh population, and their exodus will seriously affect the overall production. Change is inevitable.
You are right. There is going to be a massive shift in the way businesses are operated. Digital will be the new norm. However labour intensive work will have to be follow self reliance. Migrated labour is less likely to return for a long time now. It has been seen that people value their family, home and health over money. New online businesses will emerge as a result of all this and we will crave to see those crouds once again!
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4yVery thoughtful analysis