The macroeconomic discussions on unemployment, inflation, and growth often end in conflicting policy approaches and government intervention. What are the most important managerial challenges at times of crisis? How do we manage crises efficiently at times of recession / economic downturn?
Using the pandemic as an example of a recent crisis, it had significantly impacted the economic and labour market. We have seen disruptions to production, logistics, and supply chains across the world. Businesses are also facing challenges such declining revenue, insolvencies and job losses. One of the main issues during the pandemic was the lock down and border closures which had caused employees of businesses unable to carry out their usual job and these companies were not able to hire workers as well due to mobility. Because of many uncertainties, management were not able to make investment decision as well, as they are unable to foresee how long the pandemic will last for.
During the pandemic, labour supply declines due to quarantine measures and a slowdown in economic activity. Employment impacts will then cause income losses for workers. The loss of labour income will translate into lower consumption of goods and services, which in turn impacted the continuity of businesses and the economy.
To manage such crisis, firstly would be health protection at the workplace and across communities. This includes provision of protective equipment to employees and also the option of remote working. Secondly, large-scale and coordinated policy efforts should be taken to provide employment and income support to stimulate the economy and labour demand. This includes:
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- Fiscal policies such unemployment benefit and tax relief for low income earners
- Accommodative monetary policy such as interest rate reductions
- Lending and financial support for specific sectors such as SMEs
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