People & Money

No Productivity Loss, UK’s Chief Scientist Urges Continued Remote Working

The United Kingdom declared a lockdown on March 23, 2020, to control the COVID-19 pandemic. This has helped to avert a full-scale public health crisis, but has also dealt the economy a heavy blow. The cost to the government has been enormous, calculated at £123 billion by the Institute of Fiscal Studies. About 650,000 people who lost their jobs during the lockdown have had to be supported. Britain’s economy contracted by 2.2% in the first three months of 2020 – its sharpest decline in more than 40 years – as the immediate impact from the Covid-19 pandemic provided an even more severe hit to output than first thought.

Working at home isn’t working for many parts of the economy. There is a very close link between the millions of office workers and thousands of retail businesses – restaurants, fast-food joints, coffee shops, bars, clothes shops etc. Retail is the British economy’s largest private employer of labour, with three million workers (more than 10% of the workforce). British Prime Minister, Boris Johnson, in a drive to get people back to their desks said that “empty offices are killing our town centres”. Government offices have closed as early as the first week in March. At the Department for Education, the country’s Ministry of Education, just 20 staff out of 6,500 are regularly in the office.

Economics has clashed with science as the Chief Scientific Adviser to the Government of the United Kingdom, Sir Patrick Vallance told British lawmakers last that the better option for curtailing the spread of the new coronavirus is for people to continue to work from home. Sir Vallance, a medical doctor and clinical pharmacologist said MPs that he could see “absolutely no reason” to change official government advice which says: “People who can work from home should continue to do so.” He insisted that working from home remained “a perfectly good option”, noting that many firms had found home working had not been “detrimental to productivity”.

But the Chief Scientist’s rosy view presents a partial picture of the economy. According to a report from PwC, around 7.6 million jobs, or 24 percent of the UK workforce, are at risk because of COVID-19-related restrictions on movement. People and places with the lowest incomes are the most vulnerable. The impact of homeworking on London’s vibrant economy which dominates UK’s output and is driven partly by retail is of particular concern to the government. A senior government official said ‘It doesn’t matter how much Rishi Sunak spends on incentives and subsidies to help restaurants and shops if their customers are sat at home.’

As the hustle and bustle in UK’s vibrant town centres, train stations and airports ceased, towns and cities are becoming ghost towns. The consultancy McKinsey projects that UK GDP in 2020 will shrink by 9 percent. Some companies do not plan to ask staff to return to the office before the end of the year.

Many Nigerian businesses, big organisations such as banks as well as companies that employ less than 20 people, have asked many of their workers to work remotely. But the impact on the Nigerian economy is somewhat less severe as 65% of the economy is in the hands of small informal operators who continue to carry on their activities either out of necessity or because they do not believe the coronavirus pandemic is real or that it is very easy to catch or poses a big danger to health and lives.  The informal sector has continued to generate output. Markets and bars operate almost at normal levels in many parts of big cities like Lagos, generating output for a long value chain as the thousands of small retail and service businesses who have also remained open for business.

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