There has been much talk in the past several weeks regarding the health crisis caused by Covid-19, but can it affect more than our health?
Unfortunately, the answer is yes. We live in a globalised world that is highly dependent on China. The fact that there are already cases detected in Europe, as well as the risk of a worldwide pandemic announced by the WHO this week is not exactly good news for the markets.
Indeed, in Spain, this week we are seeing how fear of the Coronavirus is affecting the Ibex 35, which has suffered its second worst blow after the United Kingdom voted “yes” to Brexit. Beyond the stock market setback, we can see how there are already sectors, such as tourism, ceramics, textile, transportation, technology, e-commerce and automobile, that are suffering its impact.
What might this imply?
In order to answer that question, we must take into account that in Asia the Coronavirus has caused the forced paralysation of industrial activity, the closing of shops, the imposition of quarantines, restrictions on logistical activity and on transportation and, thus, the interruption of the supply chains. All of this, unfortunately, is affecting Spanish companies, which see how the health crisis originating in China is affecting their economic and production forecasts.
In Spain and from an employment perspective, considering factors such as economy and production, we can conclude that the crisis caused by the Coronavirus could lead to companies having to carry out substantial modifications of working conditions, the temporary suspension of contracts (ERTE) or even dismissals due to objective causes in order to be able to stop the Coronavirus from infecting their balance sheets.
Furthermore, we are also seeing how the expansion of the Coronavirus is causing many Spanish companies to begin to consider the need to take precautions in order to protect and, as such, guarantee, the safety and health of their staff. Accordingly, some measures or recommendations on the table are to facilitate telecommuting, limit or even prohibit business trips, above all to the most affected regions, promote meetings by videoconference, adopt hygiene protocols (frequent washing of hands, use of disinfectants, maintaining a safe distance, etc.) etc., in order to minimise the risk of contact with the illness.
We must take into account that although the Coronavirus may affect the economy, it is also true that the extensive, official information surrounding Covid-19 makes it easier for companies to prepare and adopt contingency measures in order to minimise the consequences that this health crisis might imply. Accordingly, the companies themselves are the most interested parties in guaranteeing their economic and productive stability and, thus, in maintaining the work positions and working conditions of their staff.
For further information: Monika Bertram