A RADICAL CHANGE IN THE WAY WE WORK MAY PRESENT FUTURE OPPORTUNITIES
The COVID-19-related lockdown has had a radical impact not only on economic growth, but also on the way many of us think about work, living and “play”. “These potential radical changes may offer some new opportunities for “country” regions such as parts of the Free State, and it is these country regions that appear to have cruise through the COVID-19 crisis far less negatively impacted than the major metro regions,” said John Loos, FNB Economist, while speaking at the Free State Business Chamber’s webinar on 01 September 2020.
With regard the direct short term economic impact of the 2nd quarter 2020 hard lockdowns, Loos believes that GDP (Gross Domestic Product) growth in the smaller “platteland” provinces likely dipped far less than that of the major cities. This is because Agriculture GDP makes up a far greater portion of many of these rural regions’ economies, and the food producing parts of the Agriculture
Sector had far less lockdown restrictions placed on them than, for instance the Manufacturing Sector.
So, in a region where food producing Agriculture is the lion’s share of its GDP, that region would have remained far more “open for business. This would mean that even small town retail, which had the same lockdown rules applied as retail centres in the major cities, would have been less impacted than retail in the cities, because the broader economy of the country towns (i.e. the
Agriculture part) would be less affected and therefore the overall consumer purchasing power that supports retail would be less severely impacted.
Loos says, “it is not surprising when one hears certain listed property funds saying that their rural shopping centres have been less affected by the COVID-19 economic shock than the city retail centres”. This is a combination of a smaller negative economic impact in many rural regions, consumer purchasing power heavily supported by stable social grant payments in certain rural regions, and rural centres being more driven by essential consumer items, and many of those retailers remained open for business through lockdown.
“In short”, Loos says’, while the Free State was far from unaffected by the COVID-19 crisis, it, along with other more rural provinces in SA, appears to have been the “relative safe haven” economically, compared to the major metro regions such as those of Gauteng.
But the impacts of the crisis are more far reaching than merely causing a massive temporary drop in GDP. It has also radically changed the way that we work and live. Will these be permanent changes?
Time will tell, but I suspect that some will be, and this is where businesses and economic regions all have to keep their eyes open for both threats and opportunities.
“Probably the most talked about change”, Loos says, “is technology strongly -related, and I call it the “Zoom Boom””. Virtually overnight, in order to stay open, much of the country’s office-working services sector relocated to their homes and discovered how effectively they could all work using the available technologies. Out went the time-wasting and costly commuting to work, and gone was the time wasting trek across the city for face to face meetings.
Suddenly, corporate financial officers were starting to realise how much less costly office space they could get by with in future. And so, much of the speculation around the Zoom Boom relates to how much less office space will be required in future, as office leases come to an end. I believe that far less will be occupied, and that the country’s already high office vacancy rate will trend far higher in the coming years. This is not great news for office landlords, and I suspect those in the likes of
Bloemfontein will also be faced with this challenge to a degree. So, repurposing off office space …possibly into residential, will need to be considered for some.
But the potential impact of the Zoom Boom goes way past the impact on office space demand.
I expect a significant portion of company business travel and conferencing never to return, with corporate travel budgets being reduced significantly. Not only do financial pressures encourage such travel budget cuts, but our effective use of video conferencing/meeting software has made us realise that for many of our cross country interactions with clients, business partners and colleagues it is not necessary to climb on a plane and sleep over in another city in a hotel. Maybe a face to face interaction periodically, but far less often than in the past I expect. Then there are the myriad of conferences and business speaker events, from which I believe webinars have taken a slice.
This has challenging implications for the hospitality and conferencing venue business in many parts of the country, and the likes of Bloemfontein will be no different to the larger metros, I believe.
But there is a potentially positive side to the COVID-19 Crisis and the accompanying Zoom Boom too.
I sense that many of us big city folk looked over at the smaller economic regions enviously while locked away in our often high density suburbs. The smaller towns appeared to be far more free.
Following lockdown, we’ve seen a flood of people to open spaces….bicycle shops have done a roaring trade so I’ve heard, and our poor dogs are exhausted from all the walking. There has long since been a growing trend amongst the higher skilled population to look for work life balance, some going as far as to “semi-grate” to as far a flung region as Cape Town, and then to commute weekly by plane to Gauteng for instance. But that way of life was only for a wealthy few.
We can’t all fly to work weekly, and we were still largely office bound before COVID-19, so most of us stayed in the big cities within daily commuting distance from their place of work.
But NOW, going forward, not only will many of us not be office bound, but with video conferencing having become an acceptable way of doing business we will likely not be expected to even attend physical meetings nearly as often anymore. Suddenly, it may be that the long time wasting commute to the office for a sizeable portion of us only needs to happen once a week or once or twice a month.
That is a potential lifestyle-related game changer. Providing we have the connectivity, what is to stop more of us from relocating to a town perhaps 2 to 3 hours’ drive from the office (or 4 or 5 perhaps) as opposed to the traditional thinking of a home less than an hour’s drive away. I believe that the Zoom Boom has potentially opened up that long distance commuting option to a far greater number of people, not the costly flight option from Cape Town, but the less costly driving option.
A most obvious Free State region to potentially benefit from this would be the Vaal Dam region, but does it extend further to Bloemfontein with its great amenities…schools, private hospitals and other essential amenities?
I cannot predict the impact of the Zoom Boom with any accuracy, because this is very much new and unknown territory. But the combination of an increasing search by higher skilled echelons of the labour force for quality of life, and a radical lockdown/technology-driven change in the way many of us work, suggests to me the existence of an opportunity.
It is on this that I believe entrepreneurs and authorities in South Africa’s “Platteland” regions such as the Free State should look to capitalise in various ways.
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