Responding to the COVID-19 crisis:
The first ‘R’ in emergency management
With Harvey Brookes, Patrick McVeigh and Jason Leung-Wai / 7 April 2020
In the Introduction to this series we talked about this being an unprecedented time for our regional and local economies and communities. Across New Zealand, businesses and workers are having to adjust rapidly to completely new circumstances.
The Introduction outlined the ‘4 Rs’ emergency management framework, as a guide for managing the COVID-19 pandemic and its effects. We talked about the need for local government and economic development agencies to think about:
- RESPONDING to the immediate economic shocks created by COVID-19, in particular during the lockdown
- Preparing for RECOVERY and the work that will be needed to get regional and local economies, businesses and workers back on their feet
- Ensuring we are READY for potential changes in how regional and local economies and industries will operate in a post-COVID-19 world
- Building an economy that is more RESILIENT to future economic shocks and that is based on equity, sustainability and inclusion.
In this article we look at some of the responses to the local and regional economic impacts.
Looking at three dimensions of the response
The impacts of the COVID-19 pandemic differ from place to place and from sector to sector. Some businesses, such as in the visitor sector, have seen an immediate contraction, and many workers have already lost their jobs. In other sectors, particularly the primary industries and other essential services, demand has increased and there is a shortage of workers.
Consequently, different regions and localities need to think and act differently to address their particular needs and contexts.
We focus on three key dimensions of the response phase:
- Establishing a clear understanding of the immediate impacts of the pandemic and lockdown on local and regional economies
- Connecting impacted businesses to relevant business support and advice, and rapidly putting further business support services in place
- Assisting displaced workers and supporting local labour markets.
UNDERSTANDING THE DIFFERENT IMMEDIATE IMPACTS
As the COVID-19 pandemic unfolds, we will continue to see different impacts across regions. A key factor in this variation will be the local industrial structures– this will influence how quickly the impacts become visible and determine how deep the impacts are and how long they last.
Take tourism hotspots like Queenstown for instance, where 63% of all jobs are tourism-related. Previous research from MartinJenkins has shown that visitor spending in Queenstown generates between $988 million and $1.10 billion for the South Island’s GDP, and between 9,600 and 11,600 jobs across the South Island.
Regions that have a strong primary-industry base may suffer less. The lockdown is increasing demand across the primary sector and putting pressure on supply chains and distribution networks. Labour shortages are also emerging, as demand increases and temporary labourers, often from overseas, are harder to find.
Larger cities, particularly Auckland, Wellington and Christchurch, are likely to see significant impacts. Their service industries will be hit hard as the economy continues to contract and international borders remain closed.
Wellington will most likely be partly shielded by its high level of public-sector employment. Job numbers in the public sector may in fact increase during the immediate response phase — for example the Ministry of Social Development is currently bolstering its resources to deal with the expected rise in unemployment.
Information is key
Local government and Economic Development Agencies (EDAs) across New Zealand have the important job of monitoring and understanding the specific impacts in their areas and of supporting businesses and workers. Although central government agencies have more resources and more levers to pull, they don’t have the same connections with local issues and it’s impossible for them to have their fingers on the pulse of all parts of the country.
Standard economic metrics tell you what happened last month or in the last quarter (‘lag indicators’), and we normally assume we’ll see some continuation of the recent trend. However, in the current fast-moving environment, the past is simply no reference for the present, or the future. We need to know what’s happening right now and what’s likely to happen in the future (‘lead indicators’).
Rapid surveying of business
With timely information and data now a priority, one of the immediate responses seen in most regions has been rapid surveying of businesses. Most regions have carried out COVID-19 related surveys and used them to develop tailored responses.
Economic Development New Zealand’s COVID-19 resource centre provides examples of the types of surveys used in regions. EDNZ are also collating the results of these surveys and sharing them across regions and with the Ministry of Business, Employment and Innovation to inform national initiatives. EDNZ are also promoting some standardisation across surveys in order to improve their comparability.
Alongside local and regional survey data, information is also being collected on a sectoral basis by industry bodies, chambers of commerce and other business organisations such as the Employers and Manufacturers Association.
The information and data from these surveys is essential for diagnosing the issues and challenges that businesses are experiencing and for providing frontline intelligence for local stakeholders and government. Surveys can also be a key tool in immediately connecting businesses to available support and in tailoring new support services.
CONNECTING BUSINESSES TO TARGETED SUPPORT
As local areas build a clearer understanding of the impacts of the pandemic and the lockdown, there is then a role for local government, EDAs and business support organisations in establishing direct contact with affected businesses and connecting them to available support and advice.
Promoting existing support as a first step is important. In most regions only a small proportion of businesses will have previously accessed, or even been aware of, existing services, such as those funded under NZTE’s Regional Business Partners (RBP) programme.
The RBP programme
Across New Zealand, the network of RBP business advisors have been quick to mobilise and respond to requests for help.
Usually based within economic development agencies or chambers of commerce, they provide an immediate point of contact for impacted businesses, and they connect businesses to established support services and funding where that’s available.
Recognising these greater demands on RBP advisors, central government has increased its investment in the programme. This allows the programme to support more businesses to access advice on HR, health and wellness, and business continuity planning, as well as finance and cashflow management support.
Greater use of one-to-many formats
In order to reach as many impacted businesses as possible, there has also been an increased use of one-to-many formats, such as webinars and online conferencing.
For example, the Otago Chamber of Commerce, which is the Regional Business Partner for Otago, has organised a series of free online webinars focused on issues such as leasing, contracting, and resilience. Similarly, the Central Economic Development Agency (CEDA) is running webinars on financial planning, business continuity and communication for businesses across the Manawatu-Whanganui region. In Auckland, the EMA has partnered with ATEED and the RBP Network to deliver webinars on working with banks, managing employee leave and staff retention, and redeployment.
At the same time, business support providers have acted quickly to make sure their services are tailored to the current climate and are accessible. For example, the Manaaki Initiative has brought together a network of business experts to provide an emergency business forum to provide help and guidance for small businesses.
New advisory services funded by local councils
Elsewhere, alongside the increased national funding, some local councils have invested directly in new advisory services for small businesses in their areas.
One of the first initiatives established in New Zealand is Venture Taranaki’s Professional Services Grant programme. It’s supported financially by New Plymouth District Council, Stratford District Council and South Taranaki District Council.
All these early responses to support local businesses have been a critical element of New Zealand’s immediate response to the pandemic. They demonstrate the important role that local government, economic development agencies and business support providers are playing alongside central government in responding to the economic impacts of the pandemic and the level 4 lockdown.
ASSISTING DISPLACED WORKERS AND SUPPORTING LABOUR MARKETS
As we move deeper into the lockdown, workers across the country will continue to be significantly impacted. Some businesses and employees, particularly in the public and professional services sectors, should be able to work remotely, but overall only a relatively small proportion of workers are able to do so. Infometrics research estimates that only 53% of New Zealand workers are able to work from home during the lockdown.
Faced with reducing revenue, a contracting economy and ongoing costs, many smaller businesses in sectors with narrow profit margins and fixed overheads will be faced with difficult staffing decisions and their workforces will likely shrink. The niches they occupy may well still be there after the crisis, but once a business becomes insolvent, it is very difficult and very costly to get it trading again.
At the same time, some businesses providing essential services or in the primary sector are facing staff shortages as a result of increasing demand and restrictions on international travel, especially essential-service businesses that relied on overseas or temporary workers to meet seasonal demands. There is a risk that perishable and seasonal produce in the agriculture and horticulture industries will go to waste.
Immediate responses to support local labour markets
The immediate response to these labour market challenges from government and EDAs typically take two forms.
First, they encourage employers to retain as much of their workforce as possible by ensuring the employers are aware of and access the available support and advice. For example, Te Waka, the Waikato economic development agency, has prepared factsheets for businesses on the wage subsidy, leave support, and income support for workers.
Second, some emerging initiatives support displaced workers by providing advice and guidance, matching them to sectors that currently need labour, or connecting them to re-training programmes.
A good example is the Go with Tourism programme, initially developed by ATEED in Auckland but now running nationally — it’s designed to address recruitment and skills shortages across the visitor sector. Go with Tourism has redirected its resources to support employees that have recently been displaced, individuals who run tourism businesses, and workers wanting to explore education pathways into tourism during the lockdown or self-isolation.
Elsewhere, the Ministry of Social Development is also starting to work with regions and sectors to improve labour market matching by supporting recruitment for essential service sectors and the primary industries.
After the response
Although the responses outlined above will lessen the immediate impacts of the crisis and provide some relief for employers, it is inevitable that that there will be redundancies and that some businesses will fail.
This will have a double impact, as it will reduce demand and therefore further depress local labour markets as employers struggle through ongoing economic uncertainty.
Our next article on recovery and readiness
The next article in this series on COVID-19 and our regions will focus on the second and third of the four R’s, looking at what regions can do to support the recovery in their areas — not only to ensure the recovery happens as quickly as possible, but as an opportunity to reshape things to create a better and stronger local economy.
About the authors
Harvey Brookes is a regional economic development expert with more than 25 years’ experience focusing on Auckland and the Waikato.
Harvey brings a strong inter-disciplinary and outcomes-based approach, and a proven track record of working with stakeholders and partners to develop enduring solutions to complex problems and opportunities. His approach blends together a unique combination of strategic thinking, applied science, performance excellence, public policy and industry development.
Since late 2015 Harvey’s main focus has been economic development in the Waikato, and he is now based in Hamilton. In 2015 he led the region’s economic development programme, and oversaw the design, funding and establishment of Te Waka — the region’s first economic development agency (EDA).
Patrick McVeigh has more than 25 years’ experience working across the public and private sectors in strategy development, policy formulation, research and evaluation, scenario planning and visioning. He has delivered a broad range of projects in a variety of subject areas and locations, bringing high-level political understanding and finesse. Patrick is a hands-on practitioner who focuses on the client’s needs.
Patrick’s strong consultancy background is based on eight years’ experience in public policy and economic development roles in London, where he worked with clients in local, regional and central government.
Patrick has a BSc in Town Planning Studies, a Post Graduate Diploma in City and Regional Planning (Distinction), and a Post Graduate Diploma in Social Science Research Methods — all from Cardiff University.
Jason Leung-Wai joined MartinJenkins in 2013 after 10 years in an economic research consultancy. Before that he contributed seven years to the public service, working for the Ministry of Economic Development.
Jason’s focus is on encouraging economic growth, particularly from a regional perspective. He has supported regions to design and implement economic development strategies. He has put together regional and industry profiles and has prepared economic impact analyses for industries, events and infrastructure.
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