Employees at a Yandex distribution center in Sofino, near Moscow.Andrey Rudakov / Bloomberg
Charles Dickens coined the famous phrase "man is an animal of habit" and, as such, he is obstinate when it comes to change.
But events overtake him and, although he denies evolution, it ends up prevailing.
The covid has not brought the technological revolution, although it has helped to accelerate it like no other event in recent times.
And this speed will be impregnated in the economy, unable to stop it.
In the same way that people talk about pre-war and post-war periods, in the future they will talk about a before and after the coronavirus, says Alejandro Beltrán, president of McKinsey Iberia, in the belief that “the transformation will come yes or yes”.
Inequality
Many are the changes printed by the pandemic that are here to stay. Some mutations that, in the end, will lead the world along new paths that will leave clear winners and losers. Inequality is surely the biggest toll to pay in a society that finds it difficult to distribute vaccines, jobs or training equitably; wealth, in short. A recent document from the International Monetary Fund (IMF) ensures, after comparing the effects of the covid with five major epidemics earlier this century (SARS, H1N1, MERS, Ebola and Zika), that this virus has caused “a persistent decrease in the level of GDP per capita, with lasting effects on income inequality and an increase in the number of citizens living in absolute poverty of some 75 million people ”.Everything indicates that this gap is closer to widening than narrowing.
However, the coronavirus has also resulted "in a greater weight of the role of the State as guarantor in the face of the great disturbances of the crisis, when we already had a problem of polarization and inequality, which can be exacerbated", points out Xavier Vives, professor of Economics and Finance from IESE Business School. As well as a growing distrust of international cooperation and, with it, a decline in multilateralism. The pandemic has generated a huge volume of public debt that some believe will lead to a
Japaneseization
of the economy, in addition to an increase in tension between China and the United States, which has intensified the crisis of globalization that began during the Great Recession, and which will have long-term consequences on supply chains.
In the same way that it has made the concern for sustainability and climate change go further.
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Japanized Europe
But, without a doubt, the effect that will be most noticeable in the economy is the gigantic impulse that digitization has taken from one day to the next. “We have taken a 10-year leap in the adoption of new technologies. And it will have an impact on the world of work, on the drop in the price of offices in large cities or on the increased demand for semiconductors, among many other things, ”says Federico Steinberg, principal investigator at the Elcano Royal Institute. "The process of digital disruption has acquired an unprecedented momentum that will change the world of work and the society in which we live in at least three dimensions: new forms of work, electronic commerce and the robotization of organizations", says Rafael Doménech , Head of Economic Analysis at BBVA Research.
An employee cleans a 'coworking' in Hong Kong.Paul Yeung / Bloomberg
Hybrid employment
After hasty teleworking and forced by confinements, companies will no longer go back to what they used to be;
new hybrid forms of work prevail.
In 2020, remote employment multiplied by four and, although this year the proportion has decreased, four-fifths of organizations say that they will do more telework and accelerate the digitization of employment, explains the economist.
However, "we are not going to go from 5% to 16% of people who can work more than half of their working hours remotely as happened between 2019 and 2020," says José García Montalvo, professor of Applied Economics at Pompeu University Fabra (UPF). The vice-rector for Scientific Strategy at UPF indicates that teleworking has now dropped to 9.4% in Spain. “And although it will not be implemented as much as we thought, the truth is that it has doubled and this is leading to new things. Like that the prices of the house in the outskirts of the big cities grow more than inside them. It is happening in the United States and also in Madrid and Barcelona, where rents fell by 10% last year, although they are now recovering, but in suburban areas they are rising more, just like on the other side of the Atlantic ”, says José García Montalvo.This has all kinds of implications on the structure of cities, he adds; a reality that will remain after the pandemic.
Andrés Rodríguez-Pose, professor of Economic Geography at the London School of Economics and Political Science, reinforces this idea: “We are going to need less office space and also for cultural and leisure activities.
In European cities, trade experiences zero or low growth up to 6%, while Amazon grows at rates of 40% and exceeds the barrier of one million workers, when all European trade employs just over 30 million people " .
Again there will be winners and losers.
In his opinion, if until now it was the employees with the lowest profiles who suffered, with artificial intelligence it is those on the intermediate scale who have suffered the most.
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Teleworking loses steam in the face of face-to-faceism
García Montalvo considers that teleworking will eventually be implemented among 15% of Spanish employees, in the sectors that can practice it and, above all, in those that can keep it while maintaining their productivity [the Organization for Economic Cooperation and Development (OECD) estimates that in large cities 35% of staff are prepared for it, but in rural areas only 20%].
It will not be 100% remote work, but it will affect many things, including salaries, he says, given that companies like Google have announced that they plan to lower the salaries of employees who have moved from San Francisco or New York. to other cities with lower cost of living.
In Spain this neither happens nor will happen, he predicts.
Automation
The pandemic has dramatically accelerated the digitization of organizations. “We use more and more robots, more algorithms, more artificial intelligence in the provision of services. Robots do not get sick with covid, they do not cause sick leave ”, appreciates Rafael Doménech. If between 2010 and 2019, the decade before the coronavirus, automation on the planet had multiplied by 2.5, everything suggests that in 2022 it will have multiplied by four compared to 2010, continues the professor of Applied Economics at the University of Valencia. This does not mean, from his point of view, that there is neither less work nor more unemployment: “We have very high unemployment rates, although at the same time we are at the highest levels in the number of vacancies in the last decade in countries like the United States. ”. Or in the United Kingdom, García Montalvo supports,who believes that many people who left the job market with the crisis have not returned on purpose. You are waiting for a different job opportunity and this is causing wages to rise. "In the United States, the minimum wage increases and encourages interest in robotizing organizations, which in the short term will generate imbalances, but in the long term it will contribute to raising salaries," he appreciates.
E-commerce
All of this has to do with the rise of e-commerce and non-face-to-face consumption due to covid.
The home has acquired an unusual role, it has revolutionized businesses such as food delivery or the consumption of
streaming
digital content
, trends that have come to stay, in Doménech's opinion.
“In April 2020, face-to-face consumption fell by 51% in Spain.
Non-attendance rose 20% and stabilized its growth at 40% during the second half of last year.
Today, data on card spending shows that non-contact consumption is 46% above August 2019. The trend is consolidating ”, he estimates.
And it gives rise to new businesses such as the so-called
live shopping
, a kind of digital telemarketing that, through live videos, allows users to know the properties of any product in an entertaining way and companies to place their articles online while interacting with Your clients.
In China, this format, which now reaches Europe and Spain, already represents 10% of electronic commerce, with more than 265 million users, explains Alfredo Ouro, founder of Onlive.site, a company specialized in developing this type of platform. sale.
It is estimated that in 2023 they will move 75,000 million dollars in the United States.
In August 2020, Tommy Hilfiger made its first broadcast with more than 14 million viewers and sold 1,300 sweatshirts in just two minutes.
Contactless payment
The heyday of e-commerce and fear of coronavirus contagion have sparked another trend that will remain with us: contactless payment. If 2020 was the record year in the number of card operations - while cash withdrawals fell by a third - in the first quarter of this year they increased more than 15%, according to data from the Bank of Spain. A boom that has triggered the use of applications such as Bizum, which doubled its users in 2020 and multiplied its operations by 3.6, or of smartphones and smart watches. So much so that Amazon has launched pilot stores in which the customer is recognized and their payment method is detected without doing anything, as is already the case in China.
With the disappearance of cash, the race for digital currencies has picked up steam during the pandemic.
Last June, El Salvador became the first country to recognize bitcoin as legal tender.
But not only that.
More and more central banks are announcing the creation of cybercurrencies, which in García Montalvo's opinion can create financial inclusion problems even in countries like the United States.
The UPF professor believes that these movements will greatly affect the banking system.
"If central banks opted for the model of keeping citizens' deposits, commercial banks could disappear," he warns.
Supply chains
All these trends will be perpetuated in the new economy that will be born after the covid. However, there are others that experts do not seem to agree on. "It remains to be seen whether the weight of the States, globalization or supply chains will change," Domenech doubts. Lessons can be drawn from all the crises, such as that companies are going to guarantee their supplies after the shortage experienced last year with sanitary products or the current one with microchips, “but this does not necessarily have to mean a transfer of production to other countries , but there is less dependence on a single market or a single supplier, something that can be achieved with intermediate warehouses and more suppliers, "he continues. “I don't think there will be less globalization, there will be a nation-state that wants to become stronger,but it is very difficult for him to prove it, as has been seen in the trade war between the United States and China ”, supports Rodríguez-Pose.
Warehouse of materials for the manufacture of electronic products at the Continental plant in Bavaria (Germany) .Armin Weigel / dpa / picture alliance via Getty I
McKinsey points out in a recent report that up to a quarter of global exports of goods, 45,000 million dollars, may change in 2025. Because the covid has contributed to a process of moderation or partial reversal of globalization, which will help bring closer global production and value chains, in the words of Xavier Vives, as has happened with paracetamol, which was produced in China and which laboratories like Ferrer have decided to reinforce its manufacture in Barcelona.
The IESE professor also gives Germany as an example, which reduces offshoring in countries such as Spain and other markets, to concentrate the industry around his country.
There are cases of offshoring, such as the textile sector, "but we are not going to de-globalize value chains because this has a lot of impact on costs," says Steinberg. When, as McKinsey details, any company can expect a production stoppage lasting a month or more every 3.7 years, which indicates that they are predictable contingencies. “Companies will have to calculate the risk of their supply chain breaking and look for alternatives, something that is more expensive. Each geographic area will have to have its own supply of sanitary material, chips, even oil and energy reserves to guarantee supply when geopolitical tensions increase ”, indicates the UPF professor.
He does believe that the strengthening of the weight of the State as a result of the pandemic has come to stay: “What we are currently seeing is a transition in the labor market and technology that will leave winners and losers.
The State will have to protect the most vulnerable from all the educational and income inequalities that will arise in the medium term to avoid dramatic situations ”, he says.
The reinforcement of the redistributive policies that the pandemic has brought has a clear example in the change in fiscal policies that Joe Biden is leading in the United States, with the increase in taxes on the richest, adds Steinberg.
Globalization
The Elcano Royal Institute researcher appreciates that the rise of nationalism or the closed defense of markets and capital movements, which the pandemic has rekindled, for example with a new tax system for multinationals, may become more acute. Just like the decline of multilateralism. Although with Biden, the United States has strengthened its presence in international organizations, it continues with the policy of America First, says Vives. “The big issue is the war between the United States and China, which is neither expected nor expected in world institutions. We are creating a bilateral world and Europe should strive to play a more relevant role. But it seems that the trend is to reaffirm economic and political nationalism, as we have seen with Brexit ”, laments the IESE professor.Like most of the experts consulted, he believes that world hegemony will revolve around China in the future. His best way out of the covid crisis has also accelerated this process.
In the same way that it has contributed to the concern for sustainability permeating society and companies, according to the president of McKinsey Iberia. “It is not just because the environment is deteriorating as seen with climatic events such as fires or floods, but because certain industries are going to suffer a lot and because more and more impact investment funds are going to look at it with a magnifying glass. what companies do, ”says Beltrán. The changes experienced during the pandemic have shown the preferences of the population, says Aitor Jauregui, head of BlackRock in Spain, Portugal and Andorra, where the acronym ESG (for environmental, social and governance) are gaining more and more force.“A key point in this reactivation of economies is the opportunity to lay the foundations for a recovery based on sustainable, resilient, inclusive and equitable development. This is perhaps one of the big changes that we could expect ”after the pandemic, he maintains. The future that is yet to come.
A digital, healthy and sustainable consumer
Flink mobile supermarket app on an iPhone Christoph Dernbach / dpa / picture alliance via Getty I
The pandemic will forever change some of the consumer habits that had permeated society. The first effect of the covid on the shopping basket, highlights Patricia Daimiel, general director of Nielsen for Spain, Portugal and Italy, is the dry demographic brake that we have experienced. Between January and June of this year, the 160,681 births registered in Spain represent a decrease of 5.2% compared to the same period in 2020 and 7.9% over 2019, according to the National Institute of Statistics (INE), as well as the figure lowest in the first half of the entire statistical series. "The growth of mass consumption is linked to demography and it seems that the birth rate will continue to slow down, with new generations concerned about climate change, who weigh much more than the previous ones to have children", he appreciates.Daimiel considers that the second effect of the pandemic is the impact of technology: “We have all digitized ourselves, even the oldest people and, with teleworking, we have consumed more at home and bought more online. Last year e-commerce in food doubled and between January and August 2021 it grew at rates of over 20% ”.
Those are the two trends that have come to stay in the food and beverage industry, which, yes, has been recovering the frequency of citizen purchases for some months and lowering the average ticket. You no longer need to accumulate and, with current vaccination rates, visits to shops have become much more common. Also, bars and restaurants reconquer the part of the pie lost due to confinements and capacity restrictions. June was very good, explains the directive, with growth of 36% over 2020, but still 28% below 2019. But in July, the fifth wave of the coronavirus again put pressure on hospitality establishments. Perfumery, which gained 24% compared to 2020, when it fell 21%, is close to the figures registered in 2019.The return to the office has driven demand for makeup.
Although much remains to be seen until the return to normality, since "currently the market is very volatile", the head of Nielsen is convinced that there are trends driven by the covid that will become structural: There is much growth ahead, we will consume more at home because we have learned to cook with this crisis and the citizen will buy more natural and sustainable products, penalizing products, such as cookies, which are made with palm oil.
The concern for health and the environment is also here to stay ”.
In the UK, half of consumers practice mindful eating, 38% eat less meat and 30% consider sustainability when choosing food, according to McKinsey.
The strategic consultancy also highlights that the online market has experienced a meteoric growth of 17% during the last five years, generating 65% of the growth among the 150 main retailers in the world.
Because, as its president in Spain and Portugal, Alejandro Beltrán, recalls, 65% of the people who bought for the first time online during the pandemic assure that they will continue to do so after it.
sightseeing
Digital, healthy and respectful with the environment, this is the consumption that will be imposed after the pandemic, in the opinion of Francisco Lorente, ESIC professor, and not only in the shopping basket but in any type of product. The trip, one of them. Despite the fact that tourism is expected to pick up once the coronavirus is left behind, business trips will be more than touched. "We have taken great advantage of virtual meetings during the covid, we have taken a giant leap that will hardly back down," says Lorente. In fact, Beltrán predicts that this type of travel will drop between 20% and 30%.
Spending related to business travel accounted for 21% of the global travel and tourism industry's revenue in 2019 (using OECD data), but last year, it fell by more than half, according to the Global Association. of Business Travel, explains Barclays in a recent report on the sector, in which it emphasizes that business travelers will re-evaluate the number of flights they really need to do, considering the time and energy involved, and the ease of holding meetings virtual from their homes and offices. "These are behavioral changes that can be difficult to reverse," he says. And that will affect the aviation industry, for which corporate travelers represent only 12% of passengers,but they are twice as profitable as the others (they account for almost 75% of airline profits in some cases).
The key to innovation
If the covid-19 has shown something, it is that more spending on health and health and greater investments are needed to be able to face a crisis like this one, in which the shortage of medical supplies was a constant during 2020. And in which Public and private money have joined forces to carry out multiple vaccines in record time.
"If those lessons are applied to
other diseases, they could play a
significant
role
in laying the foundation for
faster development of treatments," says McKinsey.
States are expected to redouble their efforts in this area, according to Rafael Doménech, from BBVA Research. Investment in life sciences, technology and medical equipment will be strengthened after the pandemic, as it has already been proven that we were poorly prepared to face it, supports Xavier Vives, from IESE. From now on, both the public and private sectors will invest more, he says.
However, the professor at the Pompeu Fabra University, José García Montalvo, is not so convinced that investment in research and development will redouble in other areas, as it was glimpsed a few months ago. "Yes, the funds for health are going up, but not in general," he says, "and we are going to need science to combat climate change or the natural disasters that are being experienced," he warns.
Innovation is the only means we have to grow and generate employment, says Andrés Rodríguez-Pose, from the LSE.
Which, however, he considers to be too geographically concentrated.
In Spain it is in Madrid and Barcelona, in France in Paris, in the United Kingdom in London, while in the rest of the territory "deserts of innovation are being created, without intermediate areas such as in Germany, Sweden or Norway".
There is capacity, he believes, “but in Europe we are obsessing over one type of innovation: that of large projects such as Amazon or Tesla.
And there is a lot of potential that is being overlooked ”, he laments.