How long until we reach prosperity again?
Since the Great Depression came to an end in March 1933, there have been twelve recessions (around one every seven years) and their average length has been eleven months. The Great Recession (1929 – 1933) lasted for three years and seven months, whilst the Great Financial Crisis (GFC) of 2008-2009 lasted for 18 months.
COVID-19 commenced in March 2020, so the good news at least is that we already have 3 months out of the way!
Recent recessions have been caused by a variety of factors: energy crises, the .com bubble, 9/11 and US subprime mortgages. The challenge with COVID-19 is that not in the last century has a Global Health Crisis caused a recession. This is why it is so hard to predict how long it will last and how severe it will be.
What we know for certain is that, along with other previous recessions, certain sectors will be hit much harder than others, and are specific to the “lockdown” nature of this recession:
- Airline and travel
- Brick and mortar retail
- Sports and events
- Industries relying on global supply chains
- Hospitality and leisure
The really notable exception, and one that provides significant hope for the future is one vital industry that has not been seriously affected:
- The financial industry
When Lehman Brothers collapsed on 15th September 2008, it exposed the fact that even banks which were considered at the time to be almost indestructible, were in fact unable to access enough capital to survive the shock of bursting housing bubbles across the US, UK, Spain and Ireland. They collapsed because the global financial system, far from being robust, was actually fragile. Today, thanks to increased regulation and multiple stress tests over the intervening years to ensure that the banks carry sufficient liquidity, they have been able to withstand the first stage of the COVID-19 recession and there is a good chance that this pandemic may have a less significant long-standing impact on the global economy as compared to the GFC as a result.
So, what can we expect over the coming months?
- The furlough scheme will end before the crisis does.
- Industries not seriously affected could recover quickly, especially as they adapt to a brave new world – pre-vaccine but post-panic.
- Businesses will fight to survive by keeping costs down – all suppliers can expect to share the financial pain while still being able to supply, albeit in reduced volumes.
- The recovery curve will not be fast or V-shaped: too much damage will have been done and not enough confidence gained to effect it.
- The curve will look like more of a Nike Swoosh, though for how long and how deep the curve will be is as yet unknown.
- We could also see things improve, then fall back should the virus return, then improve, then fall back etc. in an on-going W shape.
- As governments and people acclimatise further and improve how they respond to the virus in a pre-vaccine world, the fall-backs will lessen and the improvements will hasten.
- Eventually we will either find a vaccine or we will learn to live with it. Either way, all recessions end and so will this one!
To consider the world of recruitment and hiring for a moment with the above in mind – sadly, many people will lose their jobs and it will be a traumatic period for many. Many companies who carried too much debt into this crisis will not survive.
Having witnessed Australasian Recruitment Company navigate the GFC through 2008-2009, the good news is that even in the depths of recession, when fear is at its greatest, companies do still hire and people do still get jobs. This has already started in London with some of our clients.
The pay tends to be a little lower, the volume of work tends to be a little higher, and the duration of work tends to be temporary – at least initially, before companies gain in confidence and start to convert temporary hires to permanent employees. This is why you should seek to take good temp opportunities and avoid the temptation to “wait” for the right permanent job.
Companies planning for the future will manage their costs whilst continuing to invest and to innovate, they will seek out opportunity, and though certain sectors may take a long time to recover, others are even now already in recovery mode, and some are even flourishing.
The average recession has lasted eleven months since 1933. If we’re lucky, we could be 20% through this one already. Planning for the worst whilst hoping for the best is a good policy to embrace at this stage. Be ready to accept that things will take a while to correct, and be ready to get back to work and fire on all cylinders – at first to get through – and then to thrive – on the other side of COVID-19.
Australasian Recruitment Company has a 17-year track record of helping London’s premier employers find 1000+ employees on an annual basis. We are open for business and here for you when you need us. Call us on 020 7625 3300.
View our latest jobs here.