Resource Pooling at Scale
We are witnessing the greatest coordinated global demand destruction event in (at least) a century. The literal shut down of the global economy is resulting in an unprecedented drop in corporate earnings with Citi stating that global corporate profits may drop by as much as 50% or over US$ 6 trillion in 2020 compared to 2019. In the absence of bold financial and policy interventions by governments across the world, the record levels of unemployment resulting directly from this dislocation will reinforce a vicious downward economic spiral not to mention the severe distress it will most certainly cause people and families as the crisis wipes out an equivalent of 195 million workers in Q2 alone according to the International Labour Organization (ILO).
When it comes to the GCC, there is the added risk of an expat exodus. A considerable share of the population and workforce is non-indigenous – the population share represented by expats is 30% in KSA, 45% in Oman, 70% in Kuwait and 85% in the UAE. A loss of jobs will inevitably lead to an abrupt shrinkage of the population. We have seen the impact of that both in KSA and UAE over 2016-2018 period. It is therefore an economic and human imperative to address the job and wage loss issues and soften the blow as much as possible.
In the midst of this global crisis however, there are a few sectors that are thriving due to the unique dynamics precipitated by the lockdown, and are in urgent need of additional resources including labour, and working capital to manage the sudden spike in demand. E-grocery, e-commerce as well as offline grocery and essentials retailers and producers represent a few. In the UAE, I have spoken to at least 3 players in these areas who are desperately trying to secure additional human resources. This is demonstrated in the US with Walmart, Amazon and CVS and other large companies looking to hire nearly 500,000 Americans at the end of March according to WSJ.
A resource pooling initiative would not only improve the utilization of the recently furloughed workforce but also serve humanitarian, community and broader economic causes. Whilst the scale of the job loss and idle labour cannot nearly be addressed by this initiative, it would alleviate a small portion of the pain for employers and governments while addressing the growing demand for essentials and home delivery.
Individual companies can undertake this activity bilaterally, holding companies may be able to build bridges between their portfolio companies, but those efforts would be sporadic, limited and offline. Without the government championing such an initiative, it would be hard to scale especially given the need for regulatory oversight and requisite concession from labour authorities to exchange expat labour resources freely. To address that, here’s envisioning a successful collaboration – UAE government as the leader of an online marketplace, launched in partnership with Linkedin, wherein government sanctioned labour secondment can occur to scale a major labour pooling effort and take it online.
Linkedin represents a strong network of professionals and companies and already has a human resources platform. The UAE government has a history and culture of being a veritable pioneer in the region.
Moving forward, whilst labour is the obvious and easier resource that can be mobilized from idle to productive businesses, other resources may also be effectively pooled. Examples include warehouses, vehicle fleets and hotel kitchens. This exercise will bring many offline, capital-intensive resources ‘online’ and available for sharing, a move that need not be reversed following the crisis and could create market efficiencies for the longer term.