COVID-19 - General Update (18 April 2020)

Level 3 – An update on what can happen

Thursday’s announcement outlined what Alert Level 3 would look like. The key highlights are:

  • Some people can return to work, but if possible, should work from home

  • Businesses can re-open if they can operate safely (with some exceptions)

  • Slight expansion of bubbles are allowed in certain circumstances

  • More recreation activities allowed (swimming, surfing, shore-based fishing, etc.)

  • Partial re-opening of childcare (up to year 10), but those that can, should stay at home

In summary, there will be some relaxation of the rules compared to Alert Level 4, but we are still a long way from “business as usual”.

Specifically, for businesses

Many businesses can start to open under Alert Level 3. However, they must implement health and safety measures to keep their workers safe:

  • People must work from home if they can

  • Workplaces must operate safely – keeping one metre distance between workers, recording who is working together, limiting interaction between groups of workers, disinfecting surfaces, and maintaining high hygiene standards

  • Retail and hospitality businesses can only open for delivery and contactless pre-ordered pick up – customers cannot enter stores

  • Supermarkets, dairies and petrol stations can continue to allow customers into their stores, with the same restrictions and measures in place as Alert Level 4

  • Businesses cannot offer services which involve face-to-face contact or sustained close contact (e.g. hairdressing, massage, house cleaning, or door-to-door salespeople)

  • Other in-home services can be delivered if it is safe to do so (like tradespeople for repairs or installations) – keep two metre separation from those in the house

  • Most workers will not require PPE to stay safe at work. Incorrectly used PPE can create more risk. Good hygiene measures like hand washing with soap and water, physical distancing, sneeze and cough etiquette, and wiping down surfaces is the best defence against COVID-19.

Please see here for more information.

Government Budget

The 2020 budget is set for Thursday 14 May. Based on recent government announcements, expect more help for businesses (probably focused on keeping people employed)

Employment obligations

In addition to specific wage subsidy obligations, employers should continue to adhere to the fundamental employment obligation of good faith.  Use the three “Cs” for guidance:

  • Consent

  • Consultation

  • Communication

As always, seek expert help if and when required.

Economic Update

On Tuesday, the Government announced a series of “scenarios” on the economic impact of COVID-19. In Grant Robertson’s words, “These are very much scenarios rather than forecasts, because forecasting at the moment using the normal tools is virtually impossible,”

Assumptions

Output changes:

  • Alert Level 1 - output reduces 5-10% from normal

  • Alert Level 2– output reduces 10-15% from normal

  • Alert Level 3 – output reduces 25% from normal

  • Alert Level 4 – output reduces 40% from normal

Scenarios:

Covid Scenario Analysis Table.png
 

The graphs below show the impact on GDP and the unemployment rate under each of the scenarios:

 
Covid Scenario Analysis Graphs.png
 

These scenarios show significant levels of unemployment, ranging from 13% under scenario 1 to 25% under scenario 2. This compares to the current employment rate of 4%.

The graphs below show the impact on GDP and the unemployment rate under alternative scenarios where the government provides an additional $20 billion in stimulus.

 
Covid Scenario Analysis Graphs 2.png
 

The additional stimulus has limited impact on GDP due to the constrained economic activity. However, it does have a significant impact on unemployment, keeping it at just over 8%.

See this article for more detailed information.

Michael Parker