Last week, I wrote on the four economic cycles that an economy faces and based on the definitions, we have established that the majority of the countries including the Turks and Caicos Islands are in a recession.
We do not know how long this recession will last but we do know the end of the recession is linked to the end of COVID 19. We must therefore determine the ways and means to survive and thrive in this recessionary mode.
This article is to provide some tips on surviving in a recession and will focused on Governments, Businesses and Individuals.
While I am one of those persons that believe in a free market economy, however when it comes to a country facing recession, I believe this is when a Government should intervene. The Government can intervene by borrowing money and using those funds to finance capital projects and the recurrent expenditure. I believe this is a great opportunity for the Government to get very reasonable interest rates on their borrowings.
Two of my friends on two separate occasions mentioned the same idea but at that time I did not support the idea because of the borrowing costs and I was optimistic that economy would recover quickly and that COVID 19 was going away. However, we have seen the economy open and there is very little economic activity and so the Government has to take the lead in managing this recessed economy.
I know there is some opposition to some of the capital projects being done at this time but I support it as it is creating momentum in the economy by providing jobs. However, what I do think though is that the Government needs to amend or temporarily eliminate the current procurement process. We must ensure that the capital projects are shared with different qualified local vendors rather than the same people getting multiple contracts. This will help all qualified vendors to get a piece of the pie.
I also think some of the funds borrowed should be used to provide benefits to the unemployed and underemployed on a monthly basis for the rest of 2020. There is no unemployment benefits legislation but we should create an emergency temporary plan to finance the unemployed and underemployed.
Like individuals, I believe the Government should put in plan to aid those businesses that are legally registered in TCI as long as those businesses are not getting any capital or recurrent projects from Government.
I think the Government should work with some of the rental properties and negotiate a price to house those persons that are positive
Governments should also create some part time or short term jobs as a lot of work is required in the country.
Unlike Government, I do not recommend businesses borrowing at this time because of the risks as some of these businesses will have less or no sales and will not be in a position to pay monthly payments. I would recommend a temporary overdraft facility though.
Businesses should do a shift system and offered reduced hours to employees. Avoid having a schedule where you have to pay overtime.
Businesses may have to give up their rent space and work from home. Of course that will create financial issues for the landlord unless the landlord is willing to reduce the rent.
Business will have to be creative and find other services that they can offer clients.
Some businesses will have to close temporarily rather than being remained opened and encountering fixed costs.
Some businesses will have no choice but to lay off employees. However, layoffs can be very expensive especially if you are making positions redundant. I would suggest businesses make arrangements with employees to get paid only when they work or outsource some of the work.
Some businesses should consider merging with other businesses or selling some shares.
Some businesses need to focus on investing in Digital and IT platforms to reduce some of their costs in the long run.
First of all we will have to change our lifestyle and get used to it. Do not be concern about what people think of you but be concern about you will survive in this recession.
Talk with your employer and see if they will allow you to work from home. This will save you from spending money on gas and vehicle maintenance. Now while you are at home, do not use your AC, keep your windows open and absorb the fresh breeze. If you have to go to work, then see if you can carpool with someone or get a jitney.
If you are unemployed, be creative with your gifts and use your gifts to make money. You have a gift.
Control your spending and do not use your credit card to get things you do not need.
I know the six months that the financial institutions provided as a relief has almost expired. Do not be afraid to ask them for an extension even if you only have to pay the interest.
Be the best employee on the job because employers will have to lay off employees eventually but if you are good in what you do, your employer will do what it takes to retain you.
If you have access funding, consider investing as during recession, you may find people selling off their assets at great prices.
There are so many online courses at discounted prices. Take advantage of these and upgrade your skills or try new skills.
Many universities are offering online classes. Embrace this as this will reduce cost for your children’s education as they can do online from home.
In order to survive in this recession, we need the intervention of the Government. Businesses are not in a positon at this time to stimulate the economy as the tourism market is pretty much dead. Whenever we get out of this recession, one of the first things to do is start a savings plan.