The world economy is almost at a halt due to the COVID-19 pandemic. Companies around the world are experiencing its detrimental effects on various aspects of their businesses. Countries have implemented policies, such as social distancing and “stay-at-home” policies, to reduce the spread of the disease (Coibion et al. 2020). As a result, many companies have been losing business as consumers reduce their spending, especially on non-essential items. As a result, companies have witnessed a decrease in revenue and profitability. Many companies, such as restaurant and travel industries, are reporting losses since the policies are affecting their operations. One of the most affected stakeholder groups is employees in all sectors. Even though it is evident that employees are facing the adverse impact of the pandemic, research is not sufficient regarding the actual economic ramification of employment in the wake of the pandemic. Thus, the current study explores the economic effect of COVID-19 on employees, using the restaurant industry as the case study.
Significance of the study
The current research to establish the impact of COVID-19 on employees is timely due to the ongoing challenges caused by the pandemic. The findings will reveal the nature of the problem, and the extent of the detrimental effect on employees. Since the crisis is ongoing, it is essential to study the current and future ramifications of the pandemic on employment. The study is necessary at the research and policy levels to inform critical changes to address the effects of the pandemic. At the research level, the results will inform the foundation for future research on the economic impact of COVID-19, which is beneficial since the study is conducted during the pandemic. At the policy level, the research is essential to inform decisions to find ways to address the economic effects of the pandemic, such as on employment. For example, policymakers at the organizational and governmental levels can use the findings to design effective policies to shield employees from the detrimental effect of the crisis. Therefore, it is helpful to have evidence from research to inform such policy decisions.
The COVID-19 pandemic, which began towards the end of 2019 has emerged as a major challenge for companies locally and internationally. Businesses are reporting losses as they face the outcome of the crisis that has changed the way they carry out their business. The restaurant sector is one of the most affected as customers have been forced to remain home and social distant to prevent the spread of the highly infectious virus. Since customers remain at home to avoid the infection, some restaurants across the country have been forced to shut down (Coibion et al. 2020). The few that are open have experienced a considerable reduction in the number of customers they serve per day. The most affected stakeholders in the industry are employees, as a result some have lost their jobs or have their salaries reduced since their employers are unable to pay their full salaries. Therefore, as the crisis continues, the country’s economic performance worsens, and it is necessary to study and provide evidence of the actual economic effect of the COVID-19 on employees. The study will provide a deeper understanding of the economic impact of the pandemic on employees.
The proposed study will achieve several objectives related to the economic effect of The COVID-19 pandemic on employees. The research process will achieve the following objectives:
- To find out the short term economic effects of The COVID-19 pandemic on employees.
- To establish the long-term economic effects of The COVID-19 pandemic on employees.
- To establish some practical solutions to mitigate the short- and long-term effects of the COVID-19 pandemic on employees.
Preliminary Literature Review
The effects of the COVID-19 pandemic differ from any other crisis experienced in the recent past. Lockdowns and social distancing policies enacted to curtail the spread of the virus have seriously surpassed the impact of the trade shocks experienced during other economic crises in the world, such as the Great Depression (Bartik et al. 2020). Other challenges include travel restrictions that have considerable but mostly specific sectors impacts. Non-essential services and products have experienced a direct impact, such as the reduction of the number of hours worked per day, loss of jobs, and pay cuts as companies contend with the changes in the economy (Hevia and Neumeyer 2020). Previously viable businesses were facing the risk of going bankrupt due to the reduction in revenue and cash flows. Job losses are evident in all sectors of the economy, but more in areas that cannot receive government support to remain afloat. Companies have been unable to protect their employees since they cannot even protect their interests.
In the first quarter of 2020, COVID-19 virus has spread across the world, affecting all sectors of the global economy. The spread of the virus has led to an economic downturn in many countries, including the United States. Current studies indicate that companies have witnessed a sharp decline in sales volume and cash flows, as well as the capacity to serve customers (Bartik et al. 2020). As a result, companies are no longer capable of meeting the needs of their employees, with some being forced to lay off part of their workforce to remain afloat. Businesses in all sectors pay their workers from the revenue generated from their business activities (Kahn et al. 2020). Thus, if a company is unable to earn income or reduces the current level of revenue, the ability to pay salaries and other benefits is greatly affected. The first quarter of 2020 has witnessed an increase in the number of employees who have lost their jobs.
The rate of unemployment in the United States has increased rapidly during the first quarter of 2020. The challenges digress from the claim that health economies record low rates of unemployment since their economic performance is capable of paying more employees compared to weak economies. Current statistics from the World Economic Forum indicate the increase in the rate of unemployment in the United States following the outbreak of COVID-19 (Hutt 2020). The article reveals that “2.9 million more Americans have filed for unemployment, bringing the two-month total to more than 36 million”. The same article also reveals that the unemployment rate in April reached a record of 14.7%, which is the highest since the Great Depression (Hutt 2020). Companies lay off employees as they face a loss of revenue and disrupted supply chains due to the pandemic and related policies, such as lockdown and quarantine measures.
The effects of COVID-19 on employment differs from one sector of the economy to another, one country to another, and affects different groups differently. Several employees have lost their source of livelihood due to the disruption of their salaries. Employees in the informal sector, casual, and temporary workers, are affected the most due to the economic downturn and failure to support their employment. Kahn et al. (2020) add that young employees, whose employment prospects depend on fluctuations in demand have also lost their jobs due to the changes in the economy. Refugees and migrant workers are also increasingly affected by the epidemic due to the inability to get jobs, even the low-wage opportunities that they depend on in the foreign countries. Workers and micro-enterprises are facing a worse crisis than they have experienced in their employment history. The economic challenges of the pandemic are worsening poverty and inequalities in the country and around the world (Coibion et al. 2020). The crisis will continue to increase the number of people in low-income and poor families.
Although the general effect of the COVID-19 pandemic on employees is evident in all sectors, research is necessary to establish the specific sector impact of the crisis. For example, research remains inadequate to understand the effect of the pandemic on employees in the restaurant industry. Therefore, a study will find out the short- and long-term effects of the pandemic on employees in restaurant businesses, some that have closed to stop the spread of the virus.
The study will collect data from the restaurant industry to establish the impact of the COVID-19 pandemic on employees in the sector. The research will involve a case study and collection of data through interviews and documentary reviews to understand the impact of the pandemic on employees in the restaurant sector. The study will identify five restaurants in the same city to conduct a case study whereby human resource managers will provide data through interviews. Employment and salary records in the companies will also provide critical data to show how employees are affected, such as pay cuts or loss of jobs. The case study will be conducted for one month and collect all the necessary data from the companies. However, the entire process will take longer in preparation and writing the report after data collection and analysis. The table below shows the project schedule.
|Meeting with the supervisor||0 days||01/06/2020||01/06/2020|
|Writing research Objectives||4 days||01/06/2020||04/06/2020|
|Literature review||20 days||04/06/2020||24/06/2020|
|Ethics application form||5 days||24/06/2020||29/06/2020|
|Interview schedule construction||10 day||01/07/2020||10/07/2020|
|Data collection||20 days||10/07/2020||30/07/2020|
|Data analysis and report||20 days||01/08/2020||20/08/2020|
|End of research||0 days||21/08/2020||21/08/2020|
Collect and Analyze Data
Data collected from the study will be in the form of narratives (responses of interviews with the managers of the five restaurants). Thematic data analysis will be used to analyze the data from the managers. Besides, the study will review data collected from documentary evidence to show the effect of the pandemic. For instance, the researcher will focus on the changes in employment and compensation since the outbreak of the virus. Three types of data will be collected, first type is the number of employees that have lost their jobs as a direct impact of the pandemic. The second type is the number of employees whose salaries or wages have reduced as a direct effect of the pandemic. The last type of data is the number of employees who have missed their paychecks for the last three months as a direct effect of the pandemic. The expected results include: An increase in employees who have lost their jobs, an increase in the workers who have pay cuts, and an increase in those who have missed their salaries, all as direct impact of the COVID-19 pandemic. The expected short-term effect is the loss of livelihood, while in the long-term, employees will find it hard to get new jobs as the economy recovers from the impact of the COVID-19 crisis.
Economic sectors experience the negative impact of the COVID-19 pandemic due to social distancing policies and the lockdown to curtail the spread of the virus. The restaurant industry is one of the most affected by the crisis since it depends on consumers visiting the premises. The economic downturn and poor financial performance have affected employees since many have lost their jobs, experienced pay cuts, or have gone for months without salaries. The trend is also affecting their source of livelihood due to the loss of salaries and wages. Unfortunately, the effect will be long term since it will take months or even years for the economy to recover and accommodate new employees. As a result, many will take months or years or even fail to recover their jobs in the restaurant sector.
Bartik, A. W., Bertrand, M., Cullen, Z. B., Glaeser, E. L., Luca, M., & Stanton, C. T. (2020). How are small businesses adjusting to COVID-19? Early evidence from a survey (No. w26989). National Bureau of Economic Research.
Coibion, O., Gorodnichenko, Y., & Weber, M. (2020). Labor markets during the COVID-19 Crisis: A preliminary view (No. w27017). National Bureau of Economic Research.
Hevia, C., & Neumeyer, A. (2020). “A Conceptual Framework for Analyzing the Economic Impact of COVID-19 and its Policy Implications.” UNDP LAC COVID-19 Policy Documents Series, 1, 29.
Hutt, R. (2020). “The economic effects of COVID-19 around the world,” World Economic Forum
Kahn, L. B., Lange, F., & Wiczer, D. G. (2020). Labor Demand in the time of COVID-19: Evidence from vacancy postings and UI claims (No. w27061). National Bureau of Economic Research.