A juncture of opportunity? Corporations and COVID-19

Posted in: Business and the labour market, COVID-19, Culture and policy, Economics, UK politics

Michael Rogerson is a PhD Candidate in the School of Management at the University of Bath.

It is slightly more than a decade since the 2008/9 financial crisis. In that time much has been made of the decision to bail out large corporations and the extent to which we were ever “all in this together”. The lack of conditions attached to said bail-outs, and inability to use the crash as a backdrop for lasting change, have left legacies in business and society that have not been addressed. We have witnessed financial asset bubbles, sovereign debt crises, and a reduction in living standards for the wider population as low interest rates and higher inflation have increased living costs for over a decade. Can we afford to transfer risk from the private sector to the public again?

Since then, much has also been said of the rising danger and growing costs that climate change is bringing. Some have questioned whether taxpayer money spent as the economy teetered could have been used to invest in a greener future.

On the cusp of what is potentially a much deeper depression, albeit not one brought about by boardroom profligacy, there is space to revisit such questions. This is particularly relevant given the opportunistic behaviour displayed by some large firms as the business landscape, with employees furloughed and customers fearful, seeks the solid ground of relative certainty.

With governments mandating that non-essential workers stay at home, there has been a split in the way that corporations have reacted. Initially, restaurants and cafes such as Carluccio’s, Pret a Manger, and Greggs offered NHS workers free hot drinks and discounted food. This was followed by announcements of more direct healthcare help as hoteliers - including a group of former Manchester United players and football clubs such as Chelsea, Watford, and Plymouth Argyle - offered their facilities to the NHS at no cost. Alcohol producers such as Edinburgh distiller Leith Gin and drinks multinational Pernod Ricard suspended production, using their alcohol stores to make hand sanitiser as supermarkets ran short. To return to a decade ago, David Cameron’s ‘big society’ had begun to roll into action.

However, as a few firms moved to help a health service starved of investment since the financial crisis, existing firm behaviours have been called into question, and examples of corporate opportunism have proliferated. First, as lists of ‘essential workers’ were drawn up as exempt from staying at home it was pointed out that not only were these the same people being referred to by government ministers as ‘low-skilled’ - merely weeks before the coronavirus began to redraw the employment map - but many are so poorly paid that the government effectively subsidises wages. Supermarket workers, simultaneously ‘low-skilled’ and ‘essential’, were sent to work without protective clothing despite not being paid the Living Wage. Bus drivers, who have died transporting essential workers to the front line, were told they would not be paid if they did not continue driving, despite not being protected from the virus by their employers. Workers in the gig economy, already existing precariously, have found themselves abandoned by both employer and state.

While some workers have discovered that their conditions of employment do not match their new-found status, other employers have taken an outright opportunistic approach, encouraged by hastily-constructed public policy. Wetherspoons, having questioned the validity of World Health Organisation (WHO) advice to close non-essential businesses, declared that employees would not be paid while the chain’s pubs remained shut, and that workers should “get a job at Tesco”. Some businesses refused to shutter operations too. British Airways has come under intense criticism for failing to protect flight crew even as they continue to fly to parts of the world with high concentrations of coronavirus cases.

BA is not the only airline to have made headlines during the shutdown, however. The airline industry, maligned in more normal times for its contribution to climate change, has risen as a whole to ask for government assistance, and faced criticism for non-domiciled ownership. EasyJet claimed government assistance while paying out £60m in dividends to founder Stelios Haji-Ioannou, tax resident in Monaco. Virgin Atlantic has led calls for the industry to be rescued, though major shareholder Richard Branson is also not tax resident in the UK. These moves have brought heavy criticism, particularly as the government has refused to answer questions about subsidising non-tax paying individuals.

As the number of deaths have begun to decrease in some countries, discussions about the equitability of societies and where our social contracts have led begin to rise. The crisis surrounding the coronavirus has focused attention on the conditions in which some of society’s most vital workers exist in the normal running of things. Meanwhile, we have moved ever more rapidly towards a breakdown of the world’s climate that will make both the social and financial costs of our current situation no more than a barely noticeable bump in the road.

In the past few weeks, some firms have stepped forward to contribute at the juncture of opportunity and necessity. Business is not bad; it merely behaves within the boundaries set for it, largely by the state. And as the government rolls the printing presses in response to a national emergency once more, now is the time to ask what the longer term aims of that expenditure might be.

Is allowing profitable businesses, such as supermarkets, to pay staff at a level that necessitates state benefits top-ups an acceptable practice? What should the role of the state be in saving organisations and individuals who do not contribute to society in the way that society expects? Can we, in the full scientific knowledge of what the remainder of this century and beyond holds in store, return the airline industry to business as usual with taxpayer funding?

Some businesses have raised their hands. What might a future society be like for everyone – essential worker and tax exile alike – if a more active role in a more equitable society was not simply a response to extraordinary times but an ordinary expectation?

UK governments have consistently demonstrated the ability to spend vast sums of future tax revenue when the need arises. A decade ago that money could have had conditions attached to it that might have ameliorated living conditions for workers facing this new threat, while creating a generally more equitable, safer future. To what extent, to problematise a statement we should not have to ask ourselves again a decade down the road, are we all in this together this time?

Are you a decision-maker in government, industry or the third sector responding to the coronavirus crisis? Apply now to our virtual Policy Fellowship Programme for access to University of Bath research and expertise. Learn more

All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.

Posted in: Business and the labour market, COVID-19, Culture and policy, Economics, UK politics


  • (we won't publish this)

Write a response