How many people will be unemployed after the epidemic?

Since I started work yesterday, my circle of friends has been very exciting:

Those who start working envy those who work from home

I envy those who work from home and haven't started working yet.

Those who will be back to work next week will be envious of those who don’t have to work

Those who are unemployed envy those who have jobs

…

Many netizens also joked about their career plans and goals:

Career planning in the first quarter of 2020 has become "begging" .

The 2020 plan has changed from ambitious goals such as "learning English, finding a partner, and protecting my hairline" to simply "living."

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During this period, there have been many remarks such as "the epidemic will cause earth-shaking changes to the economy" and "companies cannot survive and will inevitably eliminate employees in order to save costs."

The unemployment issue after the epidemic has become a concern that everyone cannot avoid.

But will so many people really lose their jobs after the epidemic? Will unemployment endanger you and me? We will provide a comprehensive analysis from the macro, meso, micro and individual perspectives.

01What employment impact will the epidemic have?

Professionals would describe the impact of the epidemic on the macroeconomy in this way:

Demand and production dropped sharply, investment, consumption and exports were all significantly impacted, and short-term unemployment and prices increased.

In fact, it can be simply stated in one sentence: it has a negative impact on the economy. After all, everyone is stuck at home, unable to travel, unable to go out for dinner, unable to watch movies...

In the county where I live, the first decent shopping mall just opened before the Spring Festival. There was an escape room and a game hall on the 6th floor, and a cinema on the 7th floor. However, within a few days of opening, everyone was afraid to enter because of the epidemic. I don’t know if the newly opened shops inside can survive.

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If we look at the data from a medium-term perspective, it is even more "shocking". In particular, several industries that have been severely affected include hotels and catering, cultural tourism, film and television entertainment, etc.

1) Hotel catering

The Spring Festival itself is a peak season for catering. During the 2019 Spring Festival (from New Year's Eve to the sixth day of the first lunar month), retail and catering companies across the country achieved sales of approximately 100.5 billion yuan.

But this year, except for a few restaurants such as Starbucks and McDonald's, basically all dine-in catering businesses have suspended operations.

For example, Haidilao originally planned to suspend operations at all its mainland stores from January 26 to January 31, but later announced that the suspension period would be extended. Someone did the math based on the financial report and found that Haidilao's employee cost is 836 million yuan per month. With Haidilao's estimated cash reserves of less than 3 billion yuan, it can only sustain for three months, excluding raw material costs.

Xibei Catering Chairman @贾国龙 said in an interview that the company expects to lose 700-800 million yuan in revenue in the month before and after the Spring Festival. The monthly salary expenditure for 20,000 employees is about 150 million yuan, and the cash in Xibei’s account can only last for three months.

Wu Guoping, founder of Waipojia Catering Group, also said: "We have to pay 2.5 million yuan at dawn. But epidemic prevention is still the top priority, and we must ensure the safety and basic living of our employees."

Of course, catering companies with a large proportion of takeout business are relatively less affected. For example, Yum China’s takeout revenue accounts for about 20%.

But even if the takeaway business is included, the catering industry's revenue during the Spring Festival was at least halved.

2) Cultural Tourism

During the 2019 Spring Festival holiday, the total number of tourists received nationwide was 415 million, and tourism revenue reached 513.9 billion yuan.

During this year's Spring Festival, major scenic spots and cultural and entertainment venues across the country have suspended operations. For example, the Shanghai Disneyland, which is usually crowded with people, has been closed since January 25th.

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(Source: CICC Research Department)

In addition, travel agencies across the country have also suspended their services. Online travel platforms such as Ctrip, Mafengwo, Fliggy, Tongcheng, and Meituan have already released refund and change guarantee plans early on, and hotel check-outs and ticket refunds can be done free of charge.

Also related to tourism is transportation.

According to CICC, from January 24 to 30, 2020, the national railway passenger volume decreased by 61.5% compared with the same period of the Spring Festival in 2019, and the road and civil aviation passenger volumes decreased by 64.6% and 48% year-on-year respectively.

Basically, except for necessary transportation, the tourism market is at a standstill during the Spring Festival.

3) Film and TV Entertainment

In 2019, the box office during the Spring Festival was 5.859 billion. In 2020, 15 films originally scheduled to be released on February 14 were collectively withdrawn, and Wanda, Jinyi and other cinemas across the country have also suspended operations.

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(Tao Piaopiao has no popular movies, and Wanda has no showtimes)

For the film market, the box office that can be accommodated in the same period is limited. In addition, the Spring Festival period itself is a peak period for movie-watching. Therefore, compared with the "retaliatory" growth of concentrated consumption of users in the catering and tourism industries after the epidemic, the epidemic has had a real impact on the overall national box office in 2020.

In addition, film crews have currently suspended filming, which means that the supply of later film and television works may be insufficient, further affecting industry revenue.

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A rough calculation of the income losses of the above three industries during the Spring Festival is more than 1 trillion. Of course, if we look at the proportion of annual GDP, compared with the estimated 100 trillion for 2019, the loss accounts for about 1%, which does not seem high in relative terms.

But this does not include other industries, such as offline education, KTV, Internet cafes, gyms... It can be said that as long as there is offline business, it will be affected by this epidemic.

Even a company like ours that is very "Internet-based" will be affected because of its offline activities, peripheral sales (express delivery factors) and other businesses.

02Will your company survive the epidemic?

From the perspective of the industry's meso-level analysis, many people will indeed lose their jobs after the epidemic.

However, if we adjust our vision to the micro level and focus on enterprises, you will find that each enterprise has the ability to self-repair and adjust, has its own "immune" system, and can return to a healthy state.

Many companies usually invest in businesses with high growth rates and great growth potential, but currently have low market share and revenue. These exploratory businesses will be temporarily suspended under the epidemic; those businesses that obviously only invest but have no output, and those businesses that are not recognized by the epidemic policy, will be closed directly.

Suspension and closure do not mean layoffs.

When a company encounters operational difficulties, it will respond by focusing on its business and concentrating its manpower on productive activities.

Let’s take Xibei Oat Noodles, which was severely affected by the epidemic, as an example. Its annual revenue is over 5 billion yuan, and dine-in business accounts for more than 80%. Although the company is not allowed to open its doors to receive customers due to the pneumonia, there is still a high probability that its more than 20,000 employees can be absorbed by the "takeout business."

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According to public media reports, we made the following estimated table of Xibei’s main operating data in 2018.

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In 2018, Xibei’s total revenue was 5.6 billion yuan, of which 4.8 billion yuan was from dine-in meals and 800 million yuan was from takeout meals. Takeout contributed 11 million orders, 14% of revenue, and 18% of traffic, which shows that there is still a very large market and room for staffing .

In addition, for the catering industry, the takeaway business means higher operating profits per store.

Since Xibei is not a listed company, we cannot see more detailed operating data.

Let’s take another example and look at Starbucks’ takeaway data. The following table is the research result of Changjiang Securities Research Institute:

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The core point of this table is that as long as the proportion of Starbucks' single-store takeaway business revenue reaches 15%, the single-store operating profit will increase from 0% to 48.9%.

Applying this view to Xibei and the catering industry, although dine-in revenue has dropped sharply, the high-profit cooked food takeaway business can help them tide over the difficulties.

Whether to lay off employees or not depends mainly on the company's confidence in the future.

In terms of immune regulation capabilities, companies are like individuals, but when making decisions, they are not swayed by the panic of the moment. They have higher wisdom and focus more on their confidence in the future.

The confidence of entrepreneurs and bosses is what really matters to your career and mine. Academic research has found that entrepreneurs’ confidence has a significant impact on the economy, employment, investment, and industry.

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In addition to timely adjustments to business directions, there are four main aspects that currently affect corporate confidence.

First, it is cash flow and credit lines.

When the cash on the account is sufficient to support the next six months and the credit line is sufficient to support six months, the company's material confidence is basically guaranteed.

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Second, it is capital’s judgment on the future of the market.

Domestic and overseas markets have responded to the novel coronavirus outbreak. Among the few stocks that have risen, one stock is from the catering industry that has been hit very hard by the epidemic - Haidilao.

Although Haidilao's mainland stores have also been temporarily closed, investors are still optimistic about the post-epidemic catering market, and Haidilao is one of the places people most want to go when they gather on the streets again.

As long as the company's business is fine and valuable, there will be capital willing to "invest" even if it has no money in the short term.

Third, the government introduced subsidy policies.

The money that companies spend on each employee is 1.5-1.7 times the employee's salary. Most of the extra money is used to pay social insurance, provident fund, and venue fees. If the government introduces relevant policies during the epidemic, corporate confidence will double.

At present, relevant state departments have introduced a number of measures to guarantee corporate loans and reduce the pressure on enterprises to pay social security. I believe there will be more in the future.

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Fourth, it is the most direct epidemic prevention and control.

In addition to looking at the absolute values, we should also look at the trends of the national confirmed cases, suspected cases, cured cases, and deaths. On February 1, the number of people cured of the epidemic nationwide exceeded the number of deaths. February 8 is an important time point for gaining confidence in prevention and control.

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Strive for the best outcome, but prepare for the worst possible outcome.

In the article "Xibei Jia Guolong: The epidemic has caused more than 20,000 employees to be unemployed, and loans and salary payments can only last for three months", we should not only see the difficulties under the epidemic, but also look at what Xibei Jia Guolong said at the end of the interview:

"We will do our best to bear it and wait until the day when we can no longer bear it. Who knows when we will no longer be able to bear it?

How much endurance do people have, how much endurance do companies have, and what will happen in the process? There are too many variables, so don't make such precise calculations. Just try to do the things at hand well now.

This is the confidence and sense of responsibility of Chinese companies.

03 Conclusion

Today's article is not intended to cause anxiety to everyone, but to hope that everyone can objectively understand the employment environment.

In the face of an increasingly severe environment, you don't need to panic, because the company we work for has the ability to self-regulate.

In this process, we just need to maintain moderate tension and, like those wise people, try our best to do the things at hand well.

If unfortunately your company does not survive this process, there is no need to be discouraged.

China has more than 80 million small and medium-sized enterprises, and the average life cycle is only 2.9 years. Business bankruptcy itself is a part of the market economy.

In case you are temporarily "unemployed", think about it in a positive way. In fact, it is exposing your problems in advance. Then take the opportunity to study hard and make up for your shortcomings.

As long as the individual ability is strong, unemployment does not exist!