As we enter 2022, many of us will pause and take stock of where we are personally, as a company and as a country. The COVID-19 pandemic continues to impact people and businesses two years after its commencement. “Pandemic exhaustion” is widespread along with the Great Resignation - an informal name for the widespread trend of workers leaving their jobs – causing skill shortages and bottlenecks in many areas. This article looks at how companies can brave these negative factors, prepare for the upturn and succeed in achieving positive business objectives.
Shifting COVID-19 Responses
While there are still real and pressing concerns around the health impact of the different strains of coronaviruses that are evolving, as we step into 2022, the likelihood of COVID-19 being treated as an epidemic similar to flu season epidemic instead of an earth-shattering pandemic is significantly higher. This is likely to result in 2022 being a year of recovery but not a year of expansion for the global economy as a whole.
As the world's population develops herd immunity one way or another to the various evolving strains, COVID-19 related country barriers may start to come down and the global supply chain may slowly start to recover. This may not happen in all areas – for example the shortage of chips may well persist being driven by the sudden spike in demand arising from home working by so many people – but it is likely to be a general trend. Ask these supply chains stabilize during 2022, there will emerge opportunities for businesses to expand and grow. The smart businesses therefore are those that are prepared and able to take full advantage when the opportunity presents. In this respect preparation is the key.
World Interest Rates
Another key controlling parameter for the world economy will be the trend in interest rates in the world’s major economies. Interest rates have been at record low levels since the start of the pandemic. This has driven a stock market and housing boom in the US together with a huge uptick of M&A transactions. However, it is likely that the days of super-cheap credit are coming to an end, the recent increase in UK bank rate from 0.1% to 0.25% being a possible harbinger of things to come in the world’s major economies. The increase in inflation in many of the major world economies is also a matter of concern and will drive governments to increase interest rates. Business valuations are likely therefore overall to come down as a result. Thus, if the aim of investors is to exit their business, this is the time to do it!
Shifting From Office to Home & Remote Working
COVID-19 has changed the “work-in-office” culture forever. Where the business exigencies so permit, working from home is the new norm. This has brought with it a new approach by many workers to their jobs where home driven priorities and quality of life are as or more important than the employer’s priorities. Equally, employers now have a wider pool of labor to choose from, no longer geographically restricted to a region or a country. This will have a balancing effect on remuneration in relevant skillset areas.
Virtual services will therefore continue to boom in 2022. Companies in this space will need to hire employees in target markets to increase their brand recognition as well as hire engineers, many of whom are in short supply, wherever they can find them.
U.S. companies in the virtual services and FinTech sectors with a profile of employing remote workers are therefore likely to look abroad in greater numbers in 2022 than in 2021. It is important when they do so that they take expert advice.
For example, one would think running payroll for employees in our next-door neighbor Canada is not dis-similar to US. However, in Canada payroll must be run “twice a month in British Columbia”, in Ontario “regular pay day could be weekly, bi-weekly, semi-monthly, monthly or any specified period”, in Alberta payroll must be run at least once a month, in Nova Scotia “an employee must be paid at least two times each month and within five business days after the end of the pay period. There are exceptions to this however, one being where payments are made in accordance with the terms of an existing practice” and in Quebec “employer has one month to remit an employee’s first pay. After this, wages must be paid at regular intervals of no more than 16 days, or one month in case of managerial personnel”, to quote relevant legislation. Not only this but with the determining factor being the Territory pr Province where the employee lives and not where the office is located – and the burden of establishing from where each remote employee is working rests with the employer.
To summarize, we expect 2022 to be a year of consolidation and general recovery from the pandemic no doubt with twists and turns on the way in the terms of COVID-19 variants. Interest rates are likely to rise. Virtual services and FinTech sectors are expected to continue booming and the trend of hiring remote workers will possibly increase. The winners are going to be companies exploiting these trends and as well as those consciously preparing for expansion as the world economy slowly recovers from this horrendous pandemic.
Dr. Shan Nair is the President of Nucleus, a one-stop global expansion solution for businesses and a a consultant on international expansion.
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