COVID-19 SPECIAL: Economic Affairs

Reflections on costs and benefits from the circuit breaker experience

Work-from-home husbands might have a new appreciation of housework. Getting in tune with nature may become permanent. And perhaps we'll be more productive.

Covid-19 has turned the world as we know it upside down and exposed the weaknesses of public health systems in responding to pandemics.

Already, there are economic changes resulting from supply chain disruptions causing companies to search for alternative arrangements. Many are questioning long-held doctrines on the advantages of outsourcing, Singapore's dependency on international trade and reliance on foreign workers.

There is also, however, the micro-economy of individuals and families in living with, and responding to, Covid-19.

As the Albert Winsemius Chair Professor and head of economics at Nanyang Technological University, I have been occupied with research activities, talks, conference participation and board meetings, in addition to my regular teaching, as well as supervision of research projects and PhD students. In only a few weeks, my working arrangements have changed significantly, as has my lifestyle, calling into question my own long-held, seemingly immutable beliefs.

Touching on personal reflections on the Covid-19 pandemic in Singapore, I share four observations.

HOME PRODUCTION

The first observation is that Covid-19, together with Singapore's circuit breaker period during which most workplaces and schools are closed - compels everyone to rearrange their time allocation for regular work, homework, recreation and leisure.

It also transforms work and working arrangements. With many office workers now working from home, many will have more flexibility to prioritise and rearrange different types of work. Whether undertaken at home or in the office, such work remains paid productive work. But working from home has blurred the line between paid productive work and another category of work typically described as "housework".

Work at home has a value, and this value, known as household production value, increases as more of this housework gets produced. Yet, in modern economies, the value of such housework is unrecognised and unpaid. While only market work is compensated with wages, it does not mean that housework is less important. Both contribute to family and society's welfare.

In many households, husbands are "discovering" household chores as they either help out or see their wives spending time doing them throughout the day. The comparative advantage of women being more efficient in housework, due to accumulated experience and also the pre-existing gender wage gap, may be eroded by the entry of men doing more housework. Such new roles may affect long-run labour force participation between genders, furthered by the narrowing wage gap in the labour market.

In some other households, however, men's difficulties in undertaking household chores, including minding of children, may lead to them recognising the sacrifices and effort in housework, and thus having greater appreciation of women as wives and homemakers, and in many households as having dual roles as homemakers and market workers.

However, during the circuit breaker, with both spouses spending more time at home, some households may see more conflict, thus raising the costs, in terms of psychological suffering and beyond, of such a restriction period.


ST ILLUSTRATION: MIEL

Similarly, new telecommunicating and online work arrangements on a scale never seen before, not only compel most to learn and operate new computer programs more efficiently and faster, they also allow firms to discover that these alternative arrangements may be cost-saving in the long run and in fact, workable.

For example, employees in certain professions might be more productive working from home, or find that project management is enhanced.

For society as a whole, it provides a further catalyst to becoming an IT-enabled, connected smart nation - faster than any incentive-based governmental policy to transform society can achieve.

In terms of educational offerings, schools and the tertiary sector have suspended contact classes and conducted courses online. However, without the usual contact meetings and teaching in classrooms where questions and comments can be taken more readily, online telecommunication remains restrictive.

 
 

SOME QUESTIONS

The mass exercise in working from home and home-based learning throws up some interesting questions: What is the impact of the new working arrangements on productivity and does this vary by sector? How will labour force participation be affected between genders?

Will there be a rebalancing of priorities between household production and market production? Will household production get the recognition and compensation it deserves? How will working from home affect family relationships?

Will society transform into having a greater preference for non-material goods, such as health, spirituality, environment and nature, tranquillity and quietude, moving away from pure consumption of material goods, and thus, reducing the "worship" of gross domestic product and other growth indicators?

 
 

CLEANLINESS AND PRODUCTIVITY

My second observation has to do with personal and general cleanliness. With all that sustained information on minimising the spread of Covid-19 via frequent washing and cleansing, the long-term result will be a more hygienic society - and a healthier one.

This, in turn, raises productivity. There is, however, the question of whether this is sustainable, since old habits die hard.

My conjecture is that because of the longer episode of this pandemic, this increased hygienic practice will continue and become a new normal. To ensure this is the case, future government public health campaigns could reinforce this message.

RESTRICTIONS, OUTDOOR RECREATION AND NATURE

My third observation has to do with physical exercise and the discovery of nature.

I do think, drawing from medical literature, that it is important to maintain long-run health, and that any outdoor restriction will be harmful. Thus, maintaining physical distancing and controlling crowds are key, while allowing for outdoor recreation.

Many, including myself, are discovering our neighbourhoods and with it, nature and the environment, and quietude. This return to nature will change mindsets and help people realise that Singapore has such a good quality of nature close at hand. And this pausing of the daily preoccupation with work, to enjoy nature, opens up new lifestyle opportunities.

There is still a long way to go to convince some in society that managing the environment and loving nature are integral to human existence, but this pandemic has compelled us to take a break from our usual routine to better understand and appreciate nature. Together with much reduced traffic on the roads, and the ability to enjoy cleaner air, this will certainly constitute a start in appreciating the meaning of sustainable development.

 
 

TREATMENTS AND TRADE-OFFS

My fourth observation is taken from following intense discussions on how to stamp out Covid-19 in society. I am not talking about drugs or vaccines, but rather, containment measures such as lockdowns, movement restriction orders, partial lockdowns and the like.

Each approach will have different cost-benefit analysis outcomes, but one must not take an all-or-nothing choice. In this case, the choice is not between business as usual (everything reopens and people move about freely) and a full lockdown (all offices close and everyone stays at home).

The question should be framed as to whether restrictions should be eased so that people are allowed to move a little more or a little less.

Each degree of restriction carries a cost, and it is this incremental cost versus the incremental benefit that must be the basis of informed decisions. Of course, one must be aware of the potential cost to the economy and loss of jobs, but this amount lost during a restrictive order must be compared with the incremental gains from relieving overburdened and stretched public health facilities and medical resources, in addition to saving lives.

People often forget that there are two costs to society: One is the cost of damage arising, in this case, from the harmful impact of Covid-19, and second, the cost of controlling Covid-19, both of which cost society in terms of resources.

This is the reality of trade-offs, and it is this incremental gain versus incremental cost that must govern informed decisions.

Not everything is bad news about the pandemic. There are silver linings and hopefully, with the end of Covid-19, some might be retained as the new normal for the betterment of society.

• Euston Quah is Albert Winsemius Chair Professor and head of economics at Nanyang Technological University. He is also the president of the Economic Society of Singapore.

A version of this article appeared in the print edition of The Straits Times on April 29, 2020, with the headline 'Reflections on costs and benefits from the circuit breaker experience'. Print Edition | Subscribe