Business

Europeans eye endemic light at end of pandemic tunnel

Berlin, Germany – This week, German Health Minister Karl Lauterbach told his country that it was the right time to start thinking about the COVID-19 pandemic in a different way.

“When we have this [surge] behind us … we can start opening again, step by step,” he told local media. “It’s correct to envisage this now.”

The German politician, who is a professor of epidemiology, is not the only European official making this call.

Spanish Prime Minister Pedro Sanchez has already spoken about his plan to begin treating the coronavirus more like the flu. Spain would “have to learn to live with it, as we do with many other viruses”, he said.

French Health Minister Olivier Veran has also suggested this could be the final wave of the pandemic.

The argument is that although infections caused by the more infectious Omicron variant of the virus are rising rapidly, serious cases and hospital admissions have not increased at the same rate.

COVID-19 wouldn’t disappear altogether, but would be managed. The disease would become endemic, rather than pandemic.

Berlin-based retailer Emily Pelich welcomes the calls to consider COVID-19 a little differently.

Pelich opened her homewares store, Nos, right after Germany’s first lockdown in May 2020. But for her, the most challenging aspect of launching a business in the middle of a pandemic hasn’t necessarily been logistical. “It has been all the uncertainty,” she told Al Jazeera. “You just didn’t know what was going to happen from week to week.”

A protective mask mural on a sidewalk in Berlin, GermanyThe impact of COVID-19’s impending reclassification hasn’t impacted hard-hit sectors of European economies yet [File: Krisztian Bocsi/Bloomberg]

Currently, the COVID-19 crisis is still categorised as a pandemic in Europe. And despite all the optimism about a potential end to the two-year-old health crisis, any positive impact on business will take time.

Pelich says that in the German capital, where COVID-19 infections are still rising rapidly, there are fewer people on the street and in her store. “We can’t compare ourselves to Spain or France yet,” she said.

The impact of COVID-19’s impending reclassification hasn’t impacted hard-hit sectors elsewhere yet either.

“Life goes on. We have to learn to live with this,” the manager of a Barcelona-based boat charter service told Al Jazeera, asking that her surname be withheld because she is not authorised to speak on behalf of her firm.

She said she agrees with her prime minister’s shifting stance on the pandemic, but has yet to see the pivot translate into an uptick in business. “We haven’t noticed any differences for this year’s bookings,” she said. “[The year] 2020 was terrible. No planes coming in, no tourists. Last year was better. But what this year will be like, it’s really too early to tell.”

Neighbouring Portugal is often described as one of the European countries closest to being able to call COVID-19 endemic, with around 98 percent of the eligible population vaccinated.

“We were back to 2019 levels last summer,” an operator at a Lisbon-based boat charter company confirmed, asking Al Jazeera that their surname be withheld to protect privacy. “But unfortunately now people are cancelling again.”

Infection numbers in Portugal are also increasing dramatically.

Shifting consumers’ behaviour

For experts monitoring consumer behaviour during the pandemic, all of this makes sense.

“One thing we have observed during the pandemic is that people are making their own calculations, almost independent of what their government or institutions have said,” explained Sven Smit, co-chairman of the McKinsey Global Institute, the international management consultancy’s economics research arm.

People do react to what institutes and governments say but also to what they see on the ground.

Sven Smit, co-chairman, McKinsey Global Institute

Smit points to data on what’s known as “discretionary mobility” – that is, when people leave home for reasons other than work or to buy groceries.

“In most countries, it [discretionary mobility] almost perfectly aligned to what was happening in hospitals and the rate of mortality,” Smit explained. “People do react to what institutes and governments say but also to what they see on the ground, what they see is happening with friends and family.”

So for businesses, moving from pandemic to endemic won’t be like flicking a switch.

There will be a transitional phase, one that experts at Boston Consulting Group suggested might take between six and nine months in a recent strategy paper.

“Right now, we are all waiting,” confirmed United Kingdom-based economist Grace Lordan, the director of the Inclusion Initiative at the London School of Economics.

“What’s so fascinating about human behaviour is that we follow multiple, comparable others,” she told Al Jazeera. “We won’t reach a tipping point until 30 to 50 percent of the population starts to react. Then we’ll see things start to adapt, moving back to some sort of steady state.”

Who wins in the new normal?

During the pandemic, European economies saw an acceleration in existing business and cultural trends. Things like online shopping, more digital health services and working from home became more popular. Virus-sensitive sectors that involved personal contact or travel – such as hospitality, tourism, retail or trade fairs, for example – suffered.

This month, as markets started to react to the promised switch from pandemic to endemic, some of the winners of the crisis have been unable to maintain the lucrative trajectory they’d been on.

Companies like the German food specialists HelloFresh and Delivery Hero, the United States entertainment giant Netflix, exercise-at-home firm Peloton and online education specialist Chegg have all underperformed since the beginning of the year.

Meanwhile, firms that bore the brunt of the crisis have started predicting better times ahead.

We won’t reach a tipping point until 30 to 50 percent of the population starts to react.

Grace Lordan, director, Inclusion Initiative, London School of Economics

In its latest bulletin, the European Central Bank noted that by the end of 2021, locals were slowly but surely switching from spending money on goods, back to services. “The trade, transport and hospitality sector expanded by almost 7 percent, quarter on quarter, in the third quarter [of 2021],” the bankers reported, “while the arts and recreational activities sector grew by 12 percent.”

Obviously, this is still all part of the transition. But who is likely to win in the longer term, once COVID-19 is considered endemic?

To a certain extent, you can tell which trends are here to stay by assessing how “sticky” they are, McKinsey’s Smit explained.

“It’s actually quite simple,” the Amsterdam-based researcher said. “If everybody who experienced this new behaviour liked it, then it’s going to stay.”

For example, making an initial medical consultation with a doctor via a phone call or online was seen as efficient, effective and convenient by all involved, Smit noted.

At the other end of the scale, education at home was not particularly popular with anyone. “So the moment schools open, people will go back,” he said. Whereas remote healthcare is likely to stay.

Working from home is somewhere in the middle. Some companies plan to keep it, others want staffers back in the office.

Just how “sticky” all these changes are will be resolved during the transitional phase. Then the next step will involve longer-lasting, knock-on reactions to “the new normal”.

For example, as Lordan pointed out, “In every country, the corporations making these decisions [about things like working from home] are also the lifeblood of all the small and medium enterprises around them.”

If large firms decide staff can work from home more often in the future, “you will see a change in what cities look like”, Lordan argued. For instance, it’s quite possible there will be more restaurants out in the suburbs where professionals are working from home.

“Basically [the transition] will bring unpredictability for some sectors until everything settles,” the economist noted.

For Berlin-based retailer Pelich, even a little more certainty is helpful. “I think now we can all imagine things are going to get better again in summer, then maybe we’ll see another surge in winter,” she concluded. “And we need strategies for this.”

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