As the covid-19 pandemic continues to spread across the world, Latin American companies are doing all they can to implement emergency contingency measures to effectively manage their workforce and keep business productivity flowing.
The CEO of technology multinational IBM Ginni Rometty once said that “we should prepare our future workforce differently”. But even the most outside-the-box thinkers would have struggled to prepare for the dramatic effects on company workforces caused by covid-19.
Covid-19, the disease caused by the new coronavirus, was declared a pandemic by the World Health Organization (WHO) in early March and is posing a significant challenge to businesses. Right now, they are having to put emergency measures in place to keep their business afloat – but there are a myriad of other issues that arise alongside the pandemic. Internally, having to prepare for any liability issues from employees’ exposure to covid-19, as well as adapting to remote working measures and accommodating for the prospect of a higher number of workers on sick leave, is keeping in-house teams busy. Externally, GCs need to find solutions to keep parts of the business running that are affected by travel bans and quarantine measures, such as supply chains and agreements with external providers.
Although Latin America was hit by the virus later than other parts of the world – the first case was confirmed in Brazil on 25 February – it is still experiencing the consequences. Nearly all countries in the region have travel restrictions in place, with Brazil closing its borders for at least the next two weeks. In Ecuador all flights are banned, while in Bolivia it was announced that presidential elections in May would be postponed as the country heads into a two-week nationwide quarantine. In Central America, El Salvador and Guatemala have both enacted strict curfews for their populations.
According to the International Monetary Fund (IMF), the ensuing global economic slowdown and disruption in supply chains and tourism is likely to hit the region hard, despite many countries in the region predicted positive economic prospects just a few months ago. Companies like Brazilian airline Embraer have seen their stock tumble in value – it fell by 14% last Wednesday, leaving its landmark US$4.2 billion sale to Boeing hanging in the balance.
Latin America’s businesses are taking measures to protect their workforce and do their bit to contain the spread of the virus, whether through teleworking measures, amped-up office hygiene, or cancelling events. Such measures are putting pressure on commercial teams to continue to make sales and meet their objectives. “In the short-term, companies will face a decrease of productivity as a result of shutdowns and lower demands,” says Andrea Giamondo Massei Rossi, partner at Machado Meyer Advogados. “To overcome these unprecedented times, they need to implement the most stringent measures to best cooperation with staff and employees to adapt to all covid-19 concerns,” she added
The number one priority for countries has been to close their borders and contain the spread of the virus. But even in countries that have not implemented the necessary containment measures – like Brazil, which has come under fire for its relaxed approach to the virus – companies are implementing their own containment measures on a microcosmic scale to protect their business and their employees. “We have implemented work from home measures, and banned travel both within the country and internationally,” says Patricia Barbelli, GC for Brazil, Paraguay and Uruguay at drinks giant Diageo.
While isolation and the removal of a work routine can be demoralising for some, Diageo has made sure to keep employees motivated by leaning heavily on technology to organise regular catch-ups through the company’s virtual hangout and chat platforms. “My company is doing really well on being very caring and supportive with employees; we have created chats to share regular updates, but also celebrate our day, achievements and challenges,” says Barbelli.
Another country that has been the subject of criticism for its relaxed approach to the pandemic has been Mexico – President Andrés Manuel López Obrador posted a video on Twitter of himself hugging and kissing supporters during a visit to the state of Guerrero state last Sunday. He has also been photographed refusing hand sanitiser while entering a press conference.
This approach, which has been criticised by other politicians in the region, is not echoed by Mexico’s GCs. Insurance company AXA has been able to apply the same strategies it is using globally to tackle the fallout from the virus in Mexico, putting in place a crisis committee there before the virus even hit the country. It has used the team to liaise with the company’s offices across the world to decide best business practices for hygiene, installing hand sanitising stations across the building and limiting the number of employees in the building where possible. These are not the only measures the company has taken. “We restricted and cancelled a lot of our events this year, and focused on implementing the proper work from home measures for our employees,” explains Javier Oroz Coppel, GC and general secretary at AXA in Mexico.
In Argentina, the government has ordered mandatory workforce measures. The country passed an executive action on 20 March establishing a lockdown until March 31 for all persons living in the country or staying temporarily in Argentina. The period is likely to be extended, say local lawyers.
To manage the effects of the lockdown, the government is considering implementing a production recovery programme that would see employees receive a monthly remuneration on top of their salary to help with costs. The government is also considering a cut to the social security tax employers pay on their employees’ wages. “The economic situation in Argentina in recent decades has been challenging, to say the least,” says Enrique Stile, partner at Marval, O’Farrell & Mairal. “The government’s priority is therefore to prevent the unemployment and economic crisis from getting any worse.”
Given the unprecedented nature of the covid-19 crisis, it’s a big learning curve for businesses looking to follow the most effective methods of crisis management. Ricardo Estrada, senior lawyer for wider Latin America at pharmaceutical company GlaxoSmithKline in Costa Rica, says his company has been able to adapt in an agile and efficient way, implementing travel bans and work from home measures that have kept its workforce safe but allowed the company to continue to function. “We hope that this crisis will end soon and that it will allow us, in retrospect, to learn lessons that will be key to maintaining the business in the long run.”
Look out for further coverage of covid-19 and its impact on the work of Latin American legal teams in upcoming briefings.
(Latin Lawyer - 24/03/2020)