The Government is close to a decision on when New Zealand will shift from alert level 3 down to level 2.
For a number of reasons, it may be more challenging than the shift from level 4 to level 3, as with each shift the risk grows faster than the reward.
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The strategy so far is very clear, and straightforward. At alert level 4, we had just essential services, and whatever we could do working from home. The twin benefits from a quite stringent lockdown were to constrain transmission of the virus by minimising the amount of interaction among people in workplaces and socially, and in doing so protecting the essential services from risks from non-essential activity.
That maximised both aspects of distancing – physical distancing by keeping people apart, and time distancing by reducing interaction long enough for the virus to be starved of new hosts. The major cost was the shutdown of much business activity, with loss of earnings and employment.
The shift to alert level 3 was relatively straightforward, as long as the timing was right. The economic benefits would flow without doubt, while the risk was seemingly diminishing with each passing day.
Moreover, Level 3 is well structured. It has enabled the relatively lower risk business activities to get up and running. That allows for relatively strong gains in the value of business activity, with around three-quarters of jobs now operating at some capacity while still managing the level of risk in both the workplace and in the social environment. Critically, social distancing is maintained, in order to protect and support business activity for as long as possible, and give it a good chance of re-establishing.
That is clear in the nature of the business activity that has been allowed. Covid-19 is transmitted in both workplace and social settings. And not all workplaces have the same risks of transmission. Those where most daily interaction by workers occurs within the workplace bubble have relatively lower risk.
Others where interaction is both within the bubble and among a number of bubbles ("shared bubbles") impart a higher level of risk, because more contacts are involved. Those workplaces which are public-facing with interactions with the community as customers imply a higher level of risk again. The size of the workplace bubble is also important: more people means more interactions, and a greater chance of contact with a carrier if there is one present.
Simply, small "within-bubble" workplaces carry generally lower risk, while large "public-facing" workplace bubbles carry generally higher risk.
These considerations are apparent in the Level 3 structure. Those industries with mainly within-bubble and shared-bubble workplaces have been given much greater reign to re- commence operations, while public-facing workplaces are allowed provided they can maintain social distancing – pick-up and drop-off have quickly become de rigueur for many takeaway, restaurant and retail outlets. And, still supported by social distancing, Level 3 has seen a substantial increase in business activity.
An estimated 620,000 workers have been able to return to the workplace, to join some 700,000 in essential activities and an estimated 600,000 working at home, to see just more than 2 million active out of the total 2.7 million workers. An estimated
75-77 per cent of economic activity in GDP terms is now able to function
That substantial reward has been achieved by focusing on the relatively low-risk workforce. Certainly not a low actual risk, given the virus' very high transmissibility, but a sound strategy with regard to the rewards and the risks.
Alert level 2 is different. This shift is substantially higher risk, on both workplace and social fronts. The workplace front will see more relatively higher-risk activities operating again. Those businesses need to be sustained by interaction with the public. That increases transmission risks both within the workplace, and between workplace and community.
Figure 1 (below) illustrates the differences among the alert levels, and the potential workforce back in the workplace under level 2, including those working from home. The shift to level 2 could see another 800,000 persons back in the workplace - although the increase could be as little as half of that if many prefer to still work from home, where their personal risk is lower.
And though the relative transmission risk will go up significantly, level 2's expected rewards for economic activity are only about half of those achieved from the first shift. level 4 to level 3 restored an estimated 24-26 per cent of economic activity. However, level 3 to level 2 has an expected uplift of only 11-13 per cent.
The obvious nervousness from most of the scientific experts is the risk of many more in the workplace in combination with some reduction in social distancing - however well-intentioned most in the community may be. The speed with which things can go south again is well-evidenced, from many countries. All successes in limiting the spread of the virus are due to lockdowns and distancing; no vaccines or cures have emerged.
Which is why the scientific community maintains its focus on the potential of the virus to spread across our community and economy, with little regard for the small number of new cases in the past few days as some indication it has gone away for good.
And why the Government continues to be vigilant and cautious, recognising clearly that the shift to Level 2 is not going to be just a walk in the park, but a decision carrying much higher risk than the shift to Level 3.
• Douglas Fairgray is a director of Takapuna-based consultancy, Market Economics Ltd.