What will happen to salaries and prices when the pandemic ends
A Life / / January 06, 2021
Anna Bodrova
Senior Analyst at IAC Alpari.
What will happen to our salaries after the pandemic?
What will happen after - this is now the most exciting question. It won't be easy after that. It is necessary, firstly, to return to the working rhythm as quickly as possible, and secondly, to make sure that the work priorities are still relevant, the tasks are clear, and the course is correct.
It is not at all a fact that some Russians will have somewhere to return to work. Small and micro businesses in or around the service sector will die by 80%, the rest will have to adapt. This will definitely be a new reality, as we did not know it yet. The good news is that each of us will move to a qualitatively new level.
We can say with confidence that there is no point in waiting for a salary increase in the next six months, or even longer - business just needs to survive. You should be prepared for the fact that the employer will offer to keep the job, but for less money, and make a decision in advance for yourself. This already happened in 2014, so it shouldn't be too scary.
Are there areas where salaries will rise? For example, will doctors be paid more and bloggers less?
Doctors and teachers are the same employees of the public sector, as before, in the "pre-coronavirus" times. They will not become “kings of income” in the labor market simply because the entire public sector is very clumsy.
But the respect for professions will definitely increase, because the priorities will be set in the only right way. A doctor is a fundamental profession, he studies for a long time, improves for a long time, but also works for a very long time.
A blogger in a time of crisis may find himself without a livelihood at all, because advertisers have a banal money supply. And then, of course, everyone decides for himself.
If many companies permanently switch to remote work, will their employees' salaries fall?
The technically remote staff takes away a serious amount of expenses from the employer: from rent space before the need to comply with a number of rules of the "office code" - options with parking, lunch and corporate parties.
Paying for work from home is unlikely to decrease. After all, an employee valuable to the company cannot be cheap. But the business's own costs can definitely become lower, and that's good.
Everyone around says that a crisis is a time of opportunity. What to do to stay profitable?
The crisis is indeed a time of opportunity. You can try to occupy the vacant niches. Small bakeries near the house, cozy coffee houses, some shops with highly specialized goods - all this will be in demand by the townspeople who want to return to the previous rhythm of life.
How long will it take for small and medium-sized businesses to recover from the crisis? How will it recover at all?
Small and medium-sized businesses need consumers with normal purchasing power. Simply put, the business will come back to life at the same rate as the consumer. If people are willing to spend, the business will grow faster.
The problem is that very few people will have free funds to exit the self-isolation regime. This means that the restoration of business processes will be very slow and painful, and competition for the client will increase. The script will be stressful anyway.
What will the prices rise for? Will the state regulate the value of goods, and if so, which ones?
Nothing will remain cheap, you have to accept it and accept it as a fact. Imported goods rose in price due to exchange rate fluctuations, while domestic goods followed them according to market laws.
The state can take control of the rise in prices for groups of socially important goods, but hardly more. Otherwise, our relatively free market will turn into its own kind, and this is bad for business. This means that prices will rise anyway.
If oil becomes cheaper, will gasoline also cost less?
There is a purely Russian paradox here: fuel prices rise both when oil becomes more expensive and when oil becomes cheaper. This is because ⅔ of the price of a liter of gasoline are duties, excise duties and taxes.
The cost of oil itself takes a small part here and does not particularly affect the final price tag at the gas station. The state does not remove a share of taxes from the industry - gasoline has nothing to get cheaper.
Should you make big purchases now? For example, invest in an apartment or buy a huge TV?
A TV, like a car, is not an investment, but an expensive purchase. Such goods lose their price exactly at the moment when they leave the point of sale, and then only decrease in value.
The apartment is a constant. At the very least, you can live in it or rent it out, as a maximum, you can make repairs and later sell at a higher price. There are definitely options here.
Is it now possible to buy something on credit, for example a car? Anything small?
You have to be careful with a loan. Firstly, you always "feed" the bank, and it feels good anyway. Secondly, buying a TV on credit is a so-so story, because there is no urgent need for it, and it is quite possible to accumulate funds for its purchase.
In an adult and financially conscious life, loans are needed for expensive purchases that are already affordable, but with a loan it is calmer. For example, a car or an apartment. A smartphone on credit is not only expensive, but also stupid.
What to do with ruble savings? Maybe open a deposit, exchange for currency, invest in securities, or just fold it under the mattress?
The main thing to do with savings now is to do nothing with them. Do not spend, do not make sharp movements, do not buy currency at the peak of value for all ruble savings. Money doesn't like emotions.
A little later, when the financial panic subsides, they can be divided into three groups: rubles, dollars, euros. This is the safest and most conservative option. In our country, the dollar is always reliable, whatever one may say. But buying foreign currency is now a bad idea: the dollar is too expensive, you have to wait.
What will happen to the ruble exchange rate? He'll still get up from his knees, won't he?
The Russian budget will now go into a deficit, and while oil is cheap, there is nothing to cover it with. For this, the ruble was devalued, that is, made it weaker, due to the difference in exchange rates, the lack of money will be covered.
Not much will change here in the next six months. The dollar will remain in the range of 70-80 rubles, the euro - in the range of 80-86 rubles.
What to do to protect yourself from the consequences of the crisis next time?
There can be several mechanisms for potential financial assistance. The most obvious of them is the creation of a certain financial "safety cushion" equal to three monthly salaries. This will help to hold out both in quarantine and without work for some time, if such circumstances arise.
Savings should not be stored in one thing; it is better to form a basket of several products. This can be done over time, there can be currency, investments in metals and funds, and some shares. We all thought, "This will definitely not happen to me." This was the biggest misconception. Let it be a good lesson for the future.