Recovery: The SIA three-scenario prediction for our ecosystem

Our research team has spent the last few weeks developing three global industry forecasts to address three different recovery scenarios. Needless to say, this has been a highly complex and detailed process. Each of the scenarios is based on a detailed set of circumstances dependent on government pandemic control and are very well thought out. We did reference this in the Staffing Industry Daily News item, but given the brevity of the news format, were unable to give the full picture.

Let me start by saying no one scenario is more likely than the others. Each scenario is realistic and depends on the duration of Covid-19 related lockdowns.

The scenarios depicted forecast global staffing revenue declines of between 14%  and 37% this year. But all three expect growth to resume in 2021. Here is a brief look at each scenario:

The first scenario is for a shorter outbreak. In this “V-shaped” recovery scenario, either the Covid-19 virus dissipates on its own or control of the outbreak is achieved via advances in testing, tracking, treatment, and/or prevention. Lockdown conditions are lifted after a maximum of two months, and the economy returns to normalcy reasonably rapidly. Under this scenario, SIA forecasts a decline in staffing revenue of 14% for 2020. Scenario 1 seems to be playing out in countries like China, Korea, New Zealand and Singapore.

Under the second scenario, the base case assumption is for a “U-shaped” recovery with lockdowns in effect for up to three months, at which time the virus weakens or becomes controlled mainly through advances in testing, tracking, treatment, and/or prevention. The economy gradually recovers, aided by massive government fiscal and monetary policy aid, and only modest to moderate negative economic impacts remain from the crisis (for example, higher unemployment, lower consumer spending, etc.) This scenario assumes the virus does not return significantly next winter or in additional waves of outbreaks, and that country governments around the world can control outbreaks. Under this scenario, SIA forecasts a decline in staffing revenue of 24% for 2020. Scenario two seems to be where the US and most of Europe are heading at the moment. “While a few countries seem to have bounced out of lockdown quite quickly, it looks like most developed economies will be on the path outlined in our second scenario for a U-shaped recovery,” says John Nurthen, SIAs executive director of global research.

The third scenario accounts for a longer outbreak. In this “W-shaped” recovery, lockdown continues for significant stretches of 2020, with the ongoing threat of spread, and many countries struggling to contain the virus. As the “W” shape implies, the countries concerned come out of lockdown, and the economy improves temporarily, but then further outbreaks force a return of lockdowns and business closures. Also, in this scenario, governments may exhaust their ability to use monetary and fiscal policy to mitigate economic declines. Under this scenario, SIA forecasts a decline in staffing revenue of 37% for 2020. However, it still remains uncertain whether those countries that are already out of lockdown or those still in lockdown can mitigate the threat of further outbreaks later this year as outlined in our third scenario for a W-shaped recovery. Given the ongoing uncertainty, staffing firms should hope for the best but plan for the worst,” Nurthen says.

SIA anticipates the lifting of shutdown measures will lead to a recovery next year and projects growth in all 14 of the largest staffing markets in 2021 (with double-digit growth in 12 of them). However, with the exception of India, SIA does not project a full recovery in any of those markets by next year.

The full report, Global Staffing Industry Market Estimates and Forecast: May 2020 Update,” provides detailed insights for all major staffing markets and is available to corporate members of SIA.


Craig Johnson

Craig Johnson
Craig Johnson is senior editorial director at Staffing Industry Analysts. He can be reached at cjohnson (at) staffingindustry (dot) com.

Craig Johnson

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