Could H1N1 derail fledgling economy?

Just as the economy is beginning to grow, ineffective sick leave policies and lack of emergency planning for the H1N1 virus could derail it.

The warning comes from outplacement firm Challenger, Gray and Christmas.

If the pandemic continues to spread, companies could be left significantly understaffed, particularly after a year of massive layoffs in nearly every industry, their report said.

“A nationwide outbreak will not only impact company staffing levels, but could cripple an already weakened economy that is just beginning to show signs of recovery, by hindering domestic and international business travel and further impairing consumer spending as wary citizens avoid public places,” said John A. Challenger, CEO of the company.

Nearly 60 percent of small- to medium-sized businesses do not have a business continuity plan. A survey of executives at private equity, hedge funds and other financial services companies conducted by Insite Security found that only 10 percent have plans to deal with the impact of H1N1 on their businesses.

“The worry is that the business community will be slow to prepare for a widespread outbreak,” Challenger said. “For many, the cost of proactive measures is too high for something that may not escalate to pandemic proportion. Unfortunately, many companies may find out the hard way that not preparing could be very costly.”

More than 9,000 cases of H1N1 flu have been reported in the United States this year, said the Centers for Disease Control. The World Health Organization puts the number of 2009 cases worldwide at nearly 350,000 with at least 4,100 deaths resulting from the virus.

But most companies haven’t made preparations for the absenteeism that could result from the virus as it spreads. In a 2007 presentation, the Department of Homeland Security indicated that an influenza epidemic could infect up to 50 percent of the population – leaving companies without necessary workers.

“For an employer that has recently gone through a downsizing and is already stretched thin in terms of staffing, 40 percent absenteeism in a given month could be devastating,” he said.

A recent survey by the Harvard School of Public Health found that only one-third of the companies indicated that they could sustain their business without severe operational problems if half their workforce were absent for two weeks. Only one-fifth felt they could keep operations running if they were staffed at 50 percent for a month. The study also found that only 35 percent of private businesses allow employees to use paid sick leave to care for a sick family member, and only 21 percent provided paid leave to care for children in the event of a school closure.

One Response to Could H1N1 derail fledgling economy?

  1. Amy,

    Thank you for writing this article. There is so much more people and businesses could be doing to prepare for the effects of H1N1 and other communicable illnesses.

    I would point out that in contrast to the quote from Challenger, the cost of preparation can be low, and much of it can be free. There is a tremendous amount of information available. Furthermore, firms like Firestorm have put together complete packages to assist companies.

    Thiis is a known vulnerability. Failure to prepare is not an option. Officers and directors have a duty. It is going to be difficult to get on the witness stand and say ‘I didn’t know”.

    I don’t believe this is an issue of companies not wanting to spend the money, i believe it is one of Disaster Denial. Most people don’t believe that it can happen to them or that it will happen to their company.

    Most people were taken aback by how fast swine flu spread around the world earlier this year. Unfortunately they did not learn from this situation. Right now, corporations are not taking the World Health Organization, Center for Disease Control and federal government warnings about 40% absenteeism seriously. They think that because right now there is no major problem, it can be managed. Unfortunately, when the absenteeism begins to escalate, it will happen at an exponential rate. Once the escalation starts, there will be no time to plan.

    Again, thank you for writing this article.


    Harry W. Rhulen
    Firestorm Solutions, LLC

    Harry Rhulen
    October 16, 2009 at 11:35 am