ON November 5, 2021, the National Capital Region lowered its Covd-19 Alert Level from 3 to 2. Following the Inter-Agency Task Force (IATF) Guidelines, that means many establishments, including restaurants and other leisure venues not under granular lockdown, will be allowed to operate at 50 percent capacity compared to the previous 30 percent. Connected to that, the Commission on Higher Education (CHED) Chair Prospero de Vera III declared that universities and colleges may be allowed to conduct limited face-to-face classes in all degree programs subject to restrictions, including a maximum capacity of 50 percent.
However, even among establishments with the same easing, say from 30 to 50 percent capacity, some will be opening sooner than others. For the sake of classifying, there are two types of establishments with respect to the speed in which they will physically reopen. First, there are establishments that are urging to reopen. Even without the official easing of restriction, they have gotten themselves as prepared as they can be, whether they are prepared enough to some objective gold standard level of preparedness or not. As soon as restriction officially eases, they will indeed open. Second, there are establishments that are not in a hurry to reopen for good reasons.
Cases in point, while personal care service providers, restaurants, and others are in the urge to open, schools, and others that can deliver their goods and services online are not as much in the urge. Speaking of peso and cents, the firsts are in the urge for self-preservation and to save livelihoods. The difference between online versus onsite delivery is shutting down the establishment and laying off workers versus reopening the establishment and saving people’s livelihoods. As for the seconds, reopening onsite has no revenue downside. More so, it adds to the costs. In the case of schools for example, reopening onsite in the middle of the semester does not add tuition revenue. Contrary, it adds to the costs in the form of operational expenses, for example, maintenance, security, electricity, water, and so on.
Indeed, the seconds have very good reasons to drag reopening that include logistics and health risks. But one cannot argue that logistics, health care and other concerns are more important for the seconds than to the firsts, and vice versa. In fairness, the good reasons are equally important for all humans from the chief executive officer, everyone in between and to the contractual minimum wage earner. It is just that the economic repercussion incentivizes the firsts to take the necessary risk and for the seconds not to take the unnecessary risk. For the firsts, not taking the risk means shutting down the establishment and cutting down people’s livelihoods. Taking the risks means maintaining the establishment and livelihood, for example, of barbers, hairdressers, and masseurs. For the seconds, the establishment and livelihood can be maintained while not taking the unnecessary risk. For example, delivery of education can still be done online, and still maintain the livelihood of teachers and administrators without risking their health and that of their students.
Because of the cost-benefit of reopening onsite, the firsts are naturally “more prepared” than the seconds. I emphasize that “more prepared” is expressed in quotes. The reason is that the firsts are not necessarily more prepared than the seconds, and vice versa. For the firsts, they might as well be below some objective gold standard level of preparedness. But out of self-preservation, the incentive is to self-rationalize that they are prepared enough. If the establishment is at risk of shutting down and cutting people’s livelihood, there will be more justification to claim to be prepared. For the seconds, they might as well be above some objective level of gold standard of preparedness. But the incentive out of the risks from opening onsite is to self-rationalize that one is not prepared enough. If the establishment is in good enough financial position and its mission critical employees are safe in their livelihoods, then there will be justification to claim to be not prepared enough.
Albeit with so much governance failure in many aspects, the government should be credited for allowing the firsts and the seconds to reopen as they see fit. First, the government is allowing, not mandating, establishments to open to 50 percent capacity. Second, the government is allowing establishments to time their reopening as they see fit. So basically, the policy allows the firsts to reopen as fast as they need, and the seconds to reopen as cautiously as they need.
Dr. Luis F. Dumlao is Dean of the John Gokongwei School of Management at the Ateneo de Manila University. He is also a Senior Research Fellow at the Ateneo Center for Economic Research and Development.