Risk-adjusted strategy for economic activity

Posted by Casey

April 4, 2020


There is early evidence that the full national lockdown imposed since 26 March 2020 has successfully limited the spread of the coronavirus. However, there are serious risks associated with lifting lockdown restrictions too soon, or in an unsystematic and disorderly manner.

The balance between “lives” and “livelihoods”

Evidence from the Spanish Influenza pandemic of 1918 shows that the long-run economic consequences for cities experiencing a rapid infection rate and high cumulative infections were significantly worse than those for cities enduring temporary restrictions on economic activity.

"On the one hand, NPIs constrain social interactions while they are in place, and thus necessarily depress any type of economic activity that relies on such interactions. On the other hand, because the pandemic itself has severe economic consequences, by reducing the severity of the pandemic, NPIs can mitigate the most severe economic disruptions. While an interruption of economic activity may be inevitable, this interruption can be shorter-lived and less extensive with NPIs in place that solve coordination problems." (p. 17)

An alert system with levels of restriction

Restrictions on economic activity need to be adapted to epidemiological trends, and may need to be relaxed and tightened in different periods. An alert system should be created with clearly defined levels of restriction that can be imposed by the National Command Council as necessary.

  • If lockdown regulations are amended to allow some economic activity to resume, it is possible that the infection rate will accelerate and that the virus will resurge. In this scenario, it would be necessary to quickly revert to more stringent restrictions in order to arrest further transmission.
  • An “alert system” with four to five levels would allow for flexibility and responsiveness, and would reduce the need to amend regulations in future.
  • At each level restrictions would be more or less severe, and sectors and companies would know what activity is permitted depending on the level imposed at any time.
  • Government would be able to switch between levels with far greater speed, and could use mass communications platforms (such as an SMS notification system) to signal this to the public.
  • Different levels could be imposed in specific provinces and areas based on the risk of transmission.
  • NB: A gradual transition between alert levels can be implemented where necessary.
  • Detailed health protocols should be imposed at all levels of alert.

An alert system with levels of restriction

Ongoing feedback loop informs the decision to remain at a particular level, relax restrictions further, or return to a higher level of restriction.

An alert system with levels of restriction

Different levels of alert can be declared in specific provinces and districts based on epidemiological trends and the risk of infection.

Criteria for return to activity

To determine which sectors should be allowed gradually to resume activity, three criteria should be used:

1. Risk of transmission (including the ease of implementing mitigation measures)
2. Expected impact on the sector of continued lockdown (including prior vulnerability)
3. Value of the sector to the economy (e.g. contribution to GDP, multiplier effects, export earnings)

Sectors that have a low risk of transmission (or where this risk can easily be mitigated), that would suffer most acutely from a continued lockdown in terms of retrenchments, company failures, or loss of productive capacity and international market share, and that have a high value to the economy should be prioritised.

These criteria should themselves be subject to an ordinal ranking of priority. Thus, sectors with a high risk of transmission should not be allowed to resume activity until this risk is reduced, regardless of the potential impact on their sector or their value to the economy. Among those sectors with a low or manageable risk of transmission, considerations of impact and value can be used to attribute priority.

Low transmission risk AND severe impact OR high value

Post-lockdown: General exclusions

Different levels of alert can be declared in specific provinces and districts based on epidemiological trends and the risk of infection.

The following restrictions will remain in place after the national lockdown, and regardless of the level of alert at any given time:

  • Sit-in restaurants and hotels
  • Bars and shebeens
  • Conference and convention centres
  • Entertainment venues, including cinemas, theatres, and concerts
  • Sporting events
  • Religious, cultural and social gatherings

No gatherings of more than 10 people outside of a workplace will be permitted.

Passengers on all modes of transport must wear a cloth mask to be allowed entry into the vehicle. Hand sanitisers must be made available, and all passengers must sanitise their hands before entering. Public transport vehicles must be sanitised on a daily basis.

Rules applicable across all levels

The following rules will be imposed across all sectors and alert levels:

  • Industries are encouraged to adopt a work-from-home strategy where possible, and all staff who can work remotely must be allowed to do so.
  • Workers above the age of 60, as well as workers with comorbidities identified by the Department of Health should be offered a work-from-home option or allowed to remain on leave with full pay.
  • There should be workplace protocols in place that would include disease surveillance and prevention of the spread of infection.
  • All employers to screen staff on a daily basis for symptoms of COVID-19, including a symptom check as well as temperature assessment.
  • All employees to use a cloth mask especially where social distancing is not possible.
  • Work environment to have sanitisers available or hand washing facilities with soap.
  • Stringent social distancing measures should be implemented in the workplace.
  • The Department of Health will issue a comprehensive guidance note stipulating health and safety practices for returning to work.


Additional rules pertaining to sectors and firms

Before any sector resumes activity, the following conditions must be in place:

  • In addition to generally applicable health and safety protocols, each sector must agree upon a COVID - 19 prevention and mitigation plan with the Minister of Employment and Labour, the Minister of Health and any other Minister relevant to the sector.
    Individual businesses or workplaces must have COVID-19 risk assessments and plans in place, and must conduct worker education on COVID-19 and protection measures:
    o Identificationandprotectionofvulnerableemployees o Safe transport of employees
    o Screening of employees on entering the workplace
    o Prevention of viral spread in the workplace:
    o Cleaning of surfaces and shared equipment o Good ventilation
    o Managingsick employees
  • Monitoring systems must be in place to (1) ensure compliance with safety protocols and (2) identify infections among employees

Governance framework

  • Levels of alert (1-5) will be determined by the National Command Council at each meeting, upon a recommendation from the Minister of Health and the Minister of Trade and Industry. A single national alert level may be determined, or an alert level may be determined for each province.
    The highest burden of the disease is currently concentrated in Gauteng, Western Cape, KwaZulu-Natal and Eastern Cape. The remaining provinces have a limited number of cases.
  • Within the provinces the infection is concentrated largely in the metro areas.
  • Given the disproportionate distribution of infections there is an opportunity to have a differentiated approach
    to the lockdown based on the geographic distribution.
  • The initial plan is to determine alert levels at a provincial level based on the number of cases in each province.
  • Premiers may thereafter determine an alert level for specific districts, with the approval of the Minister of Health. Those districts with lower risk levels could in this way embark on increased levels of economic activity.
  • Individual Ministers, upon consultation with and approval from the Minister of Health, may provide for exceptions and additional directions in sectors within their domain.
  • A working committee should be established comprising officials from the Department of Health and the Department of Trade and Industry to consider changes to the sector restrictions as they are required.

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