Back-to-office delayed because of the Omicron variant

First detected in South Africa, the Omicron variant of Covid-19 has thrown another wrench into the rebound of the global economy. Initial studies have shown that despite being “milder” and less likely to lead to severe outcomes, Omicron’s ability to spread more easily and evade immunity from vaccinations and previous infections is a cause for concern. Omicron has quickly become the dominant strain in many countries, leading to record-high case numbers and business disruptions. In an article published in the Philippine Daily Inquirer, local health experts also project that new Covid-19 cases may exceed the figures in previous surges.

Even “mild” cases of Covid-19 infection at a high volume brought by this highly contagious variant presents its own set of challenges. More people may get infected and be required to isolate (or for close contacts of confirmed cases, to undergo quarantine). Business disruptions seen abroad have shown that this multiplier effect can result in more people being unable to report to work, which affects companies’ day-to-day operations or may even lead to temporary closure if transmission in the workplace is high.

Still, there is room for cautious optimism because studies in other countries have shown that the exponential rise in cases due to the Omicron variant may not necessarily increase hospitalizations and deaths to the same extent. South Africa, just past the peak of its recent spat with Omicron, saw fewer severe outcomes compared to previous waves thanks to pre-existing immunity of citizens obtained through exposure to previous variants and wide vaccination coverage combined with mask mandates, good ventilation, and social distancing. These conditions, which can combat the virus, are present in the Philippines as evidenced by firm health guidelines and high vaccination coverage especially in Metro Manila.

Keeping the workplace safe and business up and running

Omicron’s surge will require officials and business leaders to reimplement and recalibrate restrictions to keep the workplace safe with minimum disruption to businesses.

The threat of business disruption can be mitigated by implementing and complying with protocols that can arrest the surge of cases and protect workers. As seen throughout the pandemic, officials and business leaders continue to find ways to balance keeping the workplace safe while ensuring business continuity. Several companies continue to provide flexibility for their employees, such as allowing them to work from home, especially during case surges.

In the case of the IT-BPM sector, many occupiers are registered with the Philippine Economic Zone Authority (PEZA), which has issued memorandum circulars allowing registered business enterprises (RBE) to conduct their business activities outside the ecozones (i.e., WFH). The latest Memorandum Circular (MC 2021-049) from PEZA concerning the WFH arrangement, in line with the Resolution 19-21 of the Fiscal Incentives Review Board (FIRB), is summarized below:

Authority

Guidelines

PEZA Memorandum Circular No. 2021-049

The WFH arrangement is extended without adverse effect on the incentives of registered enterprises until March 31, 2022. From September 13, 2021, to December 31, 2021, the total number of employees under WFH arrangement shall not exceed 90 percent. For PEZA-registered IT enterprises, this shall be on a per-site/location basis. Beginning January 1, 2022, the total number of employees under WFH arrangement shall not exceed 75 percent. Should the State of Calamity under Presidential Proclamation No. 1021 be extended beyond January 1, 2022, the threshold shall be maintained at 90 percent until March 31, 2022. Revenue from export shall be maintained and there shall be no reduction of workforce despite majority of employees under the WFH arrangement.

Colliers Views

The ongoing surge of Covid-19 cases due to the Omicron variant may delay the back-to-office (BTO) initiative, because the health and safety of workers remain to be the paramount consideration. If not for this ongoing surge, many RBEs may have started BTO in the first quarter of 2022. Therefore, the government should consider extending the WFH flexibility until such time that the RBEs feel confident with the health and safety of their employees.

Colliers encourages the government to continue closely monitoring the dynamic Covid-19 situation and to develop policies that balance the various needs of office landlords and occupiers. Colliers believes that mutual support and collaboration between government agencies and the private sector will remain crucial to economic recovery and growth.

With nearly two years of experience and learnings with dealing with the Covid-19 pandemic and a wide vaccination coverage and administration of booster shots, the Philippines is well-positioned to overcome the Omicron wave, hopefully with less severe health outcomes and business disruptions.

Colliers also urges the government and the private sector to continue working closely to encourage Filipinos to get vaccinated and receive booster shots. This will help prevent our healthcare system from being overwhelmed and will allow the economy to keep its progress in reopening. These measures, alongside basic public health practices such as masking, good ventilation, and social distancing, will mitigate the worst Covid-19 outcomes, keep our workplaces safe, and ensure business continuity as the world transitions to living with the virus.

For more information on the office real estate market, talk to our Tenant Representation team.