March 27, 2020

COVID-19 APAC: Education and the staggering impact of coronavirus

COVID-19 unfortunately is now a global issue. The experience of this in Asia (and its two months headstart), may be of relevance for the rest of the world.

Governments in certain APAC jurisdictions have sought to close schools, and other educational establishments, as a means to restrict the spread of the virus. The school closures have led to children being home-schooled, in some cases for lengthy periods of time, with online education being provided by their existing educational institutions.

Governments in other APAC jurisdictions have imposed additional precautionary measures for students to protect the younger students. These include making sure that students in the same household as a person who has returned to Singapore from affected countries to self-isolate for 14 days.

In addition, a large number of after-school activities have also ceased, either due to directives from governments, or because of reduced attendance, as people seek to reduce social contact. Schools have also taken other measures such as (i) to have assigned seating and wipe-down routine in canteens; (ii) assigned play areas for students to play in reduced group sizes; (iii) staggering of recess times; (iv) conducting health checks and more frequent temperature screening for all staff and students; (v) restricting visitors into schools (with parents dropping off and picking up their children outside the schools, with the advice to stand further apart from one another); and (vi) limiting cross-deployment of staff across centres, where possible.

The impact has been significant on the education sector:

  • Children have been working from home remotely, with support from the schools in terms of online learning – the speeds at which schools geared up to this has varied substantially, and the approach has differed with some offering virtual lessons and others various online videos and other resources. Schools with better contingency plans, a greater awareness of technology and a nimble approach have improved their reputations at the expense of the others.
  • Often there is a need for additional childcare to support the children working from home.
  • Carers often need to assist children in their studying. This can be especially challenging if they need to go to work, are trying to work from home themselves, or are not skilled to do so.
  • In some cases there is a need to increase the technology available in the home, such as printers, etc. or acquiring new software/upgrading old equipment.

In the case of fee paying schools, the result of this is that parents have in many cases felt they have paid for schooling that they are not receiving in the manner they expected, and are seeking refunds or discounts on fees paid. The schools on the other hand would have their own legal arguments.

However, schools are also conscious of not alienating parents. Parents are often also cautious about removing children, as finding a new place when this is all over may be a challenge. Given this impasse, there is often a look to government to assist. In Hong Kong the government has offered subsidies as part of its "economic relief measures" for parents in schools. However, the amounts are relatively modest compared to the usual school fees in Hong Kong, so these have not really resolved the issue for those involved.

We are seeing a number of measures being rolled out. Some schools are holding firm, some kindergartens are reducing the fees by a percentage, and crediting these against future fees to be spread over a period of time. Many after school classes and bus fees (which can be substantial) are also being discounted. Any after school/sports services, which are pay as you go, are the hardest hit. 

The biggest impact will be on private kindergartens, after school educational and sporting groups, and online providers. The first two will face a liquidity squeeze and we may see closures, reductions in service, and other cost-saving measures. We could also see some consolidation, as those with solid fundamentals but less liquidity to tide them through the closure periods exit the market, or come up for sale (in whole or part), with existing owners not able to ride the storm. Similarly, businesses may be able to expand through increasing market share and finding new premises and staff where there have been closures by competitors. The key to doing these successfully would be to move early, before a situation becomes critical.

The clear winners are the online providers, whose services are being used more than ever before, in a way that potentially could make them more accepted as part of the usual ecosystem going forward.