Economic fallout of covid19

IT’S PROBABLY a safe bet that you’re about ready for a column that doesn’t start with “covid19...”

Trust me, I know the feeling. Anyway, covid19, we were told early on, is particularly devastating in people with underlying or pre-existing health conditions.

Regardless of what you were told or what you may have chosen to believe, the economy was not on a sound footing before covid19. As such, the necessary coronavirus lockdown is further battering an economy that was already on life support with a clergyman in the room.

A joint survey between the TTMA and the TT Coalition of Services and Industries of small and medium enterprises found that, as a result of covid19 lockdown measures, 36 per cent of the businesses sampled sent home full-time employees. Fifty-five per cent cut parttime or contract workers.

The survey confirmed many local businesses have recorded little to no revenue under the stay-at-home regulations. I have friends who’ve been told by employers they will not be paid for May because their businesses made no money in the lockdown.

Many people were wondering aloud online how so many businesses appeared to fold like a napkin after just a few weeks of turmoil. There were reports of workers being terminated upon the announcement of the stay-at-home orders. So why aren’t businesses more resilient?

Well, our perceptions about business, for one thing, tend to misinform widely cherished opinions. People read about annual profit statements trumpeted by banks, insurance companies or “can-glamerates” and automatically assume everyone with a call card or shingle is making out like bandits. It’s all part of the one per cent mythos – anyone with a business is a member of the wealthy, parasitic upper crust.

While a lot has been said about relief support for society’s most vulnerable – unemployed citizens struggling to make ends meet in this crisis – less has been said about support for businesses, which account for an estimated 50 per cent of GDP in TT.

When they take a hit, the ripple effects across the economy will be widespread.

Some believe the responsibility rests with businesses to create financial buffers to weather economic shocks. Well, many businesses pay taxes just like ordinary citizens. As such, they should be eligible for support in the same way assistance has been reportedly prioritised for the country’s most vulnerable. Business owners haven’t found themselves in a tight spot because of risky investments or shady portfolios. They are being ravaged by the same conditions sweeping the rest of the country.

The Government recently appointed a team to come up with an economic recovery road map. This committee has until the end of May to produce a report. Then we have to factor in time for the digestion of that report and application (or discarding) of some of the prescribed remedies.

By stark contrast, other countries dealing with the pandemic had their health response and economic protection and recovery planning running on parallel tracks.

Canada rolled out a broad-based plan offering support for individuals, businesses and sectors. Its government introduced, among a vast suite of protection measures, the Canada Emergency Wage Subsidy. It covers a percentage of the employees’ wages across all sectors who’ve suffered losses during the crisis.

In the US there’s the Paycheck Protection Programme. It’s a federally guaranteed loan scheme targeting small businesses. Companies using the funds to continue paying staff and cover their operating costs can have those loans forgiven altogether.

These strategies recognise how crucial it is for businesses to continue putting money in the hands of their employees. If people are still getting paid, that money will continue to circulate throughout the economy, keeping it afloat.

Now, were the economic response measures in these developed countries flawless? Far from it. In the early stages of the lockdown, which was applied to varying degrees across US states, an estimated ten million people employed in industries such as hospitality, event management promotion and food were immediately jettisoned in just two weeks.

Also, the Paycheck Protection Programme ran out of money fairly quickly as demand surged. Additional funds have been pumped into the scheme to keep pace with applications.

These countries are, in part, applying lessons from the 2008 financial crisis to the current economic instability brought on by covid19. Even though our resources are paltry by comparison, surely there is something we can learn from these examples. We can choose to be defined not by the crisis but by our response to it.