UNEMPLOYMENT IN THE TIME OF COVID-19
1. COVID-19 AND UNEMPLOYMENT
According to the report published by World Economic Forum, higher levels of structural unemployment (especially youth) is one of the most likely economic fallout in the world caused by COVID-19. The first global pandemic in over 100 years, COVID-19 spread across the world at an unprecedented speed. At the time of the writing, over 21.3 million cases have been confirmed and more than 767,000 people have perished.A lot of countries have implemented the policy of lockdowns to control the virus and prevent health systems from being overwhelmed. This triggered an economic crisis with horrible societal consequences, affecting the lives and livelihoods of most of the global population: 500 million people are at risk of falling into poverty.[1]
Figure 1. Most likely fallout in the world
It seems that the crisis has exposed fundamental shortcomings in pandemic preparedness, socio-economic safety nets and global cooperation. Governments and businesses have struggled to address compounding repercussions in the form of workforce challenges, disruptions in essential supplies and social instability. They have had to balance health security imperatives against the economic fallout and rising societal anxieties, while relying on digital infrastructure in unprecedented ways.
With the worsen situation, high structural unemployment (which is perceived as the second most concerning risk for the world) is likely to exacerbate inequality and affect mental health and societal cohesion, in addition to its direct economic consequences. Individual and social well-being is also likely to be affected by an accelerated automation of the workforce. The impact is likely to result from the coronavirus crisis. Without the necessary steps, it seems that a developing economy would collapse in the medium term, which would have dire humanitarian consequences as vulnerable groups would suffer the worst impacts.
2. RECOMMENDATIONS
There are three groups of solutions to contain the unemployment problem while the pandemic is still around: distribution, allocation, and stabilization. The first step is that the government is obliged to allocate qualified inputs and resources to its policy orientation (Allocation Policy), allocated to new vulnerable groups affected by Covid-19, including business groups who need consumers, groups of casual daily workers, street vendors, workers affected by layoffs, farmers, the poor, and so on.This is because the pandemic has weakened their chances of generating daily income, starting from the imposition of massive layoffs, and the number is believed to continue to increase during this pandemic, the instruction to stay at home which automatically significantly reduces people's income from their routine, very limited economic activity, and other influences that follow.
Furthermore, the government needs to formulate and implement comprehensive policies based on data and collaboration. After the allocation policy, Distribution Policy then will need to be implemented. It means that in this realm, not only does the implementation takes the form of a budget through a subsidy scheme, but also distributes constructive programs to the community. The implementation of budget distribution through the subsidy scheme is in the form of reducing prices for the most basic needs of society amidst the current Covid-19 pandemic. The basic and mandatory needs in this aspect are the needs of basic materials, the need for fuel oil, electricity, and other necessities that naturally follow, including the need for protective masks, and so on. The distribution process can technically be in the form of ad hoc programs such as the cash aid program, and also through advanced social programs by increasing the budget during Covid-19 for families in need and other social assistance. The main point in this distribution policy first is to provide cash assistance and basic material assistance, while implementing partnership programs with various elements of micro and macro community businesses. It is achieved for example though providing incentives to SMEs, community home businesses, and small sellers.
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[1] World Economic Forum. (2020). COVID-19 Risks Outlook A Preliminary Mapping and Its Implications. Retrieved from http://www3.weforum.org/docs/WEF_COVID_19_Risks_Outlook_Special_Edition_Pages.pdf (16 August 2020).