3m job loses likely
Getting the economy back on track, especially creating millions of jobs, is clearly going to require some out of the box thinking on the part of the government. According to a letter from the finance ministry to the Senate, approximately three million jobs will be lost in the country in the “initial round” of the coronavirus outbreak. This is one of those news items whose impact is not felt any less even though it is pretty much written on the wall. With the economy shut down for more than a fortnight, and many small business already closed down with no hope of revival, the job market has indeed suffered endlessly because of the pandemic. And let’s not forget that the going wasn’t exactly easy before the virus came. Low growth, high inflation and rising unemployment was already pushing jobs and businesses to the limit. And now there’s the reality of the global recession to deal with as well.
This is by no means a normal moment in the history of the world. As the international media is pointing out, we are at a point when most, if not all, economies of the world are near or below zero percent growth. It is precisely such crises that effectively eat up weak economies with chronic low growth and high debt; especially if they have very large populations, with a frightening number of people living below the poverty line. The state bank tried to calm nerves the other day, implying that we might have it easier than most countries going forward. But the governor should also have broken down the facts a little bit. The revenue stream is badly broken. Tax and export earnings, not to mention remittances, are all declining sharply. And authorities are struggling to get the IMF program back on track. There is the prospect of limited debt moratorium from G20 countries, but very little beyond that.
The finance ministry has very rightly noted that the expected 3m job losses is only an initial round figure. And since there’s still no end in sight as far as the fight against the coronavirus goes, there’s no telling how many more rounds might await us. Rather than take comfort in the fact that some of our numbers might be a little better than some other countries, the government is advised to quickly put an action plan in place. But with all sorts of income compromised, at least for the foreseeable future, it will be interesting to see what they fall back on other than more loans. *
PSM lesson for PTI