As the economic costs of the coronavirus crisis become clearer, the government and businesses are developing solutions to protect jobs and to ensure that, when the crisis is over, the economy can be revived as well as possible. Prime Minister Morrison has announced the creation of a National COVID-19 Coordination Commission. At the same time, businesses are lobbying to allow employees to use long service leave to manage their extended absence from work.
Employees, many of whom are currently unable to work or facing reduced incomes in the coming months, are already taking extraordinary measures to make ends meet. Left with few options, many are reaching for their superannuation for funds; a move that could have unwelcome consequences for them in the future. Already, it’s becoming apparent that job losses will be steep, and that few workers have savings to see them through what could be an extended crisis. Because of this, it’s likely that the government will be forced to take more active measures to ensure that workers remain solvent, and that consumer demand doesn’t collapse due to a lack of funds.
The government needs to protect consumers and businesses to save the economy
Keeping the economy in a state that will allow a swift recovery at the end of the crisis promises to be enormously expensive for governments. The US, for example, passed a $1.8 trillion USD stimulus bill just days before the writing of this article that’s designed to give money directly to workers as well as to support businesses. That’s because businesses will only be able to recover if consumers are still ready and able to spend when the time comes.
The Australian government is attempting to provide liquidity to consumers by allowing them to access up to $10,000 per year from their superannuation, and by temporarily boosting unemployment benefits. While this will help to ensure that newly unemployed workers can make ends meet, it won’t preserve their jobs. To do that, the government is extending financing and relief funds to businesses.
Businesses will battle shortages to get employees back to work
Businesses all over the world are innovating to keep their operations running even as workers in some countries are confined to their homes. In Europe, several major fashion brands have begun to make face masks which, while medically ineffective, will help to satisfy the private demand that is keeping N95 masks out of the hands of medical professionals. In the US, SpaceX has begun to produce respirators to help combat shortages.
While the economy overall is suffering, a few essential sectors are currently overburdened with demand. Hygienic and medical equipment such as disinfectants, masks, gowns, gloves, eye protection, and respirators are in extremely short supply, leaving many front-line medical workers unprotected. By shifting their operations to produce these essential items, some manufacturers that would have had to furlough or lay off their workers will be able keep their doors open.
Working together to adapt to shifting demand
The National COVID-19 Coordination Commission is designed to coordinate between the private and public sectors, as well as facilitating dialogue between business leaders to come up with solutions to national problems. One of their stated goals is to preserve jobs by shifting their efforts to address the changing needs of the country. Specifically, that means repurposing manufacturing lines and redeploying workers to cut down the supply of low-demand goods while addressing supply shortages in other areas.
Businesses are working with employees to avoid layoffs
An ideal situation, businesses would be able to retain their workers through the crisis, so they can simply get back to work when the time comes. While some can do this by adapting their operations to create medical supplies, others—such as those in the tourist industry—can’t turn the current shortages into a business opportunity. That’s why some businesses are lobbying state governments to allow employees to use long service leave to cover their extended absence.
The NSW Parliament has passed an amendment allowing employees to access long service leave flexibly. This will allow them to take leave in short blocks, such as a single day every week on agreement with their employer. This way, businesses can ask employees to take leave in lieu of standing them down, or making them redundant.
Both governments and businesses will continue to come up with additional measures in the coming weeks. This will allow the country as a whole to reduce the impacts of the coronavirus crisis as much as possible, while minimising the long term damage to Australia’s economy.