Issue link: https://maltatoday.uberflip.com/i/1338640
8 OPINION 11.2.2021 THE efforts of many govern- ments to buttress the jobs market which has suffered due to lockdowns and curfews are amazing. According to Vi- tor Gaspar, head of the IMF's Fiscal Affairs Department, Governments last year have injected a stunning €10.2 tril- lion into the global economy but now with the second wave and more pervasive variants it is obvious that many countries will need to do more with less, given increasingly tight budget constraints aid in a blog post about the report. is article discusses how in the context of a rushed pro- gramme to inoculate the front liners, the vulnerable and the rest, there has been no sign of the virus slowing down in its outreach. Many hope that economic recovery kicks in by September but there is no guarantee that "normality" will return so soon. Ideally, the popular furlough policy should shift gradually from protecting old jobs to getting people back to work, by reducing measures like wage subsidies in favour of training to give people skills to find new employment. Globally, the spread of the COVID-19 virus has decimat- ed people's travel schedules and brought havoc to the airline and hospitality sectors (among others). In the US, last May saw nearly 60% of the 17.8 million Americans out of work being furloughed — the third-largest share in history. Moving on to the UK econ- omy, we note how the initial impact of the coronavirus cri- sis was seen primarily in the labour market, with several sectors of the economy fully shut down and others heavily affected by the lockdown and social distancing. e furlough plan, intro- duced in March as the UK en- tered an initial lockdown earli- er last year, had been extended to October due to worsening turmoil sparked by the COV- ID-19 pandemic. Recent data showed that 9.9 million people have benefitted from furlough, at a cost to the government of €51.4bn. Following demands from unions, the UK govern- ment extended the furlough scheme until the end of April 2021. In a lavish stroke of job solidarity the government con- tinues to contribute 80 per cent towards wages – giving businesses and employees - certainty. is was well received and chancellor Rishi Sunak was praised for extending sup- port to firms to help them sail through the economic disrup- tion. He also confirmed the Treas- ury would be extending the business loan scheme. Need- less to comment that such a crisis has affected badly the UK's unemployment rate. is rose to 4.8 per cent in the three months to September, up from 4.5 per cent, as the coronavirus pandemic continued to impact the jobs market. In the UK, (now out of EU) the Government faced a daunt- ing challenge in maintaining a balance between preventing unemployment from rising sharply but allowing some la- bour market flexibility to en- able workers to move from shrinking sectors to growing sectors in the economy. e ra- tionale was that there is always a tension with the desire to protect employment, so there will be a tremendous political pressure in this recovery to not let people become unemployed and to not let companies fail. Obviously, the intention is not to try to protect failed businesses, but to facilitate the people who work in them moving on and having good employment prospects for the future. For such a sensitive subject, one appreciates that having reliable labour market statis- tics is crucially important for policy makers, who will need to decide if adequate remedial action has been taken to avoid lasting high unemployment. e writer asks the question - will the nine million furlough British workers eventually re- turn to work or face redundan- cy. Certainly there is no magic silver bullet that will reduce the risk of higher job queues this year. An interesting an- nouncement in the UK is the Plan for Jobs. is announced a number of measures aimed at addressing the risks of rising unemployment. One such ini- tiative includes enhanced work search support – £895 million to fund work search support by doubling the number of work coaches in "Jobcentre Plus". A novel idea is the "Kickstart Scheme" – a £2 billion fund to create "high quality" six- month work placements aimed at those aged 16–24 who are deemed to be at risk of long- term unemployment. Finally, to spur Keynesian policies is the move to reinstat- ing a £5.6 billion cache to fund national infrastructure project "shovel ready" schemes. is short introduction of job stim- ulus and retention schemes in both the USA and UK com- pares favourably with the structured approach to the lo- cal job market by the Maltese authorities. One may start by analysing the scale of the problem by noting that up to last September, the registered full-time employ- ment increased by 4.6 per cent while part-time employment as a primary job decreased by 9.9 per cent when compared to September 2019. On the other hand, in the third quarter the Labour Force Survey estimates that total employment stood at 259,731. is accounts for 59.4 per cent of the population aged 15 and over. Out of this about 47k workers are directly or in- directly paid by the state. is is contrasted with a cohort of unemployed persons at 12,589 (4.85%) while inactive persons totalled 164,659 (37.7 per cent). ese statistics lead us to the comment how Malta En- terprise (not JobsPlus) was engaged to administer a wage supplement scheme. Quoting the Hon Silvio Schembri, this furlough policy of €800 month- ly (now tapered according to a loss of business formula) is funding some 100,000 private sector workers which works out averaging 47% of total em- ployment in private sector. is looks generous but the question that arises is - are workers living from hand to mouth not knowing if the fur- lough scheme gets extended in March? What are the views of em- ployers? A survey conducted last month by the chamber of SME's shows inter alia some concern by 230 business re- spondents as regards sales orders. e level of turnover went down to 26% while cash flow when down to 17% of pre-COVID. Will they last longer once the furlough scheme is tapered down by next March? Accord- ing to deputy president Marcel Mizzi, a total of 13% said they will only last three months, while another 28% hope they will survive until summer. In conclusion, the cavalier ef- forts of governments to sustain employment is a noteworthy gesture and has cost billions over the past year. Such heavy expenditure had to be financed partly by internal borrowing, and in the case of EU coun- tries out of a stimulus package which during this time of low interest rates – this is certainly an added blessing. A look at international COVID-19 rescue packages George Mangion George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island