Issue link: https://maltatoday.uberflip.com/i/1361797
8 OPINION 15.4.2021 T he solidarity of govern- ments to buttress the jobs market which has suf- fered due to lockdowns and cur- fews is amazing. According to Vitor Gaspar, head of the IMF's Fiscal Affairs Department, gov- ernments last year have injected a stunning €10.2 trillion into the global economy but now with the second wave and more per- vasive variants it is obvious that many countries will need to do more with less, given increasing- ly tight budget constraints aid in a blog post about the report. is article discusses how in the context of a rushed pro- gram to inoculate the front liners, the vulnerable and the rest, there has been no sign of the virus slowing down in its outreach. Pessimists even fear a third wave. Others, hope that a partial economic recov- ery kicks in by September but there is no guarantee that "nor- mality" will return so soon. Ideally, the popular (yet ex- pensive) 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. Global- ly, the spread of the Covid 19 virus has brought havoc to the airline and hospitality sectors (among others). In the US, last May saw nearly 60% of the 17.8 million Amer- icans out of work being fur- loughed — the third-largest share in history. Moving on to the UK economy, we note how the initial impact of the corona- virus crisis was seen primarily in the labour market, with sev- eral sectors of the economy ful- ly shut down and others heavily affected by the lockdown and social distancing. e furlough plan, introduced in March as the UK entered an initial lockdown earlier last year, had been extended this year due to new variants mu- tating and showing little sign of abating. But the facts show that 9.9 million people have bene- fitted from furlough, at a cost to the government of €51.4bn. In a noble act of job solidarity the government continues to contribute 80 per cent towards wages – giving businesses and employees - certainty. is was well received and quoting the chancellor Rishi Sunak, he was praised for ex- tending support to firms to help them sail through the economic disruption. He also confirmed, the Treasury would be extending the business loan scheme. Such a crisis has badly affected the UK's unemploy- ment rate. is rose to 4.8 per cent in the three months to September, up from 4.5 per cent, as the coronavirus pan- demic 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. Ob- viously, the intention is not to try to protect failed business- es, but to facilitate the people who work in them moving on and having good employment prospects for the future. Will the nine million furlough British workers eventually re- turn to work or face redundan- cy? Certainly, there is no mag- ic 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 pol- icies is the move to reinstating a £5.6 billion cache to fund na- tional infrastructure project "shovel ready" schemes. is introduction about job stimulus and retention schemes in both the USA and UK compares fa- vourably with the structured approach to the job market by the Maltese authorities. One may start by analysing the scale of the problem by noting that up to last Septem- ber, the registered full-time employment increased by 4.6 per cent while part-time em- ployment as a primary job de- creased by 9.9 per cent when compared to September 2019. On the other hand, one reads in the Labour Force Survey es- timates that during the third quarter shows gains in total employment. is stood at 259,731 which amounts to 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 per- sons reached 164,659 (37.7 per cent). ese statistics lead us ques- tion why Malta Enterprise (not JobsPlus) was engaged to ad- minister a wage supplement scheme. Quoting minister Sil- vio Schembri, this furlough policy paying €800 monthly (now tapered according to a loss of business formula) is funding some 100,000 private sector workers which works out a staggering 47% of total employment in private sector. is looks generous but the question arises - if some em- ployers are not topping up the furlough rate then workers are living from hand to mouth. What are the views of em- ployers? A survey conduct- ed by the chamber of SME's shows inter alia some concern by 230 business respondents as regards sales orders. e level of turnover went down to 26% while cash flow went down to 17% of pre-Covid levels. Will the retail sector survive once the furlough scheme is tapered down? According to deputy president Marcel Miz- zi, 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 Western 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 (eventually by in- creased taxation), and in the case of EU countries out of a stimulus package which hopes to restore normality. 2021 - the year of the raging bull 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