According to the Labour Office, 6339 employees have lost their jobs during the period April-July 2020. More than 50% are the direct consequence of the Covid-19 pandemic on the different sectors in which they were employed, mostly in the tourism industry, hotels and restaurants. However, these figures do not tell the whole story: they most likely leave out the many thousands who have found themselves in a very tricky situation in this pandemic. They are the self-employed and the SMEs, whose income has fallen drastically – but they too have families to feed, other financial commitments to take care of, such as business, housing and educational loans to repay, etc.
Most economists have been saying that the worse is yet to come, with thousands more swelling the numbers of the unemployed in the months ahead. Unemployment in 2019 reached 7% of the labour force – 37,900 people -, and Finance minister Renganaden Padayachy himself stated in his first intervention on the impacts of Covid-19 on the Mauritian economy that the unemployment rate could climb to 17%. This means about 100,000 finding themselves out of a job by the end of the year – and probably more in the informal economy.
The critical issues that arise are:
- How to support industry and trade so as to preserve employment;
- Support to be given to the informal sector and SME’s;
- Balancing of the risks of re-opening to prevent a second wave.
While income support by the State has helped in some measure, but with the Wage Assistance Scheme now focusing on the tourism and related sectors, economic operators in other sectors and their employees have been left to fend for themselves. This aspect of the ground realities and the plight of the affected stakeholders are not reflected by statistics. This is where the government might have to consider extending ‘higher – and unconditional – benefits for those who will be unemployed, maybe moving towards a minimum income guarantee’, as proposed by Steve Schifferes of the University of London in a contribution to The Conversation.
It might also have, he adds, ‘to provide temporary government jobs to improve our social and physical infrastructure, such as happened in the New Deal in 1930s America, which improved schools and hospitals, built national parks and planted trees around the country. With industry on its knees, the government must play a bigger role in increasing investment to boost demand and ensure that our economy becomes more productive and more resilient in the long term. This must include major investments in other public services, especially research and education, health, etc., as well as ‘take a much more active role in the labour market, heavily subsidising jobs and training to encourage growth in the key sectors needed in the future’. This is what helped the US to get out of the Great Depression of 1929, and was President Roosevelt’s idea.
On the other hand, the strong lobbying in favour of the reopening of our skies for international passenger flights, arguing that its prolonged closure will damage the economy, will have to be weighed against the inherent risks of a second wave of the pandemic in so doing. It must be noted that the few cases that have been registered lately are imported ones.
Dr Soumya Swaminathan, chief scientist of the World Health Organization, stated recently that despite stringent public health measures, there is a real risk of a second wave as economies reopen. Until an effective and safe vaccine emerges, there would be a need to live with and manage this virus for the ’next couple of years’.
That is the scenario we have to reckon with.
It is true that the Seychelles now allows visitors to its remote islands since August 1, but that’s only if they’re from low-risk countries travelling in private jets and chartered passenger direct flights. Travellers also need to undergo a Covid-19 test before boarding any flight. The limited reopening is based on the advice of the Seychelles’ health authority and is designed to limit risk of Covid-19 transmission to people living and working on the 115 islands that make up the archipelago.
As far as Mauritius is concerned, the entry of aircraft and ships in the country is prohibited until 31 August 2020, except for those aircrafts and ships as may be approved by the Prime Minister. It is unknown at this stage if the government will go for a limited reopening for visitors from low-risk countries or otherwise, but here the point made by Steve Schifferes in his article cited above may serve as a guide for decision-makers. It is that ‘historical evidence from the 1918 ‘flu shows that extending public health measures to prevent the spread of a virus does less economic damage in the long run than letting it ravage the entire population’.
The salient point in the face of the prolonged impact of Covid-19 is that government has the major role to play in saving livelihoods in both the major sectors of the economy, and in the informal sector which should have a less cumbersome access to finance. As regards the major sectors, government must spell out very clearly the conditions under which financial assistance will be provided and ensure that these conditions are abided by. That’s the only way to avert an impending social and economic crisis.
* Published in print edition on 7 August 2020