As the UK and indeed the rest of the world looks at how to survive economically from the pandemic, amid fears of job losses and sustainability in many areas of employment, the OU’s Professor Paul Anand, Professor of Economics shares academic thinking on the policies which should be considered priority in a paper published by the IZA Institute of Labor Economics this week.
Prof Anand says: “COVID 19 has been described as a twin pandemic, for health and economic activity. It is a moving target that throws up new decision problems for economic advisors to government on a daily basis.”
Introducing the briefing note, he says it was “partly informed by discussions with colleagues in government as well as those in academia”, drawing on “early emerging experience” to present ten recommendations.
Supporting workers in the near and medium term
He says: “The policy experience on which we draw is largely from the UK though parallel issues can be found in many other high income countries.”
The recommendations for economic policy making are particularly related to employees.
In the paper Prof Anand writes:
“It has become clear that the shift from concern about prospects of a recession to a potential existential threat to national and global economic systems was rapid.
“Patterns of impact were and will continue to be unevenly distributed across the economy and range from the decline of revenues and substantive business opportunities in passenger transport, restaurants and other leisure venues through to elevated demand for food, some aspects of health and communication services.
“The emphasis on UK policy has been to hold as many of the economic relations together in the immediate term, to put the economy into hibernation while the health pandemic is brought under control and plans are put into place to unwind stay-at-home orders. Support for these is high at time of writing but likely to decline as time goes on.”
“It has been hoped that there will be a v shaped recovery and perhaps this is still feasible but it is also likely that the real economy will take time to recover.
“China’s recovery is being described as sluggish: consumers are likely to be cautious in their spending, firms will be waiting to see if investment plans need to be revised and exporters will still be suffering from the impacts of a global lockdown – with some exceptions including those manufacturing relevant medical supplies.
“In the UK, employment levels have often taken about five years to recover from spikes in unemployment.”
The ten economic policy recommendations are:
- Scrutinise all government policies and expenditures in terms of contributions to employment.
- Reduce costs to business of employing workers.
- Protect front-line, customer facing workers.
- Monitor and address employment and income inequalities due to sex, ethnicity and disability, age and educational status.
- Encourage constructive engagement between local and national government, employee representatives and business.
- Encourage workers and students to address structural change needs by developing skills in shortage areas such as IT and STEM.
- Prepare plans to deal with large numbers of ‘discouraged’ workers that may include volunteering, skill development and basic income.
- Embrace public deliberation and avoid siloism and reactivity in policy design.
- Promote international trade but also develop some within country core manufacturing capacities.
- Pursue business support policies that accelerate the creation of new environmentally sustainable infrastructure.
Read about these recommendations in full here.