THIS was the advice of Organization for Economic Co-operation and Development Secretary-General Angel Gurria if leaders were to steer their countries’ economies to survival through the pandemic. The thing about saving the economy versus public health is a false dilemma, he said during the World Economic Forum Great Reset Dialogue recently. Release all the money to help people, even throw the kitchen sink, if leaders must, to resuscitate the economy.
“Remember the big mistake we made in 2008, 2009? We withdrew the stimulus too fast. We went into austerity too fast. And what happened is we went into two further downturns of the world economy after that because we were too fast. We should not make the same mistake this time. Lives against livelihoods is a totally false dilemma. What you should do, of course, is throw everything you’ve got, including the kitchen sink, at the virus,” Gurria said.
Governments must help pay even private-sector wage earners and haul resources for fiscal stimulus, and should keep doing this sustainably while the economy staggers.
The world economy, he said, wouldn’t be able to recover until two years yet. It is best at this time for governments to address the pandemic first, invest heavily in controlling the virus. The advice apparently is most sound; a healthy workforce is what drives the economy.
The Philippines’ Bayanihan 2, meantime, has earmarked a stimulus budget of P165 billion. The biggest share of the budget will support soft loans to badly hit sectors, such as micro-small and medium-scale enterprises, transport, tourism and agriculture.
Gurria said it would be wise for governments to re-skill the most vulnerable workers to address unemployment. In August, Presidential spokesperson Harry Roque Jr. reported that the Philippine unemployment rate among adult Filipinos had reached 45 percent. This is far worse than in the US, which has 11.4 percent. The OECD member countries during the second quarter this year suffered an unemployment rate of 11 percent.
Gurria said the bottom rung in the skill hierarchy will bear the brunt the most and it is important, even politically, for governments to address this problem.
“That is going to have a very serious result because they are more difficult to catch up in terms of skilling,” Gurria said. Their displacement tends to be more permanent, he said.
The administration must seriously consider boosting local manufacturing of personal protective equipment as a way to help local production and employment. The public must support local products, especially the growing online businesses brewing amidst the health crisis.
Given all these, government must release all resources it can to animate the economy in this time of dire need. Even throw the kitchen sink.