The Ethiopian Herald has been covering different issues in the country and worldwide on its guest column. In today’s Sunday edition and the coming one, we shall delve into the Corona virus impacts over all sectors. Dr. Ravi Kanth Makarla, an Assistant Professor in the Department of Accounting & Finance, College of Business and Economics at Ambo University, Ethiopia.
The
Ethiopian Herald had a while with Dr.
Ravi Kanth Makarla. Excerpts…
Herald: How different is this global financial crisis compared to earlier crisis in the past?
Dr. Ravi: The world has experienced different crisis in the past. To mention a few, Great depression started in 1929 and lasted for a decade, on 9-11-2001 attacks on US World Trade Centre has stern implications on global economy, in 2007 Sub-Prime Mortgage crisis in USA has led to Global Financial Crisis, and now 2020 Pandemic has shocked the global economy.
This financial crisis is different in its nature as it is a result of Health Crisis. Many of the countries couldn’t control the spread of this virus resulting severe economic loss across the globe.
Globally almost all Governments, as healthcare is their priority, implemented Lockdown resulting in economic recession. Lockdown and recession are directly related. On a timescale longer lockdown period results severity in economic recession.
In this trade-off between lives and livelihood, Governments have the priority to save the lives of the people. In India,
1.3 Billion people are under lockdown of which 80% of the workforce are on daily wage & self-employed and nearly 120 million are migrant workers. Almost all sectors of the economy being hit by this pandemic because everyone has struck with new and challenging environment.
In case of South Africa 57 million people stayed at home, where unemployment rate was around 30% before the incidence of Covid-19 and with this crisis it reached to its peak.
Global unemployment and economic stagnation have resulted mainly due to supply-side factors as a result of lockdown and work from home and also demand- side factors, lack of income resulting lack of demand. This pandemic devastated the lives of daily wage and self-employed workers all over the world irrespective of financial status of the countries which is different from earlier crises.
The economic impact of this covid-19 crisis is multi-dimensional and had hit almost everyone in this world either directly or indirectly. Almost all the sectors were badly effected whereas service sector is mostly affected. This is the worst-case scenario in the world economy.
Herald: How bad is the corona virus impact on Global Economy?
Dr. Ravi: We are in an acute global financial crisis situation; as opined by WHO and various expert financial Agencies in the world, it can be said that this would be the worst global recession since great depression in 1929, where activities cannot be expected to resume normal at any time till the end of this year. Where the IMF Recent estimates reveals that Global Economy contraction by 5% approximately.
Herald: How covid-19 aggravated or worsen the global unemployment?
Dr. Ravi: The database of tourism, hotel and restaurant, retail sales, etc. service sector employees are the key to frame any guidelines to protect and ensure their livelihood on humanitarian grounds because this segment of Labour Market was badly affected.
The exponential increase in unemployment has led to greater crisis after the great depression during 1930-40, as a result, inequalities were widened. Same kind of effect can be foreseen by economists, during post covid-19. In America majority of Black and Latino workers are in low wage segment and thereby having low savings to combat crisis. Hence, because of the new norm i.e. ‘work from home’ most of the jobs in non-skilled labour is worsen and is merely impossible to the low wage labour force to recover at the earliest. Many of the low wage workers in the world lack education and skill and thereby not adhere to the earlier Government norms and finally disqualify for Government support on the basis of unemployment allowance eligibility and finally unarmed in fighting against any recession or crisis.
During the crisis, economic disparities are much higher even in developed world. In USA millions of jobs already destroyed and thereby unemployment rate is at alarming levels. Including US, all Stock Markets have fallen more than 32% within a few days (18 days) of corona crisis touched the shores of USA and Europe which was not witnessed during past Global Financial Crisis. Oil Prices fallen from cliff; 6.6 Million People in USA applied for unemployment allowance declared by the Govt. It’s more than 5 times higher than the normal of the record.
Some countries are implementing ‘Pay- out Protection Program’ to protect jobs by giving guidelines to employers to remain employees formally employed and the pay-out reimbursed by the Government to the employers like 100% in Norway, 75% in UK and 80-90% in France. Hence, the unemployment rate is not rising as much as we saw in USA and other countries.
As a result of anticipated slow recovery, majority of the jobs may not be recreated immediately after COVID-19 crisis.
Herald: What do you observe measures to protect Undocumented daily labourers?
Dr. Ravi: Many countries are implementing Social Safety Networks in making people alive by distributing the policy benefits. In some countries, undocumented daily labourers were protected by establishing food camps, health camps spread across every small region in order to protect the deprived people, who are seeking a helping hand.
Herald: How do see the transformation of workforce from conventional working system to technology based ‘Work from Home’?
Dr. Ravi: The idea of working remotely from home is not a practice for many of the industries except IT industry, because of this health crisis people falling into different rhythm of work flow across the globe, where teleconferencing has become a common practice resulting savings in time and cost. Many of the teleconferencing platforms such as Zoom, Google Hangouts, Cisco Systems, Bluejeans, Slack Video, etc. are not available in China due to firewall restrictions. This forced China to create net set of teleconferencing tools to meet the immediate needs of their industry.
Work from Home has resulted rapid growth in the usage of internet even with developing and under developed countries. This is a positive note that the world is adopting technology at a faster rate.
Herald: How do you see the on-going changes in Education Sector due to COVID-19?
Dr. Ravi: Education plays an extremely important role in the development of any nation. In China, from primary schools to higher education, has moved very quickly to online mode as a result China has created large volumes of depository of educational materials due to class recordings and online assignment appraisal. This education depository can be upgraded and meant for the use of next generations and made available at a significant low cost and accessible round the clock to all levels. Internship is the common practice in getting job training to graduating students before they actually qualify for any dream job with stipend as monitory benefit. Due to this health crisis many of them are less likely than their senior batch students in achieving their dream job even before their graduation through campus placements.
Herald: What new norms can be considered in Tax System as Government Budget Deficits are on the raise?
Dr. Ravi: Historically, tax on excess profits has been implemented by many countries, Ex. USA implemented in the events of World War – I, World War – II, Korean War. The definition and measurement of excess profits vary among the countries. This is levied on the firms making excess profits even during crisis at a very high rate, as a measure to support the national integrity.
At the same time Government must protect the weaker industries those are badly affected by crisis up to liquidation to make them alive.
Herald: How do you see the role of Health Insurance as risk mitigating tool at grass root level?
Dr. Ravi: Universal Health Insurance Policies must be framed and need to be implemented to protect the lives of the citizens in any future health crisis. At the moment, penetration of health insurance in Ethiopia is less than 1%. Opening health insurance policies without having much constraints like employment status, age, immigration status, etc. is the need of hour.
Mandatory health insurance may be implemented at least in Government Sectors, some specific hazardous sectors like construction, decease prone production industries, etc.
Across the globe people died without medical treatment might be because of worry about the cost where they were denied of healthcare due to lack of health insurance.
To be Continue …
BY AMBO MEKASA
