Coronavirus Response, April 8 – 3

A roundup of articles on the status of the Coronavirus and ways we can help….

 

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Coronavirus: India’s bailout may not be enough to save economy

Arunoday Mukharji, BBC News, Delhi, Apr. 3, 2020

https://www.bbc.com/news/world-asia-india-52117704

Mohammad Alam is one of thousands of workers standing in a food queue in India’s capital, Delhi.

The factory where he worked shut down after Prime Minister Narendra Modi announced a 21-day lockdown to stop the spread of coronavirus.

A daily-wage labourer, he has no other source of income, so he has been forced to come to a government centre for food. “I don’t know how I will survive, I will have to borrow to feed my family,” he says.

Neeraj Kumar, a migrant worker, decided to flee.

He and his family joined a throng of people leaving the city soon after the lockdown announcement was made. Public transport systems were stopped, leaving people with no choice but to walk.

Mr Kumar, his wife, and their 10-year-old daughter had already walked more than 40km (24 miles) when we spoke to him. “There is no work here, that is why we are running away. There are no buses, I have to walk another 260km to get to my village,” he said.

India has announced a $23bn (£18bn) relief package to help people like Mr Alam and Mr Kumar who are part of India’s unorganised, informal industry which employs 94% of the population and contributes 45% to its overall output.

This industry is already bearing the brunt of the lockdown with thousands finding themselves unemployed overnight.

“No-one will be allowed to go hungry,” Finance Minister Nirmala Sitharaman said while announcing the package – a combination of direct cash transfer benefits and food security measures.

• India’s pandemic lockdown turns into a human tragedy
• ‘Beaten and abused for doing my job in lockdown’
• India announces $22bn virus bailout for the poor

But the economic fallout of this unprecedented lockdown has been dire. Businesses have closed, unemployment has risen and productivity has fallen.

India’s growth engine was actually sputtering well before the threat of outbreak arrived. Once one of the fastest growing economies in the world, its growth slowed to 4.7% last year – the slowest level in six years.

Unemployment was at a 45-year high last year. Industrial output from the eight core sectors at the end of last year fell by 5.2% – the worst in 14 years. Small businesses had only just begun to recover from the controversial 2016 currency ban that came as a body blow to the cash-consuming informal economy.

Now, experts say the coronavirus outbreak is likely to further cripple the already frail economy.

 

In 2016, India withdrew 85% of all currency notes from the economy

So while most welcome the government’s measures, they feel much more needs to be done to minimise the economic impact.

“While free extra rations have been sanctioned, how will the poor access what is due to them?” wonders economist Arun Kumar.

“The government should devise a way of using the army and state machinery to physically distribute food to the poor.”

With thousands of migrant workers stuck miles away from their homes, the seamless distribution of cash and food needs to be the government’s top priority, he adds.

And it’s not just migrant workers at risk.

Farmers are also vulnerable to a potential economic shock from the lockdown – the agriculture industry contributes nearly $265bn to GDP.

The government says it will give farmers 2,000 rupees ($30) in April as an advance payment from an $80 annual pay-out to tide over the situation.

“This money will be inadequate because exports have stopped. Prices in cities will rise because of profiteering and in rural areas they will drop because farmers won’t be able to sell their crop,” says economist Arun Kumar.

The outbreak has happened at a critical farming time – the new crop is ready, waiting to be sold.

Economists warn India’s challenge will be in transporting this food from villages to cities in the midst of the lockdown.

If supply chains don’t work properly, a lot of food will be wasted and lead to massive losses for Indian farmers.

Experts warn that India is also at the brink of a major unemployment crisis.

Economist Vivek Kaul says people who work for small businesses may end up with job and salary losses. “I know of places where companies are actively discussing how many people they need to fire,” he says.

And that’s not all.

AFP Job losses and salary cuts are a very real possibility for thousands

With flights suspended until mid-April, the shutdown is also bound to push India’s fast-growing aviation industry into peril.

The Centre for Asia Pacific Aviation (CAPA) has assessed that the Indian aviation industry will post losses worth nearly $4bn this year.

This will likely have a cascading effect, affecting the hospitality and tourism industries. Hotels and restaurant chains across the country are empty and are likely to remain so for several months, sparking worries of large-scale layoffs.

The automobile industry, a key indicator of a country’s economic growth, has also been forced to hit the brakes – experts are estimating losses of nearly $2bn.

So, is India’s relief package enough?

Experts say it’s a drop in the ocean compared to bailouts in countries such as the US, China and Singapore.

They say India now also needs a larger stimulus package soon to help businesses weather this extraordinary crisis.

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The Coronavirus Pandemic Proves We Need Universal Basic Income

Anne Gaviola, Vice, Apr. 7, 2020

https://www.vice.com/en_ca/article/3a8mvw/coronavirus-pandemic-proves-we-need-universal-basic-income

Canada’s COVID-19-related unemployment crisis makes the case for a guaranteed liveable income. Economists say the CERB and wage subsidies show the need for a universal basic income.

The daily grind of holding down three jobs was exhausting for Jessie Golem. She walked dogs and taught piano while trying to build up her photography business and could never make enough to make ends meet. The 31-year-old Hamilton resident was stuck in a career rut and lived below the poverty line for years—until she got access to a basic income.

Not only did it help her figure out what she wanted to with her life, but it also gave her a temporary break from worrying about money all the time.

“There’s that constant fear where you’re putting your debit card in the machine and hoping it says ‘approved.’ I’ve lived with that fear for years and it takes a huge mental toll on you,” she said.

Golem was part of Ontario’s short-lived Basic Income Pilot Project, which for nearly two years until March 2019 gave 4,000 Ontarians on low or no income up to $17,000 annually. It was the largest experiment of its kind in the world.

Under the project, Golem doubled the $700 she was earning monthly doing survival jobs to $1,400 (participants who made money during the pilot had half of anything they earned deducted from their benefit). It allowed her to focus on her passion and eventual viable business of portrait photography. And she didn’t have to worry about making rent.

“I had no formal training but I wrote out a business plan and looked for clients. I’d been shooting photo projects, events, weddings for 10 years before that, but I’d never been able to break into it full-time because I never had a financial floor to be able to take the risk,” she said. One of her most successful endeavours was a series of 70 portraits of people who were part of the project, called Humans of Basic Income.

[Ontario Premier Doug] Ford cancels basic income pilot

After sweeping into power, however, Doug Ford’s Conservative government announced in the summer of 2018 that the basic income project would be cut short. The government said the program, which cost $50 million a year and was supposed to run for three years, failed to help people become “independent contributors to the economy.”

Now, as Canada faces a wave of unemployment unlike anything we’ve ever seen because of the coronavirus pandemic, there are calls to bring back a universal basic income.

A universal basic income is a government benefit that covers the cost of living plus a little extra to provide financial security. It comes with no strings attached and recipients can spend it any way they choose. The unprecedented job crisis underscores the need for a system that can quickly and easily reach anyone in need—not just during the economic fallout but after, as well.

NDP leader Jagmeet Singh told VICE that the COVID-19 pandemic highlights how the Employment Insurance (EI) system abandons Canada’s most vulnerable workers. “The crisis that we’re in right now has shown the gaps in our social safety net and particularly shows how ill-equipped we are to take care of people when they need immediate and direct financial support,” he said.

Sixty percent of workers—part-timers, gig workers, and freelancers—don’t qualify for EI, which is why the federal government created the CERB (Canadian Emergency Response Benefit). The CERB gives jobless people who don’t qualify for EI access to $2,000 a month for up to 16 weeks.

But according to analysis by the Canadian Centre for Policy Alternatives (CCPA) published Thursday, a third of unemployed Canadians, about 862,000 people, aren’t eligible for either EI or the CERB.

On Monday, Prime Minister Justin Trudeau said more help was coming soon to those who don’t qualify for the emergency relief, and Golem and others are hoping he will announce a universal basic income, even if only temporarily.

VICE reached out to Trudeau’s office for comment but did not hear back.

“It’s geared on the premise that if people become unemployed, you really don’t want to give them too much to dissuade them from desperation jobs,” McKenzie said. “But the economy’s not like that anymore. Most people work in service economies, most of them work in the thought economy—they have to be able to generate ideas and they also have to be able to go to work,” he said.

McKenzie said rising inequality makes it even worse for lower income earners. “Thirty years ago, in real terms, the average family in Toronto made the equivalent of $100,000. Now, the average family in Toronto makes the equivalent of $70,000. Normal working people, especially young people, have been pretty well screwed over,” he said.

“People now have to pay for more things themselves and because of that wages don’t go as far, which means that their savings have decreased. Not only are they going in and out of work, but they’re going in and out of work at times when they have fewer savings and more debt,” he said.

McKenzie disputes the narrative pushed by critics that a universal basic income is an extreme option by political progressives that costs too much. “People think it’s radical, but the stuff pays for itself,” he said.

Canada can afford universal basic income

Before the coronavirus pandemic hit, Canada’s parliamentary budget watchdog estimated that a federal UBI program would cost $43 billion in its first year and benefit 7.7 million people. According to economist Evelyn Forget, that isn’t a huge sum of money when you consider that Ottawa spends $23 billion on the Canada Child Benefit (CCB), and provinces spend $20 billion on income assistance and $50 billion for Old Age Security (OAS).

Her research shows that a universal basic income can decrease health care costs by 8.5 percent and produce “significantly reduced health system savings.” Forget looked at the data produced from the Mincome experiment in Manitoba in the 1970s that guaranteed low-income participants enough to live on for five years. A family of four received $4,800 a year (equivalent to about $29,000 today), which was slightly more than they would have received from social assistance from the province.

“One of the big reasons they were hospitalized less often was because they had better mental health and they had less accidents and injuries,” she said. “We are using the healthcare system to pay for and patch up the consequences of poverty.”

Another consequence she found was that the high school graduation rate increased dramatically because there was less financial pressure on children to drop out of school and start working to help support the family. “Those kids went on to college and university so it looked like the basic income had a very positive effect,” she said.

Ruth Westcott is a Thunder Bay resident who took part in Ontario’s pilot project. She has an autoimmune condition that gives her migraines and bad headaches, and, for most of her life, has made it difficult for her to keep previous jobs as a researcher and financial analyst.

She said that getting rid of the chronic stress she felt when she worried about money and paying rent allowed her to focus on her health. Westcott says she was able to get enough sleep and eat well—and keep working as a research assistant, which is a job she still has today.

“I’m very concerned about the million of us on social assistance in Ontario who are living so far below the poverty line that we have no reserve to deal with any crisis, let alone one of this magnitude. We need more support and we need it now,” she said.

Westcott receives a disability benefit from the provincial government but she worries about the right-wing narrative suggesting that a national universal basic income replace or claw back other forms of government support.

Help for the poorest across Canada

A national universal basic income was part of Singh’s campaign platform. He said his vision for this program does not include reducing other types of support that people like Westcott receive. He says a Canada-wide solution is urgently needed.

“During this crisis the best way to help people right now is to make it not an application process—where you have to test who gets it and who doesn’t,” Singh said. “Just send out the support to everybody and we can tax it back afterwards. Some people don’t need it, but that’s why our tax system can recover that in the next tax cycle.”

Spain, which is currently dealing with Europe’s worst COVID-19 outbreak, has committed to a basic income. Economy minister Nadia Calvino said the plan is to keep the basic income as a tool “that stays forever, that becomes a structural instrument, a permanent instrument.”

According to Forget, the crisis has the potential to change the discussion around a universal basic income only being temporary. She said all the uncertainty and the massive job losses caused by the coronavirus may be an opportunity to foster empathy for vulnerable workers and others who need a guaranteed annual income.

“In the past it’s been very easy for those of us who have regular jobs to imagine that we’re somehow different from the people who need income assistance,” Forget said. “One of the things I think the current pandemic is doing is making it obvious to a whole lot of middle-class people that the security they thought they had doesn’t exist. The jobs and the lives that we thought were very secure are actually very precarious.”

Follow Anne Gaviola on Twitter.