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We are heading towards a bumpy road, but are we prepared?
Khondaker Golam Moazzem
Bangladesh has decided to gradually resume economic activities, a decision that was taken at a time when the daily detection of coronavirus patients in the country is on the rise -- from 418 on 26 April to 1,034 on 11 May.
As of 9 May, a large part of the country is in some state of lockdown; 395 upazilas in 49 districts have gone for partial lockdown so far.
Such a decision for opening up of business activities when there are risks of mass-spread of the virus across the country indicates that the government has taken a tough decision to walk in the bumpy road.
This bumpy road appears to be in the form of allowing economic activities simultaneously with its effort to limit the risks of spread of coronavirus within the country. Ironically, the issues are not mutually exclusive and the former may harm the latter.
It seems that the government is under pressure on several accounts, and, most importantly, in terms of having ‘people in starvation’ or ‘businesses in trouble’ despite undertaking various support measures in the form of stimulus packages.
The question is the ‘choice of timing’ to allow the businesses and economic activities to carry on. Can a reasonable delay to start business operations could result in better outcomes in case of health emergencies?
More importantly, is the decision to allow economic activities would cause more adversity towards economic recovery and health safety?
If so, should the approach and initiatives for economic recovery and health and safety be different compared to what is being done or are being planned? In this backdrop, do we need to consider mid-course policy revisions to address the health and economic emergencies?
Until the end of April, the various measures, initiatives and activities that were undertaken in the country have reflected the perception that health-related emergencies are the priority in all activities.
One of the important measures taken during this period was the announcement of long public holidays, which forced all economic activities to shut down to reduce the risk of virus contagion.
A limited level of success was noticed because of various measures such as reduced number of coronavirus patients and the number of people in quarantine, lower number of deaths and limited level of community spread.
Then from the end of April, major businesses and economic activities were permitted to start by maintaining safety instructions.
These include opening up of garment factories, followed by those of other industries, extending business hours for local level businesses, allowing people’s movement from rural areas to urban areas, particularly to Dhaka city and nearby districts, and the decision to reopen the doors of shopping centres.
While large numbers of economic activities have started after the announcement, a section of businesses decided to stay shut.
Given the limited enforcement capacity, limited logistic support to monitor the compliances in a health emergency, and lack of awareness of people and businesses, the risk of community level spread is likely to increase for opening up the businesses.
The World Health Organisation’s advisory for maintaining social distance strictly seems weekly maintained. Hence, the ‘new normal’ situation has emerged in the country.
But some issues and concerns may have forced the decision to take the bumpy road.
It is a fact that there were some early successes of the government by quickly responding to the immediate crisis, followed by implementing a number of those under the various monetary policy and sectoral policy measures.
Given the huge demand for policy support as well as possible scope for leakages, a section of individuals, households and businesses would be difficult to reach through these support measures and would be ‘left behind’.
These section of target groups would further raise the number of poor and the number of marginalised in the future.
Secondly, the constraints of resources perhaps make it difficult to ensure necessary support for the target groups as per their requirements.
Had there been surplus resources in hand, the government could extend necessary support quickly and thereby persuade different target groups in abstaining from opening up business activities.
Thirdly, the limited success of keeping people at home and reducing the community spread during the prolonged public holidays raises doubts about its success in the future.
In this backdrop, the choice of the bumpy road might come up, under which the opening up of economic activities would at least create scope for businesses on a limited scale and would ensure a minimum level of income of the workers and the marginalised.
To address the health emergency, priority is given on following and maintaining safety protocols in commercial places and workplaces.
However, the level of maintenance of safety protocol in congested cities and industrial clusters is still in question and therefore, the health and safety of workers remain at risk.
The process of economic recovery and health and safety on this journey on the bumpy road is likely to be more difficult and time-consuming.
Firstly, at the household level, the expenditure pattern would be changed. It would more likely be influenced by health-related expenditures, particularly for taking more protection against the coronavirus.
Considering the possible high risks of coronavirus contagion, the propensity to save for future medical expenses would rise.
Consequently, non-food expenditures (other than medical emergencies) may drop at least for some time.
Such consumption patterns would be further enforced because of the possible rise of job cuts and salary-cut in the future.
Secondly, the growth of businesses (both formal and informal) would be slower given the restricted movement of people within the coronavirus outbreak.
Such limited movement would badly affect different types of formal and informal services.
The exception would be medical services, medicines and other kits, where a significant rise in the demand would take place.
Thirdly, the demand for industrial goods would rise at a slower pace, not only because of limited money in hand to the people but also because of risks of coronavirus contagion through those goods.
Fourthly, the production and export in export-oriented industries may be affected due to possible risks of contamination within the factories as well as risks of a considerable number of workers being on leave due to illness.
Fifthly, the rise in coronavirus outbreak may limit the movement of foreigners in the country who usually work in public sector projects, private investments, operation of private enterprises and in-bound tourism etc.
A section of new enterprises would be at risk of shut down and a group of additional households would be further marginalised.
Under the ‘new normal’ situation, the policy stance of the government should be different.
It needs to take a more targeted approach and instruments to address these new forms of health and economic emergencies.
A primary focus of this approach should be on ‘health-induced economic management’.
Under this approach, the health-related issues need to be built in all economic activities.
The health-related protocols, guidelines and their implementation will need to be strictly followed in all kinds of economic activities.
This would require significant investment in installing health-related equipment, technologies, providing training and capacity-building for all employees and workers and maintaining special health insurances for employees.
Besides, new modes of work need to be developed along with the mode of ‘work from home’ to reduce the loss of working hours.
All kinds of activities need to follow the health and safety guidelines suggested by the WHO and vetted by the health ministry.
Since the period of recovery would be longer, and the level of risk would be deeper for households and private sector in this new normal situation, the adjustment process of the businesses (both formal and informal), particularly coping with health emergencies and conducting businesses, would be unusually longer.
The challenges for the workers and their decent employment-related issues would be more complex.
The households’ demand for social safety net programmes maybe for a longer period.
Moreover, each kind of economic activity needs to be designed, taking into account health protection.
Such issues demand more customised policy support instruments for the households and the private sector.
In other words, the currently announced fiscal, monetary and sectoral allocation would not be adequate to address those new form of challenges.
Moreover, those stimulus packages need to be redesigned taking into consideration the health-induced risks in the economic activities.
Proposed national budget for fiscal 2020-21 may consider measures in case of health, social safety nets, decent employment and small-scale businesses-related issues.
These include a further rise in investment for the establishment of emergency health infrastructure and health management, special health and safety measures for workers working in major industrial clusters, extended treatment facilities for industrial workers and workers working in different service sectors, extended relief support for targeted marginalised households, investment in workplaces for controlling occupational and health safety measures, support to small- and medium-sized enterprises, particularly those involved in different formal and informal sectors for an extended period.
The national budget for fiscal 2020-21 would provide the opportunity to consider those measures.
More importantly, some of these measures may need to be accommodated on a need basis; and the government need to be ready to undertake mid-course revisions of the policy measures during the next fiscal year.
The author is the research director of the Centre for Policy Dialogue
Firoz Ahmed