The U.S. announced that another 5.2 million Americans filed new jobless claims between April 5 through April 11. The new claims add to the nearly 17 million others that have been filed over the past month. Most of those people will be able to receive benefits from the actions the U.S. government took to prop up the economy during the early days of the pandemic.
I thought it would be a good idea to take a moment to see what measures various countries are taking to protect their workers and their job markets. I also reached out to economists to see what they had to say about the actions. You can read all of their responses by clicking here.
One important note is that government actions don’t easily translate into immediate relief on the ground. Some programs are not available yet. People in many countries have also been encountering serious hurdles when applying for financial relief. Additionally, the information below is just a brief snapshot of the various programs some governments are offering.
The U.S. has a complex social safety net for people who lose their jobs. While unemployment insurance is technically a jointly run program between the federal and state governments, each state is allowed to set its own qualifying standards. The CARES Act, which was signed into law in late March, does a few things to offer additional assistance.
- The law provides an extra $600 per week for unemployment recipients from the federal government in addition to the amount paid out by the individual states.
- It extends the amount of time a person can receive payments by 13 weeks.
- The CARES Act creates the Pandemic Unemployment Assistance for gig workers who wouldn’t qualify for traditional unemployment benefits.
- It creates loan and grant programs for small businesses to help weather the economic downturn and possibly keep employees on the payroll.
- Also, while these moves are not specific to the job market, the U.S. is also providing cash payments to most people and pausing payments on federal student loans.
Government interventions that absorb businesses’ labor costs — such as the small business programs — will have the greatest outcome for the economy, wrote Eric M., who is an economist and analyst. “While this is a short term solution, in my opinion, this doesn’t forsake additional stimulus packages in the future,” he added. “By creating [an] economic vehicle to maintain pressure of the labor market, governments are helping to stem the bleeding from the pandemic. Capital can recover a lot quicker than labor.”
The UK government has announced several rounds of financial assistance to help businesses and workers during the pandemic. The funding is so extensive that it has already surpassed what the government spent on relief during the Great Recession, reports Bloomberg.
- The UK is also propping up its social safety net programs with additional funding.
- The country is paying 80% of the wages — up to 2,500 pounds per month — for most workers whose jobs are threatened by the pandemic. Self-employed individuals can take advantage of a similar program later this year.
- Certain businesses also have access to grants and emergency loans, as well as various forms of tax relief.
“The UK approach has one big advantage over the single pronged U.S. approach of higher/longer unemployment insurance in that it keeps retained workers in touch with their employers which helps to reduce the anxiety of job loss and preserves firm specific investments in skills and/or worker experience that might otherwise be lost,” wrote John P., who is an economist. “This also contains the overall rise in measured unemployment, reducing social costs, and makes it easier to ‘return to normal’, if such is achievable, once the COVID-19 crisis is over.”
Canada is also taking a multipronged approach to shield its citizens and businesses from the economic hit caused by the pandemic. The country has already seen the largest number of jobs lost in one month — more than 1 million — in its modern history.
- The country is offering extended jobless benefits under the new Canada Emergency Response Benefit, which also covers contract workers and people who are self-employed.
- The government is also offering to pay 75% of wages — up to up to a certain amount — of wages for workers at risk of being laid off from their jobs.
- Canada is offering businesses interest-free loans and other assistance to stay afloat during this difficult time.
Data from Australia has yet to capture the full extent of the job losses caused by the coronavirus pandemic. The latest numbers show the unemployment rate increasing just 0.1 points in March, but that is only based on data from the first half of the month. April’s numbers will likely show a much greater impact from the virus. Still, the government has been rolling out relief efforts for its citizens and businesses.
- The country is essentially doubling the amount unemployed people receive from the government for six months. The program is also rolling back obligations that citizens use their savings before tapping into the safety net.
- The government is also sending a payment to vulnerable people, such as those on welfare or veterans.
- Australia is also trying to keep small businesses going during this difficult time and encouraging them to keep people employed. It will provide a wage subsidy that’s directly linked to companies keeping people on their payrolls. Small and medium-sized businesses will also qualify for special loans.
Depending on how quickly the virus is contained could determine which countries took better action to support their workforces and job markets, wrote Megan G., who is an economist. Quick containment may mean the UK’s approach and those that keep people on payrolls will be better. “It means that as activity returns to normal, firms can ramp back up production of goods and services without having to find and train workers.”
The U.S. may be in a stronger position if the virus isn’t contained quickly, she added. Guaranteeing salaries can be more expensive and some of those companies may never actually recover. “Allowing people to collect unemployment insurance while they look for new roles increases the flexibility of the labour market.”