By Rachel Lipson, Jess Northend and Jenna Albezreh
As the COVID-19 pandemic threatens health and human livelihood across the globe, the economic effects of the crisis are becoming increasingly apparent. As the necessary public health measures intended to slow the spread of the virus are rolled out and sustained, nations are facing declining demand, rising levels of unemployment, and serious cash flow constraints amongst their firms.
There remains some level of uncertainty and debate about how to best support workers and employers through this unique crisis. This collection of different policies from across the globe demonstrates the wide range of responses adopted, often at unprecedented speed. While many countries have prioritized maintaining formal employer-employee relationships by (partially) reimbursing firms for payroll costs, others, like the US, have focused on reinforcing their unemployment insurance systems or providing capital through forgivable loans or grants to affected businesses. Even when responses appear structurally similar, countries have made different choices about the right levels of employer reimbursement to keep non-working workers on payroll, the proper criteria for expansion of eligibility for benefits, and the timeline and mechanisms for businesses to receive financial support.
As the situation continues to unfold, we will be monitoring the evolution and implementation of these policies throughout 2020. One factor we will watch closely is the relationship between efficacy and program lifespan. For instance, will countries like Germany that could rely on existing programs already in place before the crisis (e.g. Kurzarbeit) perform better than those that are creating new employer subsidy programs from scratch (e.g. the UK’s Coronavirus Job Retention Scheme)? We will also follow countries’ policies with an eye to subsequent stages of labor market response and recovery, as more countries begin to focus on re-employment, job placement and human capital development. To date, Norway is one of the few countries to highlight and fund skill development programs in its publicized package of support. Worth NOK 190 billion, the scheme includes rapid admission to university programs and funds for basic training for those currently unemployed.
While not intended as comprehensive, we continually updated this page to share highlights of new developments in countries’ responses. The Wiener Center is also directly comparing the deployment of policy tools in different country contexts– see our analysis here.
POLICY DEFINITIONS
Employer wage subsidies: Covers all payments made directly to employers, to reimburse them - either in whole or in part - for an individual’s wages. Eligibility periods differ between countries.
Tax relief: Covers tax deferrals and reductions in tax rates.
Direct cash transfer: Includes cash payments made directly by governments to citizens - including those currently employed.
General business support: Grants paid directly to employers, often targeted at small businesses specifically.
Unemployment insurance: Covers federal / national payments to individuals who are out of work. In some instances, this includes support for independent contractors and the self-employed who have lost work as a result of the virus.
Business lending: Includes state guarantees and eligibility requirements for government-backed lending.
Human capital / active labor market policies: Includes government programs to drive retraining, including for those in hard-hit industries, subsidized apprenticeships for those working in ‘critical industries’ and workforce planning councils.