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How To Reactivate The Economy During The Coronavirus?

PIK - economy during the coronavirus

During the coronavirus pandemic (COVID-19), governments and emergency services are focused on immediate needs: increasing the capacity of hospitals, tackling hunger, and protecting families and businesses from evictions and bankruptcies. Much of the funds that currently flow from the World Bank, the IMF, other regional development banks, or central banks are used to provide resources for protective equipment in hospitals stabilize financial institutions, pay companies to provide goods and services to essential workers or provide direct monetary support to households.

At the same time, in some countries, preliminary work has already begun on what the next phase of recovery should look like and on the role that strong public action should play in boosting demand, providing replacement income, and facilitating new investment. We pointed out that the recovery phase can help build prosperity and resilience by contributing to the potential of the country on their development path, as well as their long-term sustainability. 

Decisions governments make to get their economic engine back on track – including the long-term combined social, economic, and environmental benefits they seek to achieve through their stimulus investments – will have far-reaching implications in ensuring that it can be rebuilt better and more solidly.

Retraining people for the post-COVID-19 

The coronavirus crisis is accelerating the transformation of our economies. The digitization and protocols incorporating strict biosecurity, among other trends are changing the actions of the different economic sectors and how to work for many people. In this context, it is key to understand the post-COVID-19 world and the skills that will be most in-demand in the new normal. Based on this, it is urgent that countries design strategies to agilely equip all their citizens with these skills, especially those most vulnerable workers who traditionally do not have access to job training and job reintegration opportunities.

Encourage formalization

The mechanisms to deliver temporary social transfers that many Americans have implemented to mitigate the effects of the crisis have focused on bank transfers. This has led many informal workers to open an account. This bankarization is a first step towards the formalization of some people and the promotion of saving for retirement. Transfers subject to training are incentive schemes that can be implemented to give continuity to this formalization effort and put people on the path of employability in the medium and long term.

Buy products made in your area or country

In addition to shopping in local stores, look for products made in your area or country. For example, if your local grocery store sells olive oil made abroad and another made by a local farm, go for local oil. For products that cannot be made directly in your area, look for those that are made in your country.

Encourage investment

The investment must be a key element to achieve greater growth in the short and medium-term. Accelerating the execution of productive infrastructure projects. Including the expansion of broadband, is a way to reactivate economic activity, promote employment. And lay the foundations for greater growth that can benefit more people, especially those in less connected areas. In this effort, the government can contribute to reducing logistics costs, underpinning productivity, and formalization.  

Save at local banks and credit unions

Small banks and credit unions are generally more aware of your money and invest it directly in your community. They tend to be more flexible when it comes to supporting local small business loans. Work with a local bank or credit union instead of working with a megabank to not only support local jobs but also to support investment in your local community.

Protect formal employment to preserve informal

Supporting formal firms for their recovery is key to preserving not only formal employment but also informal employment that is related to the economic activity derived from formal firms. Thus, programs that protect formal jobs and discourage layoffs are important to minimize long-term unemployment, both formal and informal, and avoid drops in productivity. 

Likewise, it is key to help formal companies to rethink for the reactivation, redirecting the processes towards the new goods and services to be offered, and retraining the workers to insert themselves in this new productive matrix. These types of programs ensure that all people have access to new jobs with higher income, creating a virtuous circle of employment, income, and well-being for the population.

Last words

The COVID-19 crisis forces us to think outside the box and look for innovative solutions and adjust them in a very agile way to the territory in which we want to implement them. Failure to take the necessary actions on time has a high cost, as previous crises demonstrate. For this reason, the highly informal country America must take appropriate measures with a long-term vision that not only allow them to emerge stronger from the crisis but also prevents deterioration in the conditions of vulnerable workers.

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