Shal­iza Has­sanali

The Min­istry of So­cial De­vel­op­ment and Fam­i­ly Ser­vices and the So­cial Sec­tor In­vest­ment Pro­gramme could be placed un­der im­mense pres­sure to pro­vide re­lief to the un­em­ployed in the next two years.

This view was shared by econ­o­mist Vaalmik­ki Ar­joon, as he weighed on the coun­try’s ris­ing un­em­ploy­ment and clo­sure of sev­er­al busi­ness­es due to the fall­out from the COVID-19 pan­dem­ic.

Ar­joon said while these two in­sti­tu­tions could face con­straints to pro­vide food sup­port and pub­lic as­sis­tance grants “it was ur­gent that they (Gov­ern­ment) take steps to lim­it the bu­reau­cra­cy and un­nec­es­sary process­es in­volved which can de­lay vul­ner­a­ble peo­ple from re­ceiv­ing them…some­times by many months.”

He said this is where the sin­gle elec­tron­ic win­dow can be quite use­ful.

In ad­di­tion, Ar­joon said a Val­ue Added Tax sys­tem should be more pro­gres­sive for these eco­nom­i­cal­ly vul­ner­a­ble in­di­vid­u­als by pro­vid­ing re­bates and cash trans­fers to poor­er house­holds.

He said, “Re­mem­ber, the earn­ings of many were al­ready de­pressed be­fore COVID-19 and the fall in sales brought on by the lock­down have caused them to ei­ther down­size and cut staff or cease their op­er­a­tions al­to­geth­er. Some busi­ness own­ers have tapped in­to their own per­son­al sav­ings to pay work­ers to avoid let­ting them go.”

“Emer­gency re­lief mea­sures from the gov­ern­ment have on­ly part­ly com­pen­sat­ed for the loss in in­come and sev­er­al house­holds are still await­ing as­sis­tance promised, like the salary re­lief grants. The re­al­i­ty is that pover­ty and in­come in­equal­i­ty lev­els have start­ed to soar even fur­ther.”

Giv­en that many are job­less among the low-skilled labour, Ar­joon said there was now an ex­cess of these work­ers seek­ing em­ploy­ment and this will damp­en low skilled wages across the board – if they are able to find work, they might not earn as much as be­fore.

Sev­er­al may seek em­ploy­ment in the in­for­mal sec­tors and not pay tax­es.

“Height­ened pover­ty could al­so in­crease COVID in­fec­tion rates, es­pe­cial­ly if per­sons start work­ing in seg­ments of the in­for­mal sec­tor that are not abid­ing by gov­ern­ment re­stric­tions. House­holds may al­so start rent­ing small­er spaces mak­ing it more dif­fi­cult to abide by so­cial dis­tanc­ing.” (SH)

Ar­joon said this comes at a time when the State’s rev­enues have not been healthy, and they may have no choice but to cut ex­pen­di­ture in sev­er­al ar­eas. With ten years of fis­cal deficits amount­ing to over $55 bil­lion, he said we clear­ly have not saved and there­fore have lit­tle mon­ey to fall back on to as­sist fis­cal ex­pen­di­ture.

With lit­tle sav­ings, Ar­joon said we have no choice but to bor­row some eye wa­ter­ing amounts in these next two to three years and tap in­to the Her­itage and Sta­bil­i­sa­tion Fund.

“This is no longer a re­ces­sion – we are in an eco­nom­ic de­pres­sion with five years of con­sec­u­tive eco­nom­ic de­cline since 2016.”