Harry Tuul: Will 100,000 people lose their job?

Harry Tuul.
Harry Tuul. Source: Private collection

Another dangerous phenomenon is hiding behind the coronavirus in Estonia and the world. Because governments have sent the economy into shock, unbridled unemployment is already on the horizon," Harry Tuul writes.

In a situation where Estonian media portals are busy counting new coronavirus patients, we should also be counting people who have lost their job. It is possible their number has already exceeded the number of official COVID-19 cases, while a longer latency period (30 days) means we just cannot see it yet.

Because governments have forced the economy on its knees with draconian measures, economists are forecasting a sharp and rapid decline. Deutsche Bank reckons the world's leading economies will shrink by up to a fifth in the second quarter. And while it is possible growth will return in the second half of the year, the blow has been delivered and recovery will be long and arduous.

What is more, professor Kristjan Port writes on the pages of Maaleht that the quarantine could persist for the entire summer that would spell a longer recession. Perhaps the most striking description of the situation was delivered by head of the Estonian Employers Confederation Arto Aas when he said on the "Terevisioon" morning show that for every day the emergency situation continues, another week is added to economic recovery.

The crisis from a decade ago left us with 100,000 fewer employed persons at its worst. In other words, a similar recession could see 100,000 jobs in jeopardy. Whereas back then, that figure developed over a long period of time, while companies are finding themselves stranded quickly and en masse today. Pay cuts in various sectors are just the beginning. Layoffs will follow.

The claim that health is more important than economic well-being is a half-truth. It is simply very difficult to gauge the number of deaths caused by recession. Much more complicated than it is to administer a coronavirus test.

Oxford researchers found in 2014, when comparing data from before 2007 to the time of the previous economic crisis, that it caused around 10,000 suicides in USA, Canada and Europe alone. Whereas suicides are just the tip of the iceberg as the researchers put it. Their data showed a creeping mental health crisis in Europe and North America.

Measures introduced by the government, like the tax arrears interest exemption and paying 70 percent of the salary of people whose job has been affected by the crisis, help but cannot answer the question of how to come out of this crisis.

Rampant quantitative easing and payment holidays offered by banks are of little use in a situation where the economy is kept from working. Having a plan for bringing the economy out of this induced coma quickly and safely is vital.


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Editor: Marcus Turovski

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