COVID-19 PANDEMIC: SOCIO-ECONOMIC RESPONSE, RECOVERY AND RECONSTRUCTION POLICIES ON MAJOR GLOBAL SECTORS - MUNICH PERSONAL REPEC ARCHIVE
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Munich Personal RePEc Archive COVID-19 Pandemic: Socio-economic Response, Recovery and Reconstruction Policies on Major Global Sectors Amir, Md. Khaled and Amir, Md Zobayer Department of Banking and Insurance, University of Dhaka, Department of Economics, Jagannath University 17 June 2020 Online at https://mpra.ub.uni-muenchen.de/101244/ MPRA Paper No. 101244, posted 28 Jun 2020 12:53 UTC
COVID-19 Pandemic: Socio-economic Response, Recovery and Reconstruction
Policies on Major Global Sectors
*Md. Khaled Bin Amir
**Md. Zobayer Bin Amir
June 17, 2020
Abstract: Since adopting all the possible plans, strategies, and containing measures to defy the outbreak
of COVID-19 pandemic, the world fails to prevent rapid contagion of a novel coronavirus, breaks down
the regular all-inclusive socio-economic channels, damages countless lives and livelihoods and forces
global economic downturn could be facing world’s worst depression since the 1930s. This research
paper has two phases amid and after the impact of novel coronavirus on global Scio-economy, can be
mitigated by focusing and implementing effective responsive and reconstructive socio-economic plans
and frameworks covering emergency financing, robust capital market, independence of the central
bank, and sound banking sector, currency swap, liquidity facilities, tax relief, loan forbearance, and
expanded unemployment insurance, concessional financing, grants, debt relief, global collaboration,
innovating new diversified technologies, job transition, reskilling, re-deployment, setting watchdog for
corruption, global collaboration, adding resilience, response, and re-configurability in existing supply
chain metrics are essential to lighten the global socio-economic imbalances including financial distress,
economic stress, food crisis, rising hunger, job layoffs, educational institutions closure, supply chain
interruptions and shutting down businesses. Declining Carbon dioxide (CO2) emission creating an
opportunity of establishing a low carbon economy and reducing air pollution and environmental crisis,
a chance on focusing clean energy, and emphasize more on hi-tech like cloud computing and artificial
intelligence are positive outcomes from coronavirus pandemic, will help to accelerate response and
recovery plans against COVID-19.
Key Words: COVID-19, Socio-Economy, Clean Energy, Cloud Computing, Job Transition, Fiscal Aid
JEL Code: A120, B55, L86, J62, H87
1
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath University1.0 Introduction
Recovery from the strike of novel coronavirus is a matter of time as the world overcome some other
pandemic at past centuries. In a natural sense a tsunami comes to destroy and devastate extensive areas,
damage lives and livelihoods likewise COVID-19 undoubtedly a storm, suddenly hit on the humanity
with unavoidable pace as 188 countries and regions are covered and affected (Johns Hopkins University
and Medicine; 5th May 2020). Life is not priced by anything as 339,949 people have already died in
the whole world which an irrecoverable loss for humanity. There is no specific medication working
against novel coronavirus (2019-nCoV). On top of that infection increases at a geometric rate
(Shedlock, 2020). The world is now drifting on uncertainty in every sector.
COVID-19, a perfect storm, raises uncertainty and breaks down the regular global medical, financial,
political, geopolitical, socioeconomic chain (Roubini, 2020). Coronavirus first hits as a medical crisis
turned into a bundle of crises especially economic disaster. Containing measures have taken to control
the outbreak of COVID-19, uplifts starvation because two billion informal economy workers are
suffering for foods and basic needs (modern diplomacy, 2020). So long time lockdown, staying home
and social distancing saves people from infection (Akira Toda, 2020) however creates economic distress
and pain (Nicola et al., 2020). The novel coronavirus is (SARS-CoV-2) so contagious and fatal than
any other virus in history. The world has already experienced more or less six months of the hit of
COVID-19 facing humanitarian toll and economic stress yet not get the permanent solution.
Considering quick contagion by nature of COVID-19, global economy needs to reopen as new 130
million people could be suffered by starvation (Winsor, Shapiro and Deliso, 2020). Developed countries
are not feeling quite a comfort to bear unemployment burden, office and school closures, interruption
in factory production like this developing and emerging countries are facing a big dilemma to tradeoff
between lives and livelihoods. So to consider both the paradoxical issues governments and global
leaders try to adopt different financial and economic strategies for reducing the sacrifice between deaths
and economic pain. Along with the responsive strategies during COVID-19 countries need to prepare
for future recovery for bouncing back again and reconstruct the global economy which strengthens
resilience for further attacks.
The global economy cannot move by its direction and pace. So it needs support and proper guidelines
combination of strategies. This paper tries to provide potential responsive and rebound strategies against
the COVID-19 pandemic. Monetary and fiscal areas, capital market, money market, businesses, supply
chain management, behavior of employer and employees, informal sector workers, secondary, higher
secondary and tertiary education, tourism, and travel sectors are mainly discussed in this research study
as responsive and recovery strategies against the coronavirus-2 pandemic.
2
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath University2.0 Economics of Pandemic
2.1 Economic Responses amid COVID-19 Pandemic
As the coronavirus is so virulent and infectious the public health should get priority before anything,
which relates to an economic cost because testing kit, medication, ventilators, and ICU beds are the
results of trillion dollars spending. So rapid and effective global collaboration (Woods and Batniji,
2020) among international governments, global leaders should be keeping away from politicizing on
COVID-19 (Lacina, 2020), corporations along with their innovative and diversified technologies and
supply chain mechanisms (Blyth, 2020; ) and businesses of all shapes and sizes should take proper
initiatives (Thackeray, 2020; Henderson, 2020; D'Auria and Smet, 2020) to enhance resiliency
(government should build public trust and watchdog on corruption, transparency, and wastefulness;
Howell, 2020) for eradicating forecasted recession quickly (Schwab and Vanham, 2020).
To alive global economy within the lockdown and quarantine, effective economic responses will act
both resisting the outbreak of COVID-19 and save the global economy. Economists and researchers are
continuously analyzing and working on this issue and produce different socio-economic strategies,
alleviate shock and worse impact of COVID-19 in the global economy. Printing money would be a
great option to mitigate the economic meltdown even inflation is positively correlated with this strategy.
The government may issue 20%-30% of GDP worth of cash by its central bank to spend on healthcare,
employment, critical supplies, and state aid and avoid insolvencies of banks and other firms. 5% of the
overall amount would be kept for developing economies that suffer a lot for the COVID-19 pandemic
(Kapoor and Buiter, 2020). The accurate percentage prediction is tough rather government can adopt,
amount suitable for them. Many economists give their consent about the best responses against COVID-
19 would be emphasizing on more testing, ramp up treatment capacity (protective medical supplies,
ventilators, and beds), introducing social insurance and providing liquidity ( interest cut) (Bang, 2020).
Helicopter money (Bhansali, 2020) or advocating fiscal firepower (Rayner et al., 2020; Davies, 2012)
should be introduced for forwarding economic burden to the government to save the lives and
livelihoods, reduce personal and corporate insolvencies, keep spending money without having a job and
ensure health care spending and public investment (Hutt, 2020), ignoring the price hike and government
debt, even legacy of this mechanism is questionable and cause to undermine the individuals’
effectiveness (Galí, 2020).
To alleviate the unprecedented shock from COVID-19 needs to finance an unusual amount of money
(a record of about $100 billion of portfolio outflow is severe more than any other crisis). So liquidity
crisis in the short term will put a huge impact on the longer run solvency issues. Bilateral swap lines
among the countries would be an option to alleviate the acute demand of short term liquidity but Fed
and other major central banks cannot open swap lines for the whole world (Okamoto, 2020). The IMF
announced up to $1-trillion cost-effective financing toolkit SLL (Short-term Liquidity Line) aims to
3
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath Universityminimize the risk of shocks evolving into deeper crises and spilling over to other member countries
(Gay, 2020). The world is in now both medical and financial crises due to unprecedented shock by
COVID-19. The more important task to flatten both infections and the recession curve. The economy
is like a body and the virus is like a sudden shock. So intensive care, ventilators, and beds must be
restructured quickly to alive the global economic system (Hutt, 2020).
Figure-01: Reducing Economic Scar Tissue (Governments need to address red crosses in this diagram)
Source: Centre for Economic Policy Research (CEPR).
Considering no tradeoff between lives and economic assets, lockdown leads to shutting down the global
economy. So policymakers propose collaborative fiscal, monetary, and financial Policies including
currency swap, liquidity facilities, tax relief, loan forbearance and expanded unemployment insurance,
concessional financing, grants, and debt relief among poor people should be provided by bilateral
creditors and international financial institutions (Gopinath, 2020). So all the policies should be compiled
in a bundle to flatten the three spikes human suffering, recession, and bankruptcies curves (Izvorski,
Mahajan, Moorty and Vincelette, 2020).
4
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityFigure-02: A policy framework for mitigating the impact of the COVID-19 crisis.
Policy Targeted Outcome
Monetary Downturn the
Polices human toll
curve
Fiscal Policies
Financial Health Downturn
Downtur financial
and and n the insolvencie
Regulatory Social recession
policies s curve
Protecti curve
Source: Author modified and developed based on online news reports.
Effective and impactful policies should be taken to get back the normal life, reopen the economy, and
respond to the crisis. The war against COVID -19 is divided into two phases one is in full swing spread
of the virus and another one is the recovery phase (Dell’Ariccia, Mauro, Spilimberg, and Zettelmeyer,
2020). To face the first phase government should aware to save the lives by quarantining at home and
limiting the movement of people with allocating money for hospitals and new labs to prevent, detect,
control, treat, and contain the virus, giving relief and wage subsidies to people and firms timely,
expanding and extending transfers (social safety nets and unemployment insurance benefits), providing
tax relief both for distressed people and companies (Brondolo, 2009) and Creating a business continuity
plan (Mauro and Gaspar, 2020). IMF is helping its member countries to control the COVID-19 disaster
by introducing emergency financing, augmenting existing lending programs, grants for debt relief, and
initiating New financing arrangement. The recovery phase will ensure economic policies get a normal
path again. People leave their homes to join their tasks again. Flattening trend of interest rates and
inflation, sizable public debt would be common scenarios in that phase if containing initiatives are
successful to control the spread of the COVID-19. More details about economic recovery from the
COVID-19 pandemic have discussed in section 2.2.
5
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityTable-01: Policy Options (Policies in support of households, businesses and the financial sectors)
Liquidity Solvency
Postponement of mortgage payments and Cash transfer
student loans
Households Tax and social security contribution delays Unemployment Insurance
Meal Vouchers for students who
are away from school
Extension of loan maturities ( Rescheduling) Equity injections
Tax and social security contribution deferrals Subsidies for maintaining
Business contribution deferrals employment
Buying of commercial paper and bonds Direct subsidies based on past
sales ( tax based)
Direct credit provisions by central bank
Credit guarantees
Financial Liquidity provisions for financial Equity injections
sectors intermediaries
Actions to preserve market liquidity Government guarantees
Source: Author modified and developed, based on International Monetary Fund (IMF). Note: Liquidity
measures loans or payment deferral; Solvency measures include transfers, payment waivers and
nonrefundable goods of services.
Investment in infrastructure would be an option along with targeted monetary and fiscal policies
(Sandbu, 2020) to come out from the COVID-19 crisis. However, this approach is applicable for
developed countries because they have enough fund but they have a lack of compliance in the decision-
making system at the municipality and state level and high labor cost increases the construction cost.
Merging technological capabilities with traditional infrastructure will enhance economic growth
(Kivity, 2020). United Nations initiates immediate socio-economic response and recovery efforts
covering 162 countries and territories, continues next 12 to 18 months aiming to protect health services
and systems, provide social protection and basic services, protect jobs and SMEs, safeguard most
vulnerable productive actors, macroeconomic response and multilateral collaboration and social
cohesion and community resilience. The UN’s mission is to achieve no poverty, zero hunger, and good
health and wellbeing severely by ensuring global solidarity, shared responsibility and immediate
responsive actions, interrupted by COVID-19. Also the UNDP implies two directive policies both from
monetary and fiscal authorities. Central banks can supply the liquidity by buying treasuries or lending
6
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath Universitythe institutions directly for paying salary to the job layoffs workers or SME’s employees with
calculating sizable inflation in the economy. Another mechanism is supplying acute demand for
liquidity from government, deferring corporate and labor income taxes for future payments.
COVID-19 forces to rebuild businesses, trade, and economic transactions procedures as organizations
use cloud computing systems where they adopt robotic automation and artificial intelligences (Joshi,
2020). In many countries, small businesses fall under pressure to supply their products regularly. While
business owners are trying to introduce visibility of value chain, curtail supply chains to respond nearer
customers demand, leveraging the technologies for getting the best output using few resources and
evaluating different scenarios to fight against coronavirus pandemic (Betti and Hong, 2020). Big
businesses and restaurants are emphasizing on sufficient home delivery and retail support that ensure
social distancing as well as meeting demand both. So most businesses are trying to keep in mind agility,
scalability, and automation for newly reforming and restructuring current shape to survive in this
situation. Contactless payment (ATM, Debit Card and Credit card, etc.) and delivery system is the main
motto to survive as well as not to spread this virus. Working and socialization could be from the remote
zone as people use Zoom, Slack, and Microsoft’s Teams to complete their responsibilities and tasks.
Figure-03: Most downloaded apps in the U.S from march 26 to
April 1, 2020 (in million downloads)
3.5
3 3.2
2.5
2
1.9
1.5
1 1.2 1.1 1.1
0.9 0.8 0.8
0.5 0.7
0
Source: Author developed from Priori Data (Statista).
The ILO has announced COVID-19 responding policies by developing four connected pillars, which
work together to strengthen and stable the actual purpose. This four pillar policy is actually standing
based on the international labor standards (International Labor Organization (ILO), 7th may 2020).
7
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityTable-02: Policy framework; four key pillars to fight COVID-19.
Pillar-1 Pillar-2 Pillar-3 Pillar-4
Stimulating the Supporting Protecting workers Relying on social
economy and enterprises, jobs and in the workplace dialogue for solutions
employment incomes
Active fiscal policy Extending social Strengthen OSH Strengthen the
protection for all measures capacity and resilience
(Pillar 2+3) of employers' and
workers' organizations
Accommodative Implement Adapt work Strengthen the
monetary policy employment retention arrangements (e.g. capacity of
measures teleworking) governments
Lending and Provide financial/tax Prevent discrimination Strengthen social
financial support to and other relief for and exclusion dialogue, collective
specific sectors, enterprises bargaining and labor
including the health relations institutions
sector and processes
Provide health access
for all
Expand access to paid
leave
Source: International Labor Organization (ILO).
Without herd immunity or effective vaccine, countries have to consider the transition phase about 12 to
18 months in between taking containment measures and full operation in economy (Candelon et al.,
2020). The way would be treated as the best which saves both lives and livelihoods. So policymakers
should think sectoral, regional, and individual physical isolation methods rather blanket lockdown of
the whole country. Abating the effect of corporeal distancing on the economy, spending profoundly to
keep the economy buoyant, spending, even more, to speed up the crisis convalescence and to end
historical gaps (Cadena and Ferrari-Haines, 2020).
Job transition in most of the industries would be a good response for reducing unemployment, reopen
the economy amid COVID-19 pandemic and help people enter again labor market. Again job layoffs
based on three overarching themes (investment for a sustainable and resilient future, an enabling
environment for clean energy, and empowerment of people to drive the energy transition forward), the
global governments, intergovernmental bodies, and global lending institutions should invest on wind
8
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath Universitypower sector would be a great option to mitigate inconsistency of current global economy. These
strategies will open numerous opportunities such as job creation, affordable power, cleaner air, and
resilient infrastructure, etc. accelerate the post-COVID-19 pandemic recovery.
People coming back after suffering from coronavirus can work more time than regular schedule, will
raise cost lead to temporary inflation should not be considered by central banks. Falling social
consumption leads to both demand and supply shock may overcome by bridging finance for the indebted
firms and not to force firms into insolvency during COVID-19 hit. Sick leave funds should be
introduced for workers especially for self-employed and one without financial cushion and self-isolation
facilities if he has coronavirus symptoms. All in all government should continue public services and
utilities (Lewis, 2020).
Around 1.5 million students of all primary, secondary and tertiary learners in the world are blocked to
physically go to school. The online portal is must to continue education and avoid infection by novel
coronavirus. Some developed countries can continue their higher education by online access using faster
than 5G technology (Mehjabeen, 2020) but these facilities and infrastructure are not available for the
whole world education system (Kandri, 2020). Students who are continuing higher education abroad
are quite upset about their funding and accommodations. Also, some other students who have already
applied for higher education but still they do not get any reply eagerly wait for their approval in this
unprecedented situation. Teachers in developing countries have not sufficient options to do more fruitful
doings because of not having extensive technological infrastructure connectivity. In all level of
education teachers and students are remaining quite isolated due to COVID-19 strike intrudes thought
generation processes.
On the other hand, educational institutions follow job cut and job layoff process as many teachers lose
their jobs and salaries. Likewise, students are trying to survive their lives by spending their savings
rather concerning their semester fess. So permanent solution like vaccine (Schwab and Vanham, 2020)
or herd immunity (Mock, 2020) innovation needs flowing fiscal aid from the government, philanthropic
contribution, and alliances, and solidarity of all stakeholders would be a way of solving this
unprecedented problem. The following two models could be a probable solution to mitigate the
education system from the COVID-19 attack.
9
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityFigure 04: The potential long-term shifts of education due to COVID-19 pandemic.
Deeper digital mastery
Internet and distance learning
Fiscal Aid High bandwidth internet
Smart phones
Falling real salaries
Teacher strikes
The potential long-term shifts from COVID-19
Teacher shortages in some fields and
geographic areas
Possible shifts and
strategies
Use of online
tools
Home
Easier to
Shifting A shift to schooling and access
roles charter schools fully virtual Engaging
students
instruction Mentoring
them
Competency-based Families accustomed with online
learning learning
Families monitor hall and teachers
Atomize learning
Standardized Have IT departments
0 tests
Complex test Directors facilitating
Personalized special education,
process of
learning procurement, and more
Benefit from economies of
scale and expertise
Teachers like coaches and More political support
mentors Funds from
Students and parents trying philanthropists
online learning
Source: Author developed based on online report.
2.2 Possible Socio-economic Recovery and Reconstructive Measures
Recovery stage is the regular phase when the virus is truly contained. In the normal stage countries and
regions can lenient their economic policies, stringent global coordination, and integrations because
firms will have already adjusted their processes and supply chain systems (Beck and Wagne, 2020)
however novel coronavirus spreads more by individuals movement, tourism and traveling rather an
economic transaction (Han Wong, 2020). Also to optimize economic recovery against shock from novel
coronavirus, governments must have a robust capital market, independent central bank, and sound
banking sector can introduce SPV (Special Purpose Vehicle). The idea of SPV would be a public risk-
sharing mechanism to support the distressed SMEs (Board of Governors of the Federal Reserve System,
2020). As SMEs are getting working capital loan from the central banks’ mechanism (SPV), they can
maintain the employment and continue their production line (Kang and Rhee, 2020).
10
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityFigure 05: Financing smaller firms (Central banks can incorporate public risk sharing by
introducing lending program; April 23, 2020)
Other Financial Central Bank Government
Institutions
Special Purpose Vehicle Equity Investment
Funding
SPV
Cash Loan Obligation
Financial
Institutions
Cash Loan Obligation
SMEs
Working capital and payroll
Source: Author’s modification and IMF staff.
Economic recovery after truly beaten COVID-19 not only depends on rocket economic theories rather
should concentrate some lessons from other disciplines deal with human nature, technologies, political
and moral legitimacy. The government should not unwind their emergency fiscal and monetary supports
considering stressed and traumatized populations who may not get back their jobs again because of
future distress condition of companies. Allocation the stimulus packages properly (Ahmed, 2020; Islam
and Divadkar, 2020), is an economic rescue plan including spending to the distress people, led great
intervention on production and distribution of goods and services (Phelps, 2020) and avoiding
corruption by rebuilding trust, integrity, transparency, and compliance in every sector both during and
after the the virus will over. Cross border recriminations and political screeching will drag down
international trade and investment must be mitigated by ‘Just in case’ supply chain mechanisms
indicates the processes of mixing products, assets, geographies, customers, and suppliers is matter of
huge cost (Cliffe, 2020). To avoid disruptions in the international production network for the upcoming
future (Chandra, 2020) new 3Rs (resilience, responsiveness, and re-configurability) must have been
added with traditional supply chain metrics (cost, quality, and delivery).
The world had not any option to deal with novel coronavirus at the very early stage causes humanitarian
toll and global economic crisis. Gradually people try to innovate ideas, identifies nature of the COVID-
19, develop medication ways (Duddu, 2020) and trying to innovate vaccine (Ryan, 2020) for reducing
11
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath Universitydeath rate at zero level, lifting containing measures, mitigate global economic pain, reopen the global
economy with full pace and safety. All countries should be concentrate not only vaccine but also the
cost of the vaccine. To do so countries need to collaborate with each other, creating sufficient fund for
purchasing desired vaccine and develop the pharmaceutical industry to produce vaccine domestically.
All in all fiscal support is must along with availability of all the facilities to face COVID-19 pandemic
because of mammoth strike both on lives and livelihoods. Following model signifies the importance of
fiscal support with mentioning allocating sectors to confront COVID-19 pandemic.
Figure 06: Unwinding fiscal support to stabilize global socio-economy during and aftermath
COVID-19 hit.
Fiscal Support
Social Safety Net (SSN)
Purpose:
Plan Discretionary Policies Infrastructure
1. Better redistribution
2. Poorest receive more Purpose: Purpose:
benefits 1. Accelerate smaller 1. Improve public
SSN as to consider three major investment sectors net worth
issues 2. Supportive for fiscal 2. Creating Job for
policies informal workers
1st Issue
Possible strategies Possible Strategies
1. Providing Benefits to
the poorest 1. Payroll tax cut 1. Emphasize on Green
2. Providing Benefits to 2. VAT reductions technologies
vulnerable groups 3. Tax reliefs 2. Think on wind and
solar energy
2nd Issue 3. Trying to fulfill
SDG goals-Long
1. Unemployment Possible Scenarios lead projects roads,
Benefits bridges and clean
2. Work incentives Advanced economies (Germany) energy, reviewing
3. Helping to search job with ample room – Increase in investment pipeline
4. Health Care facilities spending public investment increases
5. Education and training Govt. net worth Note:
Emerging market and development
3rd Issue economies (Brazil and South Africa) 1. No inefficiency and
– High debt levels and rising interest corruption
1. Avoid fragmented SSN payments, call for financing 2. Reduces 1/3 of
programs development in a prudent and projects prospects
2. Developing mobile sustainable way
phone networks Developing Countries with low
3. In kind provision- income (Nigeria)- raising tax and
health, food, and revenues
transportation
Source: Author’s model development based on IMF report.
Strict containment and worldwide lockdown has plummeted novel coronavirus spreading oppositely
soared the global unemployment and economic crisis. Researchers, economists and analysts tries to
imagine about the global economic movement and shape of economic recovery, ambiguous to all.
12
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityEconomists provide some educated guess on both global economic pace and corresponding recovery
shape after the virus truly beaten (Sheiner and Yilla, 2020).
Table 03: Possible global socio-economic recovery shape after COVID-19 pandemic.
Name Scenarios Image
The Z Most optimistic Bounce back up from economic Z-Shaped
sufferings quickly Recovery
Pent-up demand creates a
temporary boom
Sacrificing GDP for delaying
shopping, restaurant meals and
trips
The V Still very optimistic Permanently loses the production but V- Shaped
quick return is possible after lifting recovery
Trips, restaurant meals and concerts are
not foregone rather delayed
Basic Shapes
The U Somewhat Effect will last beyond end of U-Shaped
pessimistic, and social distancing recovery
probably more GDP recovers slowly
likely Even health risks decline ,
economic crisis will exist
further
The Nike or Somewhat After lifting restriction economy starts Nike Swoosh-
Swoosh pessimistic, and to bounce back sharply but consumers, Shaped Recovery
probably more businesses, and state and local
likely governments confused to spend that
hinders to get pre-pandemic trajectory
early
The W Also possible Double dip- easing lockdown W- Shaped
Double-dip - if the easing of Recovery
lockdown restrictions initially
boosts activity but the effects of
unemployment and corporate
bankruptcies then start to filter
through.
The L Most pessimistic When growth plunges and does L- Shaped
not recover for some time Recovery
Permanent effect on GDP
Lost investment during the
crisis
A rethinking of global value
chains
A permanent change to fiscal
policy
13
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityA slowdown in productivity
growth
This is basically what the
recovery from the Great
Recession looked like
Long time need to get normal
shape of economy
Source: Author’s own model based on online reports.
Some other things are recommended that investors can invest for a long time horizon which may offset
the short time pain and panic. The capital market analysts already mentioned some of the stocks like
Amazon, Alexion Pharmaceuticals, and Bank of America could be the option of investing for a long
time horizon. Work from home, distant working and the revival of the online economy can perform as
pivotal points in envisaging the future courses. New technologies, ideas, and innovations to work from
the remote zone (Stewart, 2020) will reduce interruptions and enhance efficiency and working hours in
the future. Several economists also argued that if the government remove visas restrictions or
simplifying the visas, cut the travel taxes and introducing incentives once the pandemic is under control
it will take ten months to get its normal level but again it is totally dilemma that when the government
will get rescue from this COVID-19 pandemic and reopen travel and tourism sectors because all things
are interlinked but uncertain.
Countries, maintain handsome welfare fund can afford active labor market policies (ALMP) to respond
the shock of COVID-19 on labor market. (Levy Yeyati, Montané and Sartorio, 2020) develops ALMP
predominantly amassed four big policy clusters training on vocational sectors, aiding to search, wage
subsidies or public works programs, and support to micro entrepreneurs or self-employed , is a matter
of big fiscal amount. Also COVID-19 pandemic has changed the labor market culture as frontline
workers, have a lack of social protection, lose their health or jobs because automation has replaced to
continue organizational tasks. Considering this situation ILO predicts around 3 billion people are going
to lose their jobs and livelihoods. The government should have provision for upskilling and reskilling
of the workers (deeply both human and digital skills). COVID-19 shock opens opportunities in the job
market as the care economy and green economy are expected to increase. Also technological innovation,
artificial intelligence. Cloud computing, product development, and E-commerce will get more priority
to produce huge job opportunities.
Table 04: Number of opportunities per 1000
Number of opportunities per 1000
Professional Cluster 2020 2022
Figures extrapolated from data for 20 economies (LinkedIn)
Data and Al 78 123
Engineering and cloud computing 60 91
14
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityPeople and culture 47 58
Product Development 32 44
Sales , Marketing and Content 87 125
Figures extrapolated from data for the United States (Burning Glass)
Care Economy 193 260
Green Economy 9 14
ALL CLUSTERS 506 715
Source: World Economic Forum, Jobs of Tomorrow.
The cost of inaction of people would be higher than the pandemic loss if government departments and
agencies, local government, sector bodies, trusts and foundations, and key stakeholders will not work
collectively for generating employment after getting rescue from COVID-19. Women, young and older
people are mostly affected not to join work regularly for their survival. With keeping in mind that
recovery needs years not months, investing in new labor programs for those out of work, providing
training to enhance skill, offering the integrated and coherent job to young people and introducing
coronavirus job retention scheme and back-to-work campaign should be getting heightened priority at
post-COVID-19 pandemic (Moss, 2020)
Giving priority on both re-deployment and re-employment include providing job market insights, job
market intermediation (match-making services), and job-search assistance used to halt rising
unemployment, will be treated active support both at risk and unemployed workers as well for job
layoffs people. Need to upgrade the covenant for blue colored employees (O'Connor, 2020), essential
worker serving precarious role. Introducing the Reskilling Revolution platform will help to accelerate
educations, skills and jobs which success depends on national, and global collaboration. (Zahidi, 2020)
developing and underdeveloped countries cannot provide financial support more than one or two
months during the lockdown period even developing countries are quite unprepared to contain the virus
and reopen the economy (Cassidy, 2020). So governments should support agro sectors, informal
workers, businesses and industries to avoid future burden and unprecedented situations.
Most of the well-established and IT configured institutions can continue their decision jobs from home
by using internet access but front line workers have not opted to work from home because they directly
involved with the production. So sufficient support and protective equipment are mandatory for them.
Sound physical interruption also causes economic pain because workers' health is related to production
as they directly engage with production tasks. COVID-19 hit changes the global economic balance,
forces both on supply and demand shocks different from 2007-2008 financial crisis or 9/11 attack
(Mangan, Lovelace Jr., and Feuer, 2020).
15
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityFigure 07: Strategies to save informal workers from COVID-19 shock.
Offer vouchers or discounts to customer (Travel sector)
Stimulate consumer
demand and rebuild
confidence Enhance Creativity and involving
private sector
Need Speed and agility in
Possible Solutions
Collaboration
Fiscal and liquidity
Save Informal Workers from the hit of COVID-19 pandemic
Government’s initiatives
constraints
Keeping people employed
Introducing training programs
Working together to support small
Transparency businesses supply chain
on job
Need for changing demand
Redeployment (talent
Job opportunities
exchanges) Matching between job
Facilitate
seekers and employers
redeployment Information on existing
skills
Collaboration among
Rapid upskilling-- (short- Industry associations, labor
term demand surges, ex- agencies, and groups of
large companies
grocery retail)
Long-term upskilling
Reskill (health services, digital
literacy and social and Reshaping the
emotional skills) labor market
Increasing
demand for
Subsidies and tax particular skills
Government- rebates Digital literacy
backed Increasing registration and cognitive,
incentives of informal businesses social, and
Improving female emotional skills.
participation
Redeployment and reskilling Adoption of automation for physical
distancing
(Microcredits)
Moving to clean energy for Climate
Technological advancement- digital
literacy, cognitive, social, and emotional
skills
Source: Authors’ own model based on online report.
16
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversitySo government and related parties should concern to take relevant initiatives to balance demand and
supply in the economy. To stabilize supply in the economy government can provide subsidies for the
framers and producers, supporting by giving tax rebate and payment deferral facilities. Farmers and
small business owners should have been provided sufficient liquidity, ensuring access to capital, and a
chance to engage with policy leaders (Monson, 2020). Purchasing goods and services and stockpiling
foods for relief or different philanthropic purposes directly from farmers or producers will cut the
mediums and ensure them more profit, would be options to stabilize market demand. reducing
regulatory barriers, alliance with large industries, leveraging workers' skill and capabilities and extra
remuneration should be offered for survival both businesses and employees The following model
developed by Bain and Company to protect small businesses amid coronavirus and outlast in the future.
Table 05: Business protection plans during pandemic and retool strategizes for future.
Act now to protect and run the business Plan now to retool the business for the future
today
Respond to the Ensure business Accelerate through the Retool for the new
crisis and protect continuity and stability recovery world
the business
Put the safety of Shift the war room from Forecast demand by Rediscover the raw
employees and reactive to proactive geography, channel customer need while
customers first crisis management and segment avoiding "average
customer" discussions
Set up a war room Plan a cascade of more Develop flexible Rethink strategic
of senior leaders to severe actions to operational, priorities and invest in
tackle immediate preserve business organizational, and or acquire key
challenges viability, and identify financial plans to capabilities to leapfrog
what would trigger them capture pent-up the next few chapters of
demand (or adjust for your industry's
over-served demand) evolution
Model scenarios Focus on employee Build resilience into Use digitalization and
more aggressive sustainability, operations and other partnerships to help
than any your team particularly for the functions for future your organization and
has imagined crisis-response team risks operations increase
resilience, scale and
speed
17
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityFocus on revenues, Reduce or eliminate Prepare your cost Start a learning journey
costs, cash, nonessential activity structure and balance to accelerate your most
operations and sheet for the future critical initiatives and
organization and begin to acquire build future businesses
new capabilities
Retool for the new
world
Source: Author’s modified model based on Bain and Company.
Trust is important for systemic coordination and cooperation, influence the economy to rebound.
Businesses and organizations need to enhance trust for employees, customers, and value chain,
partners. Four key trust drivers play a vital role to bounce back economy from COVID-19 crisis
(Candelon et al., 2020)
Figure 08: Four Key Trust Drivers in the COVID-19 Crisis
1 2
Transparency Privacy/ Security
Level of openness and
sharing information
Trust Safety when entrusting
someone with something
3
4
Proximity/Intimacy Reliability/Credibility
Balance of focus (Self Vs others) in a Expectation of delivery on promise given
trusting relationship track record, competency and expertise
Source: BCG Henderson Institute Analysis.
Climate change, massive unemployment, wealth concentration, and income inequality would be the
fatal problems after COVID-19 pandemic stage. So need to redesign the socio-economic structure to
achieve zero unemployment, no-concentration of wealth, unanimous global decision (Mohale, 2020),
not to bash globalization (Babones, 2020) said socially, economically, and environmentally conscious
economists. Governments need to allocate a huge budget for economic recovery plan (Lederer, 2020)
on agriculture, health, mega projects. Allocating more than stimulus packages (Hindery, Jr, 2020), can
create social business venture capital funds which encourage to engage the private sectors and
foundations, financial institutions and investment funds, influence to generate different ideas of social
businesses from individuals as well institutions could be a scenario changer both for recovery and
bouncing back the world again (Yunus, 2020).
18
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath University3.0 Concluding Remarks
No one sector in the globe does not get rescue from the storm of the novel coronavirus. It begins creating
a humanitarian crisis then gradually spreads all over the world forced to stop working and staying home,
disrupts socio-economic cycles lastly continue to devastate lives and livelihoods in the whole world.
People in the globe are now helpless, they can try but no single strategy is accepted as a permanent
solution. As both lives and livelihoods are interlinked, medical scientists, economists and policymakers
all are trying to save both. Contactless task completion is the main motto to control the outbreak of this
pandemic. Without upholding solidarity, unity, cooperation, and collaboration within and beyond the
nations, fight against COVID-19 would be impossible. Honesty, integrity, and a corruption-free world
is a must to get the best output from socio-economic strategies set to confront COVID-19. Sector-wise
proper monetary and fiscal policies implementation and continuation, technological innovation and
adoption, innovating new supply chain cycle, continuity of secondary and higher education, creating
job opportunity by reskilling and redeployment of workers, continuing public projects to create
opportunity for a day laborer and informal workers and concern on reducing young and women people
unemployment are effective initiatives against COVID-19 pandemic and vital to give back the world
regular shape.
The challenges and difficulties of this COVID-19 pandemic also create some other opportunities which
will ease to rebuild and reconstruct the world quickly on a more sustainable way. The pandemic
manifestly elucidates about the past and current weaknesses in socio-economic systems, all inequalities
and inadequacies by refocusing the fundamental value of human life, human potential, and human
livelihoods. Digital technologies, cloud computing, artificial intelligence, internet, intranet, and
automation help to complete jobs from distance and develop new job sectors also. Global demand for
energy has fallen causes of the major disruption for COVID-19 pandemic (Mountford, 2020) which in
turn reduces global greenhouse gas emissions to be down by 6.8% (Vince, 2020). So changes in using
the energy system will concentrate on CO2 emissions and influence to rely more on fossil fuel and
countries around the globe will have not need to allocate money for alleviating air pollution and climate
crisis. However, they can use that amount to mitigate severity of both amid and post effect of COVID-
19. So the world should not hopeless by reminding the quote of Albert Einstein told “In the middle of
every difficulty lies opportunity”, will help to implement rigorous responses amid coronavirus
pandemic and reconstruct global socio-economy in a more resilient way.
19
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23
*Lecturer, Department of Banking and Insurance at University of Dhaka
** Assistant Professor, Department of Economics at Jagannath UniversityYou can also read
