The Pandemic and an Overall Exposure to Inequality
One of the biggest concerns that are currently affecting worldwide economics is the ever-growing inequality among different layers of society. Even though the labor market usually survives the pandemic, the effects of COVID19 are genuinely unprecedented because they are causing the whole market to be redefined into new cohorts that are going to stay from now on because of the huge influence of measures aimed at COVID19 consequence mitigation. The whole worker pool was divided into three key categories that can be defined as follows:
- knowledge workforce,
- frontline employees,
- other workers (Bartik et al., 2020).
These three broad categories are crucial to follow because they build the basis for successful communal existence and complement each other in terms of the work that they do, especially when the number of the so-called unessential workers went through the roof during the toughest periods of the COVID19 pandemic. Therefore, the government intuitively tried to find the best solution to the problem without having to resign the majority of workers.
Regardless of the proposed division into categories, this by no means creates room for a hypothesis that it could be utilized to battle inequality because knowledge workers gained an upside compared to any other members of the workforce. With the majority of past investments going behind the backs of knowledge workers, they now receive increased praise for the same responsibilities while keeping their organizations intact with the help of the so-called essential employees (Hamouche, 2020). The frontline workers also gained serious advantages that allowed them to engage in negotiations related to work pay and working hours. The community, on the other hand, was not ready for such changes much more than the government, meaning that every shade of lockdown affected the population in a different way and forced many organizations to come down to initiatives that ultimately damaged their sustainability and became the perfect runway for economic and employment inequalities that started shining brighter than ever under the influence of the pandemic.
The alleged stark inequalities became an essential issue for many organizations across the globe because the governments turned out to be unable to make swift decisions regarding who could be considered an essential worker, who might be working from home, and who would be placed at the bottom of the company’s roster. When it comes to income and unemployment, the pandemic imposes its specific limitations on the workforce and the remaining citizens because they have to find ways to qualify for a job and then keep it during the lockdown. The current COVID19 pandemic became a challenge for part-time workers and their counterparts who were working flexible shifts because many businesses have lost the capability to support their tractability under the strict conditions imposed by the pandemic threat. This idea is rather important to understand because multiple businesses shutting down across the globe increased the gap between those who protected their jobs and those who lost theirs to the pandemic.
Ultimately, inequalities could also be witnessed when looking at the economy worldwide, as the implications of trade and industry generated by the pandemic actually turned out to be detrimental to more than just one production hub. With so many sectors being affected at once, the government could not come out with any policies because the customers themselves decided not to visit any retail stores or supermarkets in order to protect themselves. In turn, the pandemic exposed businesses to a situation where both employees and consumers were compromised. Significant performance losses turned out to be real for many organizations that never predicted such a dropdown in their quarterly productivity reports. The issue of the COVID19 pandemic created a situation where the barriers affecting individual people went beyond mere economic concerns and contributed to the development of the whole financial burden affecting households across the globe. The differences in terms of how much an employee earns became even steeper within the last four-five months.
Effects of the Growing Inequality on the Government
The government was no stranger to the effects of the pandemic either, as officials had to work hard to respond to the short- and long-term effects of COVID19 global breakout. None of the predictions made by market experts before the growth of the pandemic turned out to be true. It contributes to the link between GDP diminution and the increasing rates of unemployment, which is a direct reflection of Okun’s law. It is important to gain more insight into how governments might respond to the effects of a pandemic because existing jobs cannot be simply closed or inflated to an improbable extent. The idea for the governments across the globe was that there could be policies that would consider unemployment projections and allow organizations to take necessary action to retain employees and protect the workforce from inequalities. Nevertheless, the effects of COVID19 show that there are no effective measures that could protect the population from inequalities so far.
The derivatives from Okun’s law could serve as a hint at the fact that most governments do not treat the current pandemic as an issue that could generate excessive unemployment. The prevalence of the knowledge workforce and essential employees and their superiority to any other worker are what the government leaves out of discussions when it has to touch upon job retention and the local economy (Mollenkopf et al., 2020). The ever-increasing inequalities in pay rates started growing even more during the COVID19 pandemic because of the huge job retention schemes that were not designed to withstand this kind of a threat. Even though the given retention schemes were effective on a short-term scale, their influence on worker reallocation during an unexpected incident quickly became trivial because of the lack of balance between industries. The difference in growth prospects turned out to be another outcome of inequalities among the varied layers of the population. With no opportunity to recover from the impact of COVID19, the government has to support short-term decisions made on the fly.
The persistence of the pandemic placed numerous restrictions on the unessential activities that cannot and will not be supported by the government during the recovery process. Nonetheless, the current evidence shows that even essential populations and employees were not always supported by the government due to the strong impact of the pandemic on the economy. As the consumer demand currently stays at a relatively low level, it may be concluded that the majority of industries are continuing to suffer from the need to address their customers and employees equally during the time when resources are scarce and reaction time is of the essence. A momentous rearrangement of assets is not typical of governments around the globe, so no one should expect the officials to come out with policies that would resolve the existing income and wealth inequalities within a relatively short time frame. Despite many citizens having a chance to preserve their jobs, it does not contribute to restoring the status quo in any way.
The government, though, realizes the growing gap between different layers of the population and tries to remain viable while combining employees from different cohorts. This means that workers are picked based on their performance and the size of their contribution to organizational output. The unemployment insurance system also turned out to be relatively ineffective, so it may be concluded that after the pandemic, some of the inequalities are going to be leveled. The lack of training in decision-making, though, makes it harder for employees to seize their job opportunities and become those essential workers who are wanted by companies both during and after the pandemic. The lack of balance between reallocation of resources and preserving existing jobs continuously generates additional inequalities and leads to many people being dismissed and then called back to work. Economic conditions are not yet expected to improve, so the current initiatives should be aimed at the creation of long-term solutions instead of forcing governments to resolve inequalities and poverty here and now.
Government Initiatives Aimed at Unemployment and Income Inequality
Despite the fact that some governments claimed job retention schemes to be inefficient, there is a possibility for them to improve the current state of affairs by making several specific changes to their initiatives. The first task for them would be to review the hiring principles and pay more attention to work experience and knowledge level while building a continuous relationship with the workers who might be sent home for an uncertain period of time (Alonso et al., 2020). This means that the government should always have a backup plan to provide every organization with enough room to backpedal in the case of an unexpected event and either share or reallocate resources in a way that would make the conditions of existence satisfactory for everyone. Irrespective of whether the person is working part-time or full shifts during the pandemic, they could claim a series of reimbursements intended to cover their needs. This would become the key to further leveling of the existing wage and income gaps that become evident during the pandemic or any other unexpected event.
The short-term solutions described earlier in the paper could also be improved to better reflect the needs of local populations, as businesses might help their workers take advantage of the zero-hours scheme. It would make the variance between different levels of employees less significant, allowing the government to gain more insight into how the work-sharing initiative actually gets deployed. Approaches to poverty and wage inequality that were established on the basis of the concept of wage subsidy may be expected to provide a temporary effect and protect only the most vulnerable populations (Kramer & Kramer, 2020). Working time reductions are also necessary, but they are linked to completely different assets that cannot be reallocated as quickly as their reimbursement-induced alternatives. Job retention schemes are extremely popular across the globe because they almost never force companies to resort to dismissing employees. Suspensions can be met in some of the countries around the world (Germany, for example), but the overall trend averts companies from firing their employees in the case of an unexpected event such as the current COVID19 pandemic.
The government should ensure that the dismissals – if any – are totally supported by evidence regarding employee performance and their overall input in the corporate processes. This would help businesses protect themselves from any challenges related to the inability to cover suspension costs and predict the income curve before even getting to compensate subsidies to employees (Blundell et al., 2020). The risk of failure is rather high in the case of such an initiative, but the possible outcomes are much more important, as the chance to get access to liquidity support measures is a much more valuable opportunity. Combinations of short-time suspensions and flexible work shifts seem to be a unique approach that appeals to the majority of businesses regardless of the industry that they represent. The key drawback of an improved job retention scheme is that the government would be facing an increased chance of losing track of non-standard workers who do not work under the same regulations as their part-time or full-time colleagues.
Finally, the government could reinforce its attempts by focusing on custom adjustments that could be utilized to respond to the varied needs of many different populations that have to co-exist under the principle of inequality even during the non-pandemic time. This means that unemployment insurance should be left behind as an unreliable method of responding to unexpected events due to the many social hardships that vulnerable populations have to go through on a daily basis (Fortier, 2020). When employees have to lay off some of their workers, the idea is to keep up performance and reduce the costs, which is a possibility to manipulate low-income workers into working extra hours for a slight wage increase. To a certain extent, the government might risk its reputation to excessive dismissals, but on the other hand, it could create a comfortable cushion for the economy where companies might replace their workers by implementing rotation schemes instead of their retention alternatives.
References
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