This is how the US, Germany and other European countries tried to protect jobs amidst the coronavirus pandemic
- The outbreak of coronavirus has disrupted businesses and the experts now expect a global recession.
- Several countries like the US, Australia and European countries have therefore introduced measures to protect jobs and revive the economy.
- This includes the Paycheck Protection Program in the US, unlimited loans to businesses in Germany, wage subsidy in Australia and more.
The Indian government introduced an array of relief measures for the Micro, Small and Medium Enterprises (MSMEs) — including moratorium on repayments, easy loans and more — as a part of the ₹20 lakh crore stimulus package. But none of the initiatives directly worked towards job protection and incentivizing businesses, especially MSMEs so as to retain employees.
The Paycheck Protection Program in the US
AdvertisementUnder the US Cares Act, the Paycheck Protection Programme is a loan program or funding extended to the small businesses that offers to forgive loans if the companies keep all its employees on payroll for eight weeks — and that money can be used for managing employees, rent, mortgage etc.
Besides that, the loans sanctioned under the
Unlimited loans to large and small businesses in Germany
On similar lines, Germany also offered both the small and large businesses an unlimited amount of loans to help them survive the pandemic. This will also save billions of euros spent in taxes. This is targeted at
"There is no upper limit on the amount of loans that the bank can issue," Financial Times reported citing Germany’s finance minister Olaf Scholz.
Ireland and other European countries follow
Other European countries are also learning from the measures undertaken by Germany. For instance, Ireland too relaxed the requirements to avail statutory sickness benefits. Under the initiative, every employee, including the gig workers is eligible for a ‘temporary income’ and incentive — if they show virus symptoms.
In fact, for any person testing positive for coronavirus, the illness benefits can be claimed immediately. This will also entitle them to receive a 50% increased pay. The government is encouraging the organisations to pay their absent employees as well — who are self isolating.
Australia’s wage subsidy for 6 million people
While Australia provides a subsidy like in Australia — where the employers can take fortnightly payment for a particular amount per eligible employee. The Australian government said that the wage subsidy scheme will create j obs for 6 million people in the next six months. That makes it $1,500 per fortnight. The Australian Tax Office will pay the amount to the businesses that have witnessed a sharp decline in turnover and profits.
If India replicates...
However, it might not be a good idea to implement paycheck protection or unlimited loans. Rishi Agrawal, CEO & Co-Founder of Avantis Regtech, a TeamLease Company, says that India does not need a similar paycheck protection program, rather equip them with a low-cost credit system that maintains credit history and measures creditworthiness. He says that the government should in fact create a process that reduces the cost of credit for those promoters who have great credit behaviour.
“Paycheck assumes a high degree of formalisation, strong institutions with checks and balances to prevent misuse and exploitation. In fact, In India if you do Paycheck, NPAs (non performing assets) will go through the roof as people will figure out a network of dummy companies with dummy employees, take loans and 'disburse' them and seek forgiveness,” Agrawal commented.
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