So the other shoe has dropped.
The spectre is back again after a decade, only it is too real. The last time it happened was during the 2008 global financial crisis. We are talking about the pay-cuts. The lay-offs. And the furloughs.
Across the globe, half of the workers are now at the risk of job losses, but pay-cuts are pervasive and already real.
In Bangladesh, the wave has crashed ashore. If nothing else, it now heralds the full-blown headwind of the dreaded depression economics.
The impact will however be uneven for the developed world and Bangladesh for many reasons.
Paul Krugman defines the depression economics as 'failure on the demand side of the economy – insufficient spending to make use of the available productive capacity – have become the clear and present limitation on prosperity for a larger part of the world'.
What he had suggested in his book 'The return of depression economics' is to get credit flowing and prop up spending.
How do the pay-cuts then help strengthen spending, a key element in fighting recession? In no way actually. Rather it will complicate and slow recovery.
But that is also a subjective comment, depending on the economic architectures of countries – on how countries form their inner strengths, whether by exclusiveness of political culture or by inclusive approach.
The world is seeing pay-cuts across the boards. For example, New Zealand has cut 20 percent of salaries. Private companies are swinging their axes right and left.
But to prop up spending and consumer confidence, governments have been giving out doles to people with salaries under a certain threshold. The US has been sending out cheques to private accounts. A friend in Australia who receives less than 40,000 Aussie dollars a year said she has been receiving 700 dollars a month. A friend from Canada said he has received cheques. And the story goes on.
Just recently we have seen reports about two showbiz stars Ed Sheeran and Victoria Beckham getting into a controversy that talks volumes about the ethical and moral standards of the world at large. Both had their own private establishments – Ed, a bar and Victoria, a fashion house.
Now both of them have furloughed their workers and both of them were eligible for wage support from the UK government. Ed refused the dole and paid salary from his own pocket. But Victoria did not show any qualms in applying for government wage support and got criticised for that.
But besides the personal greed, that is how the developed countries had developed their economic principles and architectures to support wage in the time of pay-cuts, the logic behind which is to keep consumer spending going.
Otherwise, supporting the businesses alone will not work. Businesses will get money to get going, they will manufacture. But there will be no buyers and no recovery.
Unfortunately for Bangladesh, there are no such schemes. Those who get the 20 percent chop, will have to do with 20 percent less, minimum. But as fear about tomorrow takes over, the cuts will reach the bones, as much as possible, to face any more future upsets.
And what will be the impact of these pay-cuts?
First, the government will surely lose income tax as wages come to a trickle. That is going to have a long-term impact on public finances in the time of spending exigency.
Secondly, people will put on hold non-essential spending that includes health and education. An ache in the tooth, let's just ignore it for now until it becomes a bigger and inevitable problem. A pain in the tummy, let's take a paracetamol and go to sleep until it becomes a full-blown appendicitis. Well, we can easily tell the English private teacher not to come any more, only maths will do, until the child flanks in the exams.
Thirdly, an inequality is going to emerge as the government employees' salaries remain intact. In recent times, the government employees have received big perks and so they are almost equally paid as any private employee.
So it is time for both the government and companies to rethink their employee strategies. It is really hard to think why Bangladesh does not have unemployment insurance. Why do our insurance companies pussyfoot around contemporary business prospects and focus on easy stuff and not try innovative approaches? Because they are not compelled to.
Why have not companies created funds for such crises? This pandemic is not the only one we will see in our lifetime, as scientists suggest, and so all around business level preparedness is essential.
And from the government's side, it should save up enough instead of wasting money on extravagant unnecessary projects to be pumped into the economy in such times of need to prop up spending.
Calls for rational steps are growing loud everywhere. In India, experts are calling for avoiding unnecessary costs such as foreign travels and training and to keep pay cheques intact. They say, after all, the workforce is all that a company has.
Why they make this call is simple.
"The impact down the line is that there's going to be less spending," Bank of America economist Joseph Song told Business Insider. "That's where you could see a shortfall, and that could lead to a weaker recovery."
But companies are also panicked as revenues are on a free fall.
"Revenues are plummeting in ways never predicted, beyond worst-case scenarios," ZipRecruiter labor economist Julia Pollak told Business Insider. "It looks like [companies] are using all of the tools at their disposal."
So in the midst of all such things and in absence of all social protections what can we do?
The best option looks like buckling up and buttoning up the jacket to face the storm.