Private sector needs government support to protect jobs

For the ongoing economic crisis, the biggest damage is the loss of employment, because from such loss leads to loss of income resulting in drop in consumer spending and demand. If consumer spending reduces, economic recovery will be delayed.  So both rich and developing countries are giving priority to save jobs.

Emergency health response and food aid for the vulnerable groups, of course, are top most priority right now. But employment protection/resuming employment program will be the priority over the short terms.

Governments are incentivizing in two ways—helping employees directly with cash assistance and supporting companies to protect jobs.

Generally, employee protection and benefits are strongest in Europe, mainly Scandinavian countries. Many government stimulus around the globe are given supports like tax credits or deferrals on condition of not laying off workers.
In US, where unemployment benefits are discouraged, the government announced additional benefit of $600 in this time of economic hardship coupled with serious health crisis leading to thousands of deaths every day. Among other supports, there is 6.5% tax credit (state social security tax) for companies which will not cut jobs during this period.

To protect jobs for locals, Singapore government announced that they will pay 75% (up to $4,500) of monthly salaries for local employees starting with month of April. It is not loan, it is government's cash handout delivered directly to employees' account.

In India, employers contribute in employee provident fund mandatory for the organized sector, and companies are bound to pay monthly to the fund against their employees.

Amid coronavirus crisis, the government announced that the amount equivalent to three months' contributions of companies to the fund will be paid from state coffer, which will cover jobs of nearly 50 million employees in the private sector.   

Among the stimulus packages announced in Bangladesh so far, the Tk5,000 crore package for export sectors, mainly readymade garment, is expected to be used for salary payments. It is a loan package at subsidized interest rate for industry owners to pay workers' wage.

Sectors other than RMG also need some supports from the government to help the private sector protect millions of jobs.

Dr M Masrur Reaz is and economist and also the chairman at Policy Exchange