Economic downturn Helping people who suffer a loss of income
I wish to explain the merits and challenges of various ways to help people who suffer a loss of income during an economic downturn.

a) Unemployment insurance. 
This will help people who are retrenched and lost their jobs. However, it will not help the self-employed or those who are placed on partial no-pay leave. 

b) Giving money for low income people 
There is usually a need to apply means testing, so that the money is given only to people with low income. There is also a need to check that there is an actual loss of income suffered by the applicant

c) Given a relief loan
This loan can be given quickly to people who apply and does not require strict evaluation. As it is a loan, it has to be repaid, so the risk of abuse is reduced. It can apply to the workers who are retrenched or are placed on partial no-pay leave and to self-employed. 

In a recent survey, most respondents prefer option (a) and (b). They look for attractive and are adopted by most countries. But the respondents probably did not realize the difficulties faced by the administrators in managing these schemes.

I prefer option (c) as it can be implemented quickly to give financial relief to most of the working people who are affected and do not need extensive evaluation upfront. Some of the loan may have to be forgiven, but this can be done in the future, when there is time to carry out a more careful evaluation. It will be less costly to the state (and actually the tax payers).

Tan Kin Lian 

Vote - do you agree that option (c) is better?
 

Add Comment

---