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27 Aug 2020  (636 Views) 
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Economy after the pandemic


Ensure that everybody has a job
The pandemic has disrupted the business environment around the world. Many tens of millions of jobs are lost. It will take a very long time for new jobs to be created to replace the lost jobs.

My common sense tells me that there is only one solution - at least for the next few years. 

The working hours have to be cut by 20%. All countries have to reduce their working week by 20%, say from 5 days to 4 days of work. 

When the working hours are cut by 20%, businesses have to employ 20% more workers to meet their current operations. This is how the 20% of unemployed workers can have a job.

When the working hours are cut by 20%, each worker will have to suffer a 20% cut in wages. There is no alternative. The employers cannot afford to increase payroll cost by 20%. They cannot survive.

The 20% pay cut may force many workers to fall below the poverty line. Many families need a certain level of income to meet their financial obligations, such as mortgages and living expenses. 

Some of these workers have past savings to draw down. But other workers may have to rely on other sources of financing to offset the pay cut.

I suggest that they should be allowed to withdraw savings from the Central Provident Fund accounts (in Singapore) or their pension fund accounts (in other countries). This may hamper their financial adequacy when they retire from the workforce, but it is a problem that will appear in 10, 20 or 30 years time. They urgently need the money now.

For workers without sufficient savings in the CPF, they can borrow from the CPF and repay back from future contributions to the CPF.

My proposal means that everybody will have more leisure time, i.e. 20% more non-working hours. They can pursue other social or recreational activities. They can take holidays. 

Eventually, the economy will start to recover and consumer demand will increase. The working hours can be increase gradually to meet the demand. Maybe, we can return to a 40 hour work week. 

But if we are stuck with a shorter work week, it will actually improve the quality of life for everyone. 

Agree or not?

Tan Kin Lian

 


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