Employers, employees need to work out compromise formula

As the coronavirus is ravaging the economy across the world, millions of jobs are in threat globally and Bangladesh is no exception. 

Industrial countries have protections like standard unemployment insurance for employees when they lose jobs in times of financial crisis. 

In US, employers have to contribute to employment benefit fund every year and the government uses the fund to support employees—from house help to corporate employee—when they are out of job.

The UK government has offered the private sector 80% of salary support to make sure that none is thrown out of job. The employees will get the amount straight from the government and there will be no pressure on employers. The government has taken it as its responsibility to help its citizens overcome the hardship.

It is different from the one offered by our government. In our country, the government announced a loan package, from which export factory owners can borrow at lower interest rate to pay workers' wages.

We do not have economic strength to the level that the government could offer cash benefit to protect private sector employees. No institutional development has taken place, nor is there any social safety-net in place to shield all section of people, including employees, from vulnerabilities.

The coronavirus outbreak and the economic stalemate resulted from it have exposed how helpless we are in economic and health emergencies.

Like in most countries, the private sector here is also plunged into unprecedented hardship as the shutdown enforced to contain the pandemic has brought all businesses to a complete halt. Many industries and businesses might not be in a position to pay their employees in full when there is no income at all.  

In such a crucial situation, institutions and employees should sit together to assess the financial position and devise a way out. Employing companies should frankly explain the real situation and ask the employees which one they would prefer—40% pay cut or 30% job cut. 

A compromise should be agreed upon through exchange of views. Employees will then realise that those are temporary arrangements to go through the difficult time. 

Once the health crisis comes under control and economy restart functioning in full swing, then situation will reverse and crisis will be over as demand for jobs will go up further. The recovery measures announced by the government would also help businesses to make a turnaround. 

But nobody knows how long it will take. 

Dr Ahsan H Mansur is an economist and also the executive director at Policy Research Institute