Covid-19 has spread worldwide this year and the pandemic has caused a global human and economic crisis. At the same time, it has highlighted the issue of balancing between public health and economic concerns as a topic for virtual coffee table discussions the world over. JYUnity got in touch with Professor Petri Böckerman, a specialist of health economics, to comment on the situation.
Petri Böckerman is a professor at Jyväskylä University School of Business and Economics and a senior researcher in the Labour Institute for Economic Research. As for the corona crisis, he is primarily concerned, alongside the immediate risk for infection, about the effects of economic recession on public health.
“The depth of the economic recession being caused by this crisis makes one worry,” Böckerman says. “In particular, this concerns Europe, where unemployment rates may grow very high. For example, many Mediterranean countries have not yet fully recovered from the 2008 financial crisis. There is a risk that an economic shock similar to this crisis will leave employment rates at a lower level for a long time.”
In his research, Böckerman has specialised in health economics. He has studied, for example, the effects of unemployment on public health and the economy.
“Economic crises of this kind weaken public health considerably,” Böckerman says. “Long-term unemployment is connected with many kinds of negative impacts on health, such as wider occurrence of chronic diseases. At the same time, there is an increasing risk that some people have to withdraw from the labour market altogether and are thus lost from the available labour force. For jobseekers, poor health means poorer prospects of employment.”
On the other hand, some companies may notice that even though half of their staff has moved to remote work, their operations continue virtually unaffected. This may also contribute to lay-offs. The decrease in exports along with the stalling global economy adds to the risk of lay-offs.
Reopening the economy faces several challenges
When talking about the economic effects of the restrictions, the media and politicians have recently used the phrase “the treatment must not be worse than the disease”. Everybody certainly has a strong desire to restore the economy and return to the normal order, but there are still many curves ahead before getting there. Böckerman does not see the conflict between health and economic issues as unambiguous.
“First, we have to get the overall situation under control. Before fully reopening our economy, everybody must be able to stay safe at their workplace and when commuting. This calls for large investments in public health and substantial testing.”
Much depends on a possible forthcoming vaccine. Böckerman is sceptical about the service sector fully reopening, for example, before a vaccine is available. It should be kept in mind that once the vaccine has been developed it might take a long time before it actually protects the population.
“After the introduction of a possible vaccine,” he says, “it is still uncertain how quickly people’s behaviour will return to what it was previously, before the crisis.”
In Europe, particular challenges to opening arise from different country-specific practices. For example, the restoring of the tourism industry is likely to be impeded by these differences between countries.
Böckerman sees that the corona crisis has revealed how strongly integrated the current global economy is and the small margins and lean storages the production chains are operating with.
“We have to keep in mind how Europe and the world in the 20th century were hit by several massive catastrophes, such as the World Wars and the 1918 influenza epidemic,” Böckerman says. “From this perspective, the current crisis is still very lenient, at least in terms of lost human lives, but it has nevertheless tied the global economy into quite a knot.”
In different boats
Corporations, states and individual people emphasise in their messages how we all are involved in this crisis and together in the same boat. Böckerman points out, however, the effect of socioeconomic status on which groups are at the biggest risk of catching the disease:
“There are numerous occupational groups where remote working is not an option. Often they work in low-paid jobs that do not require higher education. These branches can also be highly necessary for the functioning of society and cannot therefore be shut down. The people working in these occupations face considerably higher risks of catching and spreading the virus. Moreover, in places like the United States, these same workers often remain without the protection of costly insurance.”
“Of course, health care personnel hold the greatest responsibility and also deserve therefore the largest attention and appreciation for their work,” Böckerman adds, “but we should not forget other still active, often low-income labour force.”
Finally, we asked Böckerman to take the role of a prophet and consider extreme scenarios of how quickly the Finnish economy could possibly recover from the current situation:
“In the more unfortunate scenario, we start to open the economy this year, but have to shut it down again because the virus begins spreading again. This connected with the downturn in the global economy could cause GDP to shrink by as many as 8 percentage points. For example, the presidential elections in the USA in November add uncertainty to the global economy. Hence, the next year can show negative growth figures as well.
“‘Ideally’, if such a term can even be used in this case, the gross domestic product would inevitably face a steep decline of about five percentage points, which could nonetheless become growth next year.”
Let’s hope for the latter!
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