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Thursday, 06 August 2020

Coronavirus crisis to cause labour market recession worse than 2008 financial crisis: UN special envoy

With the ILO predicting 195 million jobs lost worldwide due to post-corona recession, now is a time to invest in people, Mahmoud Mohieldin says

Ahram Online , Thursday 23 Apr 2020
Mahmoud Mohieldin
Former Egyptian investment minister and World Bank senior vice president Mahmoud Mohieldin (Photo: Al-Ahram)
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UN Special Envoy on Financing the 2030 Agenda for Sustainable Development Mahmoud Mohieldin has warned that the current coronavirus crisis will cause a labour market recession worse than that experienced amid the 2008 financial crisis, adding that Egypt will need to invest in healthcare, education and infrastructure.

Mohieldin discussed Egypt's situation amid the coronavirus crisis in an interview with nation branding platform Narrative Summit published in two parts on Wednesday and Thursday.

“The coronavirus crisis has had a tremendous impact on the global economy and on people’s lives, because governments had not prioritised the health, education and human capital sectors,” Mohieldin said.

Mohieldin underlined that the lessons learned from this crisis should never be forgotten, and should be translated into prioritising spending on aforementioned sectors and engaging the public in decision-making processes.

“In the future people will not have any tolerance towards negligence in healthcare, pollution or climate change, or anything that might have a negative effect on their lives,” he asserted.

Mohieldin said that Egypt and the Arab region will need huge investments in healthcare, education and infrastructure, warning that the humanitarian repercussions of the coronavirus pandemic should not be underestimated.

He added that Egypt and the Arab region also need to enhance data sector infrastructure and pay attention to modern science and artificial intelligence.

Mohieldin drew attention to social security systems and the individual's right to well-defined state support.

He said that states already offer assistance systems like subsidies and pensions. However, governments should consider what is known as “universal basic income” that guarantees a minimum standard of living for all, as an addition to, and not a substitute for, education, health insurance and state services.

Social security is especially important in the upcoming period as the world will see a very high unemployment rates that will last for a long time, so the consequences of the labour market recession must be addressed, Mohieldin asserted.

To apply systems like universal basic income and to contain the repercussions of high unemployment, the state needs to review its budget and spending priorities in the coming period.

Mohieldin also discussed the situation of small and medium-sized enterprises (SMEs) in Egypt and how they have been affected by the Covid-19 epidemic. He noted that they represent 90 percent of total economic projects and represent between 45-75 percent of the labour market.

In current circumstances, 75 percent of these projects have reportedly been under pressure due to the pandemic and consequent recession, with only five percent witnessing an increase in interest in their services.

Although such enterprises are very beneficial to the economy, according to surveys there have been several problems reported that have been holding them back, such as training, adaptation, R&D activities, financing services, and digital transformation systems, Mohieldin said.

There are lots of initiatives to support SMEs, especially in finance, whether from the banking and non-banking sectors, but we will need more of these initiatives, Mohieldin added.

“Around the world and in Egypt, there have been support packages, whether through tax or credit concessions, so that SMEs would not lag, as they are part of the productive sector.”

Mohieldin mentioned that according to the International Labour Organisation, 195 million jobs will be lost due to the global recession, which is 10 times the figure caused by the 2008 global financial crisis.

He warned that communities will no longer be tolerant towards any policy that may harm their lives, health or the environment, asserting that this in fact is a positive outcome, since it will contribute to and speed up achieving sustainable development goals in all aspects.

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