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Coronavirus China
Business
Bala Ramasamy
Bala Ramasamy

Coronavirus response shows how universal basic income can improve life for everyone

  • Subsidies given to firms and individuals to protect livelihoods during the pandemic offer insight into how a universal income can be implemented intelligently and successfully
  • An unconditional recurring payment to every member of society will help everyone meet their basic needs and restore dignity

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Programmes like the Hong Kong government’s plan to give cash subsidies to every adult permanent resident offer some insight into how a universal basic income could work. Photo: Bloomberg
Bala Ramasamy

With one eye already on re-election, US President Donald Trump is racing towards opening up America again despite economists’ consensus that reopening the economy only when it is safe is better than risking another lockdown soon after. Regardless, once business does get back up to speed it is certain we will face a new normal.

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The 2008 global financial crisis was a walk in the park compared to this predicament. The rise in unemployment as businesses close, lay off or furlough employees is unprecedented. Even China’s first-quarter GDP shrunk by 6.8 per cent. How long this recession will last depends on how soon a vaccine can be found.

Social distancing may have slowed the virus’ spread, but it also paralysed significant parts of the global economy. Small and medium-sized enterprises have been particularly badly hit, making governments more important than ever. Administrations around the world have dug into their reserves to keep their economies alive and, more importantly, cash flowing among individuals.

It is useful to differentiate between stimulus packages and survival handouts. When lay-offs, furloughs and salary cuts envelop a significant portion of the labour force, various handouts to help businesses stay afloat are of utmost importance.

The Australian government announced on March 22 a package worth A$66 billion (US$46 billion) and another worth A$130 billion (US$91 billion) just eight days later, with a significant portion going to SMEs to help pay workers.
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In Hong Kong, the government’s 2020-21 budget included a cash subsidy of HK$10,000 (US$1,300) to all adult permanent residents. In Britain, the government announced a programme granting companies 80 per cent of workers’ salaries, costing £78 billion (US$99 billion).
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