LONDON. In the southeastern part of Ireland, Brian Byrne’s event planning business was in disaster. It was mid-March, and the coronavirus pandemic was approaching peak mortality. Since the government banned meetings such as music festivals, his income disappeared, forcing him to consider firing four of his full-time employees.
But a quickly organized government program saved them from work. She provided from 70% to 85% of their wages, allowing Byrne to keep them occupied.
“Oddly enough, this was not a stressful time,” he said. “I can keep the team together, support their motivation. We basically do our best to be ready when the restrictions are lifted. ”
Across the Atlantic in New York, a pandemic cost Salvador Dominguez his job selling real estate in Manhattan. In the end, he received the right to an emergency increase in federal unemployment benefits, but not earlier than after 72 painful days of waiting. He borrowed from friends and family to pay for the apartment, and he collected food from the garbage at a high-end grocery store.
“How can I describe this?” said Dominguez, 39, sighing. “It was very hard.” He added: “I did not feel lonely because I knew that many people like me do this.”
The pandemic ravaged both Europeans and Americans, but economic pain has diverged in different ways. The United States relies on a significant expansion of unemployment insurance to cushion the blow for tens of millions of people who have lost their jobs, provided that they recover quickly after normalcy is restored. European countries, including Denmark, Ireland, the United Kingdom, France, the Netherlands, Spain and Austria, have prevented unemployment by effectively nationalizing wages, significantly subsidizing wages, and ensuring continuous, continuous wages.
As the number of cases is growing at an alarming rate in much of the United States, dependence on an overloaded unemployment system – another infusion of money constantly subordinated to Washington’s whims – leaves Americans uniquely exposed to a deepening unemployment crisis. It seems that Europe is ready to return from the catastrophe faster when trade resumes, because its companies do not need to hire workers.
“You just send an email, and that’s it – you’re ready to go,” said Jonathan Rothwell, chief economist at Gallup, an American election campaign company, and senior fellow at the Brookings Institution. “There is no recruitment or negotiation.”
Some argue that the different approaches are functionally equivalent. European taxpayers write checks to employers who pay employees. US taxpayers provide unemployment benefits.
“I think this is a really open question,” said Jason Furman, economic adviser to President Barack Obama, “which one will be better in the long run.” They may be more alike than everyone thinks. He spoke during a recent discussion with Stephanie Flanders of Bloomberg.
But conversations with recipients of government assistance in Europe and the United States show one significant difference: in many European countries, wage subsidies allow you to get paid without delay, saving people from worrying about managing accounts while waiting for help. For Americans, the hellish confusion with the bureaucracy has become a legion, as tens of millions of people have flooded the unemployment system, destroying websites, connecting telephone systems and spending hours in parking lots near social security offices.
This is by no means an accident, it reflects the values that revitalize American capitalism, in which social protection systems are minimal and people are forced to struggle with scarce relief. The pandemic “exposes the fact that we have systemic problems,” said Joseph Stiglitz, Nobel Laureate Economist. “A system in which 50% of people are on the brink is not a sustainable system.”
The US salary protection program is similar to European wage subsidy programs. He allocated $ 520 billion in loans through private banks to small enterprises. If U.S. employers limit layoffs, they don’t need to return money. Five million businesses have received funding, but amazing rules and technical disruptions limit participation.
Washington also increased standard unemployment benefits by $ 600 per week, often giving recipients more than they earned from their jobs. But, demanding that workers move from a wage system to an unemployment system, the government actually sent people to painful delays.
Unemployed data show how a pandemic attacked American workers with exceptional force. The unemployment rate in the United States has risen by almost 8 percentage points since February — 11.1% in June — while in France, Germany, Ireland and the Netherlands, unemployment is limited by less than 1 percentage point.
“In general, the European social model has proven to be quite skillful and reliable for this kind of crisis,” said Jacob Kierkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
None of this provides guarantees for the future. In many countries, including the United States, pandemic assistance programs expire in the coming months. Given persistent fears about the virus, abrupt cessation of care can be devastating.
In the UK, 9 million workers were officially laid off, continuing to receive a salary under the state program. But, according to Bloomberg, a quarter could be fired when the government cuts subsidies in September. In the United States, supplementary unemployment benefits expire at the end of July, raising concerns that the withdrawal of this assistance will result in loss of spending, further harm business and cause a new surge in unemployment.
For Americans, the risks are heightened by the fact that the country lacks a national medical system – a feature accepted in Europe as a given – as a result of which most people depend on their work in terms of access to medical care.
At the moment, European programs protect workers from the consequences.
In Spain, the appalling spread of the virus prompted the government in mid-March to order the termination of the provision of secondary services. This threatened the life of Ana Askaso, a mother of three who works as a waitress in a popular bar in the center of Zaragoza, a city with a population of 700,000 in the north-east of the country. Her husband has been unemployed for over a year.
Within hours of announcing the state of anxiety, the Spanish government approved a wage subsidy program for natural disasters. Askaso and the remaining eight employees at the bar will be technically fired – their work awaits their return – while the government pays 70% of their salaries.
“It was very sad to watch the increase in mortality, but I was lucky that I was only concerned about my health and the health of my loved ones,” she said.
The bar where Askaso works opened late last month. The tables are located farther apart than before. She wears a mask as she serves drinks and tapas.
“For me, the wage subsidy was a gift,” she said.
Isabelle Santander, who had worked for a long time at a factory in Zaragoza that manufactures automotive dashboards, suffered a two-month delay in wage subsidies provided by the government. But her bank pushed money while she waited.
“I felt at home,” she said. She spent time with her two daughters. Her company plans to resume production in early July, returning all 200 employees.
In Ireland, a wage subsidy approach not only prevents workers from receiving arrears. It also retained their sense of cohesion.
Ian Redmond has several nightclubs and bars in Dublin that employ over 100 people. He opened a tiki bar in January, just before the pandemic, gathering a team skilled in the art of cocktails. The wage subsidy program saved him from having to start all over again.
“The government was very proactive,” he said.
As Byrne, the event manager, is looking forward to a new era of musical performances and comedy shows with fewer people and social distance, his employees were able to continue their lives. One of his employees was in the process of buying a home.
“If she was unemployed, it would be very difficult for her to get a mortgage,” Byrne said. It has been approved, and the sale is moving forward – apparently creating a future business for carpenters, electricians, and a number of other services supported by salary homeowners.
The Irish government sought to defend jobs with two quick explosions. Firstly, in the middle of March, payments were made in the amount of 350 euros (395 US dollars) to all who were unemployed, regardless of their earnings. He then completed the wage subsidy plan, agreeing to cover up to 410 euros of wages per week in companies whose revenues were reduced by at least 25%.
“These two schemes,” Byrne said, “they really kept the country open.”
The American approach, on the contrary, brought down the unemployment system for people in a difficult situation and exceeded its capabilities.
Normally, Dominguez, a real estate agent in Manhattan, would not be eligible for unemployment benefits because he was an employee. But this pandemic prompted Congress to provide benefits to freelancers and self-employed workers.
When he initially applied, he was told that he had to be turned down for state benefits before he could qualify for federal benefits – a cumbersome, time-consuming claim.
After New York petitioned the federal government to change the rules, Dominguez again applied through the website and was told that he would respond within 72 hours.
Days turned into weeks, and then months, when his bills grew. He dialed every state number that he could find to state his case. He joined groups on Facebook with other unemployed people awaiting relief. He contacted his political representatives.
He actually received a check for $ 1,200 from the federal government, supplementing this money with borrowed funds to cover the amount of $ 2,800 a month for his one-bedroom apartment.
He signed up for distribution in the pantry. Then a friend told him what was considered a gold mine in those days: Citarella, the famous expensive supplier of fresh seafood and other taste treasures, threw out expired food daily. After closing, he began to go into the store, rummaging in a trash can for hearty waste.
More than 10 weeks after he applied for unemployment benefits, Dominguez received the news that he was eligible.
He was still waiting for his first check – $ 170 in state benefits plus $ 600 in expanded federal assistance. And the money was actually spent: he had to return what he borrowed.
This article originally appeared in New York Times,
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