With the economy taking a long pause amid the coronavirus outbreak, medium and small-sized businesses are among the most affected, not being able to open their stores and having difficulties in paying wages.
In Japan, the government has decided to step up and help businesses with a subsidy so they can pay their employees in full – as part of the largest stimulus package ever given by the country, totaling $990 billion.
Small and medium-sized companies suffering from sharp sales declines will be fully exempted from paying taxes such as consumption and property taxes. At the same time, they will have access to loans without interest or collateral and subsidies if their revenue drops significatively.
The Ministry of Health, Labor, and Welfare also plans to use an existing employment adjustment subsidy, which helps enterprises forced to temporarily lay off workers continue to pay them.
Before the pandemic, laid-off workers at companies that have halted operations are entitled to at least 60% of their regular pay. But now the government increased this to 90% to keep them from being dismissed, with the company chipping in the other 10%.
“A significant impact on economic activities is inevitable,” Prime Minister Shinzo Abe told a press conference, calling the current situation “the biggest crisis” of the postwar era. “I’m resolved to overcome this crisis, together with Japanese citizens, by mobilizing all possible policy means,” Abe said.
The Tokyo Metropolitan Government and other localities across Japan have asked restaurants and other businesses to close or shorten hours during the health crisis. The central government’s financial support measures aim to maintain the income levels of workers in these industries.
The subsidy program’s parameters will cover 3 million companies and about 10 million employees. But the employment adjustment subsidy has not proved popular so far, partly owing to its complicated paperwork and the roughly one-month wait for processing applications.
Anxiety in the US economy
With US President Donald Trump eager to restart the economy as soon as possible, there is widespread anxiety among American workers that will eventually have to get back to work, a recent survey showed.
Over 80% of US workers said they would not feel safe going back to work if their state were to reopen now, according to a survey by Fishbowl, a popular workplace app. In New York, the epicenter of the pandemic, only 14% said they would feel safe to back to the office.
Just behind New York were the District of Columbia at 14.65%, Maryland at 15.28%, Washington at 15.57%, and California at 16.05%. The survey included employees at companies such as EY, Deloitte, Accenture, Amazon, Edelman, Nike, Google, KPMG, and many others.
Previous Fishbowl surveys have revealed that 54% of workers fear layoffs at their companies as a deep recession grips the country. Nationwide, at least 26 million people have lost their jobs in the U.S. over the last month, with low-wage workers among the most affected.