The world is experiencing one of the most destructive and profound economic shocks in the recent history with the deeply disastrous coronaviros or COVID-19 affecting every country. Although the damage the virus is causing is only by way of human infection and not as infrastructure destruction like in other natural disasters such as floods or earthquakes, the chaos caused through COVID-19 is more devastating than many previous catastrophes.
Many of the previous pandemic situations were mostly restricted to specific geographical areas. As an example, Ebola virus was largely confined to West Africa and SARS virus affected predominantly China, Hong Kong and Taiwan. The death tolls also were relatively lower with 11,000 and 778 respectively. Both epidemics spread to several other countries, but in insignificant numbers. In comparison, as of April 1, 2020, the COVID 19 pandemic accounts for over 44,000 deaths and the reported confirmed cases stood at a staggering 885,000.
Sri Lankans have witnessed the swift decision making and speedy measures taken by President Gotabaya Rajapksa since the emergence of the first COVID-19 patient, the Chinese national, up to the present day. The President and the Government appointed several elite panels to tackle the situation, not only to manage health related issues but also to provide essentials and other needs for the existence of public life. Even though there are lapses sporadically, the intended result is achieved to a great extent. Compared to many other countries, the measures taken thus far by the Sri Lankan Government are highly commendable. By world standards, Sri Lanka is in the forefront in containing the virus and rightly recognized by several countries along with the WHO Director General, Dr. Tedros Adhanom Ghebreyesus
Any category of disaster, natural or manmade, heavily manipulates everyday public life. Various factors including socioeconomic vulnerability affect the severity of the damage. Speed and quality of recovery depend on the efficiency of the Government machinery, public awareness and proper management of all related issues. There are many risk factors in the aftermath of this pandemic, depending on the magnitude of exposure. However, the risk factors are different to the previous calamities Sri Lankans have experienced.
It is known that developing countries undergo more severe economic impacts than developed countries irrespective of the scale of the disaster. Immediately after a countrywide long period of lockdown, the most burdened in society are self employed persons such as farmers, masons, carpenters, labourers, micro level businesses and many such individuals, which as per records is 41% of the labour force.
Financial recovery of these self employed or own account workers numbering over 2.7 million can be slow, making them vulnerable to day to day living as most of these workers are daily wagers. The volume of work will be less until the economy recovers in full as the employers themselves, mostly small and medium scale business owners, who primarily engage these daily paid workers are also struggling to survive.
However, the already functioning short term actions by the Government such as extending financial support to self employed families are highly laudable at this crucial time, considering the prevailing extreme volatility of the Government coffers. It is obvious that the Government is incapable financially to watch over the welfare of this segment in full for a long period. An important aspect in disaster recovery is to develop self efficacy and make the public to become active participants in the process.
Therefore, the best possible action is that the Government must devise a plan to engage this self employed population productively in order to assist their existence without a burden to the country.
In addition, the Government has already directed relevant authorities to provide short-term assistance to distressed households in several important matters such as extensions for electricity, water bills, additional grace periods for vehicle leases used in business, offering personal bank loans and so forth. These concessions cover pensioners, the disabled community, patients with acute illnesses and many other needy segments shielding over 5.3 million people according to a statement by the Head of Presidential Task Force to combat COVID 19, Basil Rajapaksa.
There are many industry sectors which will be hardest hit by the impact of COVID 19 globally. Among them are apparel, tourism, air travel, non food retails, shipping and so forth. Sri Lanka will have to immediately concentrate on two of the main segments, tourism and apparel which accounts for second and third highest foreign exchange earners after foreign employment remittances. According to expert opinion, impact from these two segments would be twofold and most detrimental, if not managed cautiously. Firstly, the job security of large direct and indirect labour force engaged in both industry segments and secondly, the effects of losing foreign currency earnings.
At present, remittances from foreign employment stands as the largest foreign exchange earner amounting to approximately US$ 7.2 Billion as per the experts. Gamini Kannangara, the Group Managing Director of Trico Group of Companies and an experienced specialist who has worked with millions of Sri Lankan expatriates for over 40 years, is of the view that the affect of coronavirus for workers abroad, particularly in the Middle Eastern sector will not have a severe influence. He anticipates only around a variance of approximately 10% due to COVID-19, which certainly is a big consolation for the country.
The apparel industry accounts for over US$ 5 Billion foreign exchange earnings of the country. A veteran in the apparel industry who operates several factories with over 4,000 workers declared that the industry will experience the harshest period since its inception in Sri Lanka. According to him, many orders from Europe and the USA buyers have already been called off, causing a severe burden on the industry as a whole. The future of the industry is in the balance unless a substantial amount of assistance is arranged immediately. The biggest challenge, he said is to sustain the salaries of his large workforce. The whole industry with over a million direct and indirect employees is compelled to retrench, downsize and prune benefits for whatever the remaining employees or shut down completely.
Similarly, according to another industry veteran in the travel and leisure, Nilmin Nanayakkara, Managing Director of NKAR and past president of Sri Lanka Inbound Tour Operators Aassociation (SLITO), the industry will also be hardest hit due to COVID-19. He said tourist arrivals is at zero and will remain same for an unpredictable period citing two reasons: First, the fear of travelling due to the virus and second, because of the anticipated global recession. In the coming months, there will not be inbound tourists and hotels will be empty affecting several hundred thousand leisure industry employees. The fall would also affect financially by way of a loss of approximately US$ 4 Billion to the state coffers.
As the World Bank predicts, many developing countries will be in dire straits in their respective economies. In order to meet and confront the unprecedented socio economic challenges ahead, both political and non-political mediation by the Government think tanks, economists, industry veterans and business leaders is an absolute necessity. The Government is no doubt at its best to control the epidemic. Therefore, an immediate pragmatic move would be the appointment of another task force to tackle the post disaster economic reforms.