Employers should be incentivised to test their staff, furlough should be extended beyond October and statutory sick pay should be increased according to a team of economists convened by the Royal Society.
They propose a “cautious and prolonged” reopening of the economy to allow it to restructure amid social distancing requirements and that targeted policy interventions could stave off both a second peak and the looming prospect of a double-dip recession.
The report by the Data Evaluation and Learning for Viral Epidemics (DELVE) group, a multidisciplinary team created by the Royal Society, warns against using simple cost-benefit analysis to evaluate trade-offs between public health and the economy, and urges policymakers to pay attention to the way different strategies affect different regions, sectors and age groups.
Pitting health and economic outcomes against each other is unhelpful. It is wrong to assume that the only way to get the economy back on its feet is through an excessive loosening of restrictions” – Sir Tim Besley, LSE
Interventions recommended in the report include:
- Workplace rotation schemes: Split shifts can have an “exponential” impact on infection rates; having two cohorts of staff in a workplace could see secondary infections reduced to one eighth of the size of an outbreak where no interventions are in place.
- Workplace testing: Testing should be incentivized to control workplace outbreaks quickly, particularly in key sectors and those occupations in which ‘high-contact’ is a feature.
- Sick pay: Current statutory sick pay arrangements create a financial disincentive to self-isolate, thereby forcing many workers to continue working with mild coronavirus symptoms that in turn makes it more difficult to control the transmission of virus.
- Reopening schools: Schools must prepare for any future resurgence of the epidemic with rotation schemes and better online provision for teaching and examinations. Careful consideration also needs to be given to the timing of the removal of the furlough scheme and the reopening of schools to prevent a further deterioration in parents’, and in particular, women’s productivity and career prospects.
- Flexible furloughing: A flexible furlough scheme could help to open up the labour market – to include those handling extra childcare duties – and incentivise business investment in new technologies that allow more workers to work from home.
Sir Tim Besley CBE, school professor of economics and political science at LSE and a member of the DELVE initiative, said: “Pitting health and economic outcomes against each other is unhelpful. It is wrong to assume that the only way to get the economy back on its feet is through an excessive loosening of restrictions. Targeted policies that are sensitive both to the spread of the disease and economic costs are needed.”
The report, Economic Aspects of the Covid-19 Crisis, says that workplace rotation schemes should be complemented, whenever possible, with test, track and isolate (TTI) programmes within organisations. TTI can be used to detect infections in the first place, so that the reaction time of the organisation to a possible outbreak is reduced.
Government could subsidise the adoption of TTI for firms in key economic sectors or in industries where physical distancing is harder. Elsewhere, policymakers could incentivise the adoption of TTI by providing wage subsidies in exchange for good organisational practices.
Sir Tim added: “While physical distancing measures negatively impact certain businesses, there are adaptations we can make to our ways of doing business. An optimal public health strategy will complement economic recovery while minimising the risk of a resurgence of the epidemic. By taking the right measures to protect health – for example by getting test-track-isolate right and introducing more than the minimum statutory sick pay for those who don’t have it – we open up many more doors for businesses that can keep people working and assist in containing the spread of the disease.”
The report also cites research that shows that many workers are continuing to work while sick with mild coronavirus symptoms, and that workers without sick pay beyond the statutory minimum are especially reluctant to return to work from furlough.
The authors suggest that coordination between the end of furlough and changed school schedules needs careful consideration. Mothers have been 10 percentage points more likely than fathers to have initiated the decision to be furloughed, as opposed to it being the employer’s decision, but there was no such gender gap amongst childless workers, they said.