"For now, Filipino workers rendered jobless by COVID-19 have to settle for Social Amelioration Program payments."
The recently concluded contest for the position of Democratic Party candidate in this year’s US Presidential election was largely fought, as far as the leading candidates were concerned, along ideological lines. Two of the candidates – Sen. Bernie Sanders and Sen. Elizabeth Warren – pitched ‘progressive’ (read: socialistic) ideas to the Democratic faithful, while another candidate, former Vice-President Joe Biden, stayed, safely, left of center. Sanders and Warren advocated Federal government intervention in, among other things, the health care and education sectors via subsidies and grants. Biden moved very cautiously in that direction.
Capitalizing on the long-standing wariness of conservative Americans, about socialism, which they regard as the half-brother of communism, President Donald Trump lost no time declaring that he would never allow the US to become socialist. That declaration went down very well with his political base, which is largely made up of diehard-conservative Republicans.
Given this background, it is amazing that Mr. Trump and anti-socialism Americans have had nothing to say about, and have readily embraced, the idea of close to 40 million Americans’ making claims for unemployment-insurance benefits after losing their jobs due to the coronavirus pandemic. As with other aspects of their country’s life, American politicians had been loath to see the US government intervening in the labor market; they believed that wages and other employment issues were best left to the workings of the labor market. Government intervention was socialistic and therefore something to be avoided.
That was before the occurrence of the Great Depression of 1932, with its over-20 percent unemployment rates, and the demobilization that followed the end of World War II, which saw millions of Americans jobless after switching from military uniforms to civilian clothes. Disregarding ideological reasoning, the US Congress quickly passed legislation providing for 13 weeks of fiscal benefits for workers who became unemployed involuntarily. The unemployment insurance payments were intended as a cushion to soften the impact of the workers’ income loss.
Since the approval of the unemployment-insurance legislation the US economy has experienced a number of recessions that have given rise to heavy downturns on the unemployment insurance fund. By far the heaviest drawdown on the fund took place during the period 2008-2009, when millions of Americans lost their jobs in the wake of the deep economic downturn caused by the sub-prime home mortgage crisis. That recession, which has been called the Great Recession, rivaled the Great Depression in intensity and extent and brought the US unemployment rate to its highest level since the end of World War II.
The benefit payments currently being made to nearly 40 million unemployed Americans are placing the unemployment insurance fund under enormous pressure. Realizing this, Congress included a $350-billion unemployment insurance component in the $3.4 trillion economic relief law that it recently approved. The American legislators undoubtedly hope that they will not have to authorize a follow-up round of unemployment-insurance assistance.
The unemployment insurance money not only has kept jobless Americans free from the clutches of hunger, but it also has allowed them to keep contributing to the consumption of American-made goods and services, which accounts for close to two-thirds of the US’s GDP (gross domestic product).
Unemployment insurance is expensive for workers, which is why it is enjoyed only by workers in high-wage countries. Yet, it is so beneficial to economically stressed workers, as the current economic situations in the US and other First World countries are showing.
The unemployment insurance premium would be yet another deduction from the incomes of Filipino workers, who already are saddled with mandatory contributions to their social security (SSS or GSIS), health (Philhealth) and housing (Pag-IBIG) benefits.
In time, as Philippine economic development proceeds, there will be an unemployment insurance system in this country. But Filipino workers rendered jobless by COVID-19 have to settle for SAP (Social Amelioration Program) payments for now.