GOVERNMENT’S COVID19 ECONOMIC SUPPORT MEASURES - MEASURE NO 2: WORKERS’ ASSISTANCE

NOTE: Apologies for the slight detour from my planned posts in relation to government’s economic support measures for citizens affected by the ‘fall out’ from COVID 19. I continue below with my comments on their 2nd measure.

(1) A lump sum assistance of $1,000 from their FNPF savings will be provided to employees who have lost jobs or are on reduced hours in the tourism and hospitality industry.

(2) For FNPF members who have less than $1,000 in their FNPF General Account, Government will subsidize the amount to bring it to $1,000.

When I submitted my proposals to the government for the COVID-19 Recovery Budget, the FNPF’s well established Unemployment Allowance fund of $2,000 was already in place so I decided to incorporate it into my suggestions on how we might provide for all those who are and will be unemployed.

Which is why I was surprised to hear the Minister announce a $1,000 provision for workers in the tourism & hospitality Industry through FNPF when the existing amount available was $2,000. I could not understand why the government would think a support package that was 50% less than what was already available would be seen as attractive?

The other issue I have is that the budget only looks to the Tourist Industry workers initially,when there are many workers who have lost and will lose their jobs as a result of COVID19 that are not in the Industry but operate on the fringes of tourism and in any event the 2013 Constitution Sec 26 prohibits discrimination.

Having gone through the approved budget, it’s clear the $1000 was a stand-alone separate benefit from that of the FNPF Unemployment Allowance of $2,000. But then 4 days later out of the blue the FNPF announced they were reducing the $2,000 allowance by half, because of ‘processing’ issues? I comment on this specifically in my post yesterday titled FNPF SLASHES MEMBERS UNEMPLOYMENT ALLOWANCE B Y HALF BECAUSE OF “PROCESSING’

Back to these support measures. According to the FNPF 2019 Annual Report, there are 61,284 members with $0 balances. And a further 185,125 members with less than $5,000. I excluded 3,148 members aged between 15 – 24 from the $0 balances and 49,525 of the same age group from members with $5,000 or less in their account. I assumed for the purposes of my submission they were likely unemployed children of members. I used the balance of 193,736 members for my proposal as they are the most likely category of members to need help.

I compared the FNPF 193,736 members to the Bureau of Stats June 2019 Employment & Unemployment Survey of 2015-16. This report shows a total of 199,515 workers earning from $29 to $1,000 a week. The difference between the two is 5,779 workers and according to the Bureau of Stats report they earn from $41,548 to $52,000 a year so I excluded them as well for my proposal.

In my budget proposal to government I took into account comments by world leaders and experts about the likely duration of the virus and given we are now in April and only China shows signs of it reducing while other countries could start seeing a decline by August and allowing time for nations to get back to their ‘starting line’, my guess would be not till December that we may see the back of this virus. Then there’s the ‘recovery’ period and given that the entire planet will be scrambling to regain their respective market share especially in tourism and taking into account Jan- Mar is our ‘low’ season, we could be looking at 9 to 12 months before we see signs of ‘normality’ returning, then there will be a ‘hard slog’ of the following 12 months with millions of dollars we don’t have to get out and market and bring our arrival numbers back where we left off.

Which is why I proposed we have to establish a Safety Income Threshold’ [SIT] weekly wage of $131.20 per worker per week for the next 40 weeks to December 31st, 2020.

I arrived at this weekly income by taking the average hourly rate paid out by 21 major industries in Fiji in 2018 and the current minimum wage and established a [SIT] rate of $3.28 per hour. I then used 40 hours a week as a basis for my calculation to establish the $131.20 a week per worker.

So, to provide $131.20 as the base level of financial support for those who have lost their jobs over a 40 week period to December 31st = $5,248. My idea was to use the FNPF $2,000 allowance towards this, which means the FNPF contributes 38% and the balance of $3,248 can be government’s 62% contribution towards Safety Income Threshold [SIT]

By using the maximum likely workers to be affected of 193,736 FNPF members who have under $5,000 in their FNPF account and projecting the $131.20 a week over the next 40 weeks to December 2020, the cost to Fiji will be $1 billion, I emphasize, this assumes all 193,736 need the assistance.

During his budget address Hon Syed Khaiyum referred to 25,000 workers being affected at that time and in a report, I read, ANZ projected 25% in job losses which accounts for 48,434 of our workforce. Unfortunately, there are no reliable reports on current job loses to show exactly how many workers are actually affected that I am aware of to be more accurate. So I allowed for for the maximum, knowing it can always be cut back.

So back to my $1 billion proposal, the FNPF can cover its share from its 2019 $1.2 billion earnings from profits and investments, while government can redirect current expenditure allocations totally $832.5 million which I identified in my submissions and there would be a surplus of $203 million that could be used as a contingency fund.

So, assuming the number of workers to be helped is 193,736 the FNPF covers $387.5 million which is 38% and on a weekly payout is $9.6 million and government covers $629,255 which is 62% of the cost @ $15.7 million a week.

Now if the 25,000 figure that the AG is referring to is the actual number who need help, then the FNPF contribution drops to $50 million for the 193,736 @ $1.2 million a week and Government’s share drops to $81.2 million @ $2 million a week.

Remember also that with this $1 billion injection over the next 40 weeks to December at least $864.2 million will go straight back into the economy, with workers spending their wages to survive and this will help reactivate the system. If its 25,000 workers, the re injection into the economy will be $111.5 million

But the weekly safety income threshold [SIT] of $131.20 per worker per week is not enough on its own; workers need to be supported with additional measures some of which government has already approved such as: -

Home & Office Rental reductions, with no evictions, EFL and WAF to guarantee no disconnections and a grace period of 15 days to pay bills and Loan and Hire Purchase repayments to be frozen till December then renegotiated

By conducting quarterly reviews of this arrangement and making adjustments as the prevailing conditions dictate, we will create a calm, rational approach towards stabilizing our workforce.

Most importantly, we will be removing the high levels of anxiety and stress from our people and as a consequence reduce the prospect of domestic violence that many family’s will face as they struggle to cope. This will also help retain a more positive mindset among our people as we look to the next battle ahead which will be our recovery effort to regain our lost market share in a far more desperate and aggressive world than we had just six months ago.