Nguyen Thi Thanh Mai, deputy director of the Population and Labour Statistics Department under the General Statistics Office, takes a look at the results of the first bailout package supporting people and firms hit by COVID-19, and discusses how to enhance the efficiency of the next one.
|Nguyen Thi Thanh Mai, deputy director of Population and Labour Statistics Department, General Statistics Office |
The government has just presented a new support package under Resolution No.68/NQ-CP on policies to support the labourers and their employers affected by the COVID-19 pandemic, following the first support package under Resolution 42/NQ-CP in 2020. What were the results of the first package?
After more than one year of implementing the VND61.58 trillion ($2.67 billion) bailout package to support labourers, trading households, and businesses affected by the pandemic, nearly VND14 trillion ($608.7 million) has been disbursed, a little more than 22 per cent of the total.
Most of this sum found its way to support needy people, policy beneficiaries, and trading households, but the sums earmarked for lending to employers with zero per cent interest to pay wages for their labourers who incurred job suspension due to the pandemic did not reach the set target.
In late October 2020, the government enacted Resolution No.154/NQ-CP to amend Resolution No.42/NQ-CP to remove obstacles facing employers in accessing these loans. The scope of beneficiaries under Resolution 154 was wider than under Resolution 42. However, when the duration of the support package ended, only VND41.8 billion ($1.8 million) was disbursed to 245 businesses to pay 11,200 labourers losing their jobs. That is only 0.26 per cent of the total projected budget of VND16.2 trillion ($704 million).
|In light of Resolution 68, employers can now borrow with zero per cent interest to pay for employees to rebound production instead of only paying for labourers whose employment had been suspended facing work suspension. |
That was mainly because lending requirements were strict, with a finite lending limit. In addition, the complex format of many financial reports had caused difficulties in the approval process of authorised management agencies.
To tackle the issue, the government enacted Resolution 68 on July 1, 2021 with a support package amounting to VND26 trillion ($1.13 billion) helping businesses to borrow with zero per cent interest. How is this package different from the one before?
Resolution 68 seemed very progressive, matching the actual demand. Accordingly, it has expanded the scope of policy beneficiaries, loosened lending requirements, and raised the lending limit as well as extended the duration the labourers incurring work suspension could receive payment.
For instance, Resolution 68 has annulled the revenue requirement, raising the lending limit on equal level with the regional minimum wage compared to the previous 50 per cent. Meanwhile the duration affected labourers can receive payments was extended to 11 months from May 1, 2021 to the end of March 2022, from only nine months previously.
How do you measure the significance of Resolution 68 in current business landscape?
With these loosened requirements, we hope that several dozen thousands of labourers will want to take up these loans.
Significantly, in light of Resolution 68, employers can now borrow with zero per cent interest to pay for employees to rebound production instead of only paying for labourers whose employment had been suspended facing work suspension.
COVID-19 is a growing complication at major development hubs across the country like Ho Chi Minh City, Binh Duong, and Danang. Numerous firms are facing mounting hardships to pay wages and maintain production and many are halting production for pandemic prevention.
In this context, the government’s bailout package under Resolution 68 is a lifebuoy for both businesses and their labourers. However, to boost its enforcement the government needs to present concrete guiding documents and maximally simplify lending procedures to help more firms access to the package.