Warsaw, 4th November 2020
POSITION OF THE UNION OF ENTREPRENEURS AND EMPLOYERS ON LOCKDOWN
The Union of Entrepreneurs and Employers has consistently been advocating against shutting down the economy. In our view, the right direction is rather to enable the functioning of as many industries as possible, while maintaining – needless to say – all appropriate sanitary rigors. We are observing a disturbing tendency to restrict the operations of subsequent sectors based on unverifiable and sometimes even absurd premises (as is the case of shutting down the food catering industry, an action justified during a press conference with data on significant number of infections at weddings).
At today’s press conference, further restrictions were introduced, including to the operations of shopping centres. What raises our greatest concern, however, is the explicit announcement that the only step to follow the currently introduced restrictions is a complete shutdown of the entire economy (one could conclude from the statements at the conference that on a larger scale than the one in the spring). As we have mentioned before, a full lockdown is a direction we fundamentally disagree with. Of course, it cannot be ruled out that the collapse of the healthcare system may lead to the introduction of a “national quarantine” of some kind. Nevertheless, one should in such a case communicate this fact clearly and, moreover, be aware of the huge costs associated with a lockdown.
After the March-May period, we are wiser for the experiences of the first lockdown – a decision made by the vast majority of developed countries. As a result, we now have several estimates regarding its impact on both the economy and health.
In terms of the former, a lockdown obviously means a significant reduction in economic activity. In April this year, Minister of Finance Tadeusz Kościński stressed that each month the economy was shut down meant a decline in the GDP growth rate by 2 percentage points. Back then, the lockdown was a relatively new concept and its effects were subject to forecasts rather than specific analyses. Statistics Poland later provided hard data: in Q2 2020, Polish GDP decreased by 8.2% year-on-year. According to one study, global production at the peak of the lockdown decreased by 33%, and over the entire year, global GDP will have decreased by over 9% (A. Mandel, V. Veetil “The economic cost of COVID lockdowns: an out of equilibrium analysis”). The World Bank presented a slightly more optimistic forecast, according to which the decline in global GDP will amount to 5.2%.
Faced with difficult decisions regarding a possible re-closure of economies, experts in other countries are trying to recalculate the potential costs of this solution. Economists quoted by The Daily Telegraph fear that the UK economy may shrink by 12% in November (one must remember this country was particularly affected by the first wave of the epidemic – its GDP dropped by 20% in Q2 2020). The German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung) estimates that the partial lockdown in November will cost the German economy EUR 19.3 billion and will put 400,000 workers at risk.
There is therefore no doubt that the economic costs of the lockdown are enormous. At the same time, it is not at all certain whether it is the optimal solution from the point of view of counteracting the epidemic. According to one of the studies (A.D. Arnon, J.A. Ricco, K.A. Smetters “Epidemiological and economic effects of lockdown”), interventions of federal and state authorities in the USA reduce social contacts to a much lesser extent than voluntary social distancing, which is responsible to the largest extent for this reduction and at the same time has a much lower economic cost. In particular, the authors of the study argue that individual interventions concerning people’s behaviour (such as ‘stay at home’) were much more effective in reducing viral transmission than restrictions imposed on businesses.
In this context, it is difficult to ignore the scientific dispute regarding the medical significance of a lockdown. The famous “Barrington Declaration” indicates that “lockdown policies have disastrous effects” on public health in the short and long term and, paradoxically, may lead to an increased number of deaths in the coming years due to their impact on diagnosis, vaccination, and treatment chronic diseases, as well as the mental health of the society. The Well Being Trust has estimated that the number of ‘additional’ deaths caused by COVID-19 and brought about by depression, addiction, or isolation-related loneliness could in the US be as high as 150,000. The negative impact of the lockdown policy on particularly vulnerable groups, such as children and the elderly, is also repeatedly reported. According to some researchers, the negative effects of lockdown on the healthcare system might be observed for up to five years. A detailed description of research and available data on the impact of lockdown policies on public health can be found in the latest study by the Warsaw Enterprise Institute “It is too late for a hard lockdown”.
To sum up, the Union of Entrepreneurs and Employers is against shutting down the economy. We believe that Poland cannot afford another lockdown. We understand that the healthcare system is approaching its limits and this may constitute an argument for “a national quarantine”. Nonetheless, we emphasise the enormous economic costs that it will entail, and we also draw attention to the doubts regarding the validity of this solution from the point of view of public health.
Fot. Corona Borealis / Adobe Stock