The abruptness and severity of the shock inflicted by COVID-19 have no equivalent in modern history. The pandemic’s power of exponentials has taken most decision-makers by surprise and brought a large portion of global economic activity to a sudden and dramatic halt. This has never happened before, not even during the Great Depression or the two World Wars. In Q2, global GDP might plunge by 20–30 percent (year-over-year), and joblessness rise in monumental proportions. A return to growth in the autumn is now the best-case scenario, but it is contingent upon many “ifs.”
The dramatic increase in global unemployment will have a devastating effect on subjective wellbeing. Research shows that being made redundant can lead to a roughly 20 percent drop in life satisfaction. The loss of income (which represents the greatest and immediate hit to financial wellbeing) is often accompanied by a loss of self-esteem, a loss of social networks, and a loss of daily routine.
According to Tyler Norris, chief executive of the Well Being Trust, each increase of one percentage point in unemployment leads eventually to a 3.5 percent increase in opioid addiction (studying the US), suggesting that the pandemic’s economic effects will inevitably exacerbate the drug and mental health problems already so prevalent in the country. In addition, recent economic research concludes that measures of subjective wellbeing are more than twice as sensitive to negative as compared to positive economic growth.
This makes it even more compelling to justify the reason why, from a public policy perspective, governments must do their utmost to keep as many people as possible employed in their current jobs, even if they are not actually working at the moment.
This also makes it obvious that, in the foreseeable future, the issues of (1) economic wellbeing, (2) financial wellness and (3) mental health will be at the forefront of everybody’s mind and policy action.