Answer to Question #243334 in Microeconomics for Graylin Lapi

Question

Discuss some ways in which the unemployment scheme done by the government benefits the informal and formal employees in Fiji in this pandemic.

Answer 1

Unemployment schemes in Fiji help to insure workers against unemployment spells during the Covid-19 pandemic, apart from helping to create formal jobs. The coverage is more effective if workers value the benefits provided because it has limited costs for enterprises. The schemes are more salient in countries with large informal sectors. During the pandemic, most workers in Fiji work in unregulated jobs with no access to basic benefits such as health insurance, worker compensation, death and disability insurance, or retirement pensions. They are normally called the “informal” workers, whereas “formal” workers are those covered by formal social security programs. The existence of large informal sectors impacts the way in which public policies can be implemented and how they affect the labour market. The unemployment scheme is one such policy.