As the world navigated the economic fallout from the COVID-19 pandemic, governments around the globe implemented a variety of stimulus packages to support individuals, businesses, and healthcare systems. These relief measures aimed to prevent widespread economic collapse, ensure social stability, and stimulate economic recovery. While the specifics of each country’s stimulus package varied based on their unique circumstances and economic frameworks, there were notable similarities and differences in their approach.
In this article, we will compare how various countries designed their stimulus measures and explore the lessons that can be learned from their successes and challenges. Understanding these global responses helps shape future policy decisions and provides valuable insights into what works—and what doesn’t—when it comes to economic recovery.
The United States’ approach to stimulus packages during the pandemic was marked by aggressive, large-scale interventions aimed at providing immediate relief to individuals, businesses, and healthcare systems.
Key Measures
Direct Payments to Individuals: The U.S. passed several rounds of stimulus checks to eligible citizens, with amounts ranging from $600 to $1,400 per person, depending on income levels and family size.
Unemployment Benefits: The CARES Act included an additional $600 per week in unemployment benefits, followed by a $300 weekly boost under later packages.
Business Support: The Paycheck Protection Program (PPP) offered forgivable loans to businesses to cover payroll expenses, aiming to prevent widespread layoffs.
Healthcare Funding: Significant funding was directed towards COVID-19 testing, vaccine distribution, and healthcare provider relief.
Lessons from the U.S. Approach
Speed of Implementation: The U.S. was quick to implement direct payments, which were widely credited with providing immediate relief to households.
Business Support: Programs like PPP were essential for helping small businesses survive, though the rollout faced criticism over access inequality.
Challenges in Administration: The U.S. faced delays in the disbursement of unemployment benefits and a lack of uniformity in state-level implementation, revealing the importance of clear coordination between federal and state governments.
Germany’s response to the pandemic focused heavily on protecting workers, maintaining employment levels, and stabilizing businesses. The country already had a strong social safety net, which made it easier to implement comprehensive relief packages.
Key Measures
Kurzarbeit (Short-Time Work Program): Germany expanded its existing short-time work program, Kurzarbeit, allowing companies to reduce employee hours instead of laying off workers. The government compensated employees for part of their lost income, preventing mass unemployment.
Business Loans and Grants: Small and medium-sized businesses received loans and direct grants to cover lost revenue and operational costs.
Healthcare Support: The German government provided significant funding to healthcare providers and infrastructure, including expanding testing capacities and securing medical supplies.
Lessons from Germany’s Approach
Worker Protection: Germany’s Kurzarbeit program is widely regarded as one of the most successful employment preservation measures. It allowed businesses to retain skilled workers while minimizing layoffs.
Business Stability: Direct grants and loans were tailored to businesses of various sizes, providing targeted support.
Focus on Long-Term Stability: Germany’s focus on maintaining employment and business activity rather than just short-term relief ensured the economy remained resilient.
The UK adopted a similarly aggressive fiscal response but with a more centralized approach to income support and business aid.
Key Measures
Furlough Scheme: The Coronavirus Job Retention Scheme (furlough scheme) allowed employers to claim up to 80% of employees' wages (up to £2,500 a month) if they were temporarily laid off due to the pandemic.
Self-Employed Support Scheme: The government provided grants to self-employed individuals based on their past income, offering direct support to the gig economy and freelancers.
Business Loans and Grants: Similar to the U.S., the UK introduced coronavirus business interruption loans (CBILS) and bounce-back loans for small businesses.
Lessons from the UK Approach
Job Retention Focus: The furlough scheme was instrumental in preventing mass unemployment. Its simplicity and scalability made it effective across various sectors.
Inclusive Support: The self-employed support scheme demonstrated a commitment to including the gig economy in economic recovery efforts.
Challenges with Implementation: Initially, the furlough scheme was criticized for delays and issues with determining eligibility, which could have been avoided with clearer guidance and faster execution.
Australia’s stimulus response was designed to support both businesses and individuals through a combination of direct payments and welfare increases.
Key Measures
JobKeeper Program: The JobKeeper payment was introduced to subsidize wages for employees, allowing businesses to continue paying workers even when they were unable to operate due to lockdowns.
Direct Cash Payments: The Australian government provided direct cash payments to individuals, particularly those in low-income households and the unemployed.
Business Support: Businesses were offered subsidies, grants, and tax relief to support operations and maintain employment levels.
Lessons from Australia’s Approach
Effective Direct Payments: Cash payments helped individuals weather the storm, preventing a significant rise in poverty.
Targeted Business Support: The JobKeeper program was particularly effective in supporting workers in industries that were hit hardest by the pandemic.
Swift and Decisive Action: Australia’s quick and robust response helped to prevent deeper economic scars and provided a model for rapid government action in crises.
Japan’s response to the pandemic was more cautious, focusing primarily on direct support and economic stimulus rather than large-scale financial relief packages.
Key Measures
Cash Handouts: Japan introduced a direct cash handout program of ¥100,000 ($920 USD) to all citizens, providing immediate financial relief.
Economic Stimulus Packages: The government provided economic stimulus packages aimed at stabilizing the economy and supporting businesses, including subsidies for companies that retained employees.
Healthcare Support: Japan directed funding to healthcare facilities to help deal with the surge in COVID-19 cases and ensure the availability of critical services.
Lessons from Japan’s Approach
Gradual Implementation: While Japan’s approach was more cautious, the government focused on ensuring the sustainability of its support. The gradual, measured approach helped mitigate long-term economic risks.
Challenges in Distribution: Japan’s cash handouts faced criticism for delays in distribution, underscoring the importance of efficient delivery systems.
China, where the pandemic originated, implemented aggressive public health measures alongside its economic stimulus initiatives to curb the spread of the virus and maintain social stability.
Key Measures
Tax Relief and Financial Support: China introduced tax breaks and subsidized loans for businesses to help them weather the economic downturn.
Mass Testing and Quarantine Support: China invested heavily in mass COVID-19 testing and quarantine measures to contain the virus while supporting businesses and individuals.
Healthcare Investments: Significant funds were allocated to the healthcare system to combat the virus and expand medical facilities.
Lessons from China’s Approach
Public Health-Centric Recovery: China’s focus on testing, contact tracing, and quarantines was critical in containing the virus and enabling the country to return to normalcy relatively quickly.
Rapid Economic Stimulus: The government's quick action to subsidize businesses and stimulate the economy helped China rebound faster than many other nations.
The global response to the COVID-19 pandemic through stimulus packages has provided valuable lessons in managing economic crises. Countries like Germany, the U.S., and the UK demonstrated that protecting jobs, supporting businesses, and offering direct relief to individuals are crucial components of a successful recovery plan. At the same time, countries like Japan and China showed the importance of combining public health measures with economic support to ensure long-term stability.
Ultimately, the key takeaway is that there is no one-size-fits-all solution. Each country’s response was shaped by its economic structure, political environment, and healthcare capabilities. The lessons learned from these diverse approaches will be invaluable in shaping future crisis management strategies and ensuring that governments are better prepared for the challenges of tomorrow.
