Slowing vaccination rollout threatens economic reboot

3 mins read

People who don’t get COVID-19 vaccinated are not just expressing a political view or voicing health concerns over potential side effects; they are a “potential drag on the economy”.

As the vaccination rollout slows down, every month that Cyprus delays reaching herd immunity costs an additional €400 to the average household.

It also cost businesses to comply with restrictions on staff and customers.

Cyprus’ vaccination program appears to have hit a wall with people reluctant or more sceptical about vaccines’ short and long-term effects.

Business leaders are concerned that restarting the economy will be hampered, with the costs of new waves of coronavirus having a toll on society, the economy, households, and state coffers.

In comments to the Financial Mirror, Demetris Georgiades, the head of Cyprus Fiscal Council, tasked with monitoring state spending, said the average cost of COVID on every household is estimated at around €400.

“And this is a conservative estimate, taking into consideration people who have lost their jobs or unable to return to work, especially those employed in the tourism sector,” said Georgiades.

He argued that putting a price tag on the cost of delays of the vaccination program is not easy, but the financial cost can be calculated.

“If we work on the loss of income of households, losses made by businesses and the number of businesses which have gone belly up during the coronavirus crisis, then you could come up with a figure,” said Georgiades.

He noted that one would have to add businesses that made a profit during the pandemic or had no loss of income in the mix.

“Businesses such as doctors, clinical laboratories and supermarkets were amongst those who saw their income grow.

“Meanwhile, civil servants did not feel a change to their salaries, while employees in the banking sector saw pay rises.”

He argued that people should get vaccinated, as the Cypriot economy depends on it.

“A 15 to 30-day delay in reaching herd immunity could be devasting for tourist enterprises, such as hotels and restaurants.

“In turn, would mean job losses, with many households losing a large part of their purchasing power, which will be reflected in the market,” said Georgiades.

“Similarly, airlines relying on Cyprus traffic may also go bust.

“There cannot be a tourism sector without planes or restaurants.”

During the unprecedented pandemic, there was consensus at the Fiscal Council that drastic government intervention was needed.

“Fiscal measures to support households in need, to preserve job positions, to throw a lifeline to viable businesses facing temporary cash flow issues and to keep the supply chain intact.”

Lena Panayiotou from the employers federation OEB told the Financial Mirror that the longer it takes for Cyprus to reach herd immunity (around 70% of the population), the longer businesses will have to work under restrictions.

“Which means they will be working with less staff in their offices, shops will be allowing fewer customers in, pushing their turnovers downwards,” said Panayiotou.

She said businesses have to bear the cost created by people contracting the virus.

“While it is hard to quantify the cost of a delay in the vaccination program, we do know that businesses will suffer the cost of people being on sick leave, having to find replacements for them and any possible contacts.”

Businesses have to deal with the costs of disinfecting their establishments regularly, and more so if a COVID-19 case is found among their staff.

“Productivity also suffers at workplaces as long as the virus is at large in the community; it has been proven the pandemic has taken its toll on people’s psychology.”

Panayiotou said there isn’t a “right answer for how employers should drive vaccination behaviours”.

Some businesses in Cyprus, she said, are offering incentives to reinforce behaviours or to overcome specific hurdles.

“In some cases, employers from across sectors are trying to motivate their employees to get vaccinated with targeted incentive programs that include stipends, paid time off, bonuses, and scheduling flexibility.”

Fading interest

Experts advising the government have recorded waning interest among the public.

Health Ministry advisor, Christos Petrou, told daily Phileleftheros that “interest has decreased a lot in recent days”.

“We need to focus on vaccinations for all age groups, as we have a very large proportion of adults who have not yet been vaccinated, which makes achieving our goal to reduce transmission in the community harder,” said Petrou.

Head of the pharmaceutical services, Dr Olga Kalakouta, noted there was a sharp increase in vaccine uptake in May, but interest has fallen away in June.

“In May, the online portal crashed several times due to overwhelming interest from people.

“Then the portal was catering to people in their 40s who have proven to be more susceptive to the idea of taking a COVID-19 vaccine compared to younger people”.

As the government plan has reached younger age groups, the vaccine take-up has hit a rough patch.

“Younger people feel more at ease as the risks of developing severe Covid are not as high.”

Dr Peter Karayiannis, a virologist, advising the government on handling outbreak, attributed people’s reluctance to get vaccinated to Cyprus’ improved epidemiological data.

“However, we are very concerned over the Delta (India) variant, which will eventually find its way to the island.

“Younger people must keep in mind the pathology of this variant is entirely different than other strains and can cause serious disease even in younger people,” said Karayiannis.