Intelligent Lockdown to Combat COVID-19: The Dutch Way

By Abdul Azeez Erumban

Several approaches are being followed by countries to fight the COVID-19 pandemic, ranging from complete lockdown to soft regulations. What is the best policy option is yet unclear; and whether the opted choices are appropriate is yet to be seen. There is also a short-term vs. long-term dimension to these policies and their impact. Most lockdown and restrictive policies can be seen as short-term solutions. How to move to a more long-term strategy is still unclear in most parts of the world. Whether it is to wait for a vaccine or to develop antibody and self-immunity is still being debated. It is evident, however, that the long-term strategy should be such that the spread of the virus is contained; no further lives are lost; and, economic and social life is brought back to normal.

The first case of the coronavirus in the Netherlands was reported on February 27, 2020, nearly a month after India’s first case was reported in Kerala. The virus arrived in the Netherlands from Italy, where several Dutch families were on skiing holidays during the last week of February. The initial response of the authorities was not very exigent and was limited to a piece of advice to restrict travel to Northern Italy. As the number of infections started shooting up rapidly, a few more measures were introduced. Yet, they were primarily confined to avoiding shaking hands and asking people in the affected areas to stay home. Additional measures, including a ban on large events and festivities, were introduced in the most affected area, North Brabant, while the rest of the country was still left largely to carry on as usual.

But the number of infections, as well as the number of deaths, has rapidly increased since then, making the country take the situation more seriously. On March 12, two weeks after the first case was reported, the government announced more strenuous measures that apply to the entire country. On March 16, for the first time since the oil crisis of the 1970s, the Dutch Prime Minister directly addressed the country on television, and several measures have been announced since then. Yet, those measures were not as aggressive as in many other parts of the world, including neighbouring Germany, Belgium or the UK. A minimal number of testing, hardly any lockdown, and nearly no surveillance or policing on people were some notable features of the Dutch approach.

Intelligent lockdown and 1.5-meter economy

The initial Dutch approach to tackle the situation was to adopt the herd immunity strategy, although it was not officially announced. The idea behind the herd immunity concept is to develop a natural antibody and build up immunity by exposing a majority of the low-risk group to the virus. The rationale is that young and less vulnerable people are likely to experience minor symptoms, and therefore, handling the situation would be relatively easy for the healthcare system if more people develop immunity gradually. The moral side of this approach, as it might involve casualties of several vulnerable people, including old and chronically ill ones, as well as the success probability, is often debated. But the Dutch government has rapidly changed gears and made herd immunity a useful sub-strategy, but not its main strategy.

The Netherlands rather opted for a targeted lockdown, often coined as, ‘intelligent lockdown.’ Unlike a complete lockdown, as followed in India, in this approach, only those sectors and activities that are likely to spread the virus were not allowed to operate. This included restrictions on large gatherings and events, such as sports matches, religious services, funerals, marriages and festivities. Restaurants, hotels, hairdressing saloons, red-light districts, massage saloons, sauna, dentists, beauticians, and other professions where direct human contact is inevitable, were asked to close down. Daycare centres, primary and secondary schools, and universities were also closed, although exceptions were given for children whose parents work in the essential services sector. Most teaching activities in schools and universities were moved online.

Supermarkets, construction stores, florists, alcohol shops, bakeries, toy stores, other small shops, real estate agents, and the financial sector were allowed to operate although with strict safety regulations. People were also allowed to go out for cycling, or walking or even to visit friends, on the condition that it involve no more than two persons together. In all these activities, people were required to keep a safe distance of 1.5 meters from each other. The objective of the ‘intelligent lockdown’ was to ease the economic, social, and psychological impact of social isolation and the stalling of economic activities. Indeed people were advised to stay at home as much as possible and to avoid contact unless it was inevitable. Yet, they were allowed to go out if it was essential for work, or to buy groceries, or even to get some fresh air, but the 1.5-meter distance was to be maintained.

Regular functioning of supermarkets ensured an adequate supply of groceries and also helped minimize the economic impact on farmers and grocery suppliers. There have also been regulations on the timing of supermarket visits, such that older people are allowed to go to the stores very early in the morning as the first customers when the store is clean and not busy. Moreover, the supermarkets take additional care to ensure the safety of customers, as well as the employees. To enforce the 1.5 meters distance, every customer is required to take trolly, which is more than a meter long, before entering the store. These trollies are disinfected after every use. Also, customers are required to keep a distance at the cash counters, where transparent plastic separators are placed between cashier and customer. Customers are provided with hand sanitizers freely in front of most shops. To facilitate contactless payments at supermarkets and stores, banks have increased the transaction limit using contactless card payments. This helps customers pay without using the pay machine. Also, several supermarkets already have self-paying counters, which are extensively used during these days.

Although the Dutch approach, which is somewhere in between a complete lockdown, and the Swedish approach of no lockdown, was less welcomed initially, it now seems to be revealing as not any worse. The number of new cases is falling, and hospital intakes are stabilizing. At the time of writing this, there are 42,984 reported cases, more than 11,000 hospitalizations, and 5,510 deaths.¹ The country has one of the highest case fatality rates (the rate of death per cases tested positive), close to 13 percent. However, other European countries like the UK, France, and Belgium also have shown higher case fatality rates, ranging from 13 to 15 percent. The Dutch way is not specifically to blame compared to these countries. Germany, on the other hand, remains low at less than 5 percent case fatality rate, despite having a high population. The huge difference may have to do with the low testing rate in countries like the Netherlands compared to Germany. Perhaps what went wrong in most Western European countries, including the Netherlands, is their inadequate initial response, which ignited the rapid spread of the virus at the beginning, and the further containment was harder even with a complete lockdown. For instance, the largest number of cases in the Netherlands, until now, are reported from the provinces of South Holland and North Brabant, regions where the first cases were also reported. The Northern provinces, such as Groningen, Friesland, and Drenthe, are so far largely spared.

Recent relaxation in measures

With the number of cases diminishing, the government decided to relax many measures since May 11, and several sectors are now being allowed to operate. This includes sports and other outdoor activities, hair and beauty professions, libraries, primary schools, and child care centres. These activities are allowed under the assumption that most of their clients are local, and these activities involve hardly any travel. Moreover, several regulations are in place, such as bringing children to school on foot or bicycle to avoid using public transportation. These relaxations are expected to bring the economy back into operation. More changes are expected in the first two weeks of June, including the opening of cafes, restaurants, cinemas, bars, and middle schools. These businesses will have to adhere to the so-called ‘1.5-meter economy’, which, however, will be impractical for many small cafes, restaurants, and establishments. Once the current restrictions are mostly relaxed by June, public transportation is likely to be used more intensely, and therefore, wearing a mask will be compulsory. The ban on large events, and also restrictions on fitness, sauna, sex workers, etc. will continue until September.

Potatoes and Tulips

The COVID-related lockdown has affected economic activities in various sectors globally, but there are two unique sectors in the Netherlands. In 1885, the famous Dutch painter Vincent van Gogh painted one of his masterpieces, The Potato Eaters, that portrayed the peasants of the little town, Neuen. Potato continues to be an important part of the Dutch cuisine, as well as an important crop for the Dutch agricultural industry. With restaurants and fast-food chains closed globally, the sales and distribution of potato have been heavily disrupted, and the warehouses are filled with harvested potatoes. Although the functioning of supermarkets helps continue potato supply to household customers, the closure of restaurants, where it is heavily used to make the famous potato fries, and the dampened export has left farmers with an estimated 1.5 million tons of potatoes in warehouses. Given its perishable nature, two-thirds of that cannot be sold anymore, which puts farmers in severe financial stress.

The Dutch floricultural sector constitutes about 45 percent of global production. It is the lead producer and principal supplier of flowers, plants, and bulbs across the globe. With lockdown, being the’ new normal’ elsewhere in the world, and with celebrations and family visits being cancelled, flowers have become a ‘super luxury’  that most people would avoid. Although domestic sales are allowed, the cancellation of cross-border shipments and ban on flower auctions have been a blow to the industry. The closure of flower gardens, including the largest tulip garden in Keukenhof,² also poses a severe threat to the floriculture sector. Industry’s weekly turnover has lowered by 60 to 70 percent, with an estimated loss of around 2 billion euros. Farmers were forced to throw away flowers.

Economic support

The overall economic impact of the strict measures followed so far is estimated to be huge and goes beyond potatoes and tulips. Nearly 1/5th of the economy is stalled due to the measures taken. The Central Planning Bureau (CPB) of the Netherlands has forecasted a technical recession. How deep and how long that will stay is tough to say as the spread of the virus still continues. In April, consumer confidence has fallen by the largest magnitude in its history, reaching far below its long term average. Consumer perception about the economy for the next 12 months has been extremely negative, and their willingness to spend has fallen to a historic low. The shrinking consumer spending, the falling hospitality sector, and the crippling trade and investment activities, all signal to economic weakening. The CPB estimates that, if the strict control on economic activities continues for a complete quarter, the economy is likely to contract by 1.2 percent in 2020, but if it continues for the entire year, it can lead to even a 10 percent fall in the economy.³ However, it is expected that the economy will get back to positive growth within a year.

Multiple schemes have been announced by the government to support employers, self-employed, and specific sectors that are affected by the ‘intelligent lockdown’ measures. This includes financial support to employers to continue their wage payments to workers; temporary benefit package for self-employed to bridge their income loss; and, credit guarantee schemes for small and medium enterprises (SME) and agricultural entrepreneurs. Moreover, business entrepreneurs are allowed to postpone their loan repayment from microcredit agencies by a period of 6 months, with a relaxed interest rate. In the coming days, more measures are expected, including supplier credit insurance for companies that supply goods and services to SMEs, compensation to horticultural business, additional support to cultural organizations and companies that rely on seasonal work, and compensation for flex workers. Businesses are also allowed to apply for a payment extension of several taxes, such as income tax, VAT, and the payroll tax for three months. The policies are very detailed and targeted, and are expected to ease the economic impact in the near future. Overall, the government has announced a 20 billion euros package to stimulate the economy. This would raise the fiscal deficit to about 12 percent of GDP, far above the EU standards of 3 percent. Nevertheless, to address the current crisis, the EU has agreed to breach the limit. To fund the additional financial burden, the national debt will have to be raised – thanks to the stable government financial situation so far, which places the government still in an affordable position.

Lessons for India

Consensus and expert opinion
It is hard to imagine that the Dutch way of ‘intelligent lockdown’ can be an appropriate strategy for India, given the size and nature of its economy and the collectivistic cultural attitude of the society. However, the clarity, consensus, and reliance on expert opinion in decision-making that was prominent in the Dutch process is a valuable lesson for India. It is important to devise timely policies after consultation with health professionals, for which the policymakers should be listening to them. Although politicians announced the decisions in the Netherlands, they were devised by health experts.  In fact, except for the state of Kerala, which followed the guidelines of WHO, most other Indian states were late to respond and initiate checks and controls at the airports through which most of the spread might have happened. India adopted a quick and complete lockdown, but without much discussion, or even adequate arrangements for those affected. That was pretty evident from the gloomy pictures of thousands of migrant workers leaving for their villages. In contrast, the Dutch decision not to go for a complete lockdown came after a heated debate in the parliament. The decision was supported by most members of the parliament – both from the government and the opposition sides.

Importance of local authorities
In the Netherlands, as in several other European countries, a lot of power in devising strategies and implementing policies are given to local authorities. In India, too, the Prime Minister has been discussing the current situation with the state chief ministers, indicating the importance of India’s federal setting. However, the power alluded to local authorities in implementing the policies in several states is often debatable, which creates an implementation deficit. The decentralized way of handling the situation has proved efficient in states, like Kerala. Its relatively efficient decentralized governing structure starting from the primary village panchayat level was crucial for the state government’s success in combating the epidemic.

Staying united
Social division seems to be a prominent feature in India. In Western countries, including the Netherlands, the fight against the coronavirus is perceived as a joint effort of the entire population, no matter what colour, race, or religion one belongs to. ‘Unity in diversity’ is a catchword in India that is easier said than practised, and that becomes evident even in an emergency like this. Such flaws should be strictly contained.

Long-run perspective
Given that mortality risk of COVID-19 is highest among the elderly, the probability that casualty rates will remain low is high in a young country like India.  Nearly half of India’s population is below the age of 25 years, which makes India a nation with one of the youngest people in the world. However, the high density of population in large Indian cities can lead to increased community spread, which might lead to higher infection rates. In rural areas, the population is less exposed to external carriers and hence, people in rural areas are likely to have a lower probability of getting the infection. But, the internal migration of rural informal workers who were relying on urban jobs elsewhere in the country, back to their home villages, defies that possibility. Moreover, the poor health and living conditions of a large section of the population, both in rural and urban areas, which includes millions of poor and informal migrant workers, will be a challenge. They may have a relatively high financial burden of healthcare, which would hinder them from getting adequate safety and precautionary measures, that could outweigh the demographic advantage that India has.

The economic impact of the lockdown will be one of the heaviest on the poor and a large section of informal workers in India. A recent paper by Sumner et al. (2020)⁴ estimates that the spread of the COVID-19 could lead to an increase in global poverty for the first time since 1990, which is also not good news for India.  India’s long-run vision should, therefore, include investing in primary healthcare and improve its accessibility to the poor people. While the current priorities should be to combat the spread of the virus, there are days to come after the crisis. A detailed policy strategy should be laid out to support the currently affected, but also a long-run perspective is essential to ease the upcoming challenges in the foreseeable future. The way the Dutch policymakers are foreseeing the economic consequences and trying to ease the potential impact with detailed and targeted measures and packages is a helpful example. Although India’s initial inertia to spend enough to support the victims of the lockdown was heavily criticized, the government has come up with an appreciable package of 20 lakh core stimulus package lately. Several informal businesses, SMEs and millions of affected workers, especially the informal and unorganized workers are heavily affected by the lockdown. They should get priority in India’s policy considerations.  Moreover, it is important to have a detailed, targeted, and solid plan to overcome the economic damage the prolonged lockdown would cause.

AUTHOR

Abdul Erumban is an Assistant Professor of Economics at the University of Groningen, the Netherlands, and a Senior Research Fellow at the Conference Board, Brussels, Belgium.

Disclaimer: The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the official policy or position of Azim Premji University or Foundation.