Vaccine mandates – what’s going on, and do they matter?

The discussion around vaccine mandates has become more prominent in recent months, as countries attempt to overcome lagging first dose uptake and new waves, whilst seeking a ‘return to normal’.

Despite rapid uptake amongst older age groups at the end of 2020, the same cannot be said for younger groups. Whilst the UAE is approximately 94% fully vaccinated, countries like the US and UK are stuck at 63% and 71% respectively.

Due to this stalling, vaccine mandates have recently come to the forefront of discussion, with many governments and businesses implementing their own.

The UK, for example, mandates that care home workers have at least two doses of an ‘approved vaccine’. At least 7 nations currently have mandates (and therefore penalties) for all adults, 23 have mandates only for specific cohorts, and even more nations have Swiss-style mandates where vaccination is a condition of entry to entertainment venues, according to Reuters. Healthcare workers, too, have been subject to mandatory vaccinations in many parts of the world for almost a year. 

Over 40 of the largest US-listed public companies, from Goldman Sachs to Microsoft, require proof of vaccination from staff members (and, more often than not, clients) as a condition of entry to their offices. Whilst non-vaccinated employees can currently work remotely, it seems likely that this loophole will close as so many employers push their staff hard to come back in person.

The political challenges facing mandates are enormous – the US supreme court blocked President Biden’s implementation of a mandate on employers on 13th January 2022.

There has been varied public support for mandatory vaccination. In late 2021 The Economist published limited polls showing most Americans believe healthcare workers, teachers and employees at smaller businesses should be required to have been vaccinated. Widespread protests across the world, especially in Europe and the USA, have exemplified the backlash, however.

As already mentioned, vaccination is seen as a key for allowing countries’ economies to restart whilst also keeping the pressure off healthcare workers. As British PM Boris Johnson put it, getting vaccinated is “good for you and good for the whole country”.

Covid in general has clearly had the effect of suppressing economic activity – with US GDP falling by 2.5% from 2019-2020, and around $2.96 Trillion being lost due to falling global productivity in 2020 alone.

The emergence of the Delta variant in summer 2021 led to a further fall in economic forecasts – with Goldman Sachs slashing their quarterly US GDP forecast to 3.5%, from 5.5%. A similar if somewhat milder effect was seen with the emergence of Omicron, according to analysis by Deutsche Bank.

There are several arguments for whether vaccine mandates of any kind will aid economic recovery. On one hand, assuming the mandates are effective, they will reduce the need to lockdown the economy and help with a transition to the endemic not pandemic state of Coronavirus.

Despite this, the University of Chicago economist Austan Goolsbee found that the main driver of consumer activity is not in fact lockdowns – instead it is death rate. When the rate increases, visits to businesses fall proportionally, even if stay at home orders are not implemented. Therefore, it makes sense to think that so long as mandatory vaccination reduces death rates, consumer confidence will increase. However, despite Omicron’s milder population-level impact, consumer confidence in the US has taken a major tumble in January 2022, hitting a decade low due in part to Omicron’s surge.

In healthcare, staff absences have become a major threat. In the UK, healthcare worker absences rose by 38% in the last fortnight of December, and in the US 6 states have declared crises and called in military support due to hospital understaffing. Increased vaccination amongst healthcare workers could reduce this problem.

Secondly, for businesses, the biggest risk from Omicron seems to be staff absences. Vaccine mandates would likely reduce the proportion of staff on leave due to self-isolation at any one time, allowing them to operate at a greater capacity. Many white-collar workers already have a financial incentive to get vaccinated, as returning to the office is still seen as a key contributor to professional development.

Overall, it seems probable that government vaccine mandates are one tool that will help us deal with an increasingly endemic disease whilst allowing a continued economic recovery. Despite this, private companies have also exercised responsibility and pursued mandatory vaccination policies without state intervention.

Analyst: Otto Rutter

Sector Head: Edward Raftery

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