Lasting income loss and contract renegotiations

The COVID crisis will in all likelihood lead to a lasting loss of income in OECD countries. The problem is that a large number of contracts had been signed when this unexpected income loss took place and could not be renegotiated. For example: Loan contracts between the government, companies or households and banks or investors; Employment contracts in countries with a high degree of employment protection; Rental leases. The income loss is then borne solely by contracts that can be renegotiated: Short-term employment contracts in countries with a low degree of employment protection; Dividend payments to shareholders; Subcontracting contracts between companies; Employment contracts that the young should have had without the crisis and which will not be signed. In a “ flexible ” economy, all contracts could be renegotiated in the event of an unexpected extreme shock.