The pandemic has worsened inequalities between and within countries
More than a year after the outbreak of the Covid-19 pandemic, the virus has not only affected 190 countries, causing the global economy to contract 4.3%, but also perpetuated inequalities on three interconnected fronts: inequalities in access and availability of vaccines; loss of livelihoods and standard of living, with millions of people pushed back into poverty in low and middle income countries (LMICs); and gender inequality in all sectors.
While vaccines have been produced at record speed, disparities in vaccine access and distribution have meant that vaccinations are potentially years away for many low-income countries. The Duke Global Health Institute’s assessment shows that rich countries were quick to take the lead in making purchase deals, in fact grabbing a lion’s share of available vaccine doses. As of July 2020, the United States and the United Kingdom have reached agreements to inoculate 93% and 135% of their populations. In August 2020, Japan and the EU had set out to vaccinate 95% and 60% of their populations, respectively. The Covax global initiative to support vaccinations in 92 PRFMs simply did not have sufficient funds at the time to secure doses. A trade and intellectual property (TRIPS) exemption for Covid-19 vaccines was initially blocked at the WTO by high-income countries, followed by considerations of support. As long as the virus lurks, economic recovery will be threatened by intermittent outbreaks of infection in LMICs.
World Bank estimates suggest that up to 150 million people could be pushed into extreme poverty by 2021, with significant numbers of new poor in countries where poverty rates are already high. Per capita income levels in low-income countries fell 3.6% in 2020, with output falling 0.9% – the largest contraction in 30 years. Such losses in per capita income will reverse hard-fought gains in the living standards of the poor and widen the north-south divide. Meanwhile, an equivalent of 255 million full-time jobs were lost in 2020, compared to the fourth quarter of 2019, with South Asia among the worst affected regions.
The pandemic and lockdowns have resulted in a sharp reduction in income in critical sectors affecting production and causing massive job losses. Many of these jobs are lower in the skill hierarchy, while at the same time positive employment growth is already visible in highly skilled service sectors such as ICT and finance, which accentuates existing inequalities in the market. work. Research indicates that less than 10% of urban jobs in developing countries can be done remotely, with low-paid employees and the self-employed (making up a large majority of jobs in India) with limited opportunities to work from home.
According to the IMF, commodity-dependent countries, tourism-oriented economies and physical contact-intensive sectors will face difficult prospects in the future due to the slow normalization of cross-border travel and the prospect of cross-border travel. moderate prices. MSMEs, which tend to have small stocks and operate on low margins, were already badly affected in the first wave. Almost 90 percent of all businesses in Asia and Africa are MSMEs, and many of them depend on small supplier networks. Most businesses are also informal. But constraints on fiscal space and the ability to implement income support measures are a challenge in LMICs.
The economic impacts of the pandemic were widely felt but affected some groups more than others – low-income countries, contact-intensive sectors, manual jobs and women. Female-owned businesses were 5.9 percentage points more likely to have been closed than male-owned businesses during / after Covid-19, according to a survey. In particular, women are more likely to work in low-paid, precarious and informal jobs, even though the global gender pay gap remains consistently high at nearly 20 percent.
Global recovery will require a collaborative international effort. The Covax initiative needs an estimated minimum of $ 2 billion in additional funding to block some doses through early 2022. According to IMF research, $ 50 billion in investment to immunize the world at the start of 2022. 2022 can generate economic returns worth $ 9 trillion by 2025. But right now the world is far from reaching that level of funding.
Bhunia is an international development consultant and Sahoo is a professor at the Delhi Institute for Economic Growth