Reversing COVID-19 Effects, Rebuilding Asian Economies – Science
Sat, November 12, 2022
The COVID-19 pandemic has left massive scars on Asian societies and economies. Asia-Pacific countries were ill-prepared for COVID-19, with 36 percent of their citizens lacking access to health care, 57 percent lacking access to social protection, and 51 percent of workers lacking formal labor rights.
While the full economic and social cost has yet to be determined, initial estimates suggest that over 1.5 million people have lost their lives and 150 million have been pushed into poverty. The gains made in reducing poverty and reducing inequality in recent years have been reversed.
Among other factors, rising unemployment, falling household incomes, food inflation, crowding out of government spending to increase equity, loss of schooling and learning opportunities, glaring digital divide, loss of remittances have all contributed to growing poverty and inequality.
The pandemic has pushed 90 million people into extreme poverty in developing Asia-Pacific countries by 2021, based on $1.90 a day, and over 150 million and 170 million below the poverty line of $3.20 and $3.20, respectively .$5.50. These increases have taken the total number of people living in extreme poverty to over 500 million and those living in poverty to over 1.4 billion.
World Bank surveys show that income inequality in the region is likely to have risen by 8 percent on average during the COVID-19 pandemic. Inequality between countries increased by 1.2 percent between 2017 and 2021, the first such increase in a generation, and income inequality within countries has also increased in many countries. Wealth inequality has also increased during COVID-19. In 2021, the top 1 percent owned a fifth of wealth in all countries in Asia and 25 percent in 18 countries.
Measures to contain COVID-19 have led to widespread job losses and rising unemployment. In 2020, working hours were reduced by 7.9 percent, equivalent to a loss of 140 million jobs. Job losses and quarantines hit poor and low-income households.
With informal workers more vulnerable to social distancing and lockdown measures, and a high proportion of women working in the informal sector, the pandemic has exacerbated gender inequality.
Women in the region were already disproportionately taking on care responsibilities, spending an average of 11 hours a day on unpaid care and housework. The pandemic-related lockdowns, closures of shops and schools, and restrictions on mobility have resulted in women spending more time on unpaid domestic chores.
Job losses, small business closures, supply chain disruptions and remigration contributed to the loss of household income. In 2021, labor income was estimated to fall by 13.4 percent in South Asia, 5.0 percent in Southeast Asia and the Pacific, and 4.1 percent in East Asia. Eighty-three percent, 70 percent, 55 percent, 75 percent, and 48 percent of households in Cambodia, Vietnam, the Philippines, Thailand, and Laos reported income declines, respectively.
Food prices rose by 7 to 9 percent in India, Indonesia, Malaysia, Nepal, the Philippines and Thailand in July 2022, by 20 to 22 percent in Kazakhstan, Laos and Mongolia, by 29 percent in Pakistan and by 91 percent in Sri Lanka the same month in 2021. With the poor and low-income households spending a disproportionate share of the budget on food, they are hit particularly hard.
The pandemic and rising food price inflation have worsened food security in the Asia-Pacific region. In 2021, 425 million people in Asia were affected by hunger. Overall, an estimated 1.1 billion people were moderately or severely food insecure in the Region in 2020.
The effects of a pandemic can last a long time. For example, it will take many years, if at all, to offset the loss of learning opportunities exacerbated by the digital divide due to school closures affecting millions of students, particularly those from poor and vulnerable households.
Being connected to the internet allows employees to work from home and children have access to online education. However, this luxury was not available to many. The lack of access to the internet prevented timely access to public services, including social benefits, job opportunities and e-learning opportunities.
Governments in the region responded to the crisis in 2020 and 2021 according to their fiscal space. These measures included direct cash transfers, food subsidies, utility fee subsidies, grants to businesses under worker retention schemes, support for SMEs to weather the economic shocks, increased healthcare spending, expansion of subsidized loans to households and businesses, tax credits/reductions and delays in collecting taxes. Given the impact of crises, the responses were inconsistent with the losses.
The pandemic has exposed significant weaknesses in existing health systems in many Asia-Pacific countries, stemming from years of underinvestment in public health. There was a lack of health facilities, trained medical professionals, medical equipment, testing facilities and medicines. The majority of people pay out of pocket to get basic medical services.
Across the region, social protection systems are not equipped to adequately respond to the economic and social shocks caused by the pandemic. The majority of the population has been excluded from existing social protection programs. The vast majority of those excluded from social protection programs were informal workers. Against this backdrop, it is critical that all governments, as they rebuild post-COVID economies, take the following actions to tackle rising poverty and inequality:
- Increase investment in public health systems to prepare for future health crises by building more hospitals, training more doctors and nurses, providing more medical equipment, and aiming for universal health coverage.
- Expand the scope and scope of social protection to achieve universal access. Social protection programs should cover all informal workers. Programs should go beyond pensions and cover unemployment, health care and protection against injuries.
- Invest more in the public education system to create equal opportunities and make up for lost school years. Reducing and closing the digital divide by providing affordable and subsidized access to the internet is also essential.
- End gender discrimination by providing women with more employment opportunities, women’s economic and political empowerment, and more investment in care infrastructure and services to reduce women’s disproportionate care responsibilities.
- The Asia-Pacific region is very vulnerable to climate change. As a result, with the opportunity to rebuild economies post-COVID-19, countries must accelerate the transition to renewable energy sources, invest in climate change adaptation and meet their carbon emission reduction targets.
- Adopt concrete tax policies to increase revenue to fund social protection and public services. These may include the introduction of taxes on capital gains, real estate and inheritance; reducing exemptions and incentives; Imposing “solidarity taxes” on the wealthy and “deadweight taxes” on companies that benefit from oil prices, and ensuring multinationals pay fair taxes by reducing harmful tax practices and tax avoidance. Introduce wealth taxes, both as one-off contingency measures and on a recurring basis as an ongoing redistribution policy.
The author is a regional advocacy and campaign manager at Oxfam International.
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