The COVID-19 pandemic has turned into a global human and health crisis, but also a socioeconomic one. Anda David, Hélène Djoufelkit and Salomé Mançon, from the Research Department of the Agence Française de Développement, give a point-by-point account of the recent impending inequalities.

In the Vista Alegre slum, Peru, May 21, 2020: a woman transports her son to a medical establishment for treatment. (Photo by Geraldo Caso BIZAMA / AFP)
In the Vista Alegre slum, Peru, May 21, 2020: a woman transports her son to a medical establishment for treatment. (Photo by Geraldo Caso BIZAMA / AFP)

The COVID-19 epidemic has given rise to significant health concerns, but it has also pointed toward a steadily gathering—and just as alarming—economic crisis, with deepening socioeconomic inequalities in low- and middle-income countries. This crisis has both laid bare and reinforced existing inequalities, so the question now is whether it will lead to a paradigm shift in the international fight against these inequalities.

 

The COVID-19 crisis is exacerbating socioeconomic inequalities

Worldwide, the most vulnerable people are also those most strongly impacted by the COVID-19 crisis. The economic and health repercussions have been shown to be far more disturbing in low- and middle-income countries, in which almost 85% of the world’s population live. Additionally, these countries are also less resilient than the highest-income nations.

Labor market inequalities

The most vulnerable people are generally also those who are employed in precarious work and are thus often the first to lose their jobs in an economic shock or crisis. The International Labor Organization (ILO) estimates that 38% of workers are employed in sectors that have been badly undermined by the crisis.

Again according to the ILO, more than half of the global labor force work in the informal economy. That is around 1.6 billion people, most of whom live in emerging and developing countries. Their economic situation is of particular concern in light of the health crisis. Only 45% of them benefit from social protection; and this is compounded by the fact that the companies they work for are in the informal economy and are thus not eligible for the emergency aid measures that have been put in place in certain states.

Healthcare expenditure inequalities

Negative health shocks can also drag a large proportion of the world population down toward the poverty line. Whether they are poor, working-class or middle-class, people who have little or no social protection are likely to be the most vulnerable after the COVID-19 crisis, due to their unforeseen health expenditure. For example, around one-third of Chinese households earning between 10,000 and 30,000 yuan a month (roughly 1300 to 3850 euros) expect to see their income fall significantly this year, according to a survey conducted in February by Gan Li, an economics professor at Texas A&M University.

The World Bank also estimates (see map) that only nine African countries have social protection schemes that cover more than 50% of their population: the risk is therefore than the most vulnerable people with the virus will also be those that are most affected in this respect.

 

Figure 1. Proportion of the African population covered by social protection schemes in 2019 – ASPIRE Word Bank

 

Education inequalities

UNESCO has also sounded the alarm on the educational disruption suffered by more than 1.2 billion learners around the world. Schools are still closed in 168 countries: on May 26, 70.6% of all learners were still affected, against almost 90% at the height of the crisis.

The most common solution to this issue is the use of online classes. But remote learning means having access to electricity, a computer and an internet connection. And according to the International Telecommunication Union, only 10.7% of African households had access to a computer in 2019, while only 17.8% of them had the internet in their home. Access to electricity also remains problematic, particularly for the poorest. For example, in South Africa the electricity coverage rate for the wealthiest quintile is 98%, but only 83% for the poorest quintile.

Parents have also been asked to replace their teachers and help their children with these online courses. However, parents in the poorest households generally cannot work from home and do not have the skills required to help their children. Children in the most vulnerable households are therefore likely to fall a long way behind their classmates from higher socioeconomic groups.

Lastly, this inequality between children is even more striking in places where basic nutrition depends on school canteens. Because of school closures, around 370 million children from the most vulnerable households are now deprived of their sole daily meal.

 

Global repercussions of the COVID-19 health crisis

As we have seen, the COVID-19 crisis will obviously have significant repercussions in terms of inequality in low- and middle-income countries: employment, income, health and education. But other socioeconomic impacts may also emerge on the global scale.

 

Greater gender inequalities

The global health crisis could also aggravate gender inequalities. Women make up 70% of health workers worldwide and so are more exposed to the virus than men, although a higher excess death rate has been observed among men.

 

 

Furthermore, research has shown that women are more likely than men to be on precarious employment contracts or to work in the informal economy: 70% worldwide and more than 90% in low- and middle-income countries. Women are therefore also more likely to lose all or part of their income because of the crisis. In addition, there are growing indications that violence against women is on the rise with the lockdown measures in place around the world.

 

Widening inequalities between countries

Many countries are finding themselves with little room for maneuver in their efforts to develop emergency services and to roll out recovery measures to curb the economic damage caused by the crisis.

But the situation is far more complex in low- and middle-income countries, which are now being hit hard by capital outflows, plummeting commodity prices, and their tourism revenue in freefall. DR Congo, for example, with 60% of its budget reliant upon oil and gas exports, will probably lose one-third of its revenues. Similarly, 60% of Angola’s exports and 45% of its imports are to and from China, so the country is likely to suffer significant damage from the fallout of COVID-19. These countries find themselves facing debt servicing obligations that are jeopardizing their crisis responses and widening the gap between them and wealthier countries.

 

The post-pandemic world: toward a paradigm shift

Various discussions and media forums are currently drawing parallels between past epidemics and COVID-19. Certain studies also show that previous major upheavals such as wars and epidemics have had wealth equalization effects. Nonetheless, at present it is difficult to be absolutely certain about the effects of the COVID-19 pandemic on inequalities. Not only do the economic, health and social consequences differ from country to country, but so do their responses.

That said, the less unequal countries can be expected to be more resilient to this crisis: their stronger social protection systems offer better care for the sick and higher income stability for the population as a whole. These countries, which enjoy greater social cohesion (and hence lower inequality), will also be better equipped to make political decisions on which everyone agrees and which will prevent the kind of social collapse so symptomatic of times of crisis.

As things stand, it is difficult to know whether we are witnessing a genuine paradigm shift in the fight against inequality, and in which direction that shift might be headed (toward enhanced cooperation or even greater polarization?). But it is likely that we will see a contraction of globalization and a marked return to the national scale.

In this context, the COVID-19 crisis underscores the crucial role of the social State. Public policies that reinforce social protection (extension of aid and social security, strengthening of institutions and active labor market policy, etc.) may soften certain consequences of the crisis, provide vital support to the vulnerable, and help make them more resilient.

Lastly, joint action on the international scale appears to be increasingly necessary in the efforts to limit the socioeconomic impacts of the COVID-19 crisis. This kind of universal response, based on global public investment and bringing together stakeholders from humanitarian, development and peace organizations, would lead to better protection of the world’s most vulnerable.

 

 

The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.

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