The COVID-19 crisis has brought the global economy to a standstill, but it is workers in the world’s poorest countries who are being hit particularly hard. Among the first casualties were women factory workers in countries like Bangladesh, who lost their source of income when export industries shut down; migrant workers, who are particularly vulnerable during lockdowns; and street vendors, who have lost their livelihoods and, in some cases, have suffered police violence.
“What the world needs now is solidarity,” said UN Secretary General António Guterres on March 31, echoing the statements of many world leaders. Low-income countries will need international support to manage fiscal responses, but also to implement broad-based, targeted, and gender-sensitive social policies and innovations to address the pandemic, support populations through the crisis, and build conditions for recovery. “Everything we do during and after this crisis must be with a strong focus on building more equal, inclusive, and sustainable economies and societies that are more resilient in the face of pandemics, climate change, and the many other global challenges we face,” Guterres declared.
Social and economic impacts hit low-income countries particularly hard
High-income countries have responded to the COVID-19 pandemic with wide-ranging public health measures, social distancing, and lockdowns. Many countries have implemented equally broad policies to address the social and economic impacts of the pandemic, in some cases with planned fiscal stimulus of up to 15% of gross domestic product. In Canada, these measures include direct support to individuals and credit and wage subsidies to support businesses and avoid lay-offs.
Measures to lock down societies and economies are an unparalleled challenge among richer nations, but COVID-19 problems are compounded in countries with fewer economic resources, weaker systems of governance, and limited opportunities for social distancing. Besides the challenges for health systems, a range of socio-economic issues are already emerging.
The fiscal injections occurring in wealthy countries are much more difficult to mobilize in the Global South. African countries in particular have limited fiscal resources, especially given the gradual economic downturn of the last few years, recent growth in external debt, and international investors pulling resources from emerging economies at the onset of the COVID-19 crisis.
Global traffic and economic freezes are hitting low-income countries particularly hard because they are highly dependent on global exchanges. On top of the export industry slowdown, the halt in tourism is having significant effects, especially in West African countries where the tourism industry was just beginning to recover since the Ebola crisis.
Low-income countries also lack the strong social protection systems that allow richer countries to mitigate immediate impacts on their populations and maintain and promote social cohesion. Cash transfer schemes to support the poorest populations have grown in low-income countries, but not at a broad enough scale to facilitate the response needed for the millions of workers who have lost their jobs. Moreover, will schemes that work under other conditions — such as public work programs — be suitable in this crisis?
Informal workers, migrants, and women hit hardest
Entire economies are affected by the COVID-19 crisis, but different categories of workers will feel it in different ways. The informal sector makes up a very large proportion of the workforce in low-income countries. These temporary workers, self-employed vendors, and care workers have no labour contracts, no job security, and no employment insurance. Their income sources have simply dried up, and some are at risk of losing their housing.
The plight of India’s migrant workers illustrates these impacts in an extreme manner. When the Government of India announced its lockdown, hundreds of thousands of migrant workers tried to leave cities on crowded trains or by walking hundreds of kilometres. As workers headed for villages that lack the infrastructure to receive them, this mass movement posed enormous risks of spreading the infection.
Crises often have long-term consequences for women. The World Health Organization recently warned of the increased risk of domestic violence, and research supported by the Growth and Economic Opportunities for Women program shows that women’s confinement to homes, compounded by the increasing numbers of people falling ill, may increase their already very demanding care responsibilities.The economic freeze will likely aggravate the disadvantages women face in labour markets because they are over-concentrated in informal jobs and have less access to social security. These setbacks may carry over well into recovery efforts after the immediate crisis.
Building a strong foundation for global recovery
International support is critical for countries with limited capacity for policy responses. While building social cohesion and developing the conditions for recovery will rely on the support of all countries, the public policies and solutions that are mobilized should be firmly rooted in evidence and local realities.
At IDRC, we believe that data and evidence are key to developing appropriate responses to the pandemic and for building a better future. The Centre is preparing to support research organizations in the Global South so that they can inform economic policies with approaches that are appropriate to the local context, and to ensure that the responses address inequalities and account for the needs of women and other vulnerable groups.