Over a third of the population without safety net to cope with Covid-19 economic crisis

While wealthy countries have pumped $9.8 trillion (£7.4 trillion) into their economies, including significant measures to support workers and the general population, the majority of low- and middle-income countries have not been able to deploy the same ‘whatever it takes approach’ to protecting their people and economies.

Shelter from the Storm reviewed government schemes used to support people through the pandemic in 126 low- and middle-income countries – including unemployment, disability, child, and elderly benefits – and compared data to spending in 28 rich countries. It found that 97 per cent of the support provided to low- and middle-income countries was inadequate to meet basic needs.

Prior to the pandemic, up to four billion people lacked social protection, with the World Bank estimating that only 1.3 billion of them have been reached during the crisis.

Ana Arendar, Oxfam Head of Inequality Campaign, said “Hundreds of millions of people have lost their jobs and income and the working time lost due to the lockdown in the second quarter of this year alone was equivalent to 495 million full-time jobs. Women workers in the countries we researched are suffering the most, as they work in the worst-affected sectors.

“People have fallen into debt, are skipping meals and are being forced to sell their assets. Remittances from migrant workers to their families have collapsed. Unless action is taken now, the number of people living in poverty is set to increase sharply for the first time in decades.”

The research also compared spending on social safety nets and found that 28 rich countries had spent an average of $695 (£523) per person. In contrast, spending in middle-income countries was $28 (£21) per person and as little as $4 (£3) in some low-income countries.

Overall, the world has spent an additional $11.7 trillion (£8.8 trillion) this year to cope with the fallout from the pandemic. Of this, $9.8 trillion (£7.4 trillion) was spent by 36 rich countries against just $42 billion (£31.6 billion) in 59 low-income countries.

At the same time, rich countries have only increased their aid to developing countries for social protection by $5.8 billion (£4.4 billion) – the equivalent of less than five cents (5p) for every $100 (£75) raised to tackle Covid-19.

Years of under-investment and failed policies, such as harsh and arbitrary means testing supported by international institutions, have left most developing countries with shallow or broken social protection programmes and exposed to the pandemic’s worst consequences.

50 of the 126 countries studied had social protection schemes consisting of one-off payments, now long exhausted. Only 13 per cent had programmes that lasted longer than six months. Eight out of 10 countries have not reached even half their citizens.

The analysis also found:

• Some countries like South Africa, Namibia and Bolivia were better prepared with near-universal social benefits in place prior to the pandemic. Most other countries could achieve this with better policies and more support
• By 2030, Kenya and Indonesia, for example, could cut their poverty rate by 25 per cent and 31 per cent respectively, by investing 1.7 per cent of their Gross domestic product (GDP) into universal social protection schemes
• Many developing countries have been able to mobilize non-financial help, like food aid, but this is often insufficient to make up the overall gap in formal social protection schemes

Arendar continued “Social safety nets are both a lifeline in difficult times and a human right, they are one of the most powerful and affordable investments governments can make to reduce inequality, vulnerability and poverty. There is still time for developing countries to step up their support for people who need it, by increasing taxes on the richest to pay for decent social protection. Rich nations should increase their aid and cancel the debts of low- and middle-income countries, to help support them.”

The report illustrates stories of people hit hard by the pandemic, including Sovann Vary, a single mother who borrowed $5,000 (£3,800) to buy a tuk-tuk when her job as a domestic cleaner ended. She is struggling to repay and is ineligible for the social insurance scheme set up by her Cambodian government.

Informal garment worker Brenda Carolina’s family now depends upon sporadic food aid after she was rejected for support, despite the Guatemalan government’s efforts to increase its coverage.

Oxfam is calling for a Global Fund for Social Protection to avert a huge increase in global inequality and poverty, as a keystone toward a more equal and resilient post-Covid economy. Governments should commit an additional two per cent of their GDP into social protection programmes and ensure minimum income security for children, the elderly, mothers, and people living with disability.

/Ends

Notes to Editor

Shelter from the Storm can be downloaded here.

Development Pathways provide creative, evidence-based solutions to the social and economic challenges faced by nations and citizens around the world.

Prior to the pandemic, up to 4 billion people had no social protection, according to the ILO

Using World Bank estimations on social assistance cash transfer cover-age expansion thanks to social protection Covid-19 related measures, 1.3 billion people have been additionally reached. Therefore, about 2.7 billion have been left behind.

The working time lost due to the lockdown in the second quarter of this year is taken from the ILO report ILO Monitor: Covid-19 and the world of work. Sixth edition. Updated estimates and analysis.