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Taking the Global View | Centre for Microsimulation and Policy Analysis
The distributional effects of COVID-19 around the globe
ŽUPABA VUCBA
The COVID-19 crisis has impacted people’s lives around the globe dramatically, hitting different countries asymmetrically due to differences in the health response, in the economic structure, and in the policy response aimed at reducing the effects of the first on the latter Also, within countries COVID-19 has exposed old and new divides in society. While the health emergency has initially brought people together, and the solidarity moment has resulted in robust policy responses in some countries, cracks are starting to appear and scars are visible that impact different groups differently. Elderly people (in particular the frail elderly) are more exposed to the health risk, but it is younger people who have suffered more in the labour market, and adolescents and children who have lost precious time for socialising and learning. Estimates and early evidence show that each month of lockdown shrinks advanced economies by around 2% on an annual basis (OECD, 2020). Developing countries are particularly exposed to the virus due to the weaker healthcare and welfare systems in place, the risks of famine, volatile commodity prices, and the low standards of living which make it much harder for people to keep safe. It has been estimated that 81 percent of the world’s workforce is affected by lockdown measures (ILO, 2020), that poverty could increase globally by half a billion people (Sumner et al., 2020), that Africa will be hit by at least $100 billion in economic costs this year (te Velde, 2020), and that Latin America will experience a contraction of more than 5% of GDP (ECLAC,
2020). While in advanced economies many have switched to working from home, family tasks have not always been shared equally between partners, with women taking on their shoulders a larger share of the new burden of taking care of young children in absence of childcare, monitoring attendance at online lessons and classes, checking homework, preparing meals and attending the extra housekeeping required by more crowded homes. By contrast, in developing economies the restrictions have pushed even more people into the informal sector, wiping out years of slow and painful advances towards extending basic guarantees to all workers. Businesses have gone bankrupt, in some sectors more than in others. Workers in those sectors have seen their prospects reduced dramatically, at a time when mobility between jobs and new vacancy openings in other sectors have also gone down. In Europe, increased reliance on public support is undermined by the dynamics of debt accumulation, which although mitigated by the unprecedented, powerful interventions set out at the EU level (from the ECB’s PEPP to the Next Generation EU recovery instrument), will have to be repaid in the end. This may increase the likelihood of other rounds of austerity in the years to come, with possible dire consequences on the most vulnerable people in society.
