Economic and Social Impacts of Covid-19 on the Poor and Vulnerable in our Society

 

With the dawn of a new decade, we all woke up with brighter dreams for our future. We certainly did not discern that this year will be accompanied with the rise of a pandemic similar in nature to the deadly Spanish Flu of the 20th century. The SARS-CoV-2 is spreading exponentially throughout the globe. Globalization had made us so immune to the fast pace of life that living in quarantine and social isolation was not expected by anyone before the outbreak of this pandemic. The multitude of problems we faced had not reduced, such as the environmental crisis, water crisis, and rising inequalities, that we now lie at the forefront of a battle between mankind and viruses.

Covid-19 is not remotely comparable to any previous viral outbreaks such as the Zika and the Ebola virus. More than three months after its initial outbreak, we can more clearly see Covid-19 as a human tragedy resulting in global lockdown, with 2,482,598 reported cased till date. Globally, the crisis we face is a multifaceted one with an interplay of different factors including economic halt, inadequate health infrastructure, and a financial crisis. Although lockdown seems to be a very feasible solution for the more financially settled sectors of the population, overall its consequences have been said to reduce the income per capita of 170 countries. The IMF has predicted that this recession could have far more damaging consequences compared to the recession brought about by the 2008 Financial Crisis.

It was predicted in December 2019 that in Pakistan, the number of people living in poverty (in absolute terms) will increase to 87 million by June 2020. This statistic combined, with the current crisis, requires proper interventions because our economy is less resilient with a tenuous health infrastructure. It is imperative for the government to ensure that the masses are aware of the fact that ‘prevention is better than cure’ with regard to Covid-19.  However, till now, aside from the role which the media has been playing, we only have messages sent by the government on mobile networks, and dialing tones explaining the. SARS-CoV-2. However, the grim reality of our society is that a portion of our population lacks assets such as television sets, and mobile phones, as inferred from the poverty statistics of our country. This absence leads to lesser awareness about the spread of virus, and may lead to more cases of infections and push us in a position of profound disadvantage.

For a developing country like Pakistan, the brunt of this economic fall-out will be faced majorly by the poorest and vulnerable groups in our society because of the lack of a cushion in terms of a greater social safety net. The definition of vulnerable groups by the United Nations include older persons, migrants and refugees, children, women, and persons with disabilities. While many initiatives have been taken by our government, notably the Ehsas Emergency Cash Programme, Corona Relief Tigers Force (CRTF), Prime Minister’s Corona Relief Fund, deferment of loans, rent relief for 60 days, and new borrowings at lower rates, these might be only temporary solutions to a long-lasting phenomenon. The social implications of this virus along with the long term economic impacts are the significant issues that need attention so as to avoid facing a siege at all fronts.

Many industries which are at the core of the production process of our economy have halted production because of the restrictions of lockdown. Workers who were employed in these industries face the substance of this crisis due to losing their monthly incomes, and facing an uncertainty about their future jobs. Even if it is assumed that the major restrictions will be relaxed in the future, owing to the international trade restrictions, the imported inputs for the supply chain will still be halted. What will then be the future of their related industries? The loss of revenues due to closed factories and industries could lead to lower paychecks, and eventual laying off of workers. Consequently, future unemployment is a big dilemma that lies ahead, unless we look into measures to deal with it. Food and beverage, real estate, and travel are the main sectors which face a daunting outlook in the current times.

Another major predicament is related to the simultaneous handling of the food and health crisis. The summer fruits are ripened, and it is also the time for wheat harvesting. Since we are an agrarian economy and we have to feed the population, can we balance the need for food and the requirements of safety of the farmers in case of relaxed restrictions in the lockdown? Moreover, with regards to the trade restrictions, do we have adequate solutions for the missing food imports like certain vegetables, tea, and pulses?

Aside from these long term consequences, an immediate attention should be placed on the plight faced by the poor and vulnerable segments of our society because for them, social distancing and lockdowns might be the most costly and difficult to follow. Owners of small shops have had their businesses shut down completely. Street vendors, auto rickshaw and public bus drivers, conductors, along with food stall owners have suffered a major blow to their incomes. These people live hand to mouth on bare minimum, and have dependents and families to support.

Although we have a social safety net with a relief amount of Rs 12,000/-, is it enough for the immunity and nutritional requirements of children in the present times? Elderly people are also at a higher risk for infection because of their age and underlying medical conditions. Social care services for the elderly is another dimension that needs attention because the elderly need proper medicines, nutrition and basic supplies to live. In the case of expecting mothers, they need proper prenatal diet and regular checkups but with the ‘stay at home’ measures, will adequate maternal care follow? Persons with disabilities have more health care requirements. If they have communication needs, the virus and its consequences need to be properly explained to them, and they should be made aware about the outbreak, and all services available. Migrants and refugees often do not have registered NIC or other legal documents, so they cannot be eligible for relief programs. Migrants often live in slums, which have a characteristic of overcrowding. Overcrowding makes social distancing impossible, and the prospects of spreading of infections is high. This issue also needs to be addressed.

If these individuals supposedly go into the quarantine facilities, they need more care and emotional support there as well, without any discriminatory practices. One important aspect that needs highlighting is that during quarantine, there can be increased cases of domestic abuse. Although a helpline has been set up for dealing with this, its awareness level at a household level, especially for the poorest segments of our society, needs to be worked on.

Women entrepreneurs who have small start-ups, and women who are the head of households face a dilemma of economic stress. A lot of young women, in particular, used to work in salons and contributed to the household expenses. After the closure of these street level salons, these women have suffered majorly as well. Some women who had taken microfinance loans, which are characterized by high interest rates, might face difficulty in returning them if their businesses cannot resume because of the implications of the lockdown and economic halt. Rent exemptions have been given to people but the State also needs to address the plight of those middle-income people whose livelihood depends on rental incomes, and who are not eligible for relief programs, especially elderly couples who invest in properties for their retirement life.

In our society, women often teach in academies and small private institutes, which have students enrolled from low income backgrounds. The schools do not have the resources to pay teachers because they are operating on a small-scale to begin with. Equivalently, in such private and government schools, the children studying there do not have the option of remote access to learning because of a lack of gadgets and internet access facilities. Although a Tele School Television Channel has been launched for grades 1-12, the structure and content of such programs needs to be at a certain level to mitigate the lost knowledge, and it should also impart the needed skills in children. These children are the future of our country and their competencies need to be apt with the demand of the future skills, regardless of the lockdown.

The poor or middle-income households should be provided with the necessary technological means to survive in the upcoming days if their work can be done remotely. They can be given training on running their businesses online, or the use of social media for such purposes should be taught such as creating content on YouTube channels, which can be a source of income. Government should provide cheaper internet access options, so people can survive in these times.

How the government deals with this intermix of increasing poverty, debt financing, currency depreciation, capital outflows, and the economic distress is a big question that lies ahead of us. Keeping in consideration the countries where the curve is flattening, such as China, appropriate policies need to be designed while keeping in view the local context. For instance, in a country like ours, the liquidity constraint of households along with the percentage of population living under the poverty line needs to be considered. The optimal course should include designing policies with representatives from the poorest segment and the vulnerable groups in our society, because their livelihood has been crippled the most by this pandemic. Fiscal space for relief programs and helping the sectors which have suffered the most severe blow because of Covid-19 should be one of the major aims to save the vulnerable and poverty-stricken people. Although an optimal response is not clear, such measures can help us cope with the economic and social catastrophe resulting from this virus.

 

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