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The Financial Express

Household surveys indicate dwindling living standards in developing countries due to Covid-19


Household surveys indicate dwindling living standards in developing countries due to Covid-19

The onset of the Covid-19 pandemic has reduced the level of economic activity across the world, forcing countries and individuals to change their consumption patterns and the ways they work. Social distancing rules potentially threatened to jeopardise further the livelihood of people in lower and middle-income countries (LMICs), where most people of the world live. However, the scarcity of systematic quantitative evidence on these countries' economic situations persists owing partially to the difficulty of collecting good data under safety restrictions. To tackle these data-related impediments, a study titled "Falling living standards during the Covid-19 crisis: Quantitative evidence from nine developing countries" has been conducted with feedback from 30,000 respondents from 16 household surveys from nine countries in Africa (Burkina Faso, Ghana, Kenya, Rwanda, Sierra Leone), Asia (Bangladesh, Nepal, Philippines), and Latin America (Colombia).

The systematic documentation of the effects of Covid-19 is crucial since rich and developing countries have faced the crisis differently. Industrialised countries have employed a range of social and economic tools to help cushion the impacts. On the other hand, residents of LMICs, especially those employed informally, suffer from the lack of broad social safety nets; thus the reduced economic activity has dire consequences for them.

When Covid-19 begun to spread in early 2020, official numbers in many low-income countries were lower than expected, as many countries, observing the dangers, quickly imposed safety measures such as lockdowns, but with them came serious economic disruption. Those same safety measures made collecting first hand data from people (often done in long, face-to-face surveys) difficult or impossible to do. Making matters worse, over a quarter of economic activity and half of all workers in Africa, Asia, and Latin America are in the informal sector, they are not typically considered in official statistics, but many of them bear the brunt of downturns.

To address this urgent need for good data, 25 colleagues at a number of universities and research institutions around the world quickly undertook a coordinated data collection effort. 16 household survey samples were undertaken in nine countries, with a combined population of 500 million. Seven of these datasets are constructed with the help of random phone digit dialing (RDD), leaning towards wealthier and more educated cellphone users. The remaining nine samples were built from previous subsamples, including formal and informal sector workers, agricultural labourers, small business enterprises refugees, migrants, and their families. Since these nine samples were drawn from pre-existing randomised studies, this gave the advantage of having pre-Covid baseline data for these nine samples. The survey questions were, where possible, to be comparable with the baseline data that had been collected previously. Questions were coordinated for data consistency across the samples, and some questions had to be adapted for the local context. Each of the main results have been presented as the fraction of the respondents reporting a change in an outcome post-Covid relative to the pre-period.

The results portray the extent of economic deprivation and declining living standards in the nine LMICs in the study. Across the total 16 samples, between 8 per cent and 87 per cent of the participants reported reduced income, with a median of 70 per cent. 5 per cent to 49 per cent of respondents in the different samples had reported that employment had declined, with a median of 30 per cent. Moreover, the proportion of participants who reported a decrease in income (median 70 per cent) far exceeded those who reported an increase (median 7 per cent). The worldwide lockdowns have also reduced people's access to markets, with the median being 30 per cent (range 3 percent to 77 per cent). Where the researchers were able to ask about healthcare, respondents also reported difficulties and delays in accessing it (median 13 per cent).

Food insecurity has increased  between 9 per cent to 87 per cent of participants cutting down portion sizes or reducing the number of meals. Even among the Rohingya refugees, over a quarter of whom were receiving assistance, 27 per cent of this sample were food insecure. Colombia, despite being the country with the highest per capita GDP among the samples, 87 per cent respondents reported a drop in income, 49 per cent drop in employment, and 59 per cent rise in food insecurity.

These dire impacts of the pandemic on employment, income, and food security were seen to vary both across countries and subsamples within the same country. The share of households reporting a drop in income, for instance, was 25 per cent in Kenya, whereas it was 87 per cent in Colombia. Within the various samples in Kenya, the proportion of households facing reduced incomes range between 8 per cent and 69 per cent. In Bangladesh, out of five different samples, landless agricultural workers fared the worst, with 74 per cent reporting drops in income and 69 per cent skipping meals or reducing the amount they used to eat.

 All of the surveys took place over phone, for some that meant calling back people who were taking part in ongoing research, for others random digit dialing to find new people who would be willing to talk to the in-country local research staff. What the researchers found wherever they looked was an economic shock in the participating countries, where most people are informally employed which may mean further long-term adverse consequences. The findings further highlight the importance of generating on-the-ground survey data to track well-being during the crisis to gather details necessary to craft evidence-based policy responses.

The heightening rates of poverty in 2020 have been unprecedented when compared to the decades of stable increase in income rates. The drastic reductions in income in the low-and middle-income countries (a median of 67 per cent of the sample countries' respondents) has had an immediate impact on access to food, with long-run productivity further plummeting due to factors such as selling productive assets, and reduced usage of fertilisers. Addressing these issues through humanitarian relief has been complicated due to the social distancing measures to limit the spread of the pandemic and because of the worldwide constraints in financing due to the global economic recession. However families suffering from food shortages might not have the flexibility to stay at home or reduce distancing. Therefore, ensuring food security is an essential factor to help social distancing measures be successful.

Even in non-crisis periods, social protection programmes in LMICs are underfunded, which means an economic crisis further worsens the funding. Even though higher-income nations might be oriented towards addressing problems within their own countries first, it is in their own self-interest to come forward towards reducing the spread of Covid in the LMICs, since the disease does not follow any rules of borders. On a brighter note, technological innovation achieved during the pandemic might pave the way for long-run economic development.

The Covid-19 social distancing measures have imposed difficult policy choices for nations worldwide. It is essential that public discussions focus on framing situations in terms of 'lives damaged and lost due to disease' and 'lives damaged and lost due to economic deprivation,' rather than concentrating on 'lives and livelihoods'. While the results of the study do not consider the effects of imposing and relaxing specific lockdown policies, it still has specific policy implications for how to cope with the economic damage and how to improve well-being through executing relief measures and long-term safety net programmes, to help mitigate the suffering caused by the pandemic.

 

Chowdhury Nabila Tasnim is a student of the Department of Economics, University of Dhaka. [email protected]

[The op-ed provides a summary of the paper titled "Falling living standards during the Covid-19 crisis: Quantitative evidence from nine developing countries" published in Science Advances on February 5, 2021. The Financial Express summarised the paper with permission of Ahmed Mushfiq Mobarak, Professor of Economics, Yale University.] 

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