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The Financial Express

Covid-19 and new realities

Bazlul Khondker | Published: May 13, 2020 21:46:17 | Updated: May 17, 2020 23:35:29


The commoners stills face poor eccess to heathcare services  —FE photo The commoners stills face poor eccess to heathcare services  —FE photo

We are in the fifth month with Covid19. Within five months or 130 days, it has become the most fearful name in every household in every country. It has infected over 4.0 million global citizens and killed more than 0.29 million. Although numbers of fatalities as a proportion of total population are small, fear of contagion has stalled the global economic activities.

Assessed impacts are already large and expected to reach exorbitant height in the coming months. Some of realities of Covid19 are striking - (i) health system has failed or (been failing) envisaging that health preparedness was not adequate; (ii) gains in global poverty reduction was not robust at all forcing millions of non-poor into the new poor league; (iii) spike in unemployment rate is huge exposing the weaknesses of the labour market system; and (iv) uncoordinated global leadership perhaps suggesting bankruptcy in political institutions.

Above realities may be reinforced and intensified unless quick and measurable actions are designed and implemented in a coordinated manner. The aim of this article is to briefly discuss the above realities and suggests some strategic actions.

Except few exceptions (surprisingly mostly in Asia and Pacific), health system across the world was caught off-guard to tackle the onslaught of Covid19. This is despite some positive trends in global health spending. According to World Health Organisation (WHO), within the first two years of SDGs, global spending on health increased to US$ 7.8 trillion in 2017, or about 10.0 per cent of GDP and $1,080 per capita - from US$ 7.6 trillion in 2016. But health spending is highly lop-sided with high-income countries accounting for about 80.0 per cent of the global spending. Public spending represents about 60.0 per cent of global spending on health with an average per year growth rate of 4.30 per cent between 2000 and 2017. But this growth has been decelerating in recent years, from average per year growth rate of 4.90 per cent in 2000-2010 to 3.40 per cent in 2010-2017. So, what went wrong? Perhaps more spending is needed on the health sector. But most importantly, global leaders read the virus incorrectly, ignored advices of the health experts that resulted in unprecedented surge in cases in the shortest possible time overwhelming the health system.

'Covid19 fallout could push 'half a billion people into poverty in developing countries' - this was the title of a recently commissioned study by UN-Wider (April 8, 2020). According to UN-WIDER  'the economic fallout from the global pandemic could increase global poverty by as much as half a billion people, or 8.0 per cent of the total human population. This would be the first time that poverty has increased globally in 30 years, since 1990.' Equally disturbing is that the virus has already disproportionately impacted the poor in wealthy countries, where the most known cases are concentrated. So, what was problem with poverty count? It was a number game all along - using low poverty lines to claim victories - knowing that the poor people are walking on a very thin thread. So, the poverty debacle was not surprising!

International Labour Organisation (ILO) in March 7 this year estimated that 'as many as 25.0 million people could become unemployed, with a loss of workers' income of as much as USD 3.40 trillion while acknowledging that these numbers may underestimate the magnitude of the impact. In an update on  April 29, 2020, ILO estimated that in the first quarter of 2020, global working hours declined by 4.50 per cent (equivalent to approximately 130 million full-time jobs based on a 48-hour working week), in comparison to the pre-Covid19 situation (fourth quarter of 2019). ILO further qualifies that 'Covid19 pandemic has exposed the deep fault-lines in our labour markets. Only one in five people are eligible for unemployment benefits, job losses imply catastrophe for millions of families.' Millions of informal workers in developing world including Bangladesh are equally vulnerable. ILO in the last update qualifies it further - it may also have disproportionate impact on the most vulnerable workers - the informal workers. Around 1.60 billion informal workers are significantly affected. So, why were job losses high in a shortest possible time? Nature and security of jobs are to blame. Large segments of the jobs are insecure with little protection where employers are unwilling to take responsibility of their workers even for four weeks!

Global citizen witnessed a lack of global leadership and coordination. Global citizens were accustomed to see US leadership in crises like Covid19. But this time there was no leadership but chaos and confusion. As a result, strong and coordinated commitments from G7 and G20 countries are still missing. Rise of inward-looking nationalist policies have severely weakened the fabric of G7 and G20.

World is in a grave danger. Immediate bold and coordinated actions are needed to save lives of millions of citizens of the world. The priorities include:

• Political leaders need to pay heed to the advices of the experts/doctors to address health risks. The failure of the health system to a large extent was the fault of political system by ignoring their advices. Despite current improvement in health expenditure at the global level, it is still very unequal across countries. Moreover, access of poor is very limited to health system and they are disproportionately impacted by health risks. Thus, there is an urgency to reduce health expenditure inequality across and within nations through more investment as well as introducing universal health insurance ensuring access of the poorest. 

• Provision of cash transfers along with small scale food transfer (where market does not work) to millions of new poor and vulnerable population to avoid large scale hunger and famine is call of the day. This calls for a fresh look into the necessity of establishing a robust social protection system around the world with strong commitment and endorsement by national governments. Following on, Kidd and Sibun (2020), suggested that "a universal crisis requires a universal approach to social security".

• Government needs to find out ways to work with entrepreneurs/industries along with technical support from ILO to safeguard the job of millions of vulnerable and unprotected workers. Setting or expanding systems to enrol workers into unemployment insurance schemes with varying level of contributions could be an option. This also calls for a serious attempt by the national governments to pursue the decent work agenda.   

• The world needs jump start to return to normalcy. All nations must move together to avert deep economic and social crisis. A coordinated effort is needed with strong resource commitment. OECD (2016) reported that net Official Development Assistance (ODA), at 0.3 per cent of donors' gross national income (GNI) fell short of the commitment by many donors to achieve the target of 0.7 per cent of ODA/GNI. Only six European donors have met 0.7 per cent commitment. G7 and G20 leaders must sit with other leaders as well as listen to the voice of global citizens to design stimulus packages with firm commitment on funding.

Dr Bazlul H Khondker is Professor in Economic, Dhaka University, Bangladesh, and Chairman, South Asian Network on Economic Modeling (SANEM).

bazlul.khondker@gmail.com.

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