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Covid-19 | Worsening inequality in the developing world: why we should say no to a ‘new normal’

As the Covid-19 pandemic drags on, many of us living in wealthy countries are still struggling to get used to the ‘new normal’ of frequent regulatory changes that affect our freedom of movement and well-being. In developing countries, the negative effects of the pandemic move beyond the curtailing of movement to include increasing hunger, unemployment, and inequality. We can now witness some of these seemingly permanent changes that may take years or even decades to reverse, and we should not accept this as a ‘new normal’, write Shradha Parashari and Lize Swartz.

hunger food insecurity covid corona

Introduction

Over the past months, the world has come to experience the unthinkable as the Covid-19 pandemic has swept across the globe (Mahapatra, 2020). The overall outlook for world economy is bleak. According to Economist Intelligence Unit, as from March 17, global economic growth has slowed to just one percent—the lowest level of growth since the global financial crisis of 2008 (Economist Intelligence Unit, 2020). The pandemic has affected both the developing and developed world. However, instances of hunger, unemployment and poor access to virus testing and treatment facilities are more prevalent in developing countries (World Food Programme Report, 2020).

Developed countries are taking important measures to protect their people from the Covid-19 virus and consequent slowdown of the economy and life in general by providing unemployment benefits, measures for food security, and privileges such as facilities enabling employees and entrepreneurs to work from home or at a safe distance from one another (Mahapatra, 2020). This is a rare case in the developing world, where governments face challenges in ensuring that tens of millions of people already on verge of starvation do not succumb to virus and its adverse economic consequences, which includes hunger (Dongyu, 2020).

Thus, the pandemic, popularly referred to as the ‘pandemic of inequality’ (Mahaptara, 2020), has exposed existing inequalities and has given rise to new inequalities. According to United Nations Secretary-General Antonio Guterres,

COVID-19 has highlighted growing inequalities. It has exposed the myth that everyone is in same boat, when the truth is, we all are floating in same sea; some are in superyachts, while others are clinging to drifting debris.

It is becoming clear that the pandemic is affecting the poor in both the developed and developing world more than wealthier groups, but it is especially the long-term effects of the pandemic in developing countries that remain a cause for concern. The pandemic has created a disruptive ‘new normal’ for everyone through government orders on social distancing and Covid-19 protection measures. Below are just some of the negative effects of this ‘new normal’ that support our argument that it should not be accepted as such.

First, for billions of poor persons, these guidelines are burdensome and impossible to comply with (Du et al., 2020). Poor informal workers in Asia, Africa and Latin America live in densely populated neighbourhoods with unreliable and shared access to water and sanitation facilities, making home quarantine or social distancing almost impossible. These workers lack access to bank accounts, insurance and secure employment that forces them to work on daily basis, defying lockdowns and creating an increased risk of Covid-19 transmission (Du et al., 2020). For them, a ‘new normal’ means not being able to work and meet basic needs.

Second, the hunger crisis is most evident in the central and western parts of Africa, where there has been a massive spike in the number of people facing food insecurity. Up to 90% of people living in Southern Africa are estimated to have become food insecure (World Food Programme Report, 2020). The closure of schools has further aggravated the hunger crisis in the developing world where children are highly dependent on meal programs at schools. For example, in Latin American countries and the Caribbean, the closure of schools during the pandemic has deprived around 85 million children of what is often the only (hot) meal they get daily (Dongyu Qu, 2020). This has led to surging hunger-related poverty during the pandemic. However, this is not the case in Global North, where school closures are simply an inconvenience for most parents.

Moreover, the lockdowns have left millions of workers jobless, especially the informal workforce in the developed and developing world (Daniyal et al., 2020). Workers in developed countries are still better off than those in the developing world as governments in US and Europe have pledged to pump trillions of dollars to support the unemployed workforce (TRT World, 2020). In contrast, the situation is grim in developing countries as informal workers are not covered by any social protection measures or proper employment contracts (TRT World, 2020). Millions of workers in Pakistan, Cambodia, Vietnam, and India have faced unemployment as the market remains shut due to the pandemic.

Why we should resist a ‘new normal’

As the pandemic drags on, many people in wealthier countries or those in developing countries with secure jobs or livelihoods, especially those whose lives are disrupted but not severely negatively affected, especially in economic terms, are getting used to the ‘new normal’. For many people, a ‘new normal’ means working from home, not visiting restaurants, not going on holidays outside of our countries, and having to wear a face mask. For millions people who are less fortunate, a ‘new normal’ means a loss of jobs and the inability to secure new employment, going to bed hungry, and working illegally with an exposed risk to the virus.

We have to reject this ‘new normal’ characterized by worsening living conditions and increasing economic inequality before it becomes seen as accepted and a permanent feature of life among poor people in developing and developed countries alike. The search for a vaccine and its global roll-out may take many months still. We have to start think beyond the end of the pandemic to ensure that its negative effects, particularly for people in developing countries, are urgently addressed. If we don’t, the consequences can be far-reaching.

References:

Dongyu Qu, “Coronavirus could worsen hunger in developing world”, World Economic Forum, accessed September 15, 2020. https://www.weforum.org/agenda/2020/04/coronavirus-worsen-hunger-developing-world/

Economist Intelligence Unit, “Coronavirus what we expect for global growth”, accessed September 16, 2020. http://country.eiu.com/article.aspx?articleid=1849161968&Country=United%20States&topic=Economy&subtopic=Recent+developments

Jillian Du, Robin King and Radha Chanchani, “Tackling Inequality in cities is Essential for Fighting COVID-19”, accessed September 15, 2020. https://www.wri.org/blog/2020/04/coronavirus-inequality-cities

Richard Mahapatra, “COVID-19: The Pandemic of Inequality”, accessed September 15, 2020. https://www.downtoearth.org.in/blog/economy/covid-19-the-pandemic-of-inequality-72442

Oxfam, “Half a billion people could be pushed into poverty by coronavirus, warns Oxfam”, accessed September 14, 2020. https://www.oxfam.org/en/press-releases/half-billion-people-could-be-pushed-poverty-coronavirus-warns-oxfam

Sara Christensen, “Hunger in Developing Countries: Five Facts You Need to Know”, accessed September 16, 2020. https://borgenproject.org/hunger-in-developing-countries-five-facts/

Shoaib Daniyal et al., “As Covid-19 pandemic hits India’s daily-wage earners hard, some leave city for their home towns”, accessed September 16, 2020. https://scroll.in/article/956779/starvation-will-kill-us-before-corona-the-covid-19-pandemic-has-hit-indias-working-class-hard

TRT World. “Coronavirus hits jobs, Millions face unemployment and poverty”, accessed September 15, 2020. Retrieved from TRT World: https://www.trtworld.com/magazine/coronavirus-hits-jobs-millions-face-unemployment-and poverty-35294

Tasfia Jahangir, “The Moral Dilemma of Slum Tourism”, accessed September 15, 2020. https://fundforeducationabroad.org/journals/moral-dilemma-slum-tourism/ 

World Food Programme, “COVID-19: Potential Impact on World’s Poorest People”, accessed September 15, 2020. https://docs.wfp.org/api/documents/WFP-0000114205/download/?_ga=2.261738637.121369336.1599543905-1508832003.1599543905

About the authors:

Shradha Parashari is an ISS of Erasmus University Rotterdam alumna of the 2017-2018 batch. She is currently working as a Research and Operation Associate at PAD India.

Lize Swartz

 

Lize Swartz is a PhD researcher at the ISS focusing on water user interactions with sustainability-climate crises in the water sector, in particular the role of water scarcity politics on crisis responses and adaptation processes. She is also the editor of the ISS Blog Bliss.

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How COVID-19 is tragically exposing systemic vulnerabilities in Peru

Despite early assessments that Peru was faring well in the COVID-19 pandemic and that its preparedness was due to its strict application of austerity and reforms over the last 30 years, these quickly turned out to be tragically premature as the country emerged over the summer as one of the worst impacted globally in terms of confirmed deaths per capita. While much of the blame has been focused on people’s behaviour, the crisis ultimately points to deep overlapping structural inequalities within the social protection, employment, and health systems, which austerity and reform have not resolved and in some cases worsened.

COVID testing in Peru
COVID-19 testing in Peru. Credit: Ministerio de Defensa del Perú on Flickr.

Precocious optimism followed by demise

Peru was one of the first countries to adopt strict measures to cope with COVID-19 in Latin America. A week after the first COVID-19 case was reported on 6 March, the country closed its borders on 13 March and declared a mandatory immobilization, allowing the population to go out only for acquiring essential services. At the same time, it launched an economic plan equivalent to 12% of the GDP, considered by experts as unprecedented – the greatest economic stimulus in Latin America against COVID-19. The plan included cash transfers for the vulnerable population, subsidies for services and salaries, food provisioning, financial aid for companies, and a large budget allocation for the health system, among other measures.

The current Minister of Economy and Finance, Maria Antonieta Alva, argued that the last 30 years of good fiscal behaviour – as a result of the strict application of austerity measures – allowed the country to face this health and economic crisis. These statements and international news coverage created a positive narrative that seemed to vindicate the country’s economic and social policies in recent decades. Even as recently as 21 July, an article in the Financial Times presented Peru as better prepared for the crisis compared to other countries in the region that were in worse fiscal and macroeconomic positions, such as neighbouring Ecuador.

However, this congratulatory assessment was tragically premature, as has now become evident. As of 24 August, Peru has the highest number of confirmed COVID-19 deaths per capita in Latin America and second only to Belgium globally (and soon to overtake), at 842 per million people, versus 542 for Brazil or 468 for Mexico. It also has the sixth largest number of confirmed cases in the world, with 600,438 confirmed cases. Per capita, it has slightly more confirmed cases than Brazil and more than four times than Mexico.

After initially controlling a sharp spike in cases in late May, daily confirmed cases first plateaued at between 3,000 to 4,000 per day, and after removing the nationwide quarantine on 30 June, they again surged since the beginning of August to surpass the peak levels reported in May (see Figure 1). Confirmed deaths have been running at about 200 deaths a day since July after a peak of about 300 a day in June (see Figure 2).1

Confirmed daily new COVID-19 cases, Peru
Figure 1: Confirmed daily new cases, Peru
Confirmed daily COVID-19 deaths, Peru
Figure 2: Confirmed daily deaths, Peru

Source of both figures: https://www.worldometers.info/coronavirus/country/peru/ (last accessed 24 August 2020).

The dire comparison with its neighbours is partly due to a much higher level of testing (besides Chile), which is also reflective of at least one aspect of greater capacity in the health system (and it also underscores the certain underestimation of the severity of the crisis in Mexico and Ecuador). However, this statistic is also problematic because the Peruvian numbers include both PCR as well as serology tests, with the large majority being serological, whereas other countries only include PCR tests. As a result, the numbers are not comparable, although this being said, Peru’s positivity rate is also one of the highest in the world, meaning that far more testing is needed relative to the current prevalence of infection.2

Proximate explanations of failure: mobility and behaviour

The lack of success in controlling the pandemic was partially due to an inability to restrict peoples’ mobility despite the lockdown, which has been widely reported in media and noted by commentators. This became more evident following the initial 15-day quarantine period, even despite the extension of this initial period. As in many parts of the world, migrant workers in places such as the capital city of Lima began returning to their places of origin by foot. Specialists also noted that the lack of refrigerators in households and the habit of buying fresh products caused people to go out to markets frequently. Social protection measures to help vulnerable people ironically made this situation worse. For instance, a monetary grant of 760 soles (about 214 USD) was one of the measures intended to help people without a formal income and who lost their job because of COVID-19. However, the payment of the grant caused people to crowd in the banks. Indeed, markets and banks became the main hot spots of infection.

As a result, many experts claimed that people’s behaviour was the main factor that undermined the COVID-19 response, that lack of education about health care and respect for rules was aggravating the spread of the virus, especially among poor people. However, the discussion generally revolves around proximate reasons rather than highlighting fundamental structural inequalities that in fact point back to the legacy of social and economic policies over the last 30 years.

More fundamental structural reasons

Although the COVID-19 response at first seemed to be strong and promising, it actually quickly exposed the deep and overlapping structural problems within the social protection system, the employment structure, and the health system, which 30 years of reform did not resolve and in some cases worsened.

One crucial problem, as noted above, is the high degree of informality, which is estimated at 72.5% of the economically active population (16.511 million people), with no access to any formal social security. Poverty was estimated at about one-fifth of the national population in 2018, based on a money-metric poverty line of 344 soles (roughly 98 USD) per person per month (the extreme poverty line was 183 soles). This means that about half of employed people were informal but not considered poor by this metric, even though they might have been just above the poverty line.

Moreover, only a fraction of those deemed poor receive assistance. For instance, before the lockdown, only about 725,000 households were affiliated with the main cash transfer programme (Juntos), or less than 9% of households in the general household register that is used for poverty targeting. Those uncovered and working informally become part of the ‘missing middle’ given that they are also not covered by any social protection.

As noted above, the government has created different monetary subsidies and adapted the existing cash transfer programmes to address the vulnerability of these uncovered populations. As of 21 August, these have been extended in principle to more than 8.5 million households, with transfer values from 160 soles to 760 soles (it is unclear whether these are monthly or one-off payments). However, the government has not yet completed paying many of these households and for many it would amount to only one transfer within the six-month period from March to August. Beyond such limited support and facing unemployment with little or no savings, adhering to mobility restrictions were quite simply unrealistic or impossible for a large majority of the population.

In addition, although Peru is in a better fiscal or financial position compared to other Latin American countries, this position was achieved by austerity and reforms that have undermined the public health system. Health specialists have noted the lack of historical investment in this system, as well as fragmentation and inequality, all of which have hampered the COVID-19 response effectiveness.3

Austerity clearly contributed to critical deficiencies in terms of infrastructure, human resources and medical supplies, and also constrained the composition of health spending, producing inefficient combinations of spending and thus impacting negatively on the implementation of services. For instance, Peru has a higher number of beds per capita compared with Ecuador and Mexico, but a lower number of doctors (see here). The distribution has also been historically uneven among the regions.4

Acknowledging this situation, the lockdown helped the government to gain time to increase the supply of beds, intensive care units, personal protective equipment, health staff, and to improve the infrastructure and also allocate financial resources to the sector. It has also generated alliances between the different health subsystems (public and private) to improve the availability of beds and intensive care units.

Despite the efforts, the number of cases exceeds the capacity of hospitals, the number of health personnel is insufficient, and there is a scarcity of essential supplies. Health professionals and local authorities have recently reported the collapse of the health system in different regions including Loreto, Piura, Lambayeque, Ucayali, Ica, Lima, Huánuco and Arequipa due to lack of human resources and key medical supplies, including scarcity of medicinal oxygen.5

Realities exposed

In sum, COVID-19 has exposed a reality that is distant from what the government and the international news media celebrated at the beginning of the pandemic. In a short period of time, Peru went from being heralded as better prepared to having the world’s worst performance in coping with the crisis. This has been in large part because of deep structural inequalities in Peruvian society, exacerbated by the high cost of austere policy choices that, despite producing strong economic performance according to conventional measures, did not solve the most pressing social problems of the last decades and exacerbated the crisis.

COVID-19 exposed an illusion. A political commitment to redefine the last 30 years of policies is required, alongside an allocation and distribution of resources to make it happen.

About the authors:

Kattia Talla CornejoKattia Liz Talla Cornejo lives in Lima, Peru. She has been working as a consultant monitoring a health project aimed at strengthening the COVID-19 response in Ancash, one of the Peruvian regions most impacted by the pandemic. This allows her to observe the critical situation of the health system and the COVID-19 response from the inside. She holds an MA in Development Studies from ISS with a major in Social Policy, and degree in Economics and International Business. She has experience in public finance, policy advocacy and monitoring within the fields of social policy, health and childhood, and has worked in governmental and non-governmental organizations in Peru.

Andrew FischerAndrew M. Fischer is Associate Professor of Social Policy and Development Studies at the ISS and the Scientific Director of CERES, The Dutch Research School for International Development. His latest book, Poverty as Ideology (Zed, 2018), was awarded the International Studies in Poverty Prize by the Comparative Research Programme on Poverty (CROP) and Zed Books and, as part of the award, is now fully open access (http://bora.uib.no/handle/1956/20614). Since 2015, he has been leading a European Research Council Starting Grant on the political economy of externally financing social policy in developing countries. He has been known to tweet @AndrewM_Fischer

Are you looking for more content about Global Development and Social Justice? Subscribe to Bliss, the official blog of the International Institute of Social Studies, and stay updated about interesting topics our researchers are working on.