Principal investigator: Eduarda Miller de Figueiredo
Authors: François Gerard, Clément Imbert and Kate Orkin
Location of the Intervention: Countries all over the world
Sample Size: general analysis
Sector: Social Protection
Primary Variable of Interest: Social Protection
Type of Intervention: Government measures to mitigate the effects of the pandemic.
Methodology: Another
Summary
COVID-19 necessitated social distancing, resulting in numerous negative impacts. These impacts were particularly felt by the most economically vulnerable families, necessitating the adoption of emergency economic measures by governments to provide some safety net for these families. Therefore, this article provides an overview of policies that could constitute a comprehensive social protection strategy in low- and middle-income countries, providing a broad-coverage emergency safety net. Thus, strategies could include: expanding the social insurance system, building on existing social assistance programs, and involving local governments and non-state institutions.
- Policy Problem
Covid-19 spared no one, affecting all countries, from low to high income. The response to the spread of the virus involved strict restrictions on movement and economic activity. According to Unu-Wider (2020), such measures will likely have an immediate negative impact on household income and may threaten the livelihoods of families that are already economically vulnerable. Therefore, it is necessary for governments to adopt emergency economic measures to provide some safety net for these families.
The severity and duration of restrictions imposed on mobility and economic activity will determine the immediate impact on household income and, therefore, the scale of the social protection response needed to mitigate it. In this regard, support provided to help vulnerable families can increase compliance with public health policies (Financial Times, 2020).
Therefore, it is necessary for developing countries to form a comprehensive social protection strategy, with specific policies to provide a means of survival for vulnerable families who will feel the impact of the pandemic.
- Implementation and Evaluation Context
According to the authors, low- and middle-income countries can create a broad-coverage safety net by using a wider range of solutions than higher-income countries, and these strategies include:
- expand its social security system
- based on existing social assistance programs;
- Involvement of local governments and non-state institutions to identify and assist vulnerable groups that are outside of social assistance programs.
However, these governments need to finance such economic and health measures, even while facing deficits in fiscal revenues. Thus, the scale of social protection response will be limited, and developing countries may not have the resources for a public health response imposing strict restrictions on their economies. With this limited scale of response, the economic consequences of the crisis for families in developing countries will be severe. A larger proportion of workers will be less able to tolerate social distancing, families will have more limited access to credit, and their means of mitigating income shocks, through occasional work for example, will be limited by restrictions on mobility and economic activity.
- Policy/Program Details
The authors therefore provide an overview of these policies that could form a comprehensive social protection strategy in developing countries.
- Expansion of the social security system.
By expanding the social security system to provide more support to formal employees, an important pillar of the social protection strategy of developing countries is granted, even if it is not sufficient to reach all workers. Governments around the world have adopted job retention schemes, which provide subsidies for temporary reductions in the number of hours worked, replacing a portion of the earnings lost by the worker due to the hours not worked, thus preventing the destruction of existing jobs (Giupponi and Landais, 2018).
Even with a job retention scheme, many workers will likely be laid off, and those developing countries that have unemployment insurance programs will be in a better position to support these workers. However, the authors state that, given the current situation, it may be important to adjust their programs, such as relaxing job search requirements and extending eligibility rules.
To expand social security programs to formal self-employed workers, the authors point out that governments in developing countries have two options: (i) unconditional monthly transfers of a fixed amount; (ii) providing emergency credit lines at low interest rates.
- Based on existing social assistance programs
Social insurance programs will not be able to reach a large portion of families in developing countries, particularly those working in the informal sector. However, many of these families can be reached through social assistance programs. Thus, such programs could be temporarily extended to new families by removing conditionalities.
Regarding the infrastructure for making payments, the authors highlight the possibility for beneficiaries to check availability online, with payments made through a national bank. To register new beneficiaries, registries of eligible families registered in the Unified Registry can be used, and the government can also create a new website to extend the program's coverage to general information workers. However, this may exclude individuals without access to computers; therefore, it is necessary to implement physical collection points or home interview systems, respecting social distancing measures.
- Involvement of local governments and non-state institutions
According to the authors, it would be possible to use local governments and a range of non-state actors to gather better information about unmet needs with other measures and thus provide targeted assistance. This information could concern population movements, food prices and availability, whether new social protection measures have been successfully implemented, and whether specific groups remain unexpectedly uncovered.
Local governments generally have better information about local needs and preferences, therefore they can be more responsive and their decisions are more likely to have greater legitimacy. Non-governmental organizations are active in giving voice to groups that are beyond the reach of the state, thus they may be in a position to facilitate the collection of information about these specific groups in need of assistance, as well as partners who can provide emergency assistance.
- Method
Analysis of the emergency economic measures adopted by countries to provide families with some safety net during the Covid-19 pandemic.
- Main results
An analysis highlighted that governments in developing countries will have to find creative solutions to build a comprehensive social protection response to the economic impacts of the Covid-19 epidemic.
Regarding job retention programs, the authors point out that Brazil is an example of a country that already had this type of program and that it could be used more broadly to protect employment in the formal sector.
The governments of Chile and India have opted to leverage bank accounts opened for financial inclusion purposes, thereby providing direct support to the poor. In this way, even populations living on the margins of social protection systems – informal sector workers – can be reached.
Finally, the authors emphasize that the use of social security programs may reach the formal sector, leaving out the informal sector, which is a significant portion of the workforce in developing countries. Therefore, it is necessary to involve local governments and non-state institutions to help provide assistance to this group.
- Lessons in Public Policy
The challenge of mitigating the economic effects of a pandemic is enormous. Any solution will encounter barriers and have many flaws because, in cases like Covid-19, the speed with which measures are taken is essential.
References
GERARD, François; IMBERT, Clément; ORKIN, Kate. Social protection response to the COVID-19 crisis: options for developing countries. Oxford Review of Economic Policy, v. 36, no. Supplement_1, p. S281-S296, 2020.
