COVID-19 is creating a dire economic situation. According to World Bank President David Malpass, not since 1870 has the world seen so many simultaneous recessions. Progress made in reducing poverty over the last decade has been reversed. Estimates indicate that the pandemic could push as many as 115 million more people into extreme poverty this year, with this number rising to 150 million next year. The United Nations’ World Food Programme (WFP) reports that “the number of acute food insecure people [in countries most at risk] could increase from an estimated 149 million pre-COVID-19 to 270 million before the end of the year.”
The economic impact of the pandemic is not affecting people equally. Those who were already marginalized, such as low-wage workers, undocumented immigrants and women, are disproportionately affected. The policy response must be informed by pluralism; it must be an inclusive response that acknowledges the very different lived experiences of the pandemic and addresses the inequalities that have been exacerbated.
In the workforce, gender disparities, which predated the pandemic, have become much worse. In Canada, for example, women’s labour market participation has dropped to its lowest level in three decades. In Uganda, lockdowns resulted in 61% of women-led small businesses not having income, compared to 22% of men-led businesses, with similar trends in Rwanda and South Africa. This phenomenon has caused economists to dub the recession a “she-cession”. Elsewhere in the world, there is a similar story. Data gathered from 132 countries by the International Trade Centre found that women-led and youth-led small businesses were at higher risk of shutting down because of the pandemic.
Because so much of the economy has moved online, anyone who lacks a reliable internet connection faces increased challenges in obtaining information, goods and services, including education. Moreover, people who remain unbanked, or cannot bank digitally, struggle to access any of the economic supports provided by their governments.
While certain economic recoveries are looking better than expected, the strength and pace of recovery remains uneven around the world. Some governments have managed to soften the impact of the pandemic on citizens by implementing ‘safety net’ measures, such as temporary universal basic income, universal free childcare and, at the multi-lateral level, debt suspension for the poorest countries. However, other governments failed to respond adequately.
The International Monetary Fund’s October projections indicate a challenging path back up to pre-pandemic levels, one that will be heavily reliant on international cooperation and policies that help to distribute gains evenly across the economy.
Experts are calling for a permanent change of course and new economic rules to address inequalities exacerbated by the pandemic and dramatic failures of governance. Mark Carney, former Governor of the Bank of England, has said the values that have emerged in the pandemic such as “solidarity, fairness, responsibility and compassion” must be part of the new economic narrative. The International Budget Partnership sees in this global crisis an unprecedented opportunity to challenge fiscal austerity and push for a new social contract between governments and citizens that prioritizes public accountability and inclusive development, and works for the benefit of all. Likewise, the International Trade Centre sees the post-pandemic period as a chance to make the global economy “resilient, digital, inclusive and sustainable.” In Canada, the Smart Prosperity Institute argues that focusing on a green economy, gender and racial equity, and improvements in health are key to a strong recovery from the pandemic.
In this section, we will ask how we can shift from a shareholder-focused economy to one that values the stakeholder, in light of COVID-19. We will look to address how economic policies contribute to growing inequality in the world, and consider the impact that reforms could have on economic and social exclusion more broadly.
Supporting Women Entrepreneurs Through the Pandemic, From Government to the Private Sector
Interview with Vanessa Erogbogbo, International Trade Centre
Government and private sector have a responsibility to support women and informal workers weather the pandemic.
Inclusive Economic Recovery in African Cities and Beyond
Q & A with Astrid Haas, International Growth Centre
Astrid discusses rising poverty, urbanization and what is needed for inclusive economic recovery in Uganda and beyond.
Spending “More, Better and Differently” How Governments Can Change the Narrative from Neoliberalism to Wellbeing
Interview with Paolo de Renzio, International Budget Partnership
Governments must respond to the pandemic with innovative economic policymaking to relieve the burden on those suffering the most.