Countries in East
Asia and Pacific must extend successful poverty reduction programs Globally,
the COVID-19 pandemic is destroying lives and livelihoods. Until the pandemic,
the World Bank expected 35 million people in East Asia and the Pacific to
escape poverty by 2020.
At this pace, the crisis could set back cumulative poverty
reduction gains achieved over the past decade. These forecasts show the level
of distress and warrant immediate action.
Media is packed with tragic tales of affected families. We
know they aren't isolated cases. Poor households are more likely to rely on
earnings from informal work arrangements, have minimal savings, and typically
lack employment security, health insurance, or paid leave, rendering them
highly vulnerable.
For example, over three-quarters of all non-agricultural
workers in Myanmar, Indonesia and Laos have no formal employment and lack
access to formal social insurance programs.
Different industries were especially hit in some countries.
In Tonga, where one-third of the population depends on tourism, if the crisis
prolongs, poverty may hit three-quarters of all households living in this
sector. Urban poor are at risk, living in overcrowded areas, with limited
access to good infrastructure and health services.
Internal migrants and their relatives are also seriously
impacted. When richer countries see steep rises in unemployment, a significant
share of households in East Asian and Pacific countries can run the risk of
seeing this important source of income decline in this period.
Indonesia and the Philippines, for example, have extended
flagship social assistance programs and temporarily increased benefits.
In the formal sector, countries cancel or delay social
insurance payments to help employees and businesses in the short run and enact
different types of wage incentives to retain job connection where possible.
Such services require higher government spending when
revenue declines. In these unprecedented times, countries are expected to run
even greater fiscal deficits than normal, resulting in increased domestic and
external debt. It makes it even more necessary to ensure that government
funding is used to improve productive services that can be easily extended
using current administrative or digital technologies.
Policy measures that are useful for both the immediate and
long-term crisis should be promoted. Expanding school feeding and wellness
services, for example, will reduce long-term human capital losses. Reducing
import tariffs will reduce domestic business costs and reinforce global value
chains.
Lockdowns may be required to slow pandemic spread, but they
affect livelihoods. Trade-off is more severe for developing countries lacking
fiscal ability or distribution mechanisms to increase household social
assistance or implementation ability to impose social distance.
For policymakers to determine when to phase out lockdowns,
access to timely and reliable information on virus transmission and its
economic and social impacts would be crucial. Key statistics on unemployment,
food prices, and early signs of malnutrition are among those that need to be
carefully weighed along with virus-related data.
They will also need to track countries' lessons carefully in
the midst of relaxing similar restrictions.
International cooperation and assistance in resolving the
crisis would be crucial. Governments must learn from each other and apply best
practices in real-time response to the pandemic.
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