The spread of COVID-19 in developing countries has exposed gaps in social protection coverage which could compromise recovery plans, expose millions of people to poverty and affect global readiness to cope with similar crises, according to two policy briefs issued Thursday by the International Labour Organization (ILO).
The report on Social protection responses to the COVID-19 pandemic in developing countries, describes social protection as “an indispensable mechanism for delivering support to individuals during the crisis”. It looks at response measures introduced in some countries, such as the removal of financial barriers to quality health care, and protecting incomes and jobs, among other interventions.
The ability to access affordable, quality, healthcare has become “a matter of life and death”, the UN labour agency brief says.
Coronavirus, one deadly threat among others
It cautions policy makers against a singular focus on COVID-19, which could reduce the ability of health systems to respond to other conditions that kill people daily. According to its data, 55 per cent of the world’s population – 4 billion people – lack social insurance or social assistance. Only 20 per cent of unemployed people are covered by unemployment benefits.
The second brief - Sickness benefits during sick leave and quarantine: Country responses and policy considerations in the context of COVID-19 – warns that gaps in sickness benefit coverage, results in anxious workers being forced to go to work when they are ill, or should self-quarantine, increasing the risk of infecting others. The related income loss increases the risk of poverty for workers and their families.
It calls for urgent, short-term measures to close the coverage gaps – which, in turn, would bring about support for public health, poverty prevention and promotion of the human rights to health and social security.
Extend sickness benefits to all
It proposes extending sickness benefit coverage to everyone, as well as increasing benefit levels to ensure they provide income security, speeding benefit delivery and expanding the scope of benefits to include prevention, diagnosis and treatment.
“The COVID-19 crisis is a wake-up call”, said Shahra Razavi, Director of the ILO Social Protection Department. It has shown that a lack of social protection not only affects the poor but also exposes the vulnerability of those who have been “getting by relatively well,” she said, as medical charges and income loss, can easily destroy decades of family savings.
Putting robust social protection systems in place can be a huge challenge, says ILO development economist Jayati Ghosh.
Vicious circle of loss
While the need for social protection has never been more evident, these large demands on public fiscal resources come just as most developing countries are facing rapid declines in export and tourism revenues, and capital outflows.
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While most developed countries are instituting large fiscal stimulus packages, this is much more difficult for developing countries. Their estimated financing needs are around $2.5 trillion, she says, while the immediately required increase in health spending, is projected to reach between $160 billion and $500 billion.
IMF reserves, debt forgiveness
One way to achieve this goal is through a large new issue of Special Drawing Rights by the International Monetary Fund - reserve assets created to supplement countries’ official foreign exchange reserves.
She also says a halt to all debt repayments (both principal and interest) would be required for one year or until debt restructuring packages are worked out. This is essential because as much as $1.6 trillion of developing country external debt is due to be repaid in 2020, with a further $1.1 trillion due in 2021.