Governments must respond to COVID-19 by strengthening social protections and international cooperation, according to a new report by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
By Zachary Frye
On April 8, ESCAP released a report that laid out the social and economic impacts of the coronavirus in the region and its vision for government responses.
While the report suggests the fallout could be severe, the full repercussions are hard to gauge accurately as the situation is fluid and it’s unclear how long travel and trade restrictions might last.
The economic impacts will be far-reaching but certain sectors are especially vulnerable, including tourism, hospitality, retail, civil aviation, labour-intensive work and businesses that rely heavily on international supply chains.
According to ESCAP estimates, Southeast Asia has already lost over 0.5% in aggregate GDP since November 2019. Some countries may be hit harder than others. In Cambodia, tourism accounts for some 32% of overall GDP, the highest the region. Thailand, another country dependent on tourism, could lose over 4% of its GDP this year.
This economic uncertainty is already impacting the lives and livelihoods of citizens but ESCAP emphasizes that governments should adopt immediate economic responses that prioritize the safety and wellbeing of people over concerns of long-term recovery.
Governments should broaden and strengthen social protection schemes
The ESCAP report outlines two important steps governments in the region should take to support jobs and living standards: providing fiscal support to help employers keep workers in their jobs, and direct public assistance to keep households afloat.
Speaking with ASEAN Today, UN Under-Secretary-General and Executive Secretary of ESCAP, Armida Salsiah Alisjahbana, highlighted the need to strengthen protection systems in the region, especially during times of uncertainty.
“60% of the Asia-Pacific population lack access to social protection,” she noted. “The ongoing unprecedented crisis demonstrates that countries with well-functioning universal health care and social protection systems are better positioned to address the pandemic, particularly when it comes to mitigating its impact on vulnerable individuals and households.”
Specifically, Alisjahbana argues that cash transfers would help insure families against economic uncertainty, both in the short and long terms. “An emergency one-off cash payment could be a productive policy measure, especially when COVID-19 impacts on employment are broad and formal social security coverage is very limited and skewed,” she said.
Source: ILO (2017), World Social Protection Report, 2017-2019
As for more ongoing government support, she notes that “the UN advocates for nationally-appropriate universal social protection floors, which are measures for minimum-income guarantee for all age groups.”
Besides increasing citizen’s freedom and wellbeing, the report succinctly notes that social protections also act as an immediate stabilizer during times of trouble as unemployment rises.
International cooperation will mitigate damage in future crises
ESCAP also emphasizes the importance of appropriate cooperation between nations in crisis situations like a pandemic, especially given stark heath and economic imbalances across the region. A big barrier to achieving adequate cooperation, however, is the notion that leaders only have an obligation to their own citizens.
“The key argument has always been that countries have to prioritize the welfare of their constituencies first,” said Alisjahbana. “Such measures deny the most vulnerable countries, who often lack productive capacity, access to vital goods and equipment to fight the pandemic.”
While some countries, like Vietnam, have taken the opportunity to assist poorer countries with funding and equipment during the coronavirus outbreak, others are looking inward, putting restrictions on the export of medical resources that could be better utilized elsewhere.
“The result is that the masks and other medical equipment do not always end up in places where they are most needed—in the hands of healthcare providers,” added Alisjahbana.
Severe inequalities hold citizens back, increasing vulnerability to economic shocks
Although Southeast Asia has some of the fastest growing economies in the world, with millions of people making it out of poverty over the past several decades, vast inequalities remain. For millions of others, economic growth has not translated to better living standards, less uncertainty or a better quality of life.
Crises like COVID-19 lay bare the social and economic fault lines in society, highlighting the precariousness of many people’s lives.
“In the long-term, ASEAN would need to address the development gap among its members,” added Alisjahbana, as the pandemic has highlighted the differing levels of health care among countries.
Weak health care systems in Myanmar, Cambodia and Laos are especially vulnerable. So far, cases in the poorest countries in Southeast Asia have been minimal according to official numbers, but relative seclusion and a lack of testing could be keeping these numbers low, at least for now.
As for economic relief, some countries in the region, like Malaysia, Thailand and the Philippines, have already enacted laws to give emergency payments to low-income households. But some plans only support those who lost their jobs due to the pandemic or who meet income requirements, ensuring aid reaches just the very poorest.
Thailand’s package, for instance, provides 5,000 baht (around US$150) in cash assistance per month for workers who can prove they lost their jobs to the outbreak. More than 20 million Thais have already signed up, but the government warned that not everyone will qualify. The millions of migrant workers who were unable to or chose not to leave Thailand face added difficulties. Without policies that support a broader base of people, many will continue to struggle.
“The good news is that ASEAN countries still have some room to adopt more accommodative monetary and fiscal policies to support their economies,” Alisjahbana concluded, as most countries in the region have low levels of public debt and substantial budget reserves.
While crises like pandemics will never be totally preventable, after ensuring people’s basic welfare, ASEAN governments should take the opportunity to implement policies that strengthen resilience. Smart investments in social protection, public health and international cooperation are crucial, but only insofar as people—the regular citizens that keep countries running—are the priority.