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COVID-19: How social and economic sectors are responding

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The COVID-19 crisis  is having a devastating effect on workers and employers in all sectors. Workers in essential services such as health and frontline emergency response are at high risk of infection. Grocery workers, flight attendants and autoworkers, are among those who have seen both their health and livelihoods threatened by the pandemic.

In a series of briefs  the ILO has captured the impact of the crisis on several social and economic sectors, including public emergency services (PES), health services, education, food retail, automotive, tourism, civil aviation, agriculture, maritime shipping and fishing, and the textiles, clothing, leather and footwear (TCLF) industries.

The briefs reveal a picture of courage shown by the public emergency and health workers that fight the pandemic, and by the teachers, seafarers, shop keepers and other essential workers that keep our societies functioning.

They also reveal massive losses, both of output and jobs across all sectors. Developing countries will be hit hardest, and poverty is on the rise.

The analysis also outlines the drastic measures taken by governments, employers and workers to contain the virus and limit the damage to enterprises, livelihoods and the wider economy.

These measures have focused on four immediate goals: Protecting workers in the workplace; supporting enterprises, jobs and incomes; stimulating the economy and employment; and relying on social dialogue based on international labour standards to ensure that countries and sectors recover quickly and better.

“Many of our member States are taking unprecedented measures to protect frontline workers and to lessen the impact on businesses, livelihoods and the most vulnerable members of society,” said Alette van Leur, Director of the Sectoral Policies Department of the ILO. “We must increase investment in safe and decent working conditions for frontline workers and ensure that this pandemic does not leave long-lasting scars on economies, people and jobs.”

Sector Snapshots

The travel and tourism sector – which prior to the COVID-19 outbreak, was expected to make up 11.5 per cent of global Gross Domestic Product (GDP) – has been particularly hard hit. The European Union’s tourism industry is estimated to be losing around €1 billion in revenue per month as a result of the outbreak.

The impact on employment in the shipping sector, which has two million seafarers, is substantial. The cruise sector, with 250,000 seafarers, has been particularly badly affected, as some countries have advised against travel by cruise ship and major cruise companies have suspended operations.

The automotive industry is also struggling with an abrupt and widespread stoppage in economic activity, as workers are told to stay at home, supply chains grind to a halt and factories close. In 2017 direct employment in the industry was estimated at nearly 14 million workers, globally.

Due to the severity of travel restrictions and the expected global recession, the International Air Transport Association (IATA) estimates that industry passenger revenues could plummet by US$252 billion, 44 per cent below the 2019 figure.

In the textiles, clothing, leather and footwear (TCLF) industries, quarantine measures have suppressed consumer demand. In Bangladesh order cancellations have led to lost revenue of around US$3 billion, affecting some 2.17 million workers.

Agriculture and food security has also been badly affected. For example, the recent temporary suspension of one of the world’s largest tea auctions in Mombasa, Kenya, where tea from many eastern African countries is traded, could have a devastating effect on local, national and regional economies if it is prolonged.

Responses

In response, countries have taken steps to bolster key sectors and lessen the socioeconomic impact of the pandemic. Measures include economic assistance packages, tax moratoriums, extended deadlines, social security contributions, as well as wage subsidies, loans and guarantees for workers.

Spain has extended a credit line of €400 million to cover all Spanish business enterprises and self-employed workers in the passenger transport, hospitality and restaurant industries.

In Namibia, the Economic Stimulus and Relief Package includes Namibian dollars (NAD) 200 million of guarantees for low-interest loans for farmers and agricultural businesses, including cash flow-constrained farmers and agricultural SMEs that have experienced a significant loss of revenue. A one-time Emergency Income Grant of NAD 750 will be provided to all formal and informal workers who have lost their jobs.

In Japan, the government, working with the Japan Automotive Manufacturers Association (JAMA), has set up the Novel Coronavirus Countermeasures Examination Automobile Council, to share information between car manufacturers, auto part and component suppliers.

In addition to increasing spending on health, some countries are also allocating more resources to police forces to help implement mitigation measures. For example, in Australia, the United Kingdom and the United States, police forces have been strengthened to help them implement pandemic mitigation measures, including through training and the supply of personal protective equipment (PPE).

In Argentina an agreement between the federation of health workers’ associations and the Government provides a guarantee that all health-care workers will continue to earn full salaries while in quarantine, and will be eligible for free transport during the pandemic, subsidized by the Government.

Textile factories in some regions of Sri Lanka have temporarily shut down under government directives, with workers entitled to paid leave. In Cambodia, suspended workers can receive 40 per cent of their salary from their employer and an additional 20 per cent from the government. Cambodia also suspended National Social Security Fund contributions for garment and textile factories who have been affected by a shortage of raw materials because of COVID-19.

In all the affected sectors the ILO has urged governments to extend social protection to all and is advising on measures to promote employment retention, short-time work, paid leave and other subsidies, to ensure that the economies, labour markets and industries will become stronger, more resilient and more sustainable when the pandemic resides.

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Africa Today

Partnership with Private Sector is Key in Closing Rwanda’s Infrastructure Gap

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The COVID-19 (coronavirus) pandemic has pushed the Rwandan economy into recession in 2020 for the first time since 1994, according to the World Bank’s latest Rwanda Economic Update.

The 17th edition of the Rwanda Economic Update: The Role of the Private Sector in Closing the Infrastructure Gap, says that the economy shrank by 3.7 percent in 2020, as measures implemented to limit the spread of the coronavirus and ease pressures on health systems brought economic activity to a near standstill in many sectors. Although the economy is set to recover in 2021, the report notes the growth is projected to remain below the pre-pandemic average through 2023.

Declining economic activity has also reduced the government’s ability to collect revenue amid increased fiscal needs, worsening the fiscal situation. Public debt reached 71 percent of GDP in 2020, and is projected to peak at 84 percent of GDP in 2023. Against this backdrop, the report underlines the importance of the government’s commitment to implement a fiscal consolidation plan once the crisis abates to reduce the country’s vulnerability to external shocks and liquidity pressures.

“Narrowing fiscal space calls for a progressive shift in Rwanda’s development model away from the public sector towards a predominantly private sector driven model, while also stepping up efforts to improve  the efficiency of public investment,” said Calvin Djiofack, World Bank’s Senior Economist for Rwanda.

According to the Update, private sector financing, either through public-private partnerships or pure private investment, will be essential for Rwanda to continue investing in critical infrastructure needed to achieve its development goals. The analysis underscores the need to capitalize further on Rwanda’s foreign direct investment (FDI) regulatory framework, considered one of the best in the continent, to attract and retain more FDI; to foster domestic private capital mobilization through risk sharing facilities that would absorb a percentage of the losses on loans made to private projects; and to avoid unsolicited proposals  of public–private partnership (PPP) initiatives; as well as to build a robust, multisector PPP project pipeline, targeting sectors with clearly identified service needs such as transport, water and sanitation, waste management, irrigation, and housing.

While the report findings establish clearly the gains of public infrastructure development for the country as whole, it also stressed that these gains tend to benefit urban and richer households most.

 “Rwanda will need to rebalance its investment strategy from prioritizing large strategic capital-intensive projects toward projects critical for broad-based social returns to boost the potential of public infrastructure to reduce inequality and poverty,” said Rolande Pryce, World Bank Country Manager for Rwanda. “Any step toward the Malabo Declaration to allocate 10 percent of future infrastructure investment to agriculture, allied activities, and rural infrastructure, will go a long way to achieving this goal.

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Development

10 new cities chosen for World Economic Forum circular economy initiative

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The World Economic Forum’s Scale360° initiative announced today the 10 city-based hubs joining its Circular Shapers programme.

Scale360° leverages innovation hubs in cities, countries and regions worldwide, bringing together leaders in science, policy and business to trigger circular change. Circular Shapers engage with local public, private, and civil society stakeholders to design, organise, and deliver circular economy projects tailored to local needs.

Circular Shapers are competitively selected from the Global Shapers Community, a network of committed and energized young volunteers in 448 city-based hubs around the world. These changemakers have the energy, skill, networks and commitment needed to transform their cities into centres of circular economy innovation.

The latest Circular Shaper cohort hails from four continents and includes: Ankara, Asuncion, Auckland, Beijing, Bucharest, Lahore, Manama, Milan, Morelia, and Thimphu.

The cities selected to the latest cohort will apply Scale360°’s tested methodology – the Scale360° Circular Innovation Playbook – to fast-track Fourth Industrial Revolution impact to keep more goods in use. Their initiatives will explore ways to apply circular design principles, improve reuse, and to eliminate waste, all while strengthening economies and boosting job growth.

These join the successful pilot cohort which included four Global Shapers hubs in Mexico City, Brussels, Turin and Bangkok and ran from February to July 2021.

In just a few months, those pilot cities built critical relationships with leaders in government, the private sector, and NGOs, making critical early steps towards driving circular innovation. Specific achievements include:

Bangkok: Mobilized a range of partners from researchers to advertising agencies to popularize solutions to air pollution and plastics. Solutions included: assembling a catalogue to help businesses choose alternatives to single-use plastics in food packaging and a social media campaign to build momentum for clean air regulation.

Brussels: Partnered with local NGOs on its “Eat, Play, Live Circular” initiatives to create bottom-up solutions for more circular lifestyles. Initiatives included an ‘Idea-thon’ for food and packaging waste solutions and a series of experiments with the public to make one Brussels public space more circular.

Mexico City: Trained public, private and government stakeholders in Scale360° methodology to bridge circular economy knowledge gaps and drive the circular transition through focusing early conversations. 

Turin: Built critical relationships with stakeholders from 14 organizations including regional policy makers, members of the private sector, academia, and existing networks to help foster and support much-needed discussions and collaboration on circular needs and priorities.


The Circular Shapers tap into World Economic Forum networks of experts and leaders in civil society, government, industry global organizations, including the Platform for Accelerating Circular Economy (PACE). 

“It’s powerful to see how Scale360° methodology has spread so rapidly and empowered Global Shapers to become leaders driving circular innovation in their cities. Now in 14 hubs around the world, Circular Shapers is one of the largest cross-hub collaborations in the Global Shapers Community,” said Katie Hoeflinger, Specialist, Climate and Environment, Global Shapers Community.

The United Arab Emirates, a key supporter of Scale360°’s approaches, agrees that these new hubs will play an important role in building circular innovation. “The UAE supports Scale360° in driving the transition to circular economy locally and globally,” said his Excellency Dr. Abdullah Belhaif Al Nuaimi, Minister of Climate Change and Environment. “This program will go a long way in fostering innovations that have the potential to fast-track the implementation of the circular economy principles around the world.”

These efforts can also fuel a just transition, noted Head of Global Opportunities for Sustainable Development Goals (GO4SDGs), United Nations Environment Programme (UNEP), Adriana Zacarias Farah. “Jobs and skills are central to getting the political buy-in for the transformation from linear to circular. UNEP through the initiative Global Opportunities for SDGS (GO4SDGS) is happy to collaborate with the Forum and Scale360° on circular cities and the just transition narrative.”

Building circular capabilities can help meet critical climate goals. “Scaling up circular business models and solutions is vital for environmental reasons and needs to happen fast,” said Carsten Gerhardt, Partner at Kearney and Founder at Circular Valley (leading partners of Scale360° Germany).

With new Circular Shaper hubs in place, momentum for circular innovation can build further. Added Scale360°’s Global Lead, Helen Burdett: “This latest cohort is another example of local action for global impact on the circular economy transition.”

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Development

World Bank Group’s $157 Billion Pandemic Surge Is Largest Crisis Response in Its History

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In response to COVID-19 severely damaging the lives and livelihoods of millions of people in developing countries, the World Bank Group deployed over $157 billion to fight the pandemic’s health, economic, and social impacts over the last 15 months (April 1, 2020 – June 30, 2021). This is the largest crisis response of any such period in the Bank Group’s history and represents an increase of more than 60% over the 15-month period prior to the pandemic. Bank Group commitments and mobilizations in fiscal year 2021 (FY21) alone (July 1, 2020 – June 30, 2021) amounted to almost $110 billion (or $84 billion excluding mobilization, short-term financing, and recipient-executed trust funds).

Since the start of the pandemic, the Bank Group supported countries to address the health emergency, strengthen health systems, protect the poor and vulnerable, support businesses, create jobs and jump start a green, resilient, and inclusive recovery.

Following last year’s COVID-related economic deterioration, the global economy is expected to expand 5.6% in 2021. Thus far, the recovery is uneven and many of the world’s poorest countries are being left behind. While about 90% of advanced economies are expected to regain their pre-pandemic per capita income levels by 2022, only about one-third of emerging market and developing economies are projected to do the same. In 2020, global extreme poverty rose for the first time in over 20 years, with nearly 100 million people pushed into extreme poverty.

“Since the start of the pandemic, the World Bank Group has committed or mobilized a record $157 billion in new financing, an unprecedented level of support for an unprecedented crisis,” said World Bank Group President David Malpass. “We will continue to provide critical assistance to developing countries through this ongoing pandemic to help achieve a more broad-based economic recovery. The Bank Group has proven to be a rapid, innovative, and effective platform to support developing countries as they respond to the pandemic and strengthen resilience for future shocks. But we must do more still. I remain deeply concerned about limited availability of vaccines for developing countries, which are critical to save lives and livelihoods.”

 World Bank Group Commitments (in U.S. billions)
World Bank GroupQ4-FY20FY21*15-mo ending June 21*
IBRD15.130.545.6
IDA17.236.153.3
IFC11.231.542.7
 Long-term finance (own account)4.9  12.517.4
    Mobilization4.110.814.9
    Short-term finance2.28.210.4
MIGA2.45.27.6
Recipient-executed trust funds  (RETF)1.56.47.9
TOTAL (excluding short-term finance, mobilization, and RETF)39.684.3123.9
TOTAL (including short-term finance, mobilization and RETF)47.4109.7157.1
 *Preliminary and unaudited numbers as of July 14.

In the 15 months ending June 30, 2021, the Bank Group stretched its balance sheets, accelerated leveraging and disbursements, and front-loaded resources. Support to countries from the International Bank for Reconstruction and Development (IBRD) totaled $45.6 billion – including drawing down IBRD’s $10 billion crisis buffer in addition to Board-approved sustainable annual lending limits. Grants and zero or low-interest loans to the world’s poorest countries from the International Development Association (IDA) amounted to $53.3 billion. To meet increased financing needs, the World Bank fully used all remaining IDA18 resources in FY20 and frontloaded about half of all the three-year envelope of IDA19 resources in FY21. In February 2021, IDA donor and borrower country representatives agreed to advance IDA20 by 12 months to enable continued surge financing in the coming years.

In addition, over the same 15 months, the International Finance Corporation (IFC), the Bank Group’s private sector development arm, reached a record high of $42.7 billion in financing, including short-term finance ($10.4 billion) and mobilization ($14.9 billion), 37% of which was in low-income and fragile and conflict-affected states. IFC provided liquidity for businesses to remain in operation, while ramping up investments in companies on the frontlines of the pandemic response. To address the COVID-induced increase in the trade gap, IFC has expanded its trade and supply chain finance activities. IFC’s “Upstream” work continues to create the conditions to attract much-needed private investment to some of the world’s most difficult places and preparing the ground for a faster private sector recovery.

Despite a challenging year for borrowers and financial markets, IDA doubled the amount it raised last fiscal year from investors, reaching almost $10 billion. IBRD raised $68 billion, by mobilizing financing from investors around the globe. IBRD and IDA, both rated AAA/Aaa, raised awareness for a variety of development themes to successfully mobilize finance for sustainable development. The year also included innovations such as a unique $100 million five-year bond issued by IBRD to support the global response to COVID-19 through UNICEF. IFC, also rated AAA/Aaa, issued close to $13 billion in bonds for private sector development and job creation in emerging markets.

The Multilateral Investment Guarantee Agency (MIGA), whose mandate is to drive impactful foreign direct investment to developing countries, issued $7.6 billion in new guarantees over the same 15-month period since the onset of the pandemic, of which 19% supported projects in IDA countries and fragile settings.

In FY21, the World Bank Group’s climate finance totaled over $26 billion, it’s largest year of climate finance ever (25% above FY20, which was itself also a record). The new Climate Change Action Plan for 2021-2025 aims to integrate climate and development goals, and commits 35% of Bank Group financing to climate, on average, over the next five years, with at least 50% of World Bank climate finance supporting adaptation. In the same time frame, the Bank Group will align financing with the goals of the Paris Agreement, while helping client countries meet their Paris commitments, including supporting and implementation of development of their Nationally Determined Contributions (NDCs) and Long-Term Strategies.

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