The continued sharp decline in working hours globally due to the COVID-19 outbreak means that 1.6 billion workers in the informal economy – that is nearly half of the global workforce – stand in immediate danger of having their livelihoods destroyed, warns the International Labour Organization.
According to the ILO Monitor third edition: COVID-19 and the world of work , the drop in working hours in the current (second) quarter of 2020 is expected to be significantly worse than previously estimated.
Compared to pre-crisis levels (Q4 2019), a 10.5 per cent deterioration is now expected, equivalent to 305 million full-time jobs (assuming a 48-hour working week). The previous estimate was for a 6.7 per cent drop, equivalent to 195 million full-time workers. This is due to the prolongation and extension of lockdown measures.
Regionally, the situation has worsened for all major regional groups. Estimates suggest a 12.4 per cent loss of working hours in Q2 for the Americas (compared to pre-crisis levels) and 11.8 per cent for Europe and Central Asia. The estimates for the rest of the regional groups follow closely and are all above 9.5 per cent.
Informal economy impact
As a result of the economic crisis created by the pandemic, almost 1.6 billion informal economy workers (representing the most vulnerable in the labour market), out of a worldwide total of two billion and a global workforce of 3.3 billion, have suffered massive damage to their capacity to earn a living. This is due to lockdown measures and/or because they work in the hardest-hit sectors.
The first month of the crisis is estimated to have resulted in a drop of 60 per cent in the income of informal workers globally. This translates into a drop of 81 per cent in Africa and the Americas, 21.6 per cent in Asia and the Pacific, and 70 per cent in Europe and Central Asia.
Without alternative income sources, these workers and their families will have no means to survive.
Enterprises at risk
The proportion of workers living in countries under recommended or required workplace closures has decreased from 81 to 68 per cent over the last two weeks. The decline from the previous estimate of 81 per cent in the second edition of the monitor (published April 7) is primarily a result of changes in China; elsewhere workplace closure measures have increased.
Worldwide, more than 436 million enterprises face high risks of serious disruption. These enterprises are operating in the hardest-hit economic sectors, including some 232 million in wholesale and retail, 111 million in manufacturing, 51 million in accommodation and food services, and 42 million in real estate and other business activities.
Urgent policy measures needed
The ILO calls for urgent, targeted and flexible measures to support workers and businesses, particularly smaller enterprises, those in the informal economy and others who are vulnerable.
Measures for economic reactivation should follow a job-rich approach, backed by stronger employment policies and institutions, better-resourced and comprehensive social protection systems. International co-ordination on stimulus packages and debt relief measures will also be critical to making recovery effective and sustainable. International labour standards, which already enjoy tripartite consensus, can provide a framework.
“As the pandemic and the jobs crisis evolve, the need to protect the most vulnerable becomes even more urgent,” said ILO Director-General Guy Ryder. “For millions of workers, no income means no food, no security and no future. Millions of businesses around the world are barely breathing. They have no savings or access to credit. These are the real faces of the world of work. If we don’t help them now, these enterprises will simply perish.”
Philippines: Reducing Inequality Key to Becoming a Middle-Class Society Free of Poverty
Policies that support employment and workers, raise education quality and improve access, boost rural development, and strengthen social protection can reduce inequality, thus enhancing Filipino peoples’ chances for improving their well-being.
In a report titled “Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future” released today, the World Bank said that the Philippines has made important gains in poverty reduction. Driven by high growth rates and the expansion of jobs outside agriculture, poverty fell by two-thirds—from 49.2 percent in 1985 to 16.7 percent in 2018. By 2018, the middle class had expanded to nearly 12 million people and the economically secure population had risen to 44 million.
Yet inequality remains high: the top 1 percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent. With an income Gini coefficient of 42.3 percent in 2018, the Philippines had one of the highest rates of income inequality in East Asia.
“The Philippines aims to become a middle-class society free of poverty by 2040, but we know from global experience that no country has managed to make this transition while maintaining high levels of inequality,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand. “Inequality of opportunity and low mobility across generations wastes human potential and slowdown innovation, which is crucial for building a competitive and prosperous economy that will in turn improve the well-being and quality of life of all Filipinos.”
The report highlights that the expansion of secondary education, mobility to better-paying jobs, access to basic services, and government social assistance have started to reduce inequality since the mid-2000s. However, unequal opportunities, slow access to tertiary education among low-income households, inequality in returns to college education, and social norms putting the heavier burden of childcare on women has slowed down the narrowing of inequality in the Philippines.
Despite the strong recovery of growth and the labor market, COVID-19 pandemic has partly reversed decades-long gains in reducing poverty and inequality in the Philippines. It halted economic growth momentum in 2020, and unemployment shot up in industries that require in-person work. In 2021, the national poverty rate rose to 18.1 percent despite government assistance.
Recovery in the Philippines is uneven across the income distribution and the poorest who suffered the most from COVID have yet to fully recover their incomes. With food prices going up, many families coped by reducing their consumption, including eating less. These coping strategies can have serious consequences on the health and nutrition of children in these vulnerable households.
The report says that inequality starts even before birth and is perpetuated over the life cycle. It starts with maternal nutrition and health during pregnancy. Differences continue into childhood, where disparities in access to health care, proper nutrition, safe drinking water, sanitation, and quality education determine the extent to which a child’s human capital develops.
“Inequality shapes outcomes later in life, such as employment opportunities and income, which in turn influence how much support adult Filipinos are able to provide for their children to help maximize their potential,” said Nadia Belhaj Hassine Belghith, Senior Economist with the East Asia Poverty Global Practice covering Thailand and the Philippines who led the study.
The report says that policy priorities to reduce inequality in the Philippines can be structured around three themes, including healing the pandemic’s scars and building resilience, setting the stage for a vibrant and inclusive recovery, and promoting greater equality of opportunity.
Healing pandemic’s scars will require promoting greater vaccine booster uptake, overcoming the learning loss due to COVID-19, strengthening social assistance, unemployment insurance programs for the informal sector, and taming inflation.
Setting the stage for vibrant recovery entails reskilling of workers, promoting entrepreneurship, increasing the participation of women in the labor force, and raising the productivity of agriculture.
Promoting greater equality of opportunity entails increasing access to quality health care, increasing equality of opportunity in education, and improving access to quality housing, among others. Equality of opportunity needs to target the lagging regions and other people disadvantaged in accessing these because of the circumstances of their birth.
Germany in secret talks to buy Iranian oil: report
An Israeli paper has claimed that Germany is in “secret” talks with Tehran to buy Iranian oil as part of its efforts to wean itself off Russia’s energy supplies.
The Jerusalem Post quoted the chief economist for the partially state-owned bank LBBW in the southwestern German state of Baden-Württemberg as saying that Germany is engaged in secret talks with the Islamic Republic to buy Iranian oil.
“Intensive talks are already being held behind the scenes with Venezuela, Iran or Algeria to cover Germany’s oil and gasoline needs,” said Moritz Kraemer, the chief economist of the Landesbank Baden-Württemberg (LBBW).
Bernd Wagner, a spokesman for LBBW, told the Jerusalem Post that “as a matter of principle, LBBW does not conduct any Iran-related business.”
When asked about Kraemer’s statement about secret talks with Iran, Wagner said, “There seems to be a misunderstanding. The chief economist is talking about the national economy, not about LBBW’s business. We have a very clear distinction here.”
No official announcements have so far been made about the alleged secret talks between Tehran and Berlin. But tensions have been on the rise between the two sides over German officials’ statements regarding Iran’s internal developments.
On Monday, the Iranian foreign ministry summoned the German ambassador to Tehran, Hans-Udo Muzel, over German Chancellor Olaf Scholz’s “meddlesome” remarks about Iran.
“Following the meddlesome and irresponsible statements of the German chancellor towards the Islamic Republic, Hans-Udo Muzel the German ambassador to Tehran was summoned to the foreign ministry on Monday,” the Iranian foreign ministry said in a statement.
The statement added, “During the session, the director general of the west European affairs of the foreign ministry condemned the irresponsible statement of the German official. He conveyed strong protest of the Islamic Republic of Iran about Germany’s destructive approach towards the domestic developments of Iran to the German envoy.”
It continued, “The foreign ministry official said the German side should bear the consequences of the continuation of such non-constructive statements and acts on the future of the mutual ties. He stressed that the Islamic Republic of Iran is monitoring the stances and actions of the other sides with dignity and grandeur, taking into account its national interests, and will give them proportionate responses.”
The statement concluded, “The German ambassador, for his part, said he will convey the message of the Islamic Republic of Iran to his government at the earliest. During the meeting the formal notice of protest of the Islamic Republic was handed over to the German ambassador.”
India’s Urban Infrastructure Needs to Cross $840 Billion Over Next 15 Years
A new World Bank report estimates that India will need to invest $840 billion over the next 15 years—or an average of $55 billion per annum—into urban infrastructure if it is to effectively meet the needs of its fast-growing urban population. The report, titled “Financing India’s Urban Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action” underlines the urgent need to leverage more private and commercial investments to meet emerging financial gaps.
By 2036, 600 million people will be living in urban cities in India, representing 40 percent of the population. This is likely to put additional pressure on the already stretched urban infrastructure and services of Indian cities – with more demand for clean drinking water, reliable power supply, efficient and safe road transport amongst others. Currently, the central and state governments finance over 75 percent of city infrastructure, while urban local bodies (ULB) finance 15 percent through their own surplus revenues.
Only 5 percent of the infrastructure needs of Indian cities are currently being financed through private sources. With government’s current (2018) annual urban infrastructure investments topping at $16 billion, much of the gap will require private financing.
“Cities in India need large amounts of financing to promote green, smart, inclusive, and sustainable urbanization. Creating a conducive environment for ULBs, especially large and creditworthy ones, to borrow more from private sources will therefore be critical to ensuring that cities are able to improve living standards of their growing populations in a sustainable manner,” said Auguste Tano Kouamé, Country Director, World Bank, India.
The new report recommends expanding the capacities of city agencies to deliver infrastructure projects at scale. Currently, the 10 largest ULBs were able to spend only two-thirds of their total capital budget over three recent fiscal years. A weak regulatory environment and weak revenue collection also adds to the challenge of cities accessing more private financing. Between 2011 and 2018, urban property tax stood at 0.15 percent of GDP compared to an average of 0.3-0.6 percent of GDP for low- and middle-income countries. Low service charges for municipal services also undermines their financial viability and attractiveness to private investment.
Over the medium term, the report suggests a series of structural reforms including those in the taxation policy and fiscal transfer system – which can allow cities to leverage more private financing. In the short term, it identifies a set of large high-potential cities that have the ability to raise higher volumes of private financing.
“The Government of Indiacan play an important role in removing market frictions that cities face in accessing private financing. The World Bank report proposes a range of measures that can be taken by city, state, and federal agencies to bend the arc towards a future in which private commercial finance becomes a much bigger part of the solution to India’s urban investment challenge,” said Roland White, Global Lead, City Management and Finance, World Bank, and co-author of the report.
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