With the coronavirus (COVID-19) once again spreading rapidly, and the re-introduction of containment measures to flatten the curve of the epidemic, it is crucial for policymakers to plan effective strategies to re-open their economies to avoid further re-confinements. This should include much more effective testing, tracing and isolation policies that people can easily follow, as well as improved social distancing measures, according to a new OECD report.
Health at a Glance: Europe 2020 provides a first look at comparative data on how European countries have experienced and responded to the pandemic, including both outcomes and policies. Europe has again become a COVID-19 hotspot. As of 15 November 2020, over 10 million people in Europe had been infected and more than 265,000 died from COVID-19, with numbers continuing to rise rapidly. The report shows evidence that banning large gatherings, encouraging people to telework, mandating facemask wearing in public and encouraging their use in private gatherings involving at-risk groups, and strictly limiting capacity in restaurants, stores and other public indoor places can go a long way towards reducing the spread of the virus.
“The recent news of a vaccine is encouraging but tackling this pandemic is a marathon, not a sprint,” said OECD Secretary-General Angel Gurría. “International collaboration will be key to ensuring mass production and widespread distribution of the vaccine. But countries also need to reinforce their support for the healthcare sector and workers, and extend the scale and effectiveness of testing, tracing and isolation policies.”
A few European countries, like Norway and Finland, have been better able to contain the spread of the virus, partly because of geographic factors (lower population density) but also because of greater preparedness and rapid and effective test, track and trace (TTT) strategy, and stronger trust and compliance of citizens with government rules and recommendations. Outside Europe, the four OECD countries in the Asia/Pacific region (Korea, Japan, Australia and New Zealand) have successfully controlled the COVID-19 outbreak. Beyond their geographical characteristics, these countries quickly introduced effective testing, tracing and isolation policies as well as trust and compliance with social distancing and other key guidelines.
More effective testing, tracing and isolation policies are crucial. Many countries are still struggling to get test results back to people quickly and the effectiveness of contact tracing applications has been limited in several countries. Greater logistical efforts are needed to make tracing of contacts effective and for people infected with COVID-19 to isolate themselves.
During the first wave of the pandemic, 90% of deaths were people over 60 years old and about half or more of COVID-19 deaths in many European countries were among people living in care homes. Measures to isolate confirmed cases in nursing homes have improved, although it remains a challenge to isolate residents with certain conditions, such as neurological disorders like Alzheimer’s disease and other dementias, without increasing further their psychological distress.
The pandemic has also highlighted the shortages of health workers in many countries before the crisis, as well as the need to create additional reserve capacity that can be quickly mobilised in times of crisis.
Many people with chronic and other conditions besides COVID-19 were unable to access needed care during the first peak of the pandemic in Spring 2020. Access to primary care and specialist care needs to be maintained to respond to all care needs and minimise any complications and indirect deaths from the pandemic.
Even before the COVID-19 pandemic hit, waiting times for elective surgery were on the rise in many European countries, as the demand for surgery was increasing more rapidly than supply. These waiting times are likely to increase further in several countries, as many elective surgeries and cancer diagnoses and treatments were postponed during the pandemic.
The report also makes the case to address other ongoing important risk factors to health, notably air pollution that causes hundreds of thousands of deaths each year across EU countries.
Health at a Glance: Europe 2020 is the result of ongoing close collaboration between the OECD and the European Commission to improve country-specific and EU-wide knowledge on health issues as part of the Commission’s State of Health in the EU cycle.
The Path to Better Jobs in a Post Covid-19 Latin America
Economic crises like the one that Latin America and the Caribbean is suffering now, have long-lasting effects on the structure of employment and may permanently drive many from the formal economy, according to a new World Bank report.
The Covid-19 pandemic is having the biggest impact on low-skilled workers and exacerbating the region’s already high inequality, according to EMPLOYMENT IN CRISIS: The Path to Better Jobs in a Post Covid-19 Latin America. Low-skilled workers often suffer from lower earnings for a decade following a crisis, while high-skilled workers see a quick rebound. As a result, government labor policies should focus on providing social safety nets and retraining, as well as improving the macroeconomic and business environment to ensure long-term and inclusive economic growth.
“Economic recovery has often been a myth when it comes to jobs, but it doesn’t have to be that way,” said World Bank Vice President for Latin America and the Caribbean Carlos Felipe Jaramillo. “The right policies can help limit the impact crises have on employment and foster the creation of more jobs in recoveries.”
As some of the largest shocks that have shaken the region in recent decades show, the consequences of crisis in Latin America and the Caribbean are long-term and leave deep scars on employment. For example, employment data from before and after the Brazilian debt crisis, the effects of the Asian financial crisis in Chile, and the impact of the 2008-2009 global crisis in Mexico show that rapid recoveries did not materialize. In all three cases, the employment curve suffered a strongly negative deviation because of these crisis, which, far from reversing became more pronounced over time.
On average, after three years, major crisis cause a net loss of 1.5 million jobs, with a 3% contraction of formal work and an expansion of the informal. The current crisis could be even worse and cause a contraction in formal employment of up to 4%.
Low skilled workers tend to suffer the most, exacerbating persistent inequities in the region. For them, the scars of the crises can remain for up to a decade, with loss of income and greater vulnerability. In addition, two thirds of the countries in the region do not have national assistance or unemployment insurance programs. To minimize this long-term scarring, governments should adopt policies to support a sustainable recovery of economies and facilitate the recovery of employment.
“We need to seize the opportunity to build back better,” said Joana Silva, World Bank Senior Economist and the lead author of the report. “We should strengthen our labor markets so they are able to cope with and quickly reverse the impacts of future shocks.”
The key initial step is to put strong, prudent macroeconomic frameworks and automatic stabilizers in place to shield labor markets from potential crises. Sound fiscal and monetary policies can preserve macroeconomic stability and avert system-wide financial strain in the face of a shock. Fiscal reforms, including less distortive taxation, more efficient public spending, financially sustainable pension programs and clear fiscal rules are the first line of defense against crises.
Countercyclical income support programs, such as unemployment insurance and other transfers to households during downturns, limit the damage caused by contractions and help economies recover. One of the region’s challenges, though, is that large segments of the workforce are informal and thus cannot be reached through traditional unemployment insurance.
Also, it is crucial to increase the capacity of the region´s social protection and labor policies, blending these policies into systems that provide income support and prepare workers for new jobs through reskilling and reemployment assistance. Governments’ quick reaction to expand some social protection and labor programs in the wake of the pandemic can lead to progress in building better and more integrated social registries. This is feasible in the short run and can make a difference in the reach of these programs.
But stronger macroeconomic stabilizers and reforms to social protection and labor systems are not enough. Jump-starting job recovery by supporting vigorous job creation is also needed. This effort will require tackling structural issues. Competition policies, regional policies and labor regulations are key areas. If countries don’t address these fundamental issues, recoveries will remain characterized by sluggish job creation.
Critical Reforms Needed to Reduce Inflation and Accelerate the Recovery
While the government took measures to protect the economy against a much deeper recession, it would be essential to set policy foundations for a strong recovery, according to the latest World Bank Nigeria Development Update (NDU).
The NDU, titled “Resilience through Reforms”, notes that in 2020 the Nigerian economy experienced a shallower contraction of -1.8% than had been projected at the beginning of the pandemic (-3.2%). Although the economy started to grow again, prices are increasing rapidly, severely impacting Nigerian households. As of April 2021, the inflation rate was the highest in four years. Food prices accounted for over 60% of the total increase in inflation. Rising prices have pushed an estimated 7 million Nigerians below the poverty line in 2020 alone.
The report acknowledges notable government’s policy reforms aimed at mitigating the impact of the crisis and supporting the recovery; including steps taken towards reducing gasoline subsidies and adjusting electricity tariffs towards more cost-reflective levels, both aimed at expanding the fiscal space for pro-poor spending. In addition, the report highlights that both the Federal and State governments cut nonessential spending and redirected resources towards the COVID-19 response. At the same time, public-sector transparency has improved, in particular around the operations of the oil and gas sector.
The report however, notes that despite the more favorable external environment, with recovering oil prices and growth in advanced economies, a failure to sustain and deepen reforms would threaten both macroeconomic sustainability and policy credibility, thereby limiting the government’s ability to address gaps in human and physical capital which is needed to attract private investment.
“Nigeria faces interlinked challenges in relation to inflation, limited job opportunities, and insecurity”, said Shubham Chaudhuri, the World Bank Country Director for Nigeria. ”While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have to be sustained and deepened for Nigeria to realize its development potential.”
This edition of the Nigeria Development Update proposes near-term policy option organized around three priority objectives:
- Reduce inflation by implementing policies that support macroeconomic stability, inclusive growth, and job creation;
- Protect poor households from the impacts of inflation;
- Facilitate access to financing for small and medium enterprises in key sectors to mitigate the effects of inflation and accelerate the recovery.
“Given the urgency to reduce inflation amidst the pandemic, a policy consensus and expedite reform implementation on exchange-rate management, monetary policy, trade policy, fiscal policy, and social protection would help save lives, protect livelihoods, and ensure a faster and sustained recovery” said Marco Hernandez, the World Bank Lead Economist for Nigeria and co-author of the report.
In addition to assessing Nigeria’s economic situation, this edition of the NDU also discusses how the COVID-19 crisis has affected employment; how inflation is exacerbating poverty in Nigeria; how reforming the power sector can ignite economic growth; and how Nigeria can mobilize revenues in a time of crisis.
Indonesia: How to Boost the Economic Recovery
Indonesia’s economy is projected to rebound from the 2020 recession with 4.4 percent growth in 2021. The rebound is predicated on the pandemic being contained and the global economy continuing to strengthen, according to the World Bank’s latest Indonesia Economic Prospects report (“Boosting the Recovery”), released today.
The report highlights that although consumption and investment growth were subdued during the first quarter of 2021, consumer sentiment and retail sales started to improve during the second quarter suggesting stronger growth momentum. However, it also notes that pandemic related uncertainty remains elevated due to risks of higher viral transmission.
“Accelerating the vaccine rollout, ensuring adequate testing and other public health measures, and maintaining strong monetary and fiscal support in the near term are essential to boosting Indonesia’s recovery,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste. “Parallel reforms to strengthen the investment climate, deepen financial markets, and improve fiscal space for longer-term sustainability and growth will be important to further build consumer and investor confidence.”
The report recommends the government to develop a well sequenced medium-term fiscal strategy, including clear plans to improve tax revenues and fiscal space for priority spending. It also highlights the importance of maintaining accommodative monetary policy and stimulating private credit to support the real sector while monitoring external and financial vulnerabilities.
The report highlights the critical role of adequate social assistance in mitigating rising poverty risks. It finds that maintaining the 2020 social assistance package in 2021 could potentially keep 4.7 million Indonesians out of poverty.
This edition of the report also looks at the possibilities for Indonesia to boost higher productivity jobs and women’s economic participation.
“Indonesia has reduced poverty through job creation and rising labor incomes over the past decade. The next stage is to create middle-class jobs that are more productive, earn higher incomes, and provide social benefits,” said Habib Rab, World Bank Lead Economist for Indonesia. “While the crisis risks have exacerbated Indonesia’s employment challenges, it is also an opportunity to address the competitiveness and inclusion bottlenecks to creating middle-class jobs and strengthening women’s participation in the economy.”
The report recommends a four-pronged reform strategy to address these jobs-related challenges:
- Mitigate employment losses by maintaining adequate job retention programs, social assistance, training, and reskilling programs until the recovery is stronger.
- Boost productivity and middle-class jobs by promoting competition, investment, and trade.
- Equip the Indonesian workforce to hold middle-class jobs by investing in education and training systems and programs to improve workers’ skills.
- Bring more women into the labor force and reduce earning gaps between men and women by investing in child and elderly care and promoting private sector development in the care economy.
The Indonesia Economic Prospects Report is supported by the Australian Department of Foreign Affairs and Trade.
Iran, Russia, and Turkey: A Eurasionist Model of Foreign Relations
Because Westerners tend to place the idea of cooperation among nations under a normative umbrella, whether it be an alliance...
Belarus Under Sanctions, What Next?
Russia has unreservedly expressed its solidarity and unflinching support for Belarus after the United States and European Union slapped the...
Geopolitics For Giants And Dwarfs
Authors: Zlatko Hadžidedić and Adnan Idrizbegović June 2021 was far more than just dynamic in terms of global politics: President...
Say “hello” with the sixth generation of mobile network (6G)
The recent introduction of 5G across the globe has directed the interests of telecom experts to the development of the...
Human Rights violation in Palestine: A serious concern
Palestinians had long been victim of brutal Israeli assailant forces. The innocent Palestinians civilians and children are not only victim...
Centenary of the Chinese Communist Party: 100 years of Prosperity and Greatness
Since its establishment, the Communist Party of China has made many national contributions and has become the main engine of...
ACCCIM and ANBOUND Co-Hosted Forum on Digital City Development in the Post-COVID Era
After more than a year since the emergence of the Covid-19, our modern world faces unprecedented threats to our public...
East Asia3 days ago
High time for India to Reconsider the One-China Policy
Economy3 days ago
Beyond Being Friends: Russia and China Need an Exclusive Trade Deal
Economy2 days ago
Rise of Billionaires In India, Lobbyism And Threat To Democracy
Americas3 days ago
Joe Biden’s European vacations
Middle East1 day ago
Intelligence and Evolution of Democracy in Jordan
Middle East2 days ago
Middle Eastern powers vie in shaping a next generation of Muslims
Economy2 days ago
The light side (SMEs) and the dark side (virtual currency) in post-covid Italy
Science & Technology2 days ago
Disintegrating Big Tech: What Future Holds for the American Technology Giants’?