The COVID-19 pandemic has led to an infinite depression and uncertainties across the world because of business disruptions and shutdowns from measures put in place by governments across the world to slow and contain the spread of the novel coronavirus, i.e. lockdown, social-distancing measures.
Due to the temporary closure of many businesses or reduced demand for products and services, the crisis will likely have severe consequences for household income. Facing great uncertainty is the duration of the pandemic and immediate and future negative economic effect, It may be expected that firms reduce their demand for new workers, relieved employees of their duties, reduces salaries, postpone hiring decisions to a later date. The impact and duration of the economic condition on individual households and the economic system at large resulting from the pandemic are difficult to predict as many uncertainties surround the pandemic.
Job opportunities have significantly reduced across the world since most government-implemented lockdown policy to reduce and control the spread of coronavirus. Coronavirus has negative influenced the rate of unemployment. Employment is essential for the spending, saving and investment habit of individual household. A high rate of unemployment minimizes the potential output of the macroeconomy and results in decreased consumption and saving, creating a lack of confidence for more investment.
Millions of workers lost part or all of their incomes due to the temporary or permanent shutdown of workplaces around the world because of the continuous spread of coronavirus. Even if still working, many workers had to accept shorter hours and or wage cuts in different industries such as airlines, retail, and accommodation, food services, or the textile and garment sectors. In some instances, wage cuts were negotiated in collective agreements between workers and employers. For example, in Argentina, a collective agreement included a 25% cut in wages of the workers in shutdown sectors for 60 days as of April 1, 2020, to save jobs. Among workers who still had a paid job in early April,35% in the US, 30% in the UK, and 20% in Germany reported lower earnings in March when compared to earlier months (Eurofound, 2020). Numerous countries also affected wage cuts in the public sector.
Household consumption and spending have been greatly affected. Consumer spending has recorded a very sharp decline, even for households that have not experienced a fall in income. The impact is higher in most African and developing countries where food security has been a challenge before the compound impact of Covid-19.
Since early 2020, the spread in COVID-19 has resulted in various government support mechanisms reaching to improve access to food. Many governments have used discretionary economic policy to smooth the impact of the pandemic and attenuate the negative effect of the rise in prices of imported food products on household consumption. Governments in many countries distributed transfers to households through mobile phones, paychecks, and other means. As an example, in April 2020, the Senegalese government launched a food distribution program for 1 million venerable households, this was a part of the emergency fund the government projected to spend on emergency food distribution in response to the pandemic. Likewise, many governments have handed out coronavirus economic relief funds to their citizens.
Observing the global food supply chain, a very important sector of the economy, the COVID-19 had affected the world food trade through different ways and means. Especially, the lockdown resulted in the movement restrictions of workers, changes in demand of consumers, closure of food production facilities, restricted food trade policies, and financial pressures in the food supply chain. COVID-19 had significantly affected food production, processing, and transportation to the final consumer.
In conclusion, the outbreak of the COVID-19 virus have both short-term and long-term effect on individual household that resulted to fall in demand due both to uncertainty and policy interventions such as lockdowns, social distancing, and travel restrictions are having a severe impact on households and hence the economy.