With COVID-19 infections rapidly accelerating around the world and containment policies faltering in some countries, a new United Nations report is proposing that developing nations repurpose budgets to provide the poor with a minimum guaranteed income to motivate them to stay home.
“The idea of the partial containment or smart containment strategies is precisely to keep people at social distancing,” said George Gray Molina, a chief economist with the United Nations Development Program and one of the report’s authors.
“What we find is that the incentives are not working in the right way,” he added. “The incentive is actually pressuring people to go out to the marketplace every morning, and that’s what we’re seeing: this massive spread that has been documented by the World Health Organization for the past few weeks.”
Globally, 15 million people have been confirmed with the novel coronavirus, which causes COVID-19, and 618,000 have died. Molina noted that while it took three months to hit the first million, cases have been accelerating at about 1 million new infections a week.
“Over the last couple of weeks, it’s been about 1 additional million every four to five days,” he said. “The curve is accelerating and that’s because it’s reaching some of the poorest and largest developing countries in the world, Brazil, Mexico, Peru, South Africa, India, Bangladesh, Pakistan and so on.”
In the last week alone, there were almost 900,000 new cases in the Americas region, where 22,000 deaths were recorded, mostly in Brazil, Mexico and the United States, the Pan American Health Organization said. Overall, there are 7.7 million infections in the Americas and 311,000 deaths.
“The COVID-19 pandemic is showing no signs of slowing down in our region,” Dr. Carissa Etienne, the director of PAHO, the World Health Organization’s Americas office, said in a briefing with regional reporters Tuesday.
Around the world, governments have introduced economic stimulus packages and other programs in hopes of cushioning the worsening economic effects of the virus. But while many have been helped with policies like tax or rent holidays and unemployment insurance, millions of people who are self-employed or in the informal work sector have not benefited from the assistance because they are not registered in any government employment registry.
“We think in this moment in the pandemic we need to tie in both the socioeconomic aspect and the health aspect of this and we do believe that this is one tool in the toolbox that can be useful to stop the spread of the virus,” said Molina, who co-authored the report, “Temporary Basic Income: Protecting Poor and Vulnerable People in Developing Countries.”
The report, released Thursday by the United Nations Development Program, calls on governments around the world to provide vulnerable people in the population with a minimum guaranteed income above the poverty line.
In the absence of such a guarantee, Molina said, people will see “an incredible drop in incomes and livelihoods for the poorest people around the world.”
Molina and his co-author, Eduardo Ortiz-Juarez, argue that there have already been economic and development costs due to nearly four months of containment measures around the globe that have ranged from closed borders and lockdowns to work furloughs and job closures.
In some countries in Latin America, the informal economy accounts for as much as 50% of workers. And what that has meant in one of the world’s most unequal regions, where there are huge income gaps between rich and poor, is that the region has become a hot spot for the virus, with governments unable to keep people quarantined at home or off the streets.
Increasingly, countries across Latin America and the Caribbean have been reopening their economies despite the continuing surge in cases and fatalities. Recognizing the risks, PAHO has stepped up calls for governments to do more to help their citizens financially so that containment measures can be prolonged.
Molina said many of the predictions on poverty, and on jobs and income losses that were produced two or three months ago by economists in relation to the virus’s effect, are starting to play out, especially in informal economies.
“As Informal sector workers get up every morning, they go out to work and the pandemic spreads in a way that containment policies or partial containment policies are not able to control,” he said.
The U.N. report focuses on three proposals that would cover about 2.7 billion people in 132 countries. One is to assist with income, which takes into consideration the fact that different countries around the world have different poverty lines. As an example, someone living in a part of the world with $1.90 a day as income, would have their income raised above the poverty line to $3.20 a day. In parts of Latin America and Europe, where the poverty line in some countries is $5.50 a day, the poor would receive a guaranteed income of $13 a day.
Two other proposals focus on providing a lump-sum transfer that is either adjusted by cost of living or a raise of up to $5.50 a day, which is where most middle-income countries currently are, Molina said.
“What this proposal does is create a minimum floor that is temporary for the next nine or 12 months, or however long is needed,” Molina said.