‘Inequality Virus’ Strikes Asian Poor

By N. GUNASEKARAN

The recent Oxfam report, “The Inequality Virus,” showed that the combined wealth of the world’s 10 richest persons have increased by $540 billion during the pandemic. By the end of 2020, the total wealth of billionaires across the world reached $11.95 trillion and this was equivalent to the recovery spending of all the G20 countries during the pandemic.

With this amount, the world can eradicate poverty caused by the corona virus and complete the vaccinations for all. But the governments across the world are continuously giving tax reliefs to the super-rich, instead of raising wealth and corporate taxes and generating the revenue to save the people from economic and health catastrophe. It is estimated that the economic recovery of the world’s poorest would take more than a decade. In 2020, between 200 million and 500 million more people became poorer.

The crunch in the world economy and delayed vaccinations would impact the developing countries, including Asian economies. According to the Economist Intelligence Unit, economic losses, mainly due to the delayed vaccinations, would be around $2.3 trillion, and around two-thirds of these losses would be borne by developing countries. Asia would be the most severely affected continent, and Asian countries would lose about $1.7 trillion.

These estimates do not include the “missed economic opportunities like the pandemic impact on education. Advanced countries opted for remote learning during lockdowns, while many poor countries in Asia do not have infrastructural facilities for remote learning. Wealthy nations are moving ahead in speedy vaccinations, even toward booster doses, and running their economies, while poorer countries are lagging drastically behind.

The report by the Asian Development Bank (ADB), released in August 2021, stated that Asia was struggling with the problems of unemployment and underemployment due to disruptions in business and manufacturing activities. The Asia-Pacific region lost an estimated 8% of working hours, while the unemployment rates globally increased by at least 20% in 2020.

The informal economy was seriously affected in the Asian region. The ADB surveys conducted among south Asian nations’ households and workers revealed that mainly poorer sections lost their jobs and income. During the pandemic in 2020, 75-80 million people in the Asia-Pacific region were thrown into extreme poverty, which was defined as living on less than $1.90 a day. Hunger, undernourishment and deprivation of health and education facilities have aggravated the daily lives of the working population.

Women laborers were facing joblessness more acutely. Labor force participation rates among women declined by 1.4%, from 2019 to 2020. Poverty risk for low-skilled people and those living in rural areas was much higher. Lockdowns and restrictions in mobility and social interaction to prevent the spread of COVID-19 were adversely affecting the livelihoods of various segments of the population.

A higher proportion of people in poor economies in Asia are not covered by social protection programs. Without social and governmental support, the downtrodden sections were experiencing many kinds of hardships due to prolonged economic disruptions. Eighty percent of households experiencing financial difficulties reduced their consumption expenditure. Most of them have spent their savings, indulged in heavy borrowing, which would push them further into debt, and sold their possessions and properties. The ADB report said: “These coping mechanisms may potentially have long-term harmful or scarring effects.” Nutritional deficiencies during childhood due to food poverty would affect the cognitive development in children and would result in increased susceptibility to metabolic illnesses in adulthood.

Poor countries are demanding the waiver of patent rights for COVID-19 vaccines and intellectual property rights restrictions. In most developing countries, the vaccination drive is very slow. For example, Bangladesh, with a population of nearly 165 million people, has only vaccinated about 4% of the people. Intellectual property rights restrictions have been preventing the low- and middle-income countries from domestic manufacturing of vaccines. The rich countries and big pharmaceutical corporate industries, which are more concerned over their profits than the lives of the people, have been opposing the waiver of patent rights.

Progress in addressing poverty, precarious employment, and human development has been severely retarded. The International Monetary Fund forecasts revealed that income per capita of five economies in the Association of Southeast Asian Nations (ASEAN), Indonesia, Malaysia, Philippines, Thailand, and Vietnam would be reduced to 6% lower in 2024. Philippines’s income per capita is expected to be remaining 12% lower than previously expected. However, Vietnam’s economy is showing positive economic growth in 2020 due to its highly successful public health response. Vietnam seemed to be staging a strong recovery. Public spending is a key requirement to face the situation.

The poorer countries are forced to implement fiscal discipline through a reduction in public expenditures, welfare programs, and greater exploitation of the working people in the name of “austerity measures.” Taxing the super-rich, increasing the guaranteed minimum wage for working people, provision of universal health care and other social support measures are necessary to attain economic recovery. To contain the recession and to save the people from the miseries, greater government expenditure is necessary which would lead to an increase in employment and purchasing power among the people. A massive increase in public investments is required to build much-needed infrastructure, generate jobs, and increase domestic demand.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, October 15, 2021

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