As of March 20, 2020, a total of 45 countries have introduced, adapted or expanded their welfare programs in response to COVID-19. Below is a summary of the different types of responses by governments across the world to ensure the economic protection of workers and businesses[1]. Broadly, we classify these interventions into two categories:
1. Assistance Offered to Employers and Small Businesses
There have been efforts to reduce the burden of businesses running cash shortages due to temporary closure. Countries such as the UK have focussed on protecting firms by introducing interventions such as loan guarantees for the business sector. For some of the small and medium-sized businesses most at risk of collapse, business interruption loans with increased limits and no interest due for six months. In Japan, the government is introducing a credit facility where a government-affiliated lender would offer funds effectively at no interest and without collateral to small firms whose revenues have been affected due to the outbreak. In Armenia, the government has allocated funds to partially reimburse loans taken by firms to cover the salaries of the workers. In several provinces in China, it was notified that the MSMEs are exempt from making employer contributions to social security schemes up to June. The Department of Labour and Employment (DOLE) of Philippines is planning to roll out a cash assistance programme for workers displaced by the temporary closure of establishments would receive cash assistance from the government provided that the employers would submit proof that their workplace had to suspend operations due to COVID-19.
2. Social Assistance from the Government Directly to the Citizen
The most common interventions announced by governments across the world have been introducing (or adapt) cash transfers schemes. New transfer schemes have been introduced in Bolivia, Iran and Peru while universal one-off cash payment to all citizens will occur in Hong Kong and Singapore. More targeted transfer schemes have also been introduced to specifically provide the cash shortages to assist elderly low-income families or to household’s dependent on informal labour that may have been suspended due to the epidemic. Initiatives to protect informal workers have been introduced by Egypt, Philippines, Brazil and Canada[2].
The US announced the Families First Coronavirus Response Act which allows parents who are caring to get a maximum of 12 weeks of paid family leave. This includes two weeks of paid sick leave and provides up to 12 weeks of paid family and medical leave for up to $200 per day. Gig and self-employed workers also get these benefits in the form of a tax credit. In some countries, measures have been taken by governments to offer subsidies for utility payments. For example, water services are being provided for free for low-income, vulnerable households in Columbia. The impact of reduced economic activity during times of quarantine, self-isolation and social distancing are likely to create worrying levels of unemployment and increasing debt burdens for low-income households. For example, Hungary and Canada have announced moratoriums for loan repayments such as mortgages and student loans[3].
Protecting the Informal Workforce in India
The government of India has been proactively introducing interventions to prevent (or at least contain) the community transmission of the pandemic CoVID-19. With over 460 cases recorded (as of 24th March), the different state governments are imposing restrictions on international travel, closure to places of gathering (schools, colleges, malls, temples, etc.), mandated quarantines, and other social distancing measures. With less than 1 lakh ICU beds across the country, these restrictions are necessary as the Indian health system would be quite inadequate to treat full-blown epidemic in the country[4].
These policy interventions will be carefully studied over the next few months and there is much to learn from the international experiences and efforts in dealing with this pandemic. However, with social distancing measures are more strictly enforced, there will be a large portion of the population that would be out of work and may not have any source of income. Countries such as the Egypt, Philippines, Brazil have introduced cash assistance programmes for informal workers affected by this outbreak while the US has announced benefits in the form of tax credits for “gig-workers”. However, the scale of the informal sector in India provides a unique challenge that very few countries could be expected to face. Informal workers account for about three-quarters of India’s workforce, with another 49% of salaried workers without a contract, paid leave or any form of social security[5]. With the economy at a halt, there is a need to employ measures to protect these workers and households from falling (further) into poverty.
In India, the Ministry of Finance has announced grants for six states in India to ensure basic civic services and cleanliness for both urban and rural bodies. Several states have announced plans to roll out welfare schemes to protect the vulnerable segments of the populations and to deal with the economic challenges caused by the pandemic.
For example, in Uttar Pradesh, the government has announced a cash transfer scheme for workers who may have lost their livelihoods temporarily such as vegetable vendors, construction workers, rickshaw pullers, autorickshaw drivers, and temporary staff at shops. The Working People’s Charter, a labour-rights group has urged the Central Government to create an emergency fund of Rs 50,000 crore to provide much needed economic support to workers in the informal sector.
With the creation of ‘COVID-19 Economic Response Task Force’ whose mandate is to “consult stakeholders, take feedback, on the basis of which decisions will be taken to meet the challenges”, it is important for policymakers, academics, civil society and practitioners to come together and provide a thoughtful set of interventions that can help mitigate the losses to India’s informal workforce and their families.
We have a live tracker here: covering all the interventions announced by the different states in India to provide welfare to households affected by this outbreak.
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[1] Ugo Gentilini, Mohamed Almenfi and Ian Orton (2020). Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures. World Bank.
[2] ibid
[3] ibid
[4] BBC. Interview with Ramanan Laxminarayan. March 20, 2020 (accessed at: https://www.bbc.com/news/av/world-asia-india-51962813/india-must-prepare-for-atsunami-of-coronavirus-cases
[5] Government of India, Periodic Labour Force Survey 2017-18, India (May 2019), available at
http://www.mospi.gov.in/sites/default/files/publication_reports/Annual%20Report%2C%20PLFS%202017-18_31052019.pdf [“PLFS”]
