A recent United Nations Development Programme (UNDP) report advises that temporary basic income in 132 of the world’s low and middle-income countries could curb the spread of the new coronavirus and reduce the pandemic’s massive, adverse effects on global poverty.
Those Hardest Hit: Low and Middle-Income Countries
Co-author of the report, Eduardo Ortiz-Juarez, explained in a blog post that low and middle-income countries are more vulnerable to the economic effects of COVID-19 on the workforce. This is due to a few significant reasons, e.g., 80% of workers in low-income countries work in jobs that cannot adjust to accommodating lockdown procedures. Furthermore, 70% work in the informal sector — only 14% of which have access to employment-based, social protection programs. Compounding these vulnerabilities is the existing high level of poverty in low and middle-income countries. All of these variables considered, low and middle-income countries have taken disproportionate losses in the face of the pandemic and will struggle to rebuild.
Temporary Basic Income: A Solution
The solution that the UNDP proposes — temporary basic income: an unconditional emergency aid that is an “urgent, fair and feasible way of stopping people falling into poverty or further impoverishment as a result of the pandemic.” UNICEF reported that direct cash transfers, how temporary basic income would be delivered, are among the most effective poverty-reduction methods. The basic income recommended by the UNDP would affect nearly 2 billion people around the globe, in 132 countries. Most of these nations are in South Asia, sub-Saharan Africa, East Asia and the Pacific. The basic income would eventually cost between $200 and $465 billion per month, which is equivalent to between 0.27% and 0.64% of the collective GDPs of all countries involved. The World Economic Forum explained that the cost of this temporary basic income could theoretically come from these countries’ suspended debt payments, totaling around $3 trillion this year. This, in turn, could pay for up to 16 months of temporary basic income, depending on the distribution system.
Delivering Temporary Basic Income
The UNDP made three recommendations for the delivery of temporary basic income. Moreover, each recommendation depends on country-specific access to data and resources. Adding on to vulnerable individuals’ existing incomes to make sure they exceed a minimum of 70% above the poverty line in their respective country. “Lump-sum transfers” are given to vulnerable individuals totaling half of the average income in the respective country. Uniform “Lump-sum transfers” given to vulnerable individuals in all 132 affected countries that meet a minimum of exceeding the “typical level of the poverty line among upper-middle-income countries.”
Slowing the Spread of COVID-19
Temporary basic income could solve multiple problems at once, but most importantly, it would slow the spread of the new coronavirus by allowing workers the financial flexibility to stay home. While this income program cannot retroactively reverse existing pandemic economic damage — it would slow the rapid increase in global poverty. Increasing income could also affect a wide range of existing issues, worsened by the pandemic. E.g., spending on education, community health and gender inequalities that affect working women.
Model Programs Currently in Practice
UNICEF reported that Spain’s government rolled out a “Basic Income scheme” in June, reaching about 2.5 million vulnerable people. At the time, the country faced a projected 13% decline in GDP due to the pandemic. The basic income program will remain in place in Spain after the pandemic slows as a permanent social protection program. A similar program has also rolled out, in Tuvalu. However, the scope of the UNDP proposed program, would be much larger and thus, more far-reaching.
– Emily Rahhal