Covid-19 and the “New Poor”

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One of the many tragedies of Covid-19 is the economic devastation to countries all over the world.

As is often the case, the most vulnerable have been affected most adversely. Covid-19 has reversed trends of declines in global poverty for the first time in nearly a quarter of a century. The World Bank estimates that, in 2020 alone, 100 million people will have been pushed into extreme poverty, primarily down to Covid-19.

The World Bank defines extreme poverty as living on $1.90 or less per day. Those who have escaped extreme poverty in recent years have been most exposed to falling back into it, but the pandemic has also brought about a “new poor”.

The “new poor” are generally urban, involved in the informal sector, construction, and manufacturing, and are better educated.

South Asia has fared worst in its struggle against extreme poverty in 2020, followed by Sub Saharan Africa. It is estimated that 49 – 57 million additional people have been pushed into extreme poverty in South Asia this year, and 26 – 40 million additional people in Sub-Saharan Africa.

The demographics of the “new poor” differ from previous poverty trends of those falling into extreme poverty. The “new poor” are generally urban, involved in the informal sector, construction, and manufacturing, and are better educated compared to those living in extreme poverty before Covid-19. Prior to Covid-19, those living in extreme poverty were more likely to live in a rural area and be involved in agriculture.

Across the world, the poor and vulnerable have been most severely affected by both the health and the economic consequences of Covid-19. These people are generally in less secure and lower-skilled employment, with a lower level of education and assets. Their jobs are more likely to be lost in times of recession. The areas of work are less compatible with social distancing or staying at home, such as in restaurants and bars, or in construction and manufacturing. Additionally, these people often lack coping mechanisms such as savings, or wider social security.

Further, the “new poor”, involved in the likes of manufacturing and construction within the informal sector, are more adversely impacted by social distancing and lockdowns.

The World Bank highlights the highest priority for battling global poverty and once again reducing the numbers of those in extreme poverty, including the “new poor”, by first defeating Covid-19, and then reviving economies.

The pandemic has exposed the fragility of globalisation.

Developed countries should play a role in helping developing countries to eliminate the virus, before offering additional economic support to further growth. The pandemic has exposed the fragility of globalisation, manifested through distrust and closed borders. It is paramount that countries continue to share technologies and information for battling the virus. It is also essential that moredeveloped countries offer assistance and material support to less developed countries, such as medical equipment, instead of restricting the export of medical supplies.

Of particular importance in the coming months will be the distribution of vaccines, which is essential to eliminating Covid-19. So far, only Oxford/AstraZeneca have pledged a fair share of vaccines to under-developed countries, ensuring 64 percent of its vaccines will go to the most vulnerable nations.

Countries and organisations should push for similar pledges. As it stands, in 67 of the world’s poorest countries only 1 in 10 people will have access to a coronavirus vaccine. In comparison, currently the UK’s deals will result in 5.7 doses per person, enough to vaccinate everyone in the country almost three times.

It is easy to overlook global poverty in favour of national interest. However, extreme poverty is an issue of basic humanity, and its eradication will come at the benefit of all.

For a more complete look at the “new poor” and global poverty, refer to the World Bank’s publication Poverty and Prosperity 2020.

Image: Wolfgang Lonien via Creative Commons

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