IMF warns coronavirus will worsen global inequality, calls for fundamental changes
The coronavirus pandemic will worsen inequality in the world, through its disproportionate impact on poorer and vulnerable segments of the society, warns International Monitory Fund (IMF).
Like major epidemics in the 21st century, COVID-19 will raise income inequality and hurt employment prospects of those with only a basic education, much worse than of those with advanced degrees, the IMF said in a recent report.
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The report, which traced the effects of other diseases including SARS, H1N1, MERS, Ebola and Zika, found out that they had vastly disparate impact on the employment of people with different levels of educational attainment. While the employment of those with advanced levels of education was scarcely affected, the employment of those with only basic levels of education fell sharply, by more than 5 percent at the end of five years.
The coronavirus pandemic is expected to cause global income to fall by 3 percent, much worse than during the 2008-2009 global financial crisis. In this context, the IMF called on policymakers to make fundamental changes to protect the vulnerable sections in the society and to prevent the long-term damage to their livelihoods.
“Without strenuous and targeted attempts, we are again likely to see an increase in inequality, which was already one of the most complex and vexing challenges in the global economy,” IMF’s Managing Director Kristalina Georgieva was quoted in the report.
“Policymakers must use the opportunity to make fundamental changes so that when future shocks inevitably occur, including for example from the effects of climate change, societies have in place risk-sharing and social assistance mechanisms that will protect the most vulnerable much better than they do today,” the report said.
Some of the policy measure recommended by IMF to address the inequality of the pandemic include expanding social assistance systems, introducing new transfers, boosting public work programs to offer job opportunities, giving financing opportunities to sustain employment and progressive tax measures.
“Access to sick leave, unemployment benefits, and health benefits is useful for all in dealing with the effects of the pandemic but particularly so for poorer segments of society who lack a savings cushion and are thus living hand-to-mouth,” the report said.
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