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UNDP suggests the introduction of a temporary basic income to protect poor and vulnerable people in developing countries

  • Measures of economic support for the most vulnerable have been adopted by certain countries;
  • The UNDP report is providing the cost of this measure, with three possible scenarios according to the financial possibility of the country

The Covid-19 pandemic emphasised the existing gaps in social protection, with proposals for global and coordinated initiatives to improve social protection systems, such as a Global Fund on social protection.

While these initiatives are still discussed at the highest level, the United Nations Development Programme (UNDP) conducted an analysis on how to mitigate the effects of Covid-19 by ensuring a temporary basic income. The report, “Temporary Basic Income: Protecting Poor and Vulnerable People in Developing Countries, estimates that it would cost from $199 billion per month to provide a time-bound, guaranteed basic income to the 2.7 billion people living below or just above the poverty line in 132 developing countries.

The report concludes that the measure is feasible and urgently needed, with the pandemic now spreading at a rate of more than 1.5 million new cases per week, particularly in developing countries, where seven out of ten workers make a living through informal markets and cannot earn money if they are at home”.

UNDP Administrator Achim Steiner commented: “Unprecedented times call for unprecedented social and economic measures. Introducing a Temporary Basic Income for the world’s poorest people has emerged as one option. This might have seemed impossible just a few months ago”. “Bailouts and recovery plans cannot only focus on big markets and big business. A Temporary Basic Income might enable governments to give people in lockdown a financial lifeline, inject cash back into local economies to help keep small businesses afloat, and slow the devastating spread of COVID-19”.

During the pandemic, countries like Colombia, Italy, Peru decided to support families’ incomes with a temporary and limited injection of cash. This economic measure proved challenging in its management, due to the difficulty of reaching out to the target group, be it the category of self-employed workers or the poorest families and workers in the informal sector.

Other challenges relate to fiscal space and funding. Following the call from the UN Secretary-General to a comprehensive debt standstill for all developing countries during the pandemic, the report suggests that the governments can repurpose those fiscal resources directed to external debt repayment.

It is the view of the employers that measures of temporary income support are welcome during such period of crisis to restore confidence and favour consumption. However, income transfers alone are not the solution and should go hand in hand with strong and economic viable social protection systems. Moreover, to ensure that the levels of unemployment do not continue to raise, state allocations and unemployment benefits must be complemented by active labour market policies to match demand and offer and upskilling programmes.