Many countries seem to have established a clear policy mix for combating the spread of Covid-19. By combining social distancing policies and enforcing lockdowns, countries have been able to slow the spread of the virus and reduce the number of infections and deaths. The economic and social impacts of these policies are buffered through complementary economic and social policies to mitigate economic and social crises.
However, countries like Colombia, where almost half of the population is economically vulnerable, face larger obstacles to financing and delivering these relief measures. Colombia’s precarious social and economic conditions limited the deployment of policies to mitigate the unintended consequences of a lockdown. The quarantine has had a significant effect on the country’s social and economic well-being: in April 2020, the unemployment rate reached 19.8 percent, meaning that 5.4 million Colombians have lost their jobs, and the economy is now projected to shrink by 2.7 to 7.9 percent this year.
The current pandemic is a crisis with crosscutting impacts that go far beyond health implications. In a previous blog post, Ana María Álvarez highlighted the interaction between the lockdown and environmental impacts like the increase in the rates of deforestation. This post deals with the impacts of the crisis on Colombia’s most vulnerable citizens. Achieving a low number of cases and deaths in the country is not, on its own, a sufficient measure of success; the Colombian government must also increase its investments in ambitious and effective public policies to mitigate the economic and social impacts of the Covid-19.
Policies and mechanisms to face the Covid-19 crisis in Colombia
After observing the impact of the virus on health systems in places like China and Europe, Colombia enforced a lockdown only 22 days after the first reported case, slowing the spread of the virus and postponing the pressure on the health care system. This measure enabled the Colombian government to maintain a low number of infections in the initial phase of the pandemic compared to countries like Germany, the Netherlands, and the United States. At the same time, this rapid action aggravated the economic impact of the crisis in a context in which almost half of the population is financially vulnerable.
Economic aid and social policies were provided by the government to counteract the economic and social impacts of having a lockdown, but these measures were relatively weak when compared with other countries. On average, the G20 countries have dedicated the equivalent of 8 percent of their GDP to offset the economic impact of the crisis, while Colombia has invested only 2 percent of its GDP. While Colombia relatively effectively managed the epidemiological indicators, at least initially, it has yet to make the investment needed to face the economic and social crisis.
The social and economic aid provided so far by the Colombian government was delivered through multiple mechanisms and included subsidies for companies and individuals, reduced pension contributions, macroeconomic policies, and deferral of payments for basic sanitation services for vulnerable populations. Almost half of the Colombian population is in conditions of financial vulnerability, poverty, or extreme poverty if measured by using standards of monetary poverty, while 19.6 percent of Colombians are poor if measured according to the multidimensional poverty index. [1] The government’s support measures benefit individuals and companies that are operating in formal sectors of the economy, but those individuals that rely on informal ways of subsisting, like 48 percent of the workforce in Colombia, are hard to identify and reach with the subsidies or the provision of services.
These sectors of the population are the most affected by the economic and social consequences of the crisis, and they will suffer its long-term impacts. According to experts from the Faculty of Economics of the Universidad de Los Andes, the Covid-19 crisis could erase 20 years of progress to reduce inequality in Colombia, increasing the GINI index [2] from 50.4 in 2016 to 58.7, which was the coefficient in the year 2000. It is worth mentioning that in 2016 inequality in Colombia remains very high according to international standards.
Success must be measured beyond epidemiological indicators
Slowing the expansion of the virus is not enough, particularly if sanitary conditions are not improved, effective economic and social policies are not implemented, and above all if the informal population does not receive adequate support. Understanding and tackling the Covid-19 crisis as a crosscutting issue will enable more efficient interventions in the short term and will provide opportunities to implement structural reforms with long-term benefits. Short term policies to protect jobs and avoid a further social crisis, like providing significant economic aid to sectors of the population that rely on a daily income for subsisting and for companies in industries highly affected by the crisis (e.g. tourism, entertainment, etc.) must be put into place immediately. At the same time, the Colombian government should begin a series of structural reforms to tackle the root causes of the population’s vulnerability. Such reforms should begin with providing better access to public services for all sectors of the population, strengthening the health system, ensuring sustainable land management, and promoting policies that enable inclusive and sustainable economic growth.
Footnotes:
[1] The Multidimensional Poverty Index (MPI) identifies multiple deprivations at the household and individual level in health, education and standard of living.
[2] The highest score is 100, meaning the greatest level of inequality.
