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Vulnerable Workers (Russo et al.)

Covid-19: The Challenge of Ensuring Assistance to Informal and Vulnerable Workers by Matías Busso, Juanita Camacho Munoz , Julián Messina and Guadalupe Montenegro published by IDB (5/2020).

“Few measures could be more important during the current Covid-19 pandemic than ensuring that the poor and vulnerable can eat, buy medicine and pay for other basic needs as they endure a months-long shutdown essential to protecting public health. But in Latin America where about half the population works in the informal economy, that is no easy feat. Many people in the informal economy depend on daily wages. Most of them, including those who are not especially poor, will have to shelter at home without earning an income, and may become poor again.

All this has brought the opportunity and effectiveness of government assistance to the fore as one of the defining issues of government policy during the Covid-19 pandemic. How well are governments targeting those most in need? How effective are existing government programs in replacing lost income? And what do their responses tell us about the structure of social protection programs in the region? Answering these questions and making the necessary adjustments are fundamental to ensuring that the poor and vulnerable, who will suffer the greatest share of the burden during the lockdown, are not inordinately harmed.

Recognizing the urgency of measures to deal with the pandemic, most countries have correctly relied on already existing social programs for vulnerable households. This has two advantages: It speeds up the targeting to those most in need, and it facilitates implementation. However, this approach has two drawbacks. First, existing conditional cash transfers have important coverage limitations. Even if their coverage were extended to 50%, some 5% to 37% of the poorest households would not receive any transfers, depending on the country.

Second, existing programs are not designed well enough to provide insurance against transitory shocks. Many workers at risk of poverty, for example, are not typically beneficiaries of these programs. In particular, most informal workers, even those who are typically not poor, will be unable to earn an income from home and risk falling back into poverty if the lockdown is sustained over time. Thus, a second group of emergency transfers were rapidly introduced to include individuals at risk that may not have had access to existing programs, including the self-employed and the unemployed, among others. Table 1 describes which groups of the population had been selected to receive cash transfers related to Covid-19 in nine Latin American countries as of April 29…”

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