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Article

5 May 2020

Author:
Era Dabla-Norris & Changyong Rhee, IMFBlog

Asia: Informal workers need expansive and inclusive safety nets post Covid-19

"A New Deal for Informal Workers in Asia," 30 April 2020

Full or partial lockdowns to curb the spread of COVID-19 are having crippling effects on businesses and workers across Asia, as elsewhere. Among the most vulnerable of the workers are the ones working in part-time and temporary jobs without social insurance, and in sectors of the economy that are neither taxed, nor regulated by any form of government.

Known as informal workers, they are particularly vulnerable to dramatic collapses of income and loss of 

...What informal workers need now is a “New Deal” that provides immediate social protection against the pandemic’s economic fallout while putting in place the building blocks for a stronger safety net for the future. How can this be done?

  • Getting the basics right. If international assistance and internal financing can be found, countries in developing Asia should use this to mount an effective public health response, shoring up public health infrastructures and expanding coverage, and correcting deficiencies in clean water, and sanitation.
  • Setting up more expansive and inclusive safety nets. Governments could use citizen identification systems and digital technologies, such as India’s biometric Aadhar system, so that social protection programs can reach the people most at risk more quickly and efficiently, with the ability to scale up in times of crisis. The temptation to introduce universal cash transfers by “giving money to everybody” should be tempered by the goal of ensuring adequate support for the most vulnerable at a reasonable fiscal cost.
  • Investing in digital capacity and bandwidth. Across the developing world, expanding the availability of digital platforms for education and financial services would help to ensure greater and more equitable access for all.

Addressing the pervasive informality in Asia will also require comprehensive measures to improve the business environment, remove onerous legal and regulatory obstacles (especially for startups), and rationalizing the tax system. Specific policies will depend on country circumstances but should aim to bring informal workers into basic social safety nets while enhancing their productivity.