Low income workers will be disproportionately affected by COVID-19
5/21/20
Low income workers in developing countries face a higher risk of income loss during the COVID-19 isolation as it is more difficult for them to work from home. This is one of the results of a new international, economic study in which researchers at the Universidad Carlos III de Madrid (UC3M) have participated whose results provide useful information for planning post-pandemic de-escalation.
The article, recently published in Covid Economics: Vetted and Real-Time Papers review in co-operation with researchers from the University College London (United Kingdom), the National Graduate Institute for Policy Studies (GRIPS) in Japan and the Bank of Thailand, analyses the economic impact of COVID-19 in various aspects of the labour market.
“Our study is a first step towards an analysis of the impact of the pandemic from the job offer point of view. Future research may complement this by examining the impact on job demand, the decline in consumption or the supply-chain effects”, explains one of the researchers, Warn N. Lekfuangfu, professor at the UC3M’s Department of Economics.
This research focuses on Thailand as a case study, but the findings must be relevant for other countries with similar labour market structures, especially those in which a large portion of the population are self-employed and there is a poor social net for labour protection. The findings can provide useful insights for policymakers and leaders in charge of labour and economic management and who are tasked with de-escalation planning, in order to balance pandemic containment and the associated economic burdens.
According to researchers, the group of workers who are most likely to be proportionally affected by the health crisis are precisely one of the most vulnerable; those who have less income. They have also observed that this occurs because, in many cases, in this type of work (in sectors such as agriculture, construction or manufacturing) it is not possible for the workers to work remotely and earn an income. “Without adequate government intervention to support income or employment for the poor, the adverse effect of COVID-19 could worsen income inequality in the population”, indicated one of the authors, Suphanit Piyapromdee, of the Department of Economics at University College London.
The researchers also found that low income workers, such as farmers and construction workers, tend to work in jobs that require less physical proximity to other people at work than higher income workers, such as office workers or schoolteachers. “Our analysis suggests that workers in jobs which cannot be adapted to work from home, but do not require frequent physical contact with others, should be allowed to return to their workplaces first. This happens to one-third of low-income workers,” states Nada Wasi, of the Puey Ungphakorn Institute for Economic Research at the Bank of Thailand. She added that “On the other hand, those who usually work in close physical proximity to others, but whose jobs are well-suited to work from home, may be the last to return to normalcy”.
Researchers have also found differences in couples’ jobs based on their income. According to PonpojePorapakkarm, of GRIPS, “couples in low-income households are more likely to have similar occupations and are highly concentrated in jobs which cannot be adapted to work from home. Whereas high income workers have a lower correlation between husband and wife occupations.” The study has found that 60% of couples in low income households have similar occupations, whereas this only occurs in 20% of high-income households.
Bibliography: Lekfuangfu, W., Piyapromdee, S., Porapakkarm, P., Wasi, N. (2020). Covid Economics: Vetted and Real-Time Papers. New Implications of Job Task Requirements and Spouse's Occupational Sorting'. Volume 12, 2020, (May 1st, 2020), page 87-103.
