Low-income countries in Central and Western Asia, Northern Africa, and Sub-Saharan Africa would need to spend nearly 16 per cent of their GDP or $80 billion to close the social protection financing gap worsened by the COVID-19 pandemic, the latest policy brief from the International Labour Organisation (ILO) has shown.
The study released on Thursday explained that additional sources of financing are needed to guarantee at least basic income security and access to essential health care for all in 2020 alone.
It added that developing countries should invest approximately $1.2 trillion – on average 3.8 percent of their GDP to close the gap which had been before the pandemic.
“Since the onset of the COVID-19 pandemic, the social protection financing gap has increased by approximately 30 percent according to Financing gaps in social protection: Global estimate and strategies for developing countries in light of the COVID-19 crisis and beyond.
“This is the result of the increased need for health-care services and income security for workers who lost their jobs during the lockdown and the reduction of GDP caused by the crisis.
“The situation is particularly dire in low-income countries who would need to spend nearly 16 percent of their GDP to close the gap – around US$80 billion, the report stated in brief.”
It stated that even before the COVID-19 crisis, the global community was failing to live up to the social protection legal and policy commitments it had made in the wake of the 2008 financial crisis.
“Currently, only 45 percent of the global population is effectively covered by at least one social protection benefit. The remaining population – more than 4 billion people – is completely unprotected.
Stressing further, ILO’s Director of Social Protection Department, Shahrashoub Razavi, said, “Low-income countries must invest approximately US$80 billion, nearly 16 percent of their GDP, to guarantee at least basic income security and access to essential health care to all.”
This is despite the measures taken nationally and internationally to reduce the economic impact of the COVID-19, by providing short-term financing assistance.
The study stated that “some countries have sought innovative sources to increase the fiscal space for extending social protection, like taxes on the trade of large tech companies, the unitary taxation of multinational companies, taxes on financial transactions or airline tickets. With austerity measures already emerging even with the crisis ongoing, these efforts are more pressing than ever.
“Domestic resources are not nearly enough. Closing the annual financing gap requires international resources based on global solidarity,” it emphasised.
The study suggested that mobilisation at the international level should complement national efforts, complementing the efforts of international financial institutions and development cooperation agencies who have already introduced several financial packages to help governments of developing countries tackle the various effects of the crisis.
“More resources are needed to close the financing gap, particularly in low-income countries,” the study said.