New York – The immediate introduction of a Temporary Basic Income for the world’s poorest people could slow the current surge in COVID-19 cases by enabling nearly three billion people to stay at home, according to a United Nations Development Programme (UNDP) report released today.
The report, Temporary Basic Income: Protecting Poor and Vulnerable People in Developing Countries estimates that it would cost from $199 billion per month to provide a time-bound, guaranteed basic income to the 2.7 billion people living below or just above the poverty line in 132 developing countries.
The report concludes that the measure is feasible and urgently needed, with the pandemic now spreading at a rate of more than 1.5 million new cases per week, particularly in developing countries, where seven out of ten workers make a living through informal markets and cannot earn money if they are at home.
Many of the huge numbers of people not covered by social insurance programmes are informal workers, low-waged, women and young people, refugees and migrants, and people with disabilities – and they are the ones hardest hit by this crisis. UNDP has carried out assessments on the socio-economic effects of COVID-19 in more than 60 countries in the past few months and the evidence shows that workers who are not covered by social protection cannot stay at home without an income.
A Temporary Basic Income would give them the means to buy food and pay for health and education expenses. It is also financially within reach: a six-month Temporary Basic Income, for example, would require just 12 percent of the total financial response to COVID-19 expected in 2020, or the equivalent of one-third of what developing countries owe in external debt payments in 2020. Read more via UNDP
TEMPORARY BASIC INCOME: Protecting Poor and Vulnerable People in Developing Countries
ABSTRACT
As the rate of new COVID-19 cases accelerates across the developing world, it exposes the potentially devastating costs of job losses and income reversals. Unconditional emergency cash transfers can mitigate the worst immediate effects of the COVID-19 crisis on poor and near-poor households that do not currently have access to social assistance or insurance protection. This paper provides estimates for a Temporary Basic Income (TBI), a minimum guaranteed income above the poverty line, for vulnerable people in 132 developing countries. A TBI amounts to between 0.27 and 0.63 per cent of their combined GDPs, depending on the policy choice:
top-ups on existing average incomes in each country up to a vulnerability threshold;
lump-sum transfers that are sensitive to cross-country differences in the median standard of living; or,
iii. lump-sum transfers that are uniform regardless of the country where people live.
A temporary basic income is within reach and can inform a larger conversation about how to build comprehensive social protection systems that make the poor and near-poor more resilient to economic downturns in the future.
Introduction
INTRODUCTION
The rapid surge of COVID-19 cases across developing countries and the devastating socio-economic crisis that follows because of lost jobs and incomes suggests that unprecedented policy measures are needed. In most developing countries, social protection systems are weak and tend to benefit mostly formal workers, leaving poor and vulnerable people and their families partially or fully unprotected. While the world has witnessed an expansion of social protection and assistance measures in response to the pandemic, the lion’s share of spending has been accounted for by high-income economies. Specifically, the number of such measures has increased from 103 to 1,055 across 200 countries and territories since mid-March; fully one-third of those are non-contributory cash transfers benefiting 15 per cent of the world’s population. However, total spending by low- and middle-income countries amounts to just US$77.9 billion, or 13.2 per cent of the world’s total of US$589.6 billion. In per capita terms, these countries are spending an average of US$7 in social assistance or US$9.5 if social insurance and labour market programs are added, which is in stark contrast with the corresponding averages of US$121-123 recorded by high-income economies.
This paper estimates the total and per beneficiary amounts of a temporary basic income (TBI) to poor and vulnerable people in 132 developing countries defined as: a top-up to existing average per capita incomes that are below a minimum defined by a near-poverty, vulnerability threshold that changes in value (in PPP 2011), depending on a region’s standard of living;4 a transfer equivalent to half each country’s median per capita income or consumption, depending on the available indicator in each country, and thus is also sensitive to varying standard of living across countries; and a lump-sum transfer of $5.50 a day that is uniform across countries. The coverage of these schemes ranges from 168-218 million people in the Middle East and North Africa (MENA) and Europe and Central Asia (ECA), to 378-521 million people in Latin America and the Caribbean (LAC) and East Asia and Pacific (EAP), to 708-787 million people in sub-Saharan Africa (SSA) and South Asia (Figure 1).
The rationale behind the estimates is to offer a benchmark in terms of size and cost for providing unconditional, non-entitlement-based cash assistance during a specific period in the developing world.