The economic fallout from the Covid-19 pandemic could push half a billion more people into poverty unless action is taken to bail out developing countries, Oxfam has warned.
In its new report Dignity Not Destitution, the charity group is calling on world leaders to agree an economic rescue package to keep poor countries and poor communities afloat. It said this should help vulnerable small businesses, and provide cash grants to people who have lost their income.
A United Nations University World Institute for Development Economics Research (UNU Wider) paper, written by researchers from King's College London and the Australian National University, estimates that between 6 per cent and 8 per cent of the global population could be forced into poverty as a result of the economic shutdowns that have been introduced to slow the spread of coronavirus.
Oxfam said this could set back the fight against poverty by a decade, and by as much as 30 years in developing countries unable to afford the economic stimulus measures seen in richer ones. Over half the global population could be living in poverty in the aftermath of the pandemic.
An emergency rescue package could be paid for through measures such as the immediate cancellation of $1 trillion worth of developing country debt payments, it suggested.
If Ghana’s external debt payments in 2020 were cancelled, for example, it would enable the government there to give a cash grant of $20 a month for six months to each of its 16 million children, elderly and people with a disability.
The creation of at least $1 trillion in new international reserves, or special drawing rights, would also dramatically increase the funds available, while “emergency solidarity taxes”, such as a tax on extraordinary profits or the very wealthiest individuals, could generate additional resources, Oxfam said.
Some $500 billion in new overseas aid would also be needed to meet the $2.5 trillion that the UN estimates is required to support developing countries through the pandemic.
"We know that if left unchecked, without rapid, decisive and collective action, this virus could have taken as many as 40 million lives," said Oxfam Ireland chief executive Jim Clarken.
“And while we struggle to cope with the widespread loss of life and human suffering it is causing, at Oxfam we’re urgently calling for similar decisive and collective action to prevent a global economic fallout that would devastate and threaten the lives of the world’s most vulnerable people.”
Globally, just one out of every five unemployed people have access to unemployment benefits, Oxfam said, while two billion people work in the informal sector with no access to sick pay.
In poor countries some 90 per cent of jobs are informal compared to just 18 per cent in rich nations.
Women are more likely than men to be on the front line of the health emergency, and are also on track to be the hardest hit financially. Women make up 70 per cent of health workers globally, provide 75 per cent of unpaid care and are more likely to be employed in poorly paid precarious jobs.
More than one million Bangladeshi garment workers, 80 per cent of whom are women, have already been laid off or sent home without pay after orders from western clothing brands were cancelled or suspended.
Oxfam has made its call on world leaders to act ahead of next week's key virtual meetings of the World Bank, the International Monetary Fund and G20 finance ministers.
“Governments must learn the lessons of the 2008 financial crisis where bailouts for banks and corporations were paid for by ordinary people as jobs were lost, wages flatlined and essential services such as healthcare cut to the bone,” Mr Clarken said.
“Economic stimulus packages must support ordinary workers and small businesses, and bailouts for big corporations must be conditional on action to build fairer more sustainable economies.”