While the world is continuously reeling from the health and socioeconomic impacts of the Covid-19 pandemic, one key lesson has emerged: Inclusive social protection can be an effective emergency instrument to protect low-income citizens. Countries with strong social protection systems, underpinned by comprehensive household information and robust digital payment systems, have been able to effectively ramp up support to their impacted populations.
The World Bank: “Effective social protection systems are crucial to safeguarding the poor and vulnerable when crisis hits. Yet, in many countries, such systems remain limited in coverage and will need significant upgrading to respond to a pandemic like Covid-19. To help protect individuals and communities from the adverse impacts of the pandemic, the World Bank Group is prepared to deploy up to $160 billion over the next 15 months to support measures that will help countries cope with immediate health consequences and bolster economic recovery.”
The International Labor Organization said Covid-19 has exposed devastating gaps in social protection coverage in developing countries, and recovery will only be sustained and future crises prevented if they can transform their ad hoc crisis response measures into comprehensive social protection systems.
Germany recently launched an intriguing social protection experiment. For a period of three years a number of selected citizens get 1,200 euros (about P68,000) a month for free. They only have to answer researchers’ questions about how they’re faring with this unconditional income. Within a week, more than 1.5 million volunteers have signaled their willingness to participate in the study on unconditional basic income. The organizers are looking for a total of 1,500 participants. Officials from the Mein Grundeinkommen (My Basic Income) charity are convinced that an unconditional income for all citizens would solve many current problems. The assumption is that people get more creative and become freer and happier if they don’t constantly face the pressure to earn enough money to get by.
Finland did a similar basic income experiment in 2019: More than 2,000 unemployed people aged 25 to 58 were randomly selected and given a monthly stipend of 560 euros (about P30,000). The result? The experiment had little employment effects, better-perceived economic security and mental wellbeing among participants. The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group. They also had a more positive perception of their economic welfare.
The idea of basic income has gained renewed interest during the Covid-19 pandemic. Millions of jobless people are relying on social safety nets that vary greatly from country to country. Of course, there are myriad questions that social protection experiments, like the one rolled out in Germany, need to answer. How would it be financed? Who are the recipients? However, certain quarters think this is a step in the right direction. Policymakers only need to keep an open mind to realize that this could be a good policy tool against the adverse effects of a pandemic-induced recession.
What about an unconditional income designed for low income but not poor Filipinos to dovetail with the overall plan under the Pantawid Pamilyang Pilipino Program? In the time of the pandemic it’s not only the poorest of the poor but also the near poor that needs government support. It has been shown that social protection schemes like the 4Ps have positive impacts on economic growth through the multiplier effects of increased local consumption and improved labor market outcomes. After all, the best engines for a country’s economic growth are its healthy and productive citizens.