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Impact of Covid-19 and Inflation on Low Income Households

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Impact of Covid-19 and Inflation on Low Income Households Roundtable Policy Brief | 1 Kashf Foundation Roundtable Policy Brief January 2021 Impact of Covid-19 and Inflation on Low Income Households, Especially Women: Roundtable Policy Brief ----------------------------------------------------------------------------------------------------------------------------- ---------------------- Kashf Foundation hosted a roundtable on 20th January 2021 to bring to light the impact of COVID 19 on low income households, especially women. This document gives a brief summary of the discussions from the roundtable and posits policy recommendations based on the discussions. ----------------------------------------------------------------------------------------------------------------------------- --------------------- INTRODUCTION impact of Covid 19 and inflation on low income households, particularly microbusinesses, the response Kashf Foundation hosted a roundtable on 20th January by the microfinance sector and the areas of intervention 2021 to bring to light the impact of COVID 19 on low for microfinance providers to improve the social agency income households, especially women. The objectives of women. of the roundtable were: The following sections provide main points from each I. To understand the economic consequences of of the speaker’s sessions, followed by a section on key Covid 19 in Pakistan; policy recommendations. II. To highlight the underlying factors that have contributed to women facing the brunt of the DR ALI CHEEMA - COVID 19: ECONOMIC LOSS, recession, rightly termed as a ‘she-cession’; RECOVERY AND VULNERABILITIES IN III. To discuss the role of MFIs in building resilience PAKISTAN of women against economic shocks and policy actions which need to be adopted for a gender Dr. Ali Cheema used data from the PBS to demonstrate inclusive economic recovery. the economic shock brought about by the pandemic on income and employment. Dr. Cheema shared that a The panelists included the following esteemed decrease of 40% was reported in the mean income as a academics and practitioners; Dr. Ali Cheema - result of lockdown while unemployment also increased Associate Professor and Director Mehboob-ul-Haq by about a similar percentage (37%). He further shared Center, Lahore University of Management Sciences, that the analysis showed that the impact of the Dr. Hadia Majid - Assistant Professor and Director lockdown was unevenly distributed across localities Saida Waheed Gender Initiative, Lahore University of with the urban economy being affected more than the Management Sciences, Dr. Hafiz Pasha – Academic rural economy. Moreover, off-farm activities in rural and Former Civil Servant and Ms. Roshaneh Zafar - areas were also impacted more than on-farm activities. Founder and Managing Director Kashf Foundation. The analysis also showed that the mean income (in November) was still lower than the pre-Covid level and The roundtable began with Dr. Ali Cheema highlighting approximately 3 million people were still out of work the impact of Covid 19 on the economy alongside months after the lockdown was lifted (November). exploring some of the gaps and areas of improvement in terms of public and private response to the economic With respect to policy recommendations Dr. Cheema recession. This was followed by a session by Dr. Hadia proposed that a public awareness campaign needs to be Majid, who brought to light the systemic issues that designed using economic statistics on the negative limit women’s economic role, focusing particularly on impact of lock-down to impress upon the public the the problems faced by women in the informal sector. importance of social distancing and related Covid Dr. Hafiz Pasha talked about the impact of pandemic on prevention behaviors. Furthermore, he proposed that a women and its consequences on the low to middle clear and targeted vaccination strategy needs to be income households. He also presented a policy devised by the Government. In the long term, framework to enhance gender equity in the labor investments towards the enhancement of the public market. In the end, Ms. Roshaneh Zafar talked about the health system will be pivotal for increasing the capacity Roundtable Policy Brief | 2 to deal with any future pandemics. Moreover, well understand issues faced by women workers and create designed and accessible social safety nets to increase strategies to address them. More work needs to be citizen’s ability to cope with shocks and vulnerabilities undertaken to not just ensure the creation of women need to be designed and mainstreamed. Lastly, Dr. centric legislation but enabling conditions to ensure the Cheema proposed that development and promotion of implementation of the legislation is required. digital platforms to enable market access, especially for the informal sector, are essential for promoting DR. HAFIZ PASHA - COVID-19 IMPACT ON JOBS efficiency and ensuring business continuity during any AND HOUSEHOLDS future lockdowns. Using a data from a special survey undertaken by the DR HADIA MAJID - THE ECONOMIC ROLE OF PBS on the impact of Covid 19 on the economy, Dr. WOMEN IN PAKISTAN; THE VULNERABILITIES Hafiz Pasha talked about the impact of the pandemic on AND HURDLES household wellbeing, specifically looking at the impact on women. Dr. Pasha shared that it is estimated that Dr. Hadia Majid shared findings from her work with between April to July 2020; 20.6 million people could informal workers and home based workers and the not work due the lockdown, 6.7 million people lost their vulnerabilities and hurdles they face vis-à-vis the labor jobs, and there was an average decrease of 53% in market. Using a gendered lens on LFS 2014-2015, Dr. incomes. 74% of those who lost jobs were part of the Majid shared that the female labor force participation informal sector. Segregating the job loss by gender it is rate for Pakistan is 22% whilst women’s employment to estimated that about 1/3rd women lost jobs; in terms of population equal 23%. Of the female paid employees in numbers, it means job losses for 2.5 million women and Pakistan, 62.5% work on casual contracts whilst 73.5% 4.5 million men. And whilst there had been recovery of of female employment is in the informal sector. She around 67% of jobs between August to November 2020 also shared that 7.7% of girls aged 10-14 are in the – the remaining people were still out of jobs. labor force out of whom 86.1% work in agriculture. There is a massive wage differential when women are Speaking on the impact that women’s unemployment compared to men, with women earning 70% of what has on households, Dr. Pasha explained that about half men earn for the same work. Moreover, there has also of the households (46%) in the lowest two quintiles rely been an increasing feminization of the informal sector, on women to bring in income. Considering that there and agriculture over the years in Pakistan. A majority of has been a 27% rise in the cost of living over the last women employed in the agriculture sector work as two years, 35% increase in food prices, no nominal unpaid family labor and do not earn wages which limits increase in income and loss of employment of the incremental economic well-being. female member, households even approaching the 3rd quintile (middle class) run the risk of not being able to Talking about the impact of Covid 19 on women, Dr. meet the consumption standard (which is Rs.6,000 per Majid shared that since women workers occupy a adult per month). It indicates that up to half the secondary status when compared with men elasticity population of Pakistan, where households does not have analysis shows that women are the first to be laid off a female working, would struggle to meet the minimum during economic crisis. The double burden of nutrition requirement (household income and household management which women carry was expenditure survey of 17-18, updated to 19-20). exacerbated even more during the lockdown. Moreover, as a majority of women work in the informal sector, Turning his focus on the path to recovery, Dr. Pasha there were minimal legal or contractual requirements to was hopeful that of the estimated 7 million who lost retain or compensate women workers. Domestic jobs, 5 million would have found a job by the end of workers, who generally work in unfavorable conditions, 2021. He also appreciated the financing packages put were very negatively impacted as a majority of them forward by the State Bank of Pakistan (SBP) like were laid off to prevent risk of infection. extending special financing schemes, deferring loan repayments etc., leading to Rs.1,300 billion being With respect to the policy recommendations, Dr. Majid forwarded to borrowers. However, he pointed out that stressed that a majority of issues faced by women in the there has been no focus on SMEs, MFPs and gender labor market result from the social set-up in Pakistan inclusivity. He suggested a special wholesale credit line which is geared against women. Data needs to thus be through SBP at zero interest rate for the MFPs, keeping collected, gender segregated and leveraged to Roundtable Policy Brief | 3 in view the high cost of business because of small loan over the same time period. Kashf’s research also size. showed that with increasing food expenses, in the face of reducing incomes, low-income households have On the social protection front, he disagreed with the began resorting to regressive coping mechanisms such government’s decision to cut the outreach of the as decrease in the quality and quantity of food Ehsas/BISP program to 7.5 million people from 15 consumed, cutting back on other important expenses, million. He posited that considering that income loss and taking on further debt. due to COVID 19 and increase in food prices have significantly impacted households, it is important that Highlighting the response of microfinance providers to social protection be extended to the maximum citizens. the pandemic, as documented by the CGAP, Ms.
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