Inequality in a time of pandemic: perspectives and proposals from the global South

February 5, 2021

by Rosario Guzman

(Delivered at the World Social Forum 2021 virtual activity titled “Covideconomics for an Economy of Life and Climate Justice”, sponsored by the Oikotree Movement, World Council of Churches, 29 January 2021)

The severity of inequality has never been starker during the pandemic. This may be witnessed in two major ways – in how easily incomes and livelihoods of the majority poor have been wiped out and in how government response to COVID has only prioritized the elite.

That is my perspective coming from the global South, and there is no better case to make my point than our very own experience under the Duterte administration.

The Philippines has the largest economic contraction among its neighbors, and third among 25 countries in South, East and Southeast Asia. The World Bank notes that the Philippines will have slower recovery than the rest. Moody’s Analytics looks at a darker scenario – the country will be the last to recover in the Asia-Pacific (and not just among ASEAN members), and this is yet to happen by the end of 2022.

The main reason for this worst economic collapse and protracted recovery, apart from our basic crisis of underdevelopment and four decades of neoliberal globalization, is that our government has given a paltry amount for COVID response and economic stimulus.

The Philippines has the smallest fiscal response to COVID in Southeast Asia, equivalent to only 2.8% of the gross domestic product (GDP), while it is 14.7% for Singapore, 8.3% for Thailand, 6.2% for Malaysia, 4.9% for Vietnam, and 3.7% for Indonesia. Our neighbors apparently are more serious than us about recovering from this global health emergency, even if we actually have the highest mortality rate from the disease in the region.

The Philippines was not exactly known to be working on income and wealth inequality coming into the pandemic. On the contrary, over time, we had had one of the most skewed income distributions in the region, with 66% of families earning below US$438 a month, and another 29% earning between that high range and US$1,250 a month. This is while 0.04% of the families, the super-rich, have a monthly income of over US$1 million.

The already little and precarious incomes of the majority collapsed during the military-implemented lockdown, which is on its way to being one of the longest-running and harshest in the world. Millions of jobs were lost, the savings (if there were any to begin with) of millions of households were wiped out, and millions of people slid into hunger and poverty.

And as though these were not enough, we are faced now with generalized inflation in foodstuff and other basic commodities, as supply mechanics, and in our context, unscrupulous monopoly trading practices, prey on hapless consumers.

The Oxfam report released this January, The Inequality Virus, observes that it took only nine months for the wealth of the world’s top 1,000 billionaires to return to pre-COVID highs, while for the world’s poorest, recovery would take more than a decade.

I don’t have a Philippine example for this observation, but it is enough to say that not all Filipino billionaires actually lost their fortunes during the pandemic. Forbes reports that the Philippines’ 50 richest individuals saw their collective wealth fall by 22% due to the pandemic, with only 32 of them experiencing decline in their net worths.

How bad could that be? These are billionaires and they will remain billionaires even if the government continues the lockdown. These are the super-rich who actually should have paid their taxes well so that our government could have the money to spend on the poor and vulnerable.

But it does not happen that way, which leads us to believe that addressing inequality is really about political will. The Duterte administration has been penny-pinching, with emergency relief amounting to only 25 cents per person per day in the duration of the first three and a half months of lockdown. This meager amount even came quite late and in a chaotic manner. The government also canceled the second tranche for a lot of recipients in the succeeding months.

The Duterte administration underestimates the recession and the urgent need to provide economic relief to a large section of the population. But it has gone on quite a borrowing binge such that by the end of its term in 2022, it would have borrowed as much as the combined borrowings of the five previous administrations.

And this is not exactly for its COVID response, nor for stimulating aggregate demand. It is borrowing for the sake of boosting its creditworthiness, to fund its infrastructure program to stimulate construction business and real estate (some of the main sources of wealth of the local billionaires), and to provide infrastructure to foreign investors. There is also that self-interest of lining the pockets of politicians and commissioning bureaucrats.

And irony of all ironies, the Duterte government is providing corporate income tax cuts and foregoes precious revenues to further encourage big local and foreign business.

Another irony is about to unfold as our government joins the vaccine race. Still, it does not budget for vaccine procurement but only intends to borrow more and to rely on the private sector to provide inoculation. It engages in a very untransparent procurement process and privileges the military and the rich.

The poor and the middle class will bear the burden of all this insensitivity through irrecoverable jobs and incomes, rising prices, more health and education expenses, marginalization from free vaccination, and the continued spread of COVID-19.

We from the global South may have the same context and proposals at this point. But perhaps not – it has been a year after all. But would you believe that we still do not have decent triage management? Our government has refused to do mass testing, isolation and quarantine and treatment. It has only done a militarized and politicized response rather than scientific and rational containment measures. No wonder we have not contained the coronavirus.

At any rate, we are similar in wanting to address the tenacious inequality in our different contexts. Our proposals should be our resounding urgent calls for our governments to provide substantial and long-term income and livelihood assistance and economic stimulus for the poor and vulnerable, wage and employment subsidy for the displaced, price freeze and control for food and basic needs, and to strengthen our public health systems and social services. Finally, our governments must have the political resolve to tax the rich. Even a 1% tax on the wealth of the world’s billionaires can raise valuable funds to recover lost vast livelihoods.

We need to break the barriers of social distancing and isolation to collectively call for these urgent proposals, for after all, addressing inequality will start from social solidarity.