Social assistance spending contained pandemic poverty, but gap widened between rich and poor countries – new UNDP report
Rich countries spent up to 212 times more per capita than poor countries on social assistance to cushion an unprecedented economic shock
New York, July 1, 2021 – A new report released today by the United Nations Development Program (UNDP) shows that cash aid policies have dramatically reduced the number of people who might otherwise have fallen into poverty during the COVID-19 pandemic.
The report – “Alleviating Poverty” – offers new data on how welfare spending has kept people from falling into poverty.
In the 41 countries for which data are available, 80 percent of the people – 12 million out of 15 million – who would have fallen below the poverty line of US $ 1.90 did not do so thanks to the assistance measures. social.
When the impact of social assistance policies is measured at higher poverty lines in the same 41 countries – that is, on anyone living on $ 5.50 per day or less in those countries – 31 of the 42 million people have been prevented from falling into poverty since March 2020.
While the overall mitigating effects were significant, the study also found that this impact was largely confined to high-income and upper-middle-income countries, as richer countries could afford to spend more on social protection measures. .
For low-middle-income countries, spending on social assistance was insufficient to prevent an increase in the number of poor, and in low-income countries, it could not at all prevent loss of income.
“The COVID-19 pandemic has triggered the deployment of an unprecedented number of new and often innovative social protection measures. This included spending on social assistance, which played a critical role in keeping people out of poverty. Yet access to that lifeline depends on where you live – with richer countries spending up to 212 times as much per capita on social protection during the pandemic than their poorer neighbors, ”said the UNDP Administrator Achim Steiner. “The challenge now is to expand the fiscal space to allow all countries to implement and maintain social assistance spending measures, which are proving to be a very cost effective and effective in preventing people from falling into poverty.
The available data shows that there have been huge differences in the income support mobilized by rich and poor countries to alleviate poverty. Globally, $ 2.9 trillion has been invested in social protection policies, but only $ 379 billion has been spent by developing countries.
While high-income countries allocated an average of $ 847 per capita to all social protection policies (social assistance and insurance), low- and middle-income countries spent an average of only $ 124 per capita. In low-income countries only, total social protection amounts per capita are as low as $ 4.
The authors took existing estimates of the number of people who became poor during the pandemic – estimated to be between 117 million and 168 million people – and went a step further to understand how welfare spending actually impacted these. figures.
The study also finds that a temporary basic income could have prevented the number of new extreme poor in the world, if it were applied to all poor and vulnerable households in the developing world.
Projections in the report show that this could have been achieved by spending just 0.5% of developing country GDP, spread over six months, on income support measures.
“The report provides some thoughts on the impact of the pandemic on poor and vulnerable households in developing countries, but also on the importance of policy choices to alleviate the increase in poverty. Some poorer countries have succeeded in cushioning the increase in poverty, showing that there is room for action even under conditions of significant constraints and uncertainty, ”said George Gray Molina, economist Chief of the UNDP. “The bottom line, however, is that powerful social assistance programs were out of reach for low-income countries, paving the way for a two-track recovery from the pandemic. “