In Developing World, Coronavirus Slams Workers in Informal Economy

In Developing World, Coronavirus Slams Workers in Informal Economy

Hundreds of millions of workers and self-employed service providers form a vast informal economy, from India to Africa to South America. Most have no access to unemployment insurance or much in the way of savings

Life has never been easy, said Zuleidy Carrasco, but she and her husband on a good day could earn enough money to cover the room they share with two small children and pay for the family’s meals.
Until now.
With Colombia and a growing part of the developing world in lockdown, Ms. Carrasco, a gangly 31, and her husband, Hector Brisuela, 24, cannot work or even venture outside. They are quickly running out of food and their landlord wants them to leave over unpaid rent. Twelve days remain before Colombia’s quarantine ends.
Their predicament is widespread throughout the developing world. Hundreds of millions of workers and self-employed service providers form a vast informal economy, from India to Africa to South America. Most have no access to unemployment insurance or much in the way of savings.
While people all over the globe are affected by the coronavirus, it is in the developing world—where informal laborers are the backbone of the economy—that abiding by government-mandated quarantines can more readily lead to hunger and homelessness.
“You feel anguish, desperation,” said Ms. Carrasco, who normally works odd jobs at a restaurant while her husband sells sporting goods at a shop. They and their 18-month-old daughter, Jetzabel, and 3-year-old son, Josue, live just south of Bogotá’s city center. Other rooms along a narrow patio are rented out to street vendors, shop clerks and other workers all facing the same predicament of how to pay next day’s rent.
“I’m just thinking of being thrown out into the street. What would I do?” Ms. Carrasco said.
Anger is already boiling here. Hoisting placards and demanding help, hundreds of workers protested in the capital’s main square just days after Bogotá’s quarantine began March 20. Looting broke out in a coastal city, and police have been deployed to poor districts after rambunctious crowds have defied the quarantine to demand assistance.
Such scenes have been repeated in other Latin American countries and elsewhere in the developing world, where placating hunger is a daily concern for much of the workforce. In sub-Saharan Africa, where 66% of total employment is in the informal sector, lockdowns in some countries have been accompanied by clashes with security forces.
Last week, hundreds of taxi drivers fought battles with police in the Ugandan capital, Kampala, as authorities moved to enforce a two-week ban on public transportation. Police shot and wounded two drivers and arrested hundreds of others. But those angling to work say they have no choice.
“Each day I don’t work means I am not able to buy food for my family,” said Julius Magaona, a cabbie in Kampala. “What does the government expect us to eat? We shall die of hunger before we even contract the virus.”
The lockdowns follow medical guidelines to control the pandemic’s spread. In India, 1.3 billion people are being asked to stay home. Mexico announced on Monday the suspension of all nonessential activities for the next month.
“Everything has been canceled,” said Paloma Oliveira, 26, who makes pastries for weddings and birthday parties at her home in Rio de Janeiro. “We don’t know how we will survive.”
Such sentiments could prove combustible across a swath of countries where there already is anger at ruling elites—a possibility not lost on government officials, who have scrambled to put together emergency aid packages.
For such people, “if the alternative is to starve to death, they’re going to want to go back to work,” said Cynthia Arnson, who heads the Latin America Program at the Washington-based Woodrow Wilson Center for Scholars. “People are going to say, ‘What are my odds of getting Covid-19 and really suffering from it as opposed to not being able to feed my family?’”
Indeed, in India, where nine out of 10 people who work do so in the informal economy and generate nearly half of economic activity, the national lockdown ordered by Prime Minister Narendra Modi has left huge numbers without food or a roof over their heads.
It is common for migrants from the Indian countryside to eat and live where they work, so with businesses shutting down, hundreds of thousands struck out on foot for their native villages after the government canceled long-haul train service. Indian media reported that migrants complaining about the lack of food and the travel restrictions rose up in protest in one southern state, Kerala.
While several leaders in Latin America have expressed concerns over the economy and workers, Brazil’s right-wing president, Jair Bolsonaro, has gone so far as to publicly play down the dangers of coronavirus and say that he wants to keep the economy open. His position has clashed with that of big-city mayors and governors, who have instituted quarantines.
“If Brazil continues to have its jobs destroyed, you will see the misfortune that will befall the country, the chaos, hunger and misery,” he told reporters Monday.
Even before lockdown, there was pushback against stricter measures from poor and rich. Mexico’s second-richest man, billionaire Ricardo Salinas Pliego, ordered his employees back to work last week, and warned in a speech to his executives that keeping people home in a country like Mexico, where few have savings, could lead to a social explosion.
“Stopping the economy in its tracks means hunger, and…within a short period of time that means greater crime, looting and chaos,” he said. About 56% of Mexico’s workforce labors off the books in the informal economy or without safeguards.
Many governments that instituted quarantines, forcing businesses to close, have turned to emergency handouts.
India passed a $22.5 billion package last Thursday to provide 800 million people food and other staples that will be distributed through millions of neighborhood shops and government distribution centers.
Mexico’s government has earmarked about $1 billion to extend interest-free or low-interest loans to informal enterprises and small businesses, President Andrés Manuel López Obrador said Wednesday. In Peru, where 70% toil in the informal economy, the government is looking to offer the poorest a one-time payment of $110.
Ricardo Hausmann, a Harvard University economist, said to reach people who are on the margins of society, countries need to think like El Salvador, which has created a novel targeted mechanism that identifies low-income households by measuring their electrical consumption.
Colombia, meantime, is directing cash advances to individuals and poor working families, including those not on the government’s radar.
“There are three million families who aren’t in [existing government] programs. They may not be the most vulnerable or poorest, but they work each day as small-scale vendors,” said Diego Molano, who coordinates social programs for the central government. “We’re creating these programs against the clock.”
In Bogotá’s south, a largely working-class district in this city of 7.5 million, people like Victor Hugo Molina, 55, couldn’t wait for the cash advance. On a recent day, he left home with a rack covered in hundreds of multicolored shoelaces and set up on what is usually a busy street, hoping to find buyers. Few appeared.
“I haven’t even had breakfast,” he said, tears welling up in his eyes. “I won’t last until next month. I can’t do it. That’s why I’m crying.”
People with more solid employment, among them Diego Garcia, a 28-year-old construction worker, said their lives also have been turned upside down. He said he used to earn as much as $350 a week, enough to take care of his family. Now, he can only afford to give his three small children rice, potatoes and eggs.
“I can last no more than until the end of next week,” he said as he stood in line waiting to receive a money transfer of barely $6 from a relative in another Colombian city. “If I was alone, no problem. But with children, this quarantine is another thing.”
—Nicholas Bariyo in Kampala, Uganda; Luciana Magalhaes in São Paulo; Anthony Harrup in Mexico City; Santiago Perez in Mexico City; and Bill Spindle contributed to this article.

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