The gap among the poor and rich in Nigeria will widen even more this year, as COVID-19 increases inequality between low income earners and upper class individuals within the country and other smaller economies across the world.
This is according to the International Monetary Fund (IMF) in a new report seen by AllNews. The IMF said the pandemic will create an income gap in emerging market and developing economies, and this will significantly affect welfare of low earners in these countries.
IMF said high earning individuals will not be affected much, as most of them will be working for companies that can afford work-from-home amidst the COVID-19 period, "The crisis now puts much of that progress at risk while further widening the gap between rich and poor." the international body said.
The inequality will also flow to economic opportunities for women, "COVID-19 is expected to make inequality even worse than past crises since measures to contain the pandemic have had disproportionate effects on vulnerable workers and women."
According to the IMF report, both the person’s ability to work from home and the drop in GDP expected for most countries in the world will take a toll on the citizens of emerging countries and developing economies.
"These two facts combined tell us that lower-income workers were less likely to be able to work from home and more likely to lose their jobs as a result of the pandemic, which would worsen the income distribution." AllNews gathered from IMF.
IMF also disclosed that, "high-income individuals receiving much larger percentages of the total income of the population. What this tells us is the estimated effect from COVID-19 on the income distribution is much larger than that of past pandemics.
"It also provides evidence that the gains for emerging market economies and low-income developing countries achieved since the global financial crisis could be reversed."
The IMF said the expected impact of COVID-19 on income or welfare in emerging markets and developing economies could be reduced by policy of government. IMF said policies like investment in retraining and reskilling programs, increasing access to internet, social assistance, and promoting financial inclusion amongst others.
"The pandemic could reduce welfare by 8 percent in emerging markets and developing countries with more than half of it stemming from the excess change in inequality as a result of a person’s ability to work from home.
"Note that these estimates do not reflect any income redistribution measures after the pandemic. This means that countries can dampen the effect on inequality and on welfare more generally by policy actions." IMF said.
While addressing needed policies, IMF said, "Investment in retraining and reskilling programs can boost reemployment prospects for adaptable workers whose job duties may see long-term changes as a result of the pandemic. Meanwhile, expanding access to the internet and promoting financial inclusion will be important for an increasingly digital world of work.
"Relaxing eligibility criteria for unemployment insurance and extending paid family and sick leave can also cushion the impact the crisis is having on jobs. Social assistance in the form of conditional cash transfers, food stamps, and nutrition and medical benefits for low-income households must not be withdrawn prematurely.
"Policies to prevent decades of hard-won gains from being lost will be critical to ensuring a more equitable and prosperous future beyond the crisis."