• Pandemic has widened the global inequality gap
• Developing nations constrained in cushioning their citizens and economies.

Harare – The outbreak of Covid-19 pandemic in late 2019 has unexpectedly disrupted the world’s living tendencies and brought about a ‘new normal’. While this new normal calls for governments, the corporate world and the general public to become innovative for their survival, coping strategies have intensified inequality within society.

To date, there are 125 million cases of covid-19 infections worldwide with over 2.74 million deaths and still counting. It has become the world’s most contagious disease in a century since the 1918 influenza pandemic which according to the US Centers for Disease Control and Prevention infected an estimated 500 million people and killed 50 million globally.

Initially, with no vaccine to protect people against covid-19 infection, control efforts globally were limited to interventions such as practice of good hygiene, social distancing, mask wearing mandates, quarantine and limited public gatherings. Global trade and travel came to a halt as national boarders were closed. The world economy shrunk more than 5 percent in 2020, representing worst recession since World War 2 and vast majority of economies witnessed acute per capita GDP declines since 1870.

The pandemic has widened the global inequality gap which will take decades to reduce. Statistics show that labor market impact of the pandemic are hugely unequal and varies with job, worker and company characteristics. The rate of job losses is likely to be highest in industry, which have jobs that are least amenable to working from home while many small companies with low revenue base are being forced to close. These employ majority of people and their failure can turn into long-term erosion of jobs and entrepreneurial capital.

Covid-19 will likely not varnish quickly and the fear of the pandemic continue holding. The corporate world takes the risks seriously and this means certain production processes will also be viewed as riskier. Since robots are least affected by pandemics, it is highly likely that where possible they will replace humans while ‘zoom’ will replace travel. In short, the pandemic has broadened the threat from automation to low skilled workers and the reality is shaping that certain types of labor will become obsolete thereby increasing inequality.

Also, the pandemic is a threat to livelihood of children and young ones as it is affecting their education and future prospects. In-person classes was significantly affected and schooling turned completely online. However, for poor countries like Zimbabwe with majority of the population living in rural areas with no access to electricity and high data cost, online learning became impractical and uneconomical. This has deprived millions of kids across the globe their right to uninterrupted education. Also, some students who are graduating during the time of the pandemic face risk of being discriminated by employers. There is enormous evidence based on past pandemics suggesting that disrupted schooling negatively affect learning and produce observable differences years later.

Poverty rates have increased sharply in the developing world thanks to rising unemployment levels. Governments in the developed world are paying billions of dollars as direct payments to individuals coupled with weekly unemployment benefits. For instance, to date the U.S has spent about US$856 billion in direct stimulus payments to low-income earning citizens and about US$674 billion in expanded unemployment compensation. This huge spending is financed via borrowing and money printing with minimal negative effects on stability of certain metrics such as inflation.

However, because most developing nations are highly informalized, in debt stress and facing high inflation levels, they are constrained in cushioning their citizens and economies. When covid-19 emerged, Zimbabwe was already witnessing triple digit inflation levels and a huge debt overhang in excess of 70 percent of GDP.  Cheap external credit lines from international financial institutions (IFIs) cut-off two decades ago are making borrowing costly. This complicated the country’s response to the virus outbreak and over 60 percent of the population are now living below the poverty datum line. The economy is highly informalized, and lockdowns have hugely exposed the poor households living on a hand to mouth basis.

In the middle of the fight, hope has now come in the form of pharmaceutical vaccines which were discovered late 2020. However, the distribution of these vaccines globally is showing inequality patterns. Those countries with strong financial muscles have ordered enough vaccines for themselves leaving the poor stranded. The rate of inoculations in the advanced world is miles ahead of third world countries as the latter are relying mostly on donations. Even though the global economy is envisaged to rebound sharply this year, the rate of recovery for individual countries will depend on vaccine distribution and further stimuluses.

This pandemic has widened the already existing gaps between advanced and developing nations, the poor and the rich. In my view, it is high time now for new rules for the new economy. There is need to accelerate upskilling and training that matches the changing labor market. Innovative business ideas are needed to solve the new challenges of the 21^st century. As for government, new policies which focus on ensuring full employment of all groups should be targeted to reduce income inequality.

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