The social impact of Covid-19

By Larissa Fernand |  18-02-21 | 

As Covid-19 spread globally, it left in its wake acute health concerns compounded by economic devastation. The full effects are still unfolding.

The novel coronavirus has shone a spotlight on the “S” in ESG; the social side of businesses’ conduct and how companies interact with their workers, customers, shareholders and the wider community. (ESG being the acronym for Environment, Social and Governance.) We discussed this in How 2020 changed ESG perception.

According to World Economic Forum’s Global risks report 2021: “Underlying disparities in healthcare, education, financial stability and technology have led the crisis to disproportionately impact certain groups and countries. Not only has Covid-19 caused more than 2 million deaths at the time of writing, but the economic and long-term health impacts will continue to have devastating consequences.”

The pandemic has amplified systemic injustices facing minority groups, women, immigrants, and individuals living in poverty. Sara Silano, editorial manager for Morningstar Italy, looks at 3 parameters to explain how Covid-19 is impacting all aspect of our lives.

The new poor

According to the World Bank, in 2020, after decades of steady progress in reducing the number of people living on less than $1.90 a day, the pandemic is expected to produce the first reversal in the fight against extreme poverty in a generation. The latest analysis warns that Covid-19 has pushed an additional 88 million people into extreme poverty in 2020, but in the worst scenario, the figure could be as high as 115 million.

Impact on businesses and employment

The pandemic slowdown has deeply affected companies and jobs. According to the World Bank Covid-19 Business Pulse Surveys conducted between May and August 2020, companies were forced to reduce hours and wages and, to a lesser extent, fire workers. With less money, people will be forced to make trade-off that could harm health and learning for generations.

Inequalities and gender gaps

The IMF, World Bank and OECD have all warned that unless something is done, the pandemic will lead to a sharp increase in inequality in almost every country. While the richest will bounce back from this crisis rapidly without help, ordinary families will take years to get back on their feet. Covid-19 has exposed and exacerbated inequalities between countries just as it has within countries.

Zsolt Darvas, Senior Fellow, Bruegel Think Tank, said: “In the European Union, 8% of workers educated to lower secondary level or below lost their jobs between the last quarter of 2019 and the second quarter of 2020. Over the same period, the number of jobs for workers with university degrees increased by 3%. Jobs for employees with middle-level qualification declined by 5%”.

Evidence shows that gender gaps could widen, potentially reversing women’s decade-long gains in human capital and economic empowerment. According to the World Bank, during this crisis, women have lost their jobs at a faster rate than men, due to the fact that they are more likely employed in sectors hardest hit by lockdowns, such as retail and tourism, or in informal jobs that lack access to social protection.

Morningstar has done substantial research in this area which you can read in Gender diversity is not just fluff.

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