Policy Briefs

The Social Impacts of COVID-19 – Case for a Universal Support Scheme?
Thursday, 16 April, 2020

Beyond its impact on the healthcare system, the COVID-19 pandemic via economic shocks has already reached labor markets throughout every economy. As of 1 April 2020, ILO estimates indicate a substantial rise in global unemployment, leading to a 6.7% decline in working hours in the second quarter of 2020, which is equivalent to 195 million full-time workers. In this policy note, we will draw the reader’s attention to the potential scale of the impact on the labor market and the respective social consequences in Georgia. We will identify a wide variety of groups affected by the COVID-19 crisis, with a special emphasis on the labor market, and provide our judgment on the possible extent of the repercussions. The current crisis affects almost every segment of the population, including members of the following large social groups:

Labor market participants face a high risk of job loss. Fewer employment opportunities and broad-scale layoffs force a large section of self-employed and salaried workers into challenging circumstances.

Recipients of Targeted Social Assistance (TSA) are at great risk of slipping deeper into poverty. While members of this group mostly rely on social assistance layouts, the supplementary income that they receive, often from informal sources, could be cut. In addition, the increased prices of food and other essential goods could be particularly detrimental to this group of people.

Senior citizens are extremely exposed to the danger of the virus and struggle with greater health risks.

Our analysis starts with an overview of the Georgian labor market and the short-term impacts of COVID-19 on workforce displacement throughout the various sectors. The impact is not gender-neutral, as it affects men and women differently depending on the sector. Therefore, we will further provide the decomposition of the impacts on the labor market and propose gender-responsive solutions to the pandemic. To mitigate adverse effects across various vulnerable groups, we will review the existing theoretical and practical evidence on targeted and universal support schemes. An overview of international social support programs is moreover provided in this note. We will further analyze the relative merits and drawbacks of our pre-defined policy options based on a multi-criteria assessment in the context of the COVID-19 crisis and thereafter provide recommendations for policy implementation.