The Widening Socio-Economic Inequality Gap During the COVID-19 Pandemic

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The problem of inequality is a classic problem like a vicious circle. However, what is the situation of inequality during the COVID-19 pandemic? Worse or is it the same?

The cliché "the rich get richer, the poor get poorer" seems to have become a repeated reality when talking about the issue of socio-economic disparities in the Indonesian population. While the problem of social inequality is still lingering, the COVID-19 pandemic is making the situation even worse.

The problem of inequality occurs in various aspects: between individuals; inter-gender; inter-rural-urban; between regions; and between social groups. Meanwhile, fighting inequality will take a long time for its effects to be seen. The problem of reducing inequality requires not only a technical solution but also an ideological basis.

Measuring the Gap?

In October 2020, the issue of inequality was brought up again in Oxfam's report, "Fighting Inequality in The Time of COVID-19." This international non-governmental organization found that the new coronavirus pandemic had a major impact on countries that were not prepared to handle a pandemic.

Only one in six countries is considered to have allocated sufficient budget for health. Then, only one-third of the global workforce has adequate social protection, and there are one in three workers in more than 100 countries who do not have occupational protection such as sickness benefits. As a result, many people are affected economically, and economic inequality has increased.

In that report, Oxfam conducted the formulation of the CRI (The Commitment to Reducing Inequality) index. There are three pillars on which the index is based: Public Services, Taxes, and Employees. Furthermore, this index then assesses a number of indicators, namely Government Policy, Policy Implementation, and Policy Impact on sectors that fall into the three pillars (Public Service, Tax Progress, and Worker Rights and Wages).

The countries with the highest average index were Norway, Denmark, and Germany. The country occupies the first, second, and third positions respectively. Norway tops the list in terms of fulfilling workers' rights (1st place), especially since it cut income and corporate taxes in 2000. Meanwhile, Denmark has warned corporations that they will not receive bailouts or post-pandemic assistance. , if not pay taxes.

Germany has a high ranking in the aspect of public service (ranked 5). One of the political agendas in Germany is to impose higher property taxes on the rich to finance the public debt that increased after the 2008 financial crisis.

Although it is still a preliminary observation, the high rankings of Denmark and Norway may be correlated with the impact of the coronavirus pandemic in these two countries. Denmark 'only' recorded around 32.4 thousand cases of COVID-19 on October 12, 2020. The country also has not recorded any new cases as of today. It is important to note that the ratio of the Danish test per 1 million population is also very large, at 751,491 with a population of 5.7 million.

Meanwhile, Norway only recorded 15.5 thousand cases as of 12 October. The country's test ratio is also large, at 209,840 per 1 million inhabitants. On an additional note, the total population of Norway is around 5.4 million. However, considering that the two countries' population numbers are not that large, it is not surprising that they have a fast and well-targeted response in dealing with a pandemic.

Furthermore, some of the countries with the distended rank include South Sudan (ranked 158) and Nigeria (ranked 157). However, the worst impact appears to be for India, even though the country has a not so bad average index rating of 129.

When detailed, India has the fourth-lowest health budget compared to all countries in the world. Most workers in India earn less than half the minimum wage; 71 percent of workers do not have a written work contract and 54 percent do not receive a salary despite being asked to leave (paid leave). So far, the handling of COVID-19 in India has also been very bad with a large number of deaths and millions of people falling into poverty.

Meanwhile, in ASEAN, Indonesia's efforts to fight inequality in 2020 are ranked 4th with a global ranking of 93. Thailand ranks first (68 globally), Vietnam ranks second (77th globally), and Malaysia is third (78th globally). If detailed, Indonesia has ranked 111 public service indicators, 34 on taxes, and 111 on worker rights.

Indonesia's ranking in 2020 has decreased slightly when compared to 2018 when Indonesia was ranked 90. This is due to its good performance in taxes (rank 23). In 2020, Indonesia's ranking on tax progression will decline to rank 34. This is because the government has accelerated the realization of the reduction in Corporate Income Tax (PPh).

In April 2020, Minister of Finance Sri Mulyani said that the reduction of corporate income tax from 25 percent to 22 percent could now be felt immediately by the business world, instead of waiting for the Omnibus Law to be ratified and only starting from 2021. On the other hand, Sri Mulyani also accelerated tax relaxation 3 additional percent for corporations that have listed themselves on the stock exchange or gone public. According to Oxfam, this has actually widened the gap in inequality.

Meanwhile, Vietnam, which is at the top of the CRI ranking in ASEAN, has indeed increased its public health budget. The country's tax collection is also strong, especially when compared between ASEAN countries. The country does have a mediocre performance on workers' rights, but if Vietnam immediately implements the rule that workers are allowed to form unions, their score in this sector may increase in the future.

Vietnam has relatively good handling of COVID-19 compared to other countries in ASEAN. The country has only 1,110 cases as of October 12, 2020, with 50 active cases, and 35 people died. Then, this country also conducted a fairly large test, which is 12.7 thousand tests per 1 million population (Vietnam's population is 97,583,242 people).

Apart from conducting aggressive tests, the country is also actively conducting contact tracing. In Vietnam, tracing is carried out for those who have had contact for 30 minutes or more with a positive patient with COVID-19.

It is this seriousness that makes Vietnam only record 1,097 cases after seven months of the COVID-19 pandemic, and of course allows them to focus on other things, namely economic recovery.

Compared to other ASEAN countries, Vietnam's economy grew the highest in the first quarter of 2020, namely 3.82% year-on-year (y-o-y). This country also experienced a very bad decline in the second quarter of 2020, namely 0.36% (y-o-y) in the context of a pandemic. Then, in the third quarter of 2020, Vietnam's economic growth rose again to reach 2.62% (y-o-y).

Meanwhile, the Indonesian economy in the first quarter of this year grew by 2.97 percent (y-o-y). In the second quarter, Indonesia's economic growth was minus 5.32 percent (y-o-y).

This minus note is worse than the Ministry of Finance's prediction of minus 5.1 percent.

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Comments

Unfortunately we are going through very difficult times, you are very right when you say that the probes are poorer, it is the reality, many have been without work, others have decided to start an enterprise at home, to be able to survive this great agony, if before it was difficult the economic situation in the country now much more.

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3 years ago

Rich get richer and poor get poorer more. Yeah, its happening. Still happening in this modern era. Because of the pandemic poor and middle class peoples are getting the most worse experience than ever. And rich peoples have no problem at all.

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3 years ago

Yeah, you are absolutely right. The rich men are getting much richer and the poor men are getting much more poorer. That's now our economy system. Nothing to do.

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3 years ago

Good one

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3 years ago

Important article.i like it.

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3 years ago