COLOMBIA: Concerns over informal sector despite robust pandemic response

The government’s response to the Covid-19 outbreak has been largely science-based and robust. Social distancing measures were put in place relatively early, and a strict quarantine will remain in place until at least 13 April. The government is putting COP 2.1tn into the health system over April, which will allow for the purchase of 1,600 respirators and additional virus testing kits. Overall, President Ivan Duque appears to be weighing up the complexities and implications of his policy decisions; political disagreements and rivalries have mostly been put aside; and official communication with the public about the outbreak has been clear and measured. However, the government still faces major challenges both to contain Covid-19’s spread and to mitigate the economic fallout given the large number of households in the informal economy. The government has demonstrated a willingness to suffer economic damage in the immediate term in order to avoid extreme pressure on the fragile and under-resourced public health system. As of yesterday, 31 March, there were 906 confirmed cases, with 16 deaths. However, the challenge arising from this trade-off is how to sustain tough quarantine restrictions in high-density, low-income urbanized areas where most residents work in the informal economy. Not only is the risk of viral propagation in these areas high but economic needs are acute: quarantines prevent people who live in these areas from going out to earn the money they need to sustain themselves and their families. The size of these populations means that even if only a small percentage of residents ignore lockdowns, this still means large numbers of people would be circulating. In Colombia, there is a social safety net that allows the government to provide extraordinary support to low-income sectors. Among other economic support measures so far totaling COP 14.8tn (and mostly taken from the FAEP oil stabilization fund), funds will be distributed via three government social programs. The largest of these – Familias en Accion – supports 2.7mn households. The problem is that this still does not provide universal coverage because the proxy means-testing instrument the government relies on to identify beneficiaries (SISBEN) is patchy at best. For example, the database may capture some of the internally displaced population but will not cover the Venezuelan migrant population, estimated at around 1.7mn, most of whom live precariously. The government has a plan to provide resources for those not in SISBEN, but how and by how much remain unclear. In a context in which half the workforce is in the informal sector, sustaining a strict quarantine for an extended length of time will be very difficult. The government is alert to the risks of protests and social unrest; last week’s looting incidents in the sprawling Soacha neighborhood on the outskirts of Bogota, together with more recent protests against evictions of tenants, were a reminder of the public order challenges that could come with long quarantines and prolonged economic disruption. This risk partly explains why the government is also considering what has been dubbed an “accordion strategy” consisting of multiple periods of intermittent social distancing for different periods of time depending on how the outbreak evolves, as opposed to one continuous lockdown. Whether the health system is up to the challenge remains to be seen, as does the notion that intermittent lockdowns can avoid a steep rise in unemployment and poverty.

April 1, 2020

COLOMBIA: Concerns over informal sector despite robust pandemic response

BY Nicholas Watson

Report Contents

More by Nicholas Watson

LATAM PULSE

COLOMBIA: Tax reform detonates major political crisis

LATAM PULSE

CHILE: Another populist lurch as government beaten on third pension withdrawal

LATAM PULSE

PERU: The lowdown on hard-left outsider vying for the presidency

ARGENTINA: Clash over schooling sets up protracted electoral confrontation

LATAM PULSE

LATAM PULSE

April 1, 2020

COLOMBIA: Concerns over informal sector despite robust pandemic response

BY Nicholas Watson

Report Contents

Registration

More by Nicholas Watson

LATAM PULSE

COLOMBIA: Tax reform detonates major political crisis

LATAM PULSE

CHILE: Another populist lurch as government beaten on third pension withdrawal

LATAM PULSE

PERU: The lowdown on hard-left outsider vying for the presidency

ARGENTINA: Clash over schooling sets up protracted electoral confrontation

LATAM PULSE

LATAM PULSE