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Pandemic-driven poverty 

 With economic activity in the country returning to some semblance of normalcy following the debilitating third wave of the Covid-19 pandemic, an ominous reminder that Sri Lanka is far from being safe from the virus is the deadly milestone of having reached 4,000-plus Covid deaths over the weekend.

Despite calls from the medical community for heightened caution, especially in light of the dreaded Delta variant, the public at large seems to have thrown caution to the wind, taking a cue from a government desperate to get the economy ticking again. 

Left with little or no choice, the Government finds itself between a rock and a hard place by giving the green light for the resumption of almost all economic activity with little or no monitoring of health guidelines. 

The wave of protests sweeping across the country over multiple issues has added to the growing concerns that Sri Lanka seems to be walking on thin ice once again in containing the pandemic. The light at the end of the tunnel, however, is the arrival of various types of vaccines and the resultant vaccination drive which finally seems to be making headway. But the increasing number of positive cases recorded over the past week and an average of 40-plus daily deaths means there is little or no room for complacency. 

As far as Sri Lanka is concerned, Covid-19 has had a profound impact on its economy and more notably, permanently altered socio-economic demographics to the point that the rich have got richer while the poor have got poorer. On the one hand, one only needs to peruse corporate results, especially of the banking and financial sector, to comprehend the scale of the polarisation of financial resources, while on the other, people who have taken to traditional occupations such as the farmers and fishermen and not-so-traditional occupations such as apparel sector workers, tourism sector employees, teachers, etc. find themselves at a crossroads with the loss of their regular sources of income.  

Covid-19 has meant different things to different countries, with some having turned the pandemic into an opportunity to actually grow their economies and build forex reserves while others have been weighed down by its sheer destructive ability and have seen their reserves drained out. Sri Lanka obviously falls into the latter category, with its economy gasping for oxygen in the form of foreign exchange. But that is just one aspect of the economic carnage wrought by the pandemic. What should be more worrisome for Sri Lanka is the long-term socio-economic ramifications on the demographics of the country, which, among other factors, threaten to dramatically alter its entire development outlook. 

It was one year ago that the World Bank downgraded Sri Lanka from an upper middle-income country to a lower middle-income one based on the Bank’s per capita income-based classification. One year since that downgrade, the country finds itself inching towards further ignominy. Sri Lanka’s stay in the “upper middle” category was confined to just one year in 2019, having spent 22 long years in anticipation of that promotion. To further highlight the significance of that achievement, it took approximately 50 years since Independence for the country to break out of the World Bank’s “poor country” status and attain the “middle income” classification in 1997. 

It now appears that years of painstaking gains in moving up the global economic ladder stands compromised due to a combination of reasons, predominant among which is the direct impact of the pandemic on the country’s economy and the manner in which the authorities have handled the evolving situation. The end result appears to be greater poverty spread over a wider segment of people who, prior to the pandemic, were active contributors to the country’s Gross Domestic Product (GDP). 

According to findings of a survey carried out by an international alliance for collective industrial bargaining in the global garment industry, Asia Floor Wage Alliance, a great majority of Sri Lanka’s apparel workers fell deep into poverty during the pandemic as a result of job losses, pay cuts, and lay-offs. The survey notes a sharp decline in nominal wages and household income of apparel sector workers with average wages well below the international poverty line. 

The survey points to a new reality of inter-generational transmission of poverty among apparel sector workers, meaning that the households of apparel sector employees have fallen deeper into debt as a result of the pandemic and the younger members of such households have been forced to pitch in to fill up the household coffers invariably, by sacrificing their education. The survey had been carried out in six of the biggest apparel-producing countries in Asia in collaboration with nearly two dozen trade unions.  

It has been pointed out that over 90% of apparel workers in Sri Lanka suffered a minimum 23% loss in estimated income as a direct consequence of the pandemic. The losses manifested in the form of termination or lay-offs without the payment of compensation, under paid or unpaid overtime payments, non-payment of bonus and incentive payments, etc. 

If apparel sector workers have been worse off as a result of the pandemic, then the biggest casualty has been the nearly two million direct and indirect beneficiaries of the tourism sector who have had no proper income for well over a year now. Similar to their apparel sector counterparts, these households too have been forced to look at alternate avenues of income-generation in a shrinking economic space. The invariable fallout is the drafting of the youngest members of such households into income-generation activities in the informal sector. This comes with a heavy price tag in terms of social cost owing to the abandoning of education and higher education of the younger members of such households.  

Dwindling incomes often trigger a chain reaction that result in serious domestic issues such as eviction from rented housing, disconnection of utilities and other services, forfeiture of pawned items, seizure of vehicles and equipment by finance companies, etc. Such consequences often lie at the root of domestic violence. Therefore, in order to keep the peace and more importantly the home fires burning, those affected have been forced to seek new jobs in different spheres. To put the matter in perspective, the labour alliance survey notes that household debt of apparel sector workers doubled in just the past year. It can be no different in the tourism sector households as well. To add fuel to the fire, we now have farmers in the agriculture sector too facing a similar predicament due to the fertiliser issue. 

Pandemic-driven poverty is not a phenomenon exclusive to Sri Lanka. It is in fact becoming a global issue, especially in the tourism and hospitality sectors. In the West, now slowly returning to normal due to the aggressive vaccination campaigns, hotels and tourism sector businesses are struggling to reopen due to the shortage of workers who have since abandoned the trade in favour of other occupations. It is likely that Sri Lanka will face a similar crisis once the tourism sector returns to pre-pandemic levels.  

Known as distress-driven employment, this category mainly consists of youths between the ages of 18 and 22, who usually end up in the informal sector as trishaw drivers, Uber riders, construction workers, etc., where their ability to contribute to the development of society lies at a minimum. The lack of a proper education – an opportunity sacrificed in order to make ends meet – is likely to hamper prospects of better jobs in the future, further intensifying the possibility of transmission of inter-generational poverty. It is an all too familiar cycle that Sri Lanka has been grappling with for decades, and now with the pandemic kicking where it hurts, we seem destined to go through yet another round of this debilitating cycle and its habitual outcome of widening the gap between the haves and the have-nots.  

For a country that has seen at least three deadly insurrections born out of economic deprivation, the evolving economic scenario bears all the hallmarks of yet another crisis in the making. If, as in the past, the authorities choose to look the other way, pretending that things are hunky dory, the results won’t be any different from that which history has taught this country.