New UNDP studies recommend larger cash assistance program
-The Government can consider issuing immediately a new cash assistance program equivalent to 5% of quarterly GDP (approximately VND77 trillion) to be disbursed over the final months of 2021, to protect and reach a wider group of vulnerable people from the massive socio-economic shock of the current wave of covid19.
At an online event on 24 September 2021, UNDP launched two important reports “Rapid assessment of the Covid-19 Socio-economic Impact on Vulnerable Households in Viet Nam” and “Rapid Assessment of the Design and Implementation of the Government’s Second Support Package for the People Affected by Covid-19”, which were conducted in collaboration with the Centre for Analysis and Forecasting, the Vietnam Academy of Social Sciences (CAF, VASS) and the Institute of Labour Science and Social Affairs, Ministry of Labour Invalids and Social Affairs (ILLSA, MOLISA).
UNDP Resident Representative a.i. Terence D. Jones reflected on some of the trends identified across both the reports and commended the Government of Viet Nam for the comprehensive health and social distancing measures in place to mitigate the spread and impact of the pandemic.
“UNDP shares the main findings and recommendations of the two reports, as an input to whole of society and whole of government consideration of the next steps in coping with and moving beyond the immediate impacts of the pandemic, and so contribute to the Government of Viet Nam’s consideration of new policy choices and interventions to mitigate the negative impacts of the Covid-19 pandemic for the Vietnamese people and especially the most vulnerable groups,” he said.
“UNDP proposes a cash assistance program equivalent to five percent of quarterly GDP, or about VND 77 trillion,” said Prof. Jonathan Pincus, UNDP Senior Economist. “The size of this support package would be similar to the levels provided by neighboring countries during the first round of lockdowns in 2020.” (Read his op-ed)
In the VASS study of 498 households, the rapid assessment shows that the economic impact is large, with 88% of households suffering from employment impacts in July 2021, and 63.5% of households experiencing an income drop of 30% or more from the pre-pandemic period (December 2019). People working in tourism, restaurants, hotels, and passenger transportation were those hardest hit.
The non-economic impact is also significant. Mental health is an urgent emerging issue, as lockdowns have been widespread and lengthy. Two-thirds (66.4%) of households worry about the impact of COVID-19. Notably, female household heads suffered a higher incidence of mental health problems (81.6%) than male household heads (62.8%).
Cutting expenditures was the most common measure employed by affected households with four in five (79.4%) affected households cutting expenditures. Most of the expenditure cuts were related to food, with 71% of affected households cutting food expenses.
Thus, food security is becoming an issue with more than half of the households (51.2%) having to reduce the amount of food served per meal, and 17.7% of households reducing the number of meals per day.
The cut in food expenses and food shortage was reported by vulnerable households, those being laid-off for months, especially migrants. A more severe situation was reported in households having small children.
“It is through the recent disruptions in supply chains in Ho Chi Minh City and major provinces that we see the important role of vulnerable people,” said Ms Pham Chi Lan, Senior Economist in Viet Nam. “When their activities are disrupted, not only are they themselves affected, but the daily lives of many people in big cities and provinces are also severely affected. Through this, we understand more about their role in the country’s socio-economic development“.
In the ILLSA study, the results show that nine out of ten (89.9%) households have not yet received assistance, due to “difficulties in accessing the support application” or the “absence of guidance from local officials”. The study identified at least four groups of vulnerable people missing from the list of beneficiaries of the Government’s second support package: (i) migrants without residential registration; (ii) small informal household businesses such as food processing and noodle shops; (iii) homeless people; and (iv) people who lost income due to COVID-19 before the date when the decision on social distancing was issued.
The reports argue that the impact of the pandemic in Viet Nam is immense. In response, the support package should be adequate to protect vulnerable people from this massive economic shock. As the challenges are unprecedented, and the Government was recently given extraordinary power by the National Assembly, it can consider a new cash assistance program with a larger financial resource.
“The impact’s scale of the pandemic in Viet Nam is now extremely large,” said Mr Nguyen Tien Phong, Head of Inclusive Growth Unit, UNDP in Viet Nam. “We need to take a completely different approach to funding our cash assistance programs in those big shocks with impacts like this… Especially during this time, everyone is saving – businesses as well as people are forced to save, unable to spend money – then the Government must spend money to stimulate economic growth”.
“The level of per month cash assistance should be at the “minimum living standard” defined in National Poverty Line for the duration of the lockdown period and cover all people, especially the vulnerable groups,” said Ms. Pham Minh Thu, ILSSA/MOLISA.
The reports also provided detailed recommendations on the target groups and ways to effectively implement the new cash assistance program, making use of digital infrastructure for immediate roll-out and accelerating the reform of social assistance policies towards a more shock-responsive and inclusive system.
“Regarding recovery, three things need to be prioritized: first, vaccination. Secondly, treatment with accumulated experience. And finally, reopening in phased approach,” said Mr Nguyen Thang, First Vice-Chairman of the Socio-Economic Advisory Council, VASS. “The Government is on the right track. When vaccine is widely administered, I am optimistic that within the next 3 months, Viet Nam will recover. The outlook is relatively positive“.
Links to download reports and presentations:
2nd support package: https://bit.ly/VietNam2ndPackage