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Looking Into How COVID-19 Exarbuated Inequality


Media has portrayed Covid-19 as the ‘great equaliser’, a pandemic which united the global community through a collective experience of suffering, regardless of wealth. However, the trend of accelerating inequality caused by this pandemic is a complex issue which requires a multifaceted approach to address. It requires a coordinated effort from the government, businesses and individuals to hinder the approaching repercussions of global and national inequality, in order to strive for an equitable future.


Globalisation acted as a spur for the pandemic as it was a mechanism for the transmission of disease. Despite its role as most countries’ main economic growth driver, when the pandemic hit, the world witnessed a U-turn towards a pre-industrialised status quo with economic nationalism at its core. On one hand, it was a wake-up call reminding nations about their vulnerability to unprecedented shocks due to their dependence on other countries for imports. On the other hand, even in the Covid games, there were some winners as some countries were able to manipulate their production in order to exploit the opportunities presented by the pandemic, China, for instance, became the main supplier of products to help minimise the spread of the disease. Nonetheless, the harsh reality of the situation was still uncovered: globalisation has left nations fragile, inflexible and exposed.


The Covid-19 pandemic has had a profound effect on the global economy, resulting in a variety of sectoral inequalities. It has exacerbated inequality throughout several channels: gender, wealth, development and jobs; creating unprecedented consequences. Accelerating inequality acts as a threat not only towards global relationships but also to the innovation and education of the next generations which has taken two predominant forms. Students in low-income countries have lost valuable years of their education which may not be recoverable as they were unable to attend school and have had no form of remote learning to help bridge the gap in education. This international digital division positioned underprivileged children at a larger disadvantage than before. Alongside this, younger learners have been strongly impacted, perhaps even more than those in higher education. This is because younger children struggle to adapt as quickly to the new methods of learning and education that had arisen during Covid, as they have less experience with change. This may result in long-term consequences on their education due to the stunting in the development of vital skills.


That was not the only avatar of inequality felt during the pandemic; vaccine protectionism put more developed countries at an advantage. They had the financial means and, hence, were able to assert control over the discovery and distribution of the vaccines. There was an unequal scramble for the limited volumes of vaccines; therefore while some countries are receiving the much-needed protection, others are left vulnerable to the wrath of the virus. This can result in long periods of illness and death for those unable to access the vaccine, perpetuating the spread of the virus. Additionally, vaccine protectionism can cultivate resentment in countries, diminishing the global effort to combat the effects of the pandemic.


There were several other factors which contributed to global inequality on a macro level: politics and infrastructural development. There has been a proven positive correlation between the GDP per capita and the distribution of Covid-19 vaccines. However, it was not only a problem of distribution but of how they were accepted by the people. Generally, countries with lower development rates have been cornered into a healthcare trap, leaving people in a bad position from all standpoints. They are forced into a vicious cycle where their lack of education, access to healthcare and thus reluctance to receive the vaccine has resulted in them paying the price for the failure of not implementing just healthcare systems. In addition, the lack of effective political decisions resulted in a lack of sustainable vaccine management. This blatant inequality visible in the trends of vaccine distribution poses a moral problem, if the vaccine cost had been lower, the rate of accessibility would have increased, potentially saving millions of lives.


One of the more niche forms of inequality accelerated during the pandemic concerned the distribution of deaths within the population. The key workers on the frontlines of this war against Covid-19 were unable to quit their jobs as they were necessary for the country to function, putting them and their loved ones at risk due to maximised exposure. Essential workers had the highest excess mortality rate out of all occupations, and this would prove detrimental to the future of the public sector and the socialist ideologies employed by the UK. The handling of the Covid-19 situation may reduce the influx of doctors and nurses entering the medical education system and, in the long term could result in an increase of pressure on the NHS’s existing burden. All this might engender unsustainable strain which could lead to a collapse in the system and a lack of consumer confidence.


Perhaps another of the pandemic’s leitmotivs was the disparity between the rich and the poor. In addition to my previous argument, wealth accumulation acted as a trigger for inequality. While the rich were getting richer because of the nature of their investments; the poor were being fully exposed to inflation as the majority stored their wealth in cash only. This meant that when the pandemic created a chain reaction recession, this led to a global rise in inflation, removing the purchasing power of liquid assets in banks, also prevalent in the 2008 crash. However, since stocks and equities are driven by supply and demand factors, they are a good hedge against inflation. Although in the short-term, it may seem as though the value of their assets is depreciating, in the long-term it is a rewarding investment. The pandemic presented a once-in-a-lifetime opportunity for the rich to get richer and many of them exploited this. Moguls Elon Musk and Jeff Bezos invested in technology during the pandemic which was not only protected from inflation but was also in a boom, an example of how wealth inequality can widen the digital divide.


Another reason for the imbalance between social classes may be due to the distribution of redundancies during the pandemic. The lockdown punished smaller businesses that were already struggling for financial aid and resulted in money being pushed towards larger enterprises such as Amazon which have already established themselves. Smaller businesses have less built-up cash reserves as they have been operating for a shorter period of time as well as having a lower risk-managing capability than larger businesses, so surviving lockdown was practically impossible for many. In addition, while the government was encouraging remote working, this was not even an option for most low-income jobs which tended to be in manufacturing. The result of this was that a larger proportion of low-income jobs were lost which are generally held by the less skilled workers as they tend to have lower education levels. This meant that they were forced out of the labour market into a period of long unemployment, leaving these workers vulnerable to becoming deskilled, creating a long-term disadvantage for them.


Another important type of inequality to explore is the prominent trend of gender inequality which has been exposed to be undeniable in the light of the pandemic: a ‘she-cession’. A large proportion of women tend to have jobs in hospitality and manufacturing, sectors which were especially affected because of the pandemic. Since airlines were forced to shut down to help reduce the spread of the virus, there was a huge decrease in tourism globally, which had severe economic consequences on the hospitality sector. In addition, working mothers were forced to choose between employment and taking care of their children due to the limited availability of any form of childcare. This has created a large gender imbalance within the labour market as data has shown that mothers with young children who worked in jobs requiring face-to-face communication have endured a significantly slower employment recovery compared to other groups in similar positions. This is a problem as it may discourage women from working as well as preventing them from finding jobs in the future due to a depreciation in skill levels.


Each country has enacted several different policies and schemes in order to attempt to reduce the devastating effects of Covid on the nation, whether it be the UK’s Furlough Scheme or Germany’s Kurzarbeit. However, these schemes would not be plausible without expansionary fiscal policy designed in a progressive way, thus keeping in mind the need for redistribution efforts. Together, these would stimulate the economy and allow for a strengthening in the social safety net as there is greater government expenditure on healthcare, education, housing and food security, granting access to essential resources which have been more severely impacted by the pandemic. Redistribution was necessary as it acted as compensation for the rich who did not suffer nearly as many blows throughout the pandemic. However, it was this change in fiscal policy which made these schemes plausible for the government and in the end, this acted as a cushion which made the difference in the discretionary income.


Last, but not least important, the pandemic was marked by the lack of regulation in vaccine distribution. This may have been because producers were allowed to exert monopoly power within the market as there was a scarcity in stock due to the intellectual property rights (IPRs). In addition, IPRs meant that larger companies would attempt to acquire smaller companies to prevent cheaper products from being sold on the market; there are suspicions that the company Covidien engaged in this practice. This poses a problem as it undermines innovation by preventing new or improved products from entering the market. Over 100 countries campaigned for an intellectual property waiver to ensure enough units of vaccines could be produced. Although quite late compared to the peak of the pandemic, finally a compromise deal has been agreed upon where IPRs will be waived for 5 years for developing countries so that they are able to manufacture Covid-19 vaccines, helping to combat the accelerating global inequality.


Perhaps a better method of counteracting the effects of accelerating inequality on the global economy would have been to utilise redistributive policies. Implementing redistributive policies would have had an immediate effect on the economy, helping to provide support in the short run until more sustainable policies could be effectively implemented such as those explained above. Redistribution will regress inequality, helping to boost productivity and output by supporting the less affluent population. This may be done through unemployment benefits or even the availability of emergency financial aid which can especially support those who have lost their jobs or who have been made redundant. It may also be beneficial to administer greater taxes on the rich to help fund government spending, without damaging the current account.


Covid-19 can and has served as a time of reflection, we have overcome a period of great sorrow, with losses of over 6.5 million, however; it taught us a lesson that we should never forget, something we need to learn from and add to our toolkit in preparation for the next economic disaster. We need to understand that it is unsustainable to function without the appropriate mechanisms in place which create security in our society. While some claim that the pandemic has come to an end, the inequality is here to stay: children have sacrificed their education, and millions have been made redundant. In light of the above, we could have reacted sooner; however, later is always better than never.


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