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Chance emerges for more inclusive growth path in Việt Nam: ILO

Update: April, 23/2020 - 09:00

 

A worker in Hà Nội's Đông Anh District gets free rice provided by local authorities to help local citizens overcome difficulties caused by COVID-19. — VNA/VNS Photo Danh Lam

 HÀ NỘI — Despite difficulties caused by the COVID-19 pandemic, an opportunity is emerging for Việt Nam to build the foundations of a more inclusive growth path which would leave no one behind once the recovery begins, according to the International Labour Organisation (ILO) in Việt Nam.

The organisation made the statement on Tuesday in a note on the impacts of COVID-19 on economic activity and employment in Việt Nam.

As the COVID-19 situation has developed, the Vietnamese Government has implemented increasingly stringent measures that have proven effective in containing the crisis. 

The country’s economic performance, however, was being affected by measures adopted to confront the pandemic in Việt Nam and across the world, as similar measures taken by other countries across the world had large-scale, indirect effects on Việt Nam’s economy, said the ILO. 

The organisation added that the reduction in economic output expected per sector over the first two quarters of 2020 was influenced by the vulnerability of each sector to the direct effects of COVID-19 containment, or indirect, or both.

“By the end of the second quarter, the crisis could affect the livelihoods of 4.6 to 10.3 million workers, whether through a decline in working hours, in wages or, ultimately, job loss,” the ILO forecast.

It also envisaged two scenarios: one lower-impact scenario in which containment measures were eased during the second quarter, and one higher-impact scenario where the measures remained largely in place. 

Workers in the informal economy would be severely affected due to the lack of State-funded social safety nets. Vulnerable workers were especially exposed to economic risks, since most of them worked informally in low-paid occupations, and were unlikely to be able to count on savings. Female workers were over-represented in most sectors experiencing widespread reduction in economic activity. 

The actual extent of livelihoods lost would depend on the evolution of the pandemic and the measures taken by the Vietnamese Government and other countries. The unprecedented nature of the shock created by the COVID-19 pandemic made it difficult to predict its developments by means of comparison with any past crises. Countries were finding themselves in uncharted territory, taking a variety of approaches to containment, and adjusting themselves based on their own experience and that of others. 

Last week, Việt Nam had been working to ease restrictions in some parts of the country. The measure excluded several provinces and the country’s main economic centres of Hà Nội and HCM City. And where it applied, it did not remove social distancing rules altogether. Still, this measure should bring some relief to the direct channels of economic shock. 

The IMF expects negative economic growth for 2020 in over 170 countries, with a partial recovery in 2021. However, countries across the world are taking bold actions to support their respective economies. 

In Việt Nam, the Government is unveiling a range of monetary and fiscal measures to keep enterprises afloat and safeguard incomes in the short term. Plans to push economic recovery in the medium and long term are taking shape.

In the meantime, however, Việt Nam’s trade partners are in the midst of the COVID-19 fight.

In the medium term, even if Việt Nam should choose to lift social distancing measures for the whole country, the crisis (whether directly or indirectly brought to the country’s economy) may affect overall consumption by eroding the financial means of individuals, and therefore the ability of domestic demand to sustain the economy.  

Việt Nam had addressed the COVID-19 health crisis with resolve and strength, and most importantly, with the aim of protecting all women and men and leaving no one behind. The same approach needed to be directed at economic, social and labour market challenges. 

This was a critical time to ensure that socio-economic policy response was designed to be inclusive, based on tripartite consultations, and reached the most vulnerable on the labour market, the ILO noted. — VNS

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