COVID-19 and the economic crisis in the MENA region: what about a universal basic income?
The current COVID-19 crisis is deeply changing our socio-economic systems and bringing into stark focus the inequalities that shape our world. When the lockdown was only a temporary difficulty for some, for others, it is now about survival. According to the general director of the International Labor Organization (ILO), no less than 195 million full-time jobs have been lost these past three months in the world. For the Arab countries alone, we are talking about a 5 million full-time jobs’ loss, a drop of 8,1%.
It is therefore now up to the States to find bold solutions which favor the common good (environmental as well as social). This is why the issue of the universal basic income (UBI) has been put forward again in the news, these past few weeks. Thus, the ACHRS would like to deliver a short analysis on this topic concerning more particularly the countries from the Middle Eastern and North African (MENA) region.
So, the universal basic income: absolute necessity for more sustainable societies or sweet unrealistic utopia? Let’s first describe the problem: the economic situation of the MENA countries was already precarious, when not very problematic, way before the arrival of coronavirus. The value of the Lebanese pound has plummeted for these past months, the Syrian economy is bled dry after a decade of civil war, the Palestinian economy barely survives thanks to international subsidies and the Gulf countries’ gas and oil incomes have sharply decreased.
The UBI idea had already been put forward these last years, in a context of huge developments of new technologies. The latter allow us to use machines for more and more tasks, but also destroy jobs. The example of autonomous cars is blatant: if this technology were to be access-widened, 100 000 jobs of engineering would be created but 4 million low-skilled jobs would be lost (source : Arab News, https://www.arabnews.com/node/1649516). In addition to the coronavirus crisis that has forced millions of workers to stop their income-generating activities, a safety net becomes clearly more than indispensable.
The UBI, far from being a new idea – Thomas Paine, one of the USA founding fathers, already wrote about it in the 18th century – consists in the payment of money, in cash or equivalent, to individuals once they are of age, rather to the household in an indistinctive way. However, this simple definition is not enough and if States want to implement it, there are still many unanswered questions: which amount and would it be indexed to the state of the economy, for the whole population including foreign residents or only to nationals of this territory, or how to finance it?
This is actually the tricky question. Some commentators are skeptical. Among them, so is the Dr Osman Gulseven from Skyline University in Sharjah (UAE). According to him, most of Arab countries – except Gulf countries – do not have sufficient currency reserves to finance such a policy and it will not be possible for them to tax more the middle classes, nor the sales, at the risk of curbing the economic activity. According to George Politis, visiting lecturer at the Costas Grammenos Center (United-Kingdom), the Middle Eastern economies need firstly to find a kind of “normality”: functional economies, growth and prosperity. The UBI would work in emerging markets, only with the help of an international or regional fund. Finally, according to the ILO, the UBI would cost the equivalent of 17,9% of the MENA region’s average GDP.
But all these opinions are debatable, all the more considering the fact that the region’s economies are very diverse (all cannot be qualified as “emerging markets”). Other experts assert that the UBI is not only desirable for the MENA countries, but also possible. But this would imply deep economic reforms, towards a wider diversification (many of these countries base their economy on one or two resources maximum), a long-term growth as well as the curbing of corruption. This will not be easy, for sure.
If we take the example of the USA, it would be possible to finance a $1,000 monthly income to 300 million Americans, which would represent 3,6 billion dollars per year. To contextualize this, the government budget in 2019 amounted to 4,4 billion dollars and represented 21% of the GDP. In these conditions, a UBI would be financeable thanks to the removal of some social benefits and the implementation of taxes targeting the richest (source: Arab News, https://www.arabnews.com/node/1649516).
Of course, the characteristics of the US economy are not comparable at all to those of MENA economies. Such a policy is not conceivable on the immediate short-term and requires structural changes in the economies of the region, as mentioned above. Nonetheless, the reflection is worth being posed in order to think about the world we want for tomorrow. What about the workers in Iran, Palestine or Egypt who are obliged to arbitrate cruel predicaments, between ensuring the means of subsistence or health for their families? What about the numerous migrant workers in the Gulf countries who will see their situation getting even worse if the oil and gas incomes keep on plummeting? What about all these people who work in the informal sector, without any safety net, and who see their revenues drastically diminished because of this crisis? Does working really deserve to sacrifice everything, including at the expense of one’s most fundamental rights?
This crisis must compel us to be stringent and bold in the answers that we will bring to it.