BizNEWS

Economists Say Families’ Incomes Got Much Lower than Last Year’s Due to Covid-19

Diep Nguyen
BizLIVE -

Across geographies, a slightly larger share of households in the Northern and Coastal Central Region reported lower income compared to the previous year, which is likely influenced by the 2nd outbreak.

Economists Say Families’ Incomes Got Much Lower than Last Year’s Due to Covid-19
Photo: GettyImages
Recently, WorldBank just released the new report in families’s livings and incomes during the Covid-19. Households with a family business are much more likely to have lower income now than compared to last year. Households involved in farming are less likely to report lower income. Across geographies, a slightly larger share of households in the Northern and Coastal Central Region reported lower income compared to the previous year, which is likely influenced by the 2nd outbreak; Da Nang is located in this region.
Among main respondents, job loss and job changes remain challenges. Job churning is still high, among respondents who were working, as many as 17 percent were working in a different job just one month ago. Reductions in wages and salaries was experienced by about 10 percent of total households3.
The share of urban main respondents who were not working in Round 2 was slightly higher than in Round 1, 29.3 percent compared to 27.9 percent respectively. In Round 2, a higher share of urban respondents also reported they had stopped working recently. Official statistics also indicated that urban unemployment had hit a 10-year high in Q2 2020 (Khoa, 2020). Urban areas being harder hit than rural areas during this crisis is a phenomenon that is consistent across many countries in Asia, and suggests the emergence of new group of vulnerable households in the services and retail industries.
The vast majority of family businesses remain open, but a small share is struggling. Closures in family businesses also increased in Round 2 (reference period: June/July). Compared to results from Round 1 pertaining to May/June, the percent of businesses that were operating in June/July declined from 95 percent to 90 percent. While Round 1 resulted suggested a small increase in activity immediately after the first lockdown ended in April, some family businesses were still struggling by the end of Q2 and beginning of Q3 2020. Almost half of businesses that closed stated that the reason for closures is fewer or no customers. There is also concern that businesses that are temporarily closed may shift to permanent closure status. Closure rates of family businesses do not vary significantly across regions, sectors of activity, or by urban-rural location. However, larger family business with more employees were more likely to remain open.
Due to the timing of the survey, there are slightly higher rates of avoidance behaviors in some indicators in Round 2. The frequency of people going to markets and the attendance of large gatherings is slightly lower than in Round 1. About three quarters of households did not attend gatherings with more than 10 people in the last 7 days. Similar to the first round, males were more likely than females to attend large gatherings, and females were more likely than males to visit markets and acquire food supplies.
These findings are linked to the timing of the fieldwork of the 2nd round, which occurred right at the outset of the 2nd outbreak in Da Nang. Even though the contagion was ultimately very localized, in the early periods, there may have been uncertainty regarding the scale of the potential outbreak. Moreover, Vietnam suffered its first COVID-19 death during this time on July 31, which could have also increased risk-aversion and avoidance behaviors. Fewer households were making travel plans. About 31 percent of households in Round 1 had travel plans, and 17 percent in Round 2 had made new travel plans.
Community mobility data also indicate that the rebound in visitations to certain types of locations after the 2nd outbreak appears slower than after the first lockdown. While there are very few COVID-19 cases in Vietnam, the shadow of the pandemic still lingers, and may be impacting people’s risk- aversion behaviors and propensity to consume. Google data show a deterioration in location visits starting at the end of July, when the 2nd round of these surveys was being implemented and when the 2nd Da Nang outbreak began. While visitation to work localities have improved and are back to near pre-pandemic levels, activity in other sectors are still low especially in the category of retail and recreation. Continued cautious behavior among households is consistent with family businesses reporting fewer customers. The rebound visits to retail and recreation locations was swift and robust following the end of the first lockdown, but has been much slower following the 2nd outbreak in Da Nang, dragging even into October.
Concerns about food has reduced substantially since the first round, although food concerns among those in the Bottom 40 remain higher than among the Top 60 group. Those in the Bottom 40 are more likely to worry about food and to also have less variety in their food consumption, which may impact nutrition.
By the end of July and mid-August, very few households reported receiving relief from the three new COVID-19 relief programs. About 13 percent of households in a panel of approximately 4,000 households had applied for at least one of three new COVID-19 programs since February, but only 2.3 percent of these households received any money by July/August. These rates are not substantially different than results from Round 1 since the government had discontinued the set of new COVID-19 relief programs at the end of July.
A much larger share of households was receiving benefits from pre-existing social assistance programs. However, negatively affected households during the pandemic were not necessarily the poorest who were already receiving social assistance, as is suggested by the larger share of urban households who applied to new COVID-19 programs. Targeting should be updated to identify the newly vulnerable who are not existing beneficiaries.

DIEP NGUYEN