WB: Some Vietnamese Households are Experiencing Prolonged Economic Hardships Because of Covid-19

Diep Nguyen

About 4 out of 10 households who experienced income loss in Round 1 also saw continued income declines in Round 2.

WB: Some Vietnamese Households are Experiencing Prolonged Economic Hardships Because of Covid-19
Photo Credit: Nikkei
To monitor the social and economic effects on households during the COVID-19 pandemic, the World Bank is conducting High-Frequency Phone Surveys of Households in Vietnam. 
These monitoring data help generate insights on household well-being amidst this dynamic period, and highlight the effects on the most vulnerable members of Vietnamese society.
This note provides a snapshot of results from the 2nd of five rounds of this survey series. Fieldwork for the second round was conducted from July 27 to August 12, 2020. During the first half of 2020, COVID- 19 cases in Vietnam were well contained and appeared almost eradicated. However, after 99 days without any new COVID-19 cases, the Da Nang region re-entered lockdown after the emergence of a positive case on July 25th 2020. While Round 1 of the survey series (in June-July 2020) was conducted after the first lockdown, Round 2 was collected right at the beginning of this 2nd outbreak. The timing of fieldwork should be taken into account when considering trends.
While the health impacts of the pandemic are well contained, negative economic impacts are still taking a toll on workers and families. Almost a third of households reported a decrease in income in July/August compared to the previous month. Across the six regions of Vietnam, the decline in income ranged from 29 percent in the Midlands and Northern Mountainous areas to 38 percent in the Northern and Coastal Central region. 
The incidence in income reduction was also relatively even across urban and rural groups, and groups in the top and bottom of the distribution. However, the relatively uniform rate of income decline across broad groups masks sharper localized changes. In the Da Nang province, about 67 percent of household experienced a decrease in household income compared to the last month.
Some households are experiencing modest declines in household income. Among households who experienced a decline in income, about 40 percent reported their household income declining by at least 50 percent compared to the previous month.
A small number (1.3 percent of all households) reported a complete loss of income. Those in the Bottom 401 of the distribution were slightly more likely to report a larger magnitude of income loss than those in the Top 60. Those with family businesses were the most likely to report declining household income, while respondents working in agriculture or the public sector were the least likely.
Ethnic minorities and B40 households are more likely to cite job loss; those who are poorer tend to have less job stability and are more likely to work informally (Table 1). A quarter of Ethnic minority households receive wage income from agriculture activities, and half receive wage income from non- agricultural sectors. Yet, poor and ethnic minorities earn less for their labor and tend to engage in lower paying occupations across all types of activities. Their average earnings are usually lower than the Kinh majority irrespective of activity type. For example, the per capita wage income for ethnic minorities engaged in non-agricultural wage earnings in 2018 is less than half of the Kinh majority (Pimhidzai, Niu, 2020).
Economic vulnerabilities do not appear to be significantly spreading to new households, but some households are experiencing prolonged economic hardships. Poor economic conditions are impacting some households consistently. About 4 out of 10 households who experienced income loss in Round 1 also saw continued income declines in Round 2. Among those that did not see their incomes decline in Round 1, only 17 percent reported a decrease in Round 2.
The good news is that relative to Round 1, fewer households are reporting a decrease in income in Round 2. In Round 1 of this survey series, about 70 percent of households had experienced an episode of income reduction from February to May/June. Other research also found similar rates of households experiencing income declines from interviews in mid-April (Tran et al, 2020).
Despite fewer households experiencing a decrease in income, over half of households are still worse off than last year. Over half of households reported lower income in the last month compared to the same time last year. The types of households who are still worse off reflect the economic sectors being most negatively affected by the pandemic.