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Income and inequalities - thoughts as we emerge from lockdown

Four members of the IFoA COVID-19 Task Force share their thoughts as we emerge from lockdown and as they embark on their volunteering journey to investigate the impact of the pandemic on incomes and inequality.

The authors come from four continents, ranging from retired to student actuaries and united by a belief that the COVID-19 pandemic represents an opportunity to steer towards a better world. Andrew Robinson  is a property and casualty actuary recently moved into a management role at Aviva Canada, John Branford is a former pensions scheme actuary based in the UK, Naliaka Wafula works as an Actuarial Assistant for AMACO Insurance in Kenya and Sukrita Chabbra in capital modelling for RSA Insurance in India.  

Perspectives on lockdown have differed. A recent survey conducted by UCL through the Nuffield Foundation indicated 33% had enjoyed it, 46% had not, and the remaining 21% had mixed feelings. The results would repay more detailed analysis but were similar by both key-worker status and ethnicity.

Those aged 30-59 and those with higher household incomes were most likely to have enjoyed themselves. This suggests a demographic group often able to work at home in industries less vulnerable to unemployment.

For this group in particular, lockdown has given time to reflect on what is important in life and our place in the natural world and perhaps, if coronavirus has seemed sufficiently distant from us personally, our good fortune. There has been a recognition of the vital contribution made by those previously undervalued and the extent of inequalities between various demographic groups. 

Those hardest hit are likely to have been amongst the poorest (those with no or often less secure employment and cramped housing and consequently limited means to protect themselves from Covid 19), the young (those in education and leisure industries which have been hardest hit) and the elderly (the position of care homes and those who work in them has become prominent).

Looking beyond the United Kingdom we see countries where the simplest measures such as handwashing and social distancing are impossible and economies which would not survive any form of lockdown. 

In countries like India, for example, more than half of the country's workforce is engaged in the informal sector which means they have no minimum wages or any kind of social security. They depend on their daily wages for food, rent and other necessities. In Kenya, even before the pandemic, 37% of its population were living on less than $1.90 a day, according to the World Bank. Both Kenya and India are home to enormous slum areas where even basic necessities like water and sanitation resources are usually shared amongst the community, making social distancing and proper handwashing unaffordable luxuries.

While the pandemic has highlighted issues of inequality and fairness it also brings an opportunity to address them. Progress is likely to be primarily on a national basis but as Covid 19 has underlined there is also scope for international co-operation. Solutions need to combine long-term strategy with short-term tactics. The narrative of ‘levelling up’ may need to become one of ‘redistribution’. 

The actuarial profession has set up a variety of taskforces on Covid 19 and a ‘post-Covid world’. Most of these are traditionally actuarial in nature. Others address climate change and the effect of Covid 19 on income and inequalities. Within the taskforces themselves we are seeing people in very different realities as this global pandemic unfolds at different rates in different parts of the world. The international reach of the IFoA and its members highlights these differences and it is from these that our research, our thoughts and our work product are stronger and more insightful.