Social protection and inclusion policy responses to the COVID-19 crisis

Abstract

Between Monday 3 February 2020 and Sunday 18 April 2021, the total number of confirmed COVID-19 cases per 100,000 people was 6,740 for the EU-27 as a whole; in Cyprus, it was 7,118. The total number of deaths per 100,000 people was 151 for the EU27, versus 34 in Cyprus. Immediately after the onset of the pandemic, Cyprus achieved good results in containing the spread of the virus by imposing strict restrictive measures, such as travel restrictions, school closures and suspension of many economic and social activities. The good epidemiological outcomes were reversed in December 2020, when COVID-19 cases reached alarming levels, thereby forcing the government to adopt new rounds of restrictive measures. During the first half of February 2021 the situation began to improve day by day, with a relatively small number of daily cases (100-130), coming from a very large number of tests (25,000-35,000 per day) and a positivity rate of less than 0.5%. Inescapably, the continuous disruption of economic activity led to a recession; GDP in the fourth quarter (Q4-2020) of 2020 fell by 4.5 percentage points compared with the fourth quarter of 2019 (Q4-2019). To counteract the adverse effects of the recession on people and businesses, the government has exerted large efforts to protect employment, firms and all affected individuals, while a third wave of the virus is currently looming over the country. To support employees, self-employed and unemployed people, as well as several vulnerable groups, the government has implemented a series of special measures that include: schemes for the support of unemployed people who lost eligibility of regular unemployment benefits; a band of measures specifically designed to protect employment through subsidising labour costs; special sickness benefits; special (paid) leave to parents for the care of children during school closures; special benefits for self-employed people; schemes for avoiding households’ over-indebtedness; legislation for postponing evictions; and many other small-scale targeted schemes to cater for an increasingly diversified mix of social and economic needs. The majority of these schemes are administered by the Ministry of Labour, Welfare and Social Insurance (MLWSI) while some schemes are also organised and administered by the Ministry of Finance. Furthermore, a pivotal role in the protection of the public has been played by the newly implemented national health system which, now, provides a comprehensive healthcare package to all people residing in Cyprus. These measures have been introduced across various points in time during 2020 and the beginning of 2021 and are still in effect, albeit with several modifications reflecting a continuously changing and uncertain environment. Almost all of these measures are new, implying that policies already in place were not adequate to cope with this unprecedented crisis. Moreover, it is also reasonable to argue that in the absence of these extraordinary policies, it would have been rather difficult to suspend so many economic, educational and social activities without causing either socio-political turmoil or devastating effects in terms of unemployment, poverty and social exclusion. Almost all the COVID-19 measures taken can be understood as temporary and, in general, it is not expected that the pandemic will leave permanent changes in the design of social protection policies. Nevertheless, all these measures comprise a very important set of tools, which can be used as such or modified with relative safety in the future in the case of similarly difficult situations. The pandemic also bequeathed to us interesting and innovative ideas such as distance work, which can, under certain conditions, also contribute to the improvement of social protection. Furthermore, it is positive that the majority of the population is covered by the measures although we detected population groups at high risk of not receiving adequate support, such as the undeclared workers. The overarching conclusion is that the social protection system has proved more than invaluable in tackling the socio-economic impact of the pandemic, with the only negative aspect being the potential long-term fiscal consequences as the total cost of new measures, and the increasing expenditure on already existing ones, is going to be formidable.