45% of the families live out of informality

The World Health Organization (WHO) has reported 132,000 cases of coronavirus in the world. The majority (81,000) are in China, where the rate of infection has already fallen. The focus is now on Europe, particularly Italy, France, Spain, and Germany, which, although they do not have many cases (15,000 Italy and 3,000 each of the other three countries), the daily rate of infection is between 20% and 30%.

The cessation of spread in China coincided with a sudden stop in economic and social activities. Together with the compulsive confinement of the population to their homes. This precedent was taken by the most affected European countries imitating the measure. In Argentina, only 31 cases have been reported to the WHO. However, given the risk of expansion, authorities are proposing to move in the same direction: to confine the population by paralyzing productive, social, and recreational activities.

What could be the result in Argentina of paralyzing economic activity to confine the population? Looking at the ways households generate their labor income in Argentina shed some light on the subject. According to data from the INDEC’s household survey, it can be seen that

• 55% of households are headed by a registered employee, of which 16% are poor.
• 22% of households are headed by an unregistered wage earner of whom 43% are poor.
• 23% of households are headed by a self-employed person and 35% are poor.

These data show that only half of the families have as head of household to someone working as a registered salaried. In these cases, confinement is feasible as long as the employer continues to pay the wages. To this end, as is the case in developed countries, the State should provide subsidies, especially for smaller enterprises. But the other half of the households live out of informal salaried jobs and self-employment, which means that being confined to their homes means ceasing to have an income. Gravelly many of them are poor, so that the lack of income, whether through confinement or a fall in economic activity, will immediately cause more damage to their health than the coronavirus.

The World Health Organization, in its guidelines, does not recommend the cessation of activities and the confinement of the population to reduce the spread of coronavirus. It explicitly states that it is neither realistic nor desirable to aim for zero risks. Health authorities should determine what an acceptable risk is and what measures should be taken to reduce those risks. It also says that effective measures are those that inform the population to extend individual prevention measures such as hand washing and regular cleaning with disinfectants of objects and surfaces in workplaces and public access. In the case of shows and mass meetings, it says that the parties concerned, together with the health authorities, must assess the risks and take preventive measures.

In health, the cost of the disease must be weighed against the cost of the remedy. In this sense, we must not lose sight of the fact that the coronavirus manifests itself in flu that in 80% of the cases is presented as mild to moderate, in 14% as severe and 6% as critical, the latter being the one that can lead to death. These cases occur mostly in older adults and people with pre-existing chronic diseases. Stopping the economic activity and isolating the population in prevention from a minority is a remedy that has much higher social costs than the benefit in avoiding the disease.

In developed countries, confinement is possible since they have fiscal space to subsidize businesses and families living on formal income. But in Argentina, with a broken public sector and the majority of families, especially the most vulnerable, living from informality, the remedy will be worse than the disease. Therefore, it is advisable to sharpen creativity and adopt alternative preventive measures with less social damage.