Moody’s Investors Service is warning that less-skilled workers face bleak job prospects in the post-coronavirus disease 2019 (Covid-19) era, particularly in the Asia-Pacific region where social protection systems are not as advanced.
In a report released on Tuesday, the debt watcher said the Philippines is among the Asia-Pacific countries that will face income gap challenges in the post-Covid 19 era. It added the Covid-19 pandemic worsened income inequality in the region, posing challenges to nations with weaker fiscal capacity and social protection systems.
“Post-pandemic, less-skilled workers or those with basic education are more likely to face unemployment and for longer than those with advanced education. Informal sector workers have been faced with a double-whammy of significant job losses and inadequate coverage under social protection systems,” it added.
Moody’s Investor Service said that persistent income inequality is usually linked with weaker institutions that in turn have less effectiveness in delivering social protection.
The credit rater said social spending was lowest in India, the Philippines and Indonesia, presenting challenges in resolving income inequality.
“India, Indonesia and, to some extent, Malaysia and the Philippines stand out in this regard,” it added.
Eventually, persistent inequality could erode the legitimacy of governments, which could have negative implications in credit ratings.
“For most APAC economies, policies seeking to narrow inequality feature prominently in political campaigns, and are an important aspect of longer-term economic plans and a factor driving electoral outcomes, particularly where social or income mobility is an issue, such as in India, the Philippines and Malaysia,” it added. CURRENTPH