Developing countries shouldn't waste this coronavirus crisis

By Mihir Sharma
Across the developing world, the defining images of the battle against the Covid-19 pandemic have been of migrant workers: abandoned, angry, starving. In their zeal to control the spread of the new coronavirus, governments have all too often betrayed their most aspirational citizens — those who move from countryside to cities to build better lives for themselves and their families. If one thing has to change for developing nations in coming years, it is this relationship between the internal migrant and the state.

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The consequences of neglect have, in this crisis, been horrific. Here in India, tens of thousands of migrant workers packed bus stations soon after Prime Minister Narendra Modi imposed a weeks-long lockdown across the country. The buses weren’t running, so many started walking home to their villages. For many, the journey would take days; some died on the way. And, just to underline how little such workers matter, when the government extended the lockdown on April 14, migrants were left in the lurch again. Those who gathered at a train station in Mumbai, hoping to make the journey home, were beaten by police.

Similar scenes have transpired across the rest of the developing world, where the informal sector accounts for more than two-thirds of employment. (In India, the figure is closer to 90%.) Migrants usually wind up working in tiny enterprises, or are self-employed, or live off daily wages at construction sites. If they can’t work, they aren’t paid, they can’t eat and they may not be able to make rent. Back home, they can at least hope for a roof over their heads and perhaps a harvest to help bring in.

It’s remarkable how many countries take these migrants for granted, given that their development model rests on such workers’ shoulders. From the work of Nobel Prize-winning economist Arthur Lewis, we know that an apparently inexhaustible pool of cheap rural labor has been the main source of growth in the cities of the developing world. The potential of economies in South Asia and Africa, their outperformance in terms of GDP growth, is born of their demographic advantages — a euphemism for, yes, migrant workers.

Internal migration is crucial not only for growth, but for economic and social stability. Migrants are the bridge between the two halves of most developing countries — between underdeveloped hinterlands and globalized cities, between 19th-century agriculture and 21st-century techno-utopianism.

And yet, when they needed their governments’ help to deal with this pandemic, politicians once again looked away. Of course, politicians in emerging-market democracies can’t afford to ignore the poor outright. Many of them have tried to distribute money and food through whatever creaking welfare systems they had in place.

In most cases, however, these systems were not designed with the migrant worker in mind. States like India’s can sometimes see internal migration as a failure of policy rather than an engine of growth: If people are moving to the city, that means that the government should work harder to make villages attractive. And so their welfare systems protect the unionized worker in his factory and the farmer in his fields, but not the migrant selling knick-knacks by the highway. As World Bank economist Ugo Gentilini points out, in low-income countries, the poorest rural households are better covered by social safety nets than the poorest urban households. The difference, he adds, “soars to nearly 24 percentage points in some middle-income countries.”

Countries with vast informal sectors could at least hope that, as they grew richer, they would generate factory jobs with union protections and formal regulatory cover. But things haven’t worked out that way. Over the past two decades, China has soaked up most of the world’s factories, at the expense of the rest of the developing world.

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Meanwhile the formal-sector companies that have increased urban employment are often gig-economy enterprises such as Go-Jek in Indonesia or Zomato in India; in terms of social protections, they’re hardly an improvement over the informal micro-enterprises they’ve replaced. At best they provide demand-driven, contractual employment with few benefits.

Every developing-world government is learning one big thing from the Covid-19 crisis: Their welfare systems, such as they are, are particularly unable to deal with workers in informal enterprises who move from place to place, on the fringes of the gig economy. These are the citizens whose livelihoods have been most damaged by the pandemic, and who are the hardest to reach with existing relief programs.

Informality is not going away with development. It is baked into how the Uberized economy operates. That means countries ranging in income from India to Indonesia and all the way up to South Africa will have to figure out ways to fix those welfare systems.

How hard could it be? Pretty hard, actually, particularly in democracies. More than a simple policy or technocratic tweak is required.

For one thing, politicians need to think differently about who their voters are and where their votes come from. If all the workers lining up at bus stops in urban India voted in those cities, instead of in villages hundreds or thousands of miles away, then local leaders would be far more responsive to their troubles.

Even the structure of political patronage will have to change. State leaders long accustomed to placating rural satraps will have to ignore the claims of big farmers in favor of the demands of this precarious emerging urban class. Migrants who want to retain ties with their home villages as well as their new homes will need a stake in the politics of both areas.

National leaders will also need to reexamine their social-protection and employment policies, and redesign them with internal migration in mind. For one thing, welfare rights must be made completely transferable — which, in this tech-heavy age, is not as hard as it once was. Harder but equally necessary will be building affordable housing, which will require imagination as much as money: Many migrants aren’t moving with their families and so won’t want to pay for standard apartments.

On the other hand, if governments can figure out how to make this transition work, they won't just survive crises like the pandemic, they will also get a leg up in the development battles of the future. The countries that best incubate entrepreneurship and innovation are those that protect risk-takers. And who takes greater risks than a migrant heading off to a distant city?

If governments can create a solid and secure ladder to prosperity for migrants — a way for them to transfer their rights, their IDs, and their votes to the city; a place for them to live; and some basic social protection if things go wrong — then they should be able to trust those strivers to do the rest.

There is little time to waste, if migrants driven out by the virus are to be persuaded to return to cities once the lockdown is lifted. Too often, welfare policy seeks to preserve the status quo. Governments in the developing world need to focus more on protecting those who are working to change their lives.