World Bank to help alleviate burden for the self-employed in the face of COVID-19Economy
Ulaanbaatar /MONTSAME/ The World Bank is reprioritizing US$15 million under the existing Employment Support Project to support certain relief measures of the government’s economic stimulus package in response to COVID-19, which was endorsed by the Parliament on April 9, 2020.
This support will cover out-of-pocket social insurance contributions for an estimated 120,000 individuals—including the self-employed, micro-entrepreneurs, and those informally employed—for a period of five months so they can free up resources to cover their daily expenses during the difficult time of crisis. Meanwhile, they will be able to maintain access to the social insurance benefits in the future in the form of pensions, disability and unemployment benefits, and paid maternity leave among others. The exemptions for social insurance contributions will be pegged to the minimum wage for those enrolled under the voluntary scheme.
Mongolia was one of the first countries to face the economic impacts of COVID-19 due to its close linkage with the Chinese economy, particularly in trade, tourism and foreign investments. Since late January 2020, the government has enacted necessary and stringent measures to prevent the spread of COVID-19, which have brought the local economy to a standstill.
The deteriorating economic outlook has already translated to worsening employment prospects and will likely to lead to increased lay-offs, fewer jobs and lower wages for the Mongolian workforce. With few effective instruments at their disposal to manage shocks, the self-employed and wage workers in temporary contracts or in the informal sector are likely to be disproportionally affected. Even when the health crisis ebbs and measures that restrict work and mobility ease, affected workers and entrepreneurs may face a longer route to recovery than others.
“The crises caused by COVID-19 pandemic are likely to hit particularly hard the self-employed, micro-entrepreneurs and informal workers. That is why the World Bank is supporting the government’s efforts to provide timely relief to help those affected by this crisis,” said Andrei Mikhnev, World Bank Country Manager for Mongolia.
Earlier, the World Bank Board of Directors approved US$26.9 million for the Mongolia COVID-19 Emergency Response and Health System Preparedness project to help Mongolia meet emergency needs in the face of the pandemic and better prepare for future health crises. In addition, US$2.2 million has been mobilized under the ongoing E-Health project to purchase the most needed medical diagnostic equipment.
The World Bank Group’s COVID-19 response
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. We are increasing disease surveillance, improving public health interventions, and helping the private sector continue to operate and sustain jobs. Over the next 15 months, we will be deploying up to $160 billion in financial support to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery, including $50 billion of new IDA resources in grants or highly concessional terms.
source: World Bank