Impact of Covid-19 on Human Capital | 17 Feb 2023

Why in News?

Recently, the World Bank has released a report titled- “Collapse and Recovery: How COVID-19 Eroded Human Capital and What to Do”, stating that the Covid-19 caused a massive collapse in human capital, primarily affecting children and young people.

• It analyzed global data on the pandemic’s impacts on young people at key developmental stages: early childhood (0-5 years), school age (6-14 years) and youth (15-24 years).

What are the Findings of the Report?

• Impact of Pandemic:
  • The Covid-19 caused massive damage to human capital at critical moments in the life cycle, primarily affecting children and young people in underdeveloped and developing countries.
  • The development of millions in low- and middle-income countries has been derailed.
• Impact on School Children:
  • Preschool-age children in multiple countries have lost more than 34% of learning in early language and literacy and more than 29% of learning in mathematics compared to pre-pandemic cohorts.
  • In many countries, even after schools had reopened, preschool enrollment had not recovered by the end of 2021; it was down by more than 10% in multiple countries.
  • Children also faced greater food insecurity during the pandemic.
• Reductions in Healthcare:
  • Millions of children faced reductions in health care—including missed critical vaccines.
  • They also faced more stress in their care environments—orphanhood, domestic violence, suboptimal nutrition—which led to declines in school readiness and declines in social and emotional development.
• Youth Employment:
  • Forty million people who would have had a job in the absence of the pandemic did not have one at the end of 2021, worsening youth unemployment trends. Youth earnings contracted by 15% in 2020 and 12% in 2021.
  • New entrants with lower education will have 13% fewer earnings during their first decade in the labour market.
    • In Brazil, Ethiopia, Mexico, Pakistan, South Africa, and Vietnam 25% of all young people were neither in education, employment, nor training in 2021.
• Challenges in Future:
  • The cognitive deficit in today’s toddlers could translate into a 25% decline in earnings at their prime working age.
  • Today’s students in low- and middle-income countries could lose up to 10% of their future average annual earnings due to the COVID-related education shocks. Globally, this generation of students risks losing USD 21 trillion in potential lifetime earnings.
  • Losses of lifetime earnings at this scale can mean lower productivity, greater inequality, and possibly greater social unrest for decades to come.

What are the Recommendations?

• Countries should act urgently to recover these losses and invest better in their people.
• Human capital is a key driver of poverty reduction and inclusive growth. It is imperative for building resilience in the face of current and future crises and shocks.
• Some of the Policy Actions can include,
  • Vaccinations and nutritional supplementation campaigns; increasing coverage of parenting programs; increasing access to pre-primary education, expanding coverage of cash transfers for vulnerable families.
  • Increasing instructional time; assessing learning and matching instruction to students’ learning level; and streamlining the curriculum to focus on foundational learning.
  • For youth, support for adapted training, job intermediation, entrepreneurship programs, and new workforce-oriented initiatives are crucial.
• In the longer term, countries need to build agile, resilient, and adaptive human development systems that can better prepare for and respond to current and future shocks.

Source: DTE