By Faranak Bakhtiari

Building Back Better: UN supports Iran’s socio-economic response to COVID-19

July 26, 2020 - 18:40

TEHRAN – The United Nations System in Iran has launched a ‘Program on Socio-Economic Response to COVID-19’ which focuses on three particular areas of intervention, including combined employment generation, social protection, and strengthening the health system.

It will be implemented by UN Country Team (UNCT) Iran in an integrated manner jointly with national partners, according to a report released by UNDP and UNICEF.

Global socio-economic impact of COVID-19

The impact of the COVID-19 pandemic on the global economy and social fabric is unprecedented. Current UN DESA estimates indicate a possible loss of up to $8 Trillion in global GDP, that is, a possible fall of 10 percent in global income affecting over 60 percent of jobs worldwide.

With four billion people, including two out of three children, either not having social protection at all or being inadequately covered by existing schemes, the crisis will have significant adverse outcomes, wiping out many previous development gains.

Iran most impacted by the pandemic in the MENA region

Against this global backdrop, Iran has been the country most impacted by the pandemic in the MENA region: a crisis compounding already existing adverse unilateral sanctions and other structural challenges.

On a very worst-case scenario, the impact may lead to a fall of up to 15% of GDP, particularly impacting the bottom 40 percent income deciles of the population, business activity and revenues, and a falling disposable income that will deepen inequality.

The partial lockdown measures have directly and indirectly affected 50 percent of Iran’s estimated 25 million or so workforce; SME closure and falls in production affecting 3 million formal workers and 4 million informal workers and micro-enterprises; along with rising unemployment - possibly up to 2 million additional unemployed.

UN agencies supporting recovery against COVID-19 in Iran

Building Back Better: The overall intent is not to “go back to the pre-COVID-19 normal” but to pave the way for “a new (and better) normal” following the outbreak.

In response to the Government request in March 2020, the United Nations in Iran has been actively supporting national health, humanitarian, and socio-economic response to the COVID-19 outbreak in Iran.

The UN agencies are engaged in supporting recovery through focused activities of the UNDAF, some repurposed to align with recovery, and including through the Technical Assistance Package (TAP) initiative and South-South and Triangular Cooperation approaches.

So far over $15 million of the UN agencies’ core funds have been repurposed or are aligned towards COVID-19 related needs of Iran.

Given its comparative advantages, the UN System in Iran is actively supporting the Government with tailored solutions and best practices in development efforts and is launching a COVID-19 Socio-Economic Recovery Programme offer focused on three particular areas of intervention: combined employment generation, social protection, and health system strengthening.

How does the program contribute to addressing the challenges in Iran?

The program offers builds on the global UN Framework for the Immediate Socio-Economic Response to COVID-19, and the TAP of UN Iran endorsed by the Government in early 2020.

The program offer intends to support 92,000 vulnerable households through social protection initiatives and employment generation support – in four provinces.

A Conditional Cash Transfer (CCT) model targeting 42,000 vulnerable households, with expanded access to basic social services, that can be potentially considered for nation-wide scale-up through a more shock responsive social protection system – and in parallel establishing 50,000 new micro and small enterprise/employment possibilities for them through low overhead cost approaches of $1,000 per support and the establishment of relevant activities, that are also composite social protection and micro-enterprise development approaches utilizing proven methods promoted by the UN agencies in Iran.

The UN program funding would require between $20 million to $50 million. The combined UN program offer is complementary to the Government’s current needs and own up-scaling efforts; especially its approach towards area-based and rural employment generation and stated intentions to link up to some form of minimum floor social support for lower-income groups.

The UN-supported practices are already being used and up-scaled nationally; further seed capital would support positive economic and social multiplier effects in target communities and will contribute to ‘bottom up’ socio-economic approaches and impact at scale; and towards a more resilient economy and society.

Health system overwhelmed by COVID-19 amid U.S. sanctions

Iran’s health system was already stressed when COVID-19 pandemic hit the country; at a time when it was already challenged by the impact of unilateral sanctions, constraints affecting the import of essential items; reduced fiscal space required to sustain a health financing system (depending on the Government funding and despite a social health insurance system with population coverage of around 95 percent); and also a reduction of purchasing power effecting the capacity to cope with out-of-pocket payments for health expenditure; significantly affecting particular poorer and otherwise disadvantaged parts of the population.

Balancing the demands of responding directly to COVID-19, while simultaneously maintaining essential health service delivery and mitigating the risk of system collapse remains a challenge.

Accelerated humanitarian exemptions for the provision of essential medicines, raw materials, and lifesaving equipment will be crucial – and the UN is engaging in high-level advocacy for lifting the impact of sanctions on the health system; simultaneously assisting the Government and facilitating procurement and financial transactions channels.

Under such conditions of a protracted health emergency, the next phase of the health sector recovery will need to address emergency preparedness and response; Universal Health Coverage requirements in COVID-19 conditions, the financing of different health service components, and health information systems; healthier populations, whole-of-society health-in-all policies approach, from top command level down to the PHC and community level, and given the bi-directional relationship between health and sustainable development there is a need for existing multi-sectoral health governance structures to be strengthened further.

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