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A comprehensive Study on Economic, social and political issues raised by the COVID-19 pandemic : The Philosophical Review
 

The secret of change is to focus all of your energy, not on fighting the old, but on building the new.
~ Socrates

 

 

en·​dem·​ic | \ en-ˈde-mik  , in- \ Definition of endemic

 1a: belonging or native to a particular people or country

b: characteristic of or prevalent in a particular field, area, or environment problems endemic to translationthe self-indulgence endemic in the film industry

2: restricted or peculiar to a locality or region endemic diseasesan endemic species

endemic

en·​dem·​ic | \ en-ˈde-mik  , in- \ Definition of endemic 

: an organism that is restricted or peculiar to a locality or region : an endemic organism

If you translate it literally, endemic means "in the population." It derives from the Greek endēmos, which joins en, meaning "in," and dēmos, meaning "population." "Endemic" is often used to characterize diseases that are generally found in a particular area; malaria, for example, is said to be endemic to tropical and subtropical regions. This use differs from that of the related word epidemic in that it indicates a more or less constant presence in a particular population or area rather than a sudden, severe outbreak within that region or group. The word is also used by biologists to characterize the plant and animal species that are only found in a given area.

A pandemic is defined as an outbreak of a disease that affects a whole country or the whole world. Since 2002 there have been 5 major pandemics. 

It is possible to have a pandemic that only affects one nation or continent. An example of this is the 2014 Ebola epidemic that affected vast areas of Africa but had little to no effect in Europe and America. 

 

How Many Pandemics Were There In History 
We do not have records of the whole of history (sadly), so there is no way to know officially how many pandemics there have ever been. 

However, we have pretty extensive records of life in the Common Era (CE, formally AD), so we have a fairly good understanding of everything that has happened during that time. 

During the Common Era we have a record of 20 disease outbreaks that meet the pandemic criteria. 5 of which have happened in the last 20 years. 

We will be going through each of these pandemics later in this article. 

It is worth noting that our records of the earlier pandemics will not be as accurate as of the newer ones. There are many reasons for this. 

Firstly, an accurate diagnosis was near impossible until about 70 years ago. Until then, there was no cocreate way to prove what somebody had died from. There may have been many people who died without being diagnosed or people who happened to die during a pandemic but not because of it.  

Secondly, there were no accurate population counts for many thousands of years. We can only make guesses at population numbers and how many people were killed by these diseases. 

Finally, communication was poor up until the early 20th century. In the dark ages, communicating between villages was difficult, let alone communication between continents. Studying the earlier pandemics is like putting together a very tricky puzzle. 

 

Difference Between A Pandemic And An Epidemic
Throughout history, there have been thousands of Epidemics, but only 20 pandemics? What is the difference between the two? And what makes a pandemic different? 

It can be difficult for the average person to understand the differences between the two, as doctors and politicians will often misuse these worlds on purpose to make their points seem more valid. 

There are four ways to categories a disease outbreak: 

ENDEMIC – an endemic is a level of disease that is near constant in a country or area. An example of this is Malaria in Central Africa. 

OUTBREAK – an outbreak is an endemic that has spread in higher numbers or a new location when it wasn’t expected to. An example of this is the recent outbreak of Dengue fever in Hawaii. 

EPIDEMIC – an epidemic is an outbreak that develops to affect a serious percentage of a specific population (a town, a city, a continent). Most countries have a yearly Flu epidemic. 

 

Report of the WHO-China Joint Mission on Coronavirus Disease 2019 (COVID-19)

I. The Mission Goal and Objectives The overall goal of the Joint Mission was to rapidly inform national (China) and international planning on next steps in the response to the ongoing outbreak of the novel coronavirus disease (COVID-191 ) and on next steps in readiness and preparedness for geographic areas not yet affected. The major objectives of the Joint Mission were as follows: • To enhance understanding of the evolving COVID-19 outbreak in China and the nature and impact of ongoing containment measures; • To share knowledge on COVID-19 response and preparedness measures being implemented in countries affected by or at risk of importations of COVID-19; • To generate recommendations for adjusting COVID-19 containment and response measures in China and internationally; and • To establish priorities for a collaborative programme of work, research and development to address critical gaps in knowledge and response and readiness tools and activities. Members & Method of Work The Joint Mission consisted of 25 national and international experts from China, Germany, Japan, Korea, Nigeria, Russia, Singapore, the United States of America and the World Health Organization (WHO). The Joint Mission was headed by Dr Bruce Aylward of WHO and Dr Wannian Liang of the People’s Republic of China. The full list of members and their affiliations is available in Annex A. The Joint Mission was implemented over a 9-day period from 16-24 February 2020. The schedule of work is available in Annex B. The Joint Mission began with a detailed workshop with representatives of all of the principal ministries that are leading and/or contributing to the response in China through the National Prevention and Control Task Force. A series of in-depth meetings were then conducted with national level institutions responsible for the management, implementation and evaluation of the response, particularly the National Health Commission and the China Centers for Disease Control and Prevention (China CDC). To gain first-hand knowledge on the field level implementation and impact of the national and local response strategy, under a range of epidemiologic and provincial contexts, visits were conducted to Beijing Municipality and the provinces of Sichuan (Chengdu), Guangdong (Guangzhou, Shenzhen) and Hubei (Wuhan). The field visits included community centers and health clinics, country/district hospitals, COVID-19 designated hospitals, transportations hubs (air, rail, road), a wet market, pharmaceutical and personal protective equipment (PPE) stocks warehouses, research institutions, provincial health commissions, and local Centers for 1 In the Chinese version of this report, COVID-19 is referred to throughout as novel coronavirus pneumonia or NCP, the term by which COVID-19 is most widely known in the People’s Republic of China. 4 Disease Control (provincial and prefecture). During these visits, the team had detailed discussion and consultations with Provincial Governors, municipal Mayors, their emergency operations teams, senior scientists, frontline clinical, public health and community workers, and community neighbourhood administrators. The Joint Mission concluded with working sessions to consolidate findings, generate conclusions and propose suggested actions. To achieve its goal, the Joint Mission gave particular focus to addressing key questions related to the natural history and severity of COVID-19, the transmission dynamics of the COVID-19 virus in different settings, and the impact of ongoing response measures in areas of high (community level), moderate (clusters) and low (sporadic cases or no cases) transmission. The findings in this report are based on the Joint Mission’s review of national and local governmental reports, discussions on control and prevention measures with national and local experts and response teams, and observations made and insights gained during site visits. The figures have been produced using information and data collected during site visits and with the agreement of the relevant groups. References are available for any information in this report that has already been published in journals. The final report of the Joint Mission was submitted on 28 February 2020. II. Major findings The major findings are described in six sections: the virus, the outbreak, transmission dynamics, disease progression and severity, the China response and knowledge gaps. More detailed descriptions of technical findings are provided in Annex C. The virus On 30 December 2019, three bronchoalveolar lavage samples were collected from a patient with pneumonia of unknown etiology – a surveillance definition established following the SARS outbreak of 2002-2003 – in Wuhan Jinyintan Hospital. Real-time PCR (RT-PCR) assays on these samples were positive for pan-Betacoronavirus. Using Illumina and nanopore sequencing, the whole genome sequences of the virus were acquired. Bioinformatic analyses indicated that the virus had features typical of the coronavirus family and belonged to the Betacoronavirus 2B lineage. Alignment of the full-length genome sequence of the COVID-19 virus and other available genomes of Betacoronavirus showed the closest relationship was with the bat SARS-like coronavirus strain Bat Cov RaTG13, identity 96%. Virus isolation was conducted with various cell lines, such as human airway epithelial cells, Vero E6, and Huh-7. Cytopathic effects (CPE) were observed 96 hours after inoculation. Typical crown-like particles were observed under transmission electron microscope (TEM) with negative staining. The cellular infectivity of the isolated viruses could be completely neutralized by the sera collected from convalescent patients. Transgenic human ACE2 mice and Rhesus monkey intranasally challenged by this virus isolate induced multifocal pneumonia with interstitial hyperplasia. The COVID-19 virus was subsequently detected and isolated in the lung and intestinal tissues of the challenged animals. 5 Whole genome sequencing analysis of 104 strains of the COVID-19 virus isolated from patients in different localities with symptom onset between the end of December 2019 and mid-February 2020 showed 99.9% homology, without significant mutation Post-mortem samples from a 50-year old male patient from Wuhan were taken from the lung, liver, and heart. Histological examination showed bilateral diffuse alveolar damage with cellular fibromyxoid exudates. The lung showed evident desquamation of pneumocytes and hyaline membrane formation, indicating acute respiratory distress syndrome (ARDS). Lung tissue also displayed cellular and fibromyxoid exudation, desquamation of pneumocytes and pulmonary oedema. Interstitial mononuclear inflammatory infiltrates, dominated by lymphocytes, were seen in both lungs. Multinucleated syncytial cells with atypical enlarged pneumocytes characterized by large nuclei, amphophilic granular cytoplasm, and prominent nucleoli were identified in the intraalveolar spaces, showing viral cytopathic-like changes. No obvious intranuclear or intracytoplasmic viral inclusions were identified. The outbreak As of 20 February 2020, a cumulative total of 75,465 COVID-19 cases were reported in China. Reported cases are based on the National Reporting System (NRS) between the National and Provincial Health Commissions. The NRS issues daily reports of newly recorded confirmed cases, deaths, suspected cases, and contacts. A daily report is provided by each province at 0300hr in which they report cases from the previous day. The epidemic curves presented in Figures 2 and 3 are generated using China’s National Infectious Disease Information System (IDIS), which requires each COVID-19 case to be reported electronically by the responsible doctor as soon as a case has been diagnosed. It includes cases that are reported as asymptomatic and data are updated in real time. Individual case reporting forms are downloaded after 2400hr daily. Epidemiologic curves for Wuhan, Hubei (outside of Wuhan), China (outside Hubei) and China by symptom onset are provided Demographic characteristics Among 55,924 laboratory confirmed cases reported as of 20 February 2020, the median age is 51 years (range 2 days-100 years old; IQR 39-63 years old) with the majority of cases (77.8%) aged between 30–69 years. Among reported cases, 51.1% are male, 77.0% are from Hubei and 21.6% are farmers or laborers by occupation. Zoonotic origins COVID-19 is a zoonotic virus. From phylogenetics analyses undertaken with available full genome sequences, bats appear to be the reservoir of COVID-19 virus, but the intermediate host(s) has not yet been identified. However, three important areas of work are already underway in China to inform our understanding of the zoonotic origin of this outbreak. These include early investigations of cases with symptom onset in Wuhan throughout December 2019, environmental sampling from the Huanan Wholesale Seafood Market and other area markets, and the collection of detailed records on the source and type of wildlife species sold at the Huanan market and the destination of those animals after the market was closed. Routes of transmission COVID-19 is transmitted via droplets and fomites during close unprotected contact between an infector and infectee. Airborne spread has not been reported for COVID-19 and it is not believed to be a major driver of transmission based on available evidence; however, it can be envisaged if certain aerosol-generating procedures are conducted in health care facilities. Fecal shedding has been demonstrated from some patients, and viable virus has been identified in a limited number of case reports. However, the fecal-oral route does not appear to be a driver of COVID-19 transmission; its role and significance for COVID-19 remains to be determined. Viral shedding is discussed in the Technical Findings (Annex C). Household transmission In China, human-to-human transmission of the COVID-19 virus is largely occurring in families. The Joint Mission received detailed information from the investigation of clusters and some household transmission studies, which are ongoing in a number of Provinces. Among 344 clusters involving 1308 cases (out of a total 1836 cases reported) in Guangdong Province and Sichuan Province, most clusters (78%-85%) have occurred in families. Household transmission studies are currently underway, but preliminary studies ongoing in Guangdong estimate the secondary attack rate in households ranges from 3-10%. Contact Tracing China has a policy of meticulous case and contact identification for COVID-19. For example, in Wuhan more than 1800 teams of epidemiologists, with a minimum of 5 people/team, are tracing tens of thousands of contacts a day. Contact follow up is painstaking, with a high percentage of identified close contacts completing medical observation. Between 1% and 5% of contacts were subsequently laboratory confirmed cases of COVID-19, depending on location. For example: • As of 17 February, in Shenzhen City, among 2842 identified close contacts, 2842 (100%) were traced and 2240 (72%) have completed medical observation. Among the close contacts, 88 (2.8%) were found to be infected with COVID-19. 9 • As of 17 February, in Sichuan Province, among 25493 identified close contacts, 25347 (99%) were traced and 23178 (91%) have completed medical observation. Among the close contacts, 0.9% were found to be infected with COVID-19. • As of 20 February, in Guangdong Province, among 9939 identified close contacts, 9939 (100%) were traced and 7765 (78%) have completed medical observation. Among the close contacts, 479 (4.8%) were found to be infected with COVID-19. Testing at fever clinics and from routine ILI/SARI surveillance The Joint Mission systematically enquired about testing for COVID-19 from routine respiratory disease surveillance systems to explore if COVID-19 is circulating more broadly and undetected in the community in China. These systems could include RT-PCR testing of COVID-19 virus in influenza-like-illness (ILI) and severe acute respiratory infection (SARI) surveillance systems, as well as testing of results among all visitors to fever clinics. In Wuhan, COVID-19 testing of ILI samples (20 per week) in November and December 2019 and in the first two weeks of January 2020 found no positive results in the 2019 samples, 1 adult positive in the first week of January, and 3 adults positive in the second week of January; all children tested were negative for COVID-19 although a number were positive for influenza. In Guangdong, from 1-14 January, only 1 of more than 15000 ILI/SARI samples tested positive for the COVID-19 virus. In one hospital in Beijing, there were no COVID-19 positive samples among 1910 collected from 28 January 2019 to 13 February 2020. In a hospital in Shenzhen, 0/40 ILI samples were positive for COVID-19. Within the fever clinics in Guangdong, the percentage of samples that tested positive for the COVID-19 virus has decreased over time from a peak of 0.47% positive on 30 January to 0.02% on 16 February. Overall in Guangdong, 0.14% of approximately 320,000 fever clinic screenings were positive for COVID-19. Susceptibility As COVID-19 is a newly identified pathogen, there is no known pre-existing immunity in humans. Based on the epidemiologic characteristics observed so far in China, everyone is assumed to be susceptible, although there may be risk factors increasing susceptibility to infection. This requires further study, as well as to know whether there is neutralising immunity after infection. The transmission dynamics Inferring from Figures 2 and 3, and based on our observations at the national and provincial/municipal levels during the Joint Mission, we summarize and interpret the transmission dynamics of COVID-19 thus far. It is important to note that transmission dynamics of any outbreak are inherently contextual. For COVID-19, we observe four major types of transmission dynamics during the epidemic growth phase and in the post-control period, and highlight what is known about transmission in children, as follows: 10 Transmission in Wuhan Early cases identified in Wuhan are believed to be have acquired infection from a zoonotic source as many reported visiting or working in the Huanan Wholesale Seafood Market. As of 25 February, an animal source has not yet been identified. At some point early in the outbreak, some cases generated human-to-human transmission chains that seeded the subsequent community outbreak prior to the implementation of the comprehensive control measures that were rolled out in Wuhan. The dynamics likely approximated mass action and radiated from Wuhan to other parts of Hubei province and China, which explains a relatively high R0 of 2-2.5. The cordon sanitaire around Wuhan and neighboring municipalities imposed since 23 January 2020 has effectively prevented further exportation of infected individuals to the rest of the country. Transmission in Hubei, other than Wuhan In the prefectures immediately adjoining Wuhan (Xiaogan, Huanggang, Jingzhou and Ezhou), transmission is less intense. For other prefectures, due to fewer transport links and human mobility flows with Wuhan, the dynamics are more closely aligned with those observed in the other areas of the country. Within Hubei, the implementation of control measures (including social distancing) has reduced the community force of infection, resulting in the progressively lower incident reported case counts. Transmission in China outside of Hubei Given Wuhan’s transport hub status and population movement during the Chinese New Year (chunyun), infected individuals quickly spread throughout the country, and were particularly concentrated in cities with the highest volume of traffic with Wuhan. Some of these imported seeds generated limited human-to-human transmission chains at their destination. Given the Wuhan/Hubei experience, a comprehensive set of interventions, including aggressive case and contact identification, isolation and management and extreme social distancing, have been implemented to interrupt the chains of transmission nationwide. To date, most of the recorded cases were imported from or had direct links to Wuhan/Hubei. Community transmission has been very limited. Most locally generated cases have been clustered, the majority of which have occurred in households, as summarized above. Of note, the highly clustered nature of local transmission may explain a relatively high R0 (2- 2.5) in the absence of interventions and low confirmed case counts with intense quarantine and social distancing measures. Special settings We note that instances of transmission have occurred within health care settings prisons and other closed settings. At the present time, it is not clear what role these settings and groups play in transmission. However, they do not appear to be major drivers of the overall epidemic dynamics. Specifically, we note: 11 (a) Transmission in health care settings and among health care workers (HCW) – The Joint Mission discussed nosocomial infection in all locations visited during the Mission. As of 20 February 2020, there were 2,055 COVID-19 laboratory-confirmed cases reported among HCW from 476 hospitals across China. The majority of HCW cases (88%) were reported from Hubei. Remarkably, more than 40,000 HCW have been deployed from other areas of China to support the response in Wuhan. Notwithstanding discrete and limited instances of nosocomial outbreaks (e.g. a nosocomial outbreak involving 15 HCW in Wuhan), transmission within health care settings and amongst health care workers does not appear to be a major transmission feature of COVID-19 in China. The Joint Mission learned that, among the HCW infections, most were identified early in the outbreak in Wuhan when supplies and experience with the new disease was lower. Additionally, investigations among HCW suggest that many may have been infected within the household rather than in a health care setting. Outside of Hubei, health care worker infections have been less frequent (i.e. 246 of the total 2055 HCW cases). When exposure was investigated in these limited cases, the exposure for most was reported to have been traced back to a confirmed case in a household. The Joint Team noted that attention to the prevention of infection in health care workers is of paramount importance in China. Surveillance among health care workers identified factors early in the outbreak that placed HCW at higher risk of infection, and this information has been used to modify policies to improve protection of HCW. (b) Transmission in closed settings – There have been reports of COVID-19 transmission in prisons (Hubei, Shandong, and Zhejiang, China), hospitals (as above) and in a longterm living facility. The close proximity and contact among people in these settings and the potential for environmental contamination are important factors, which could amplify transmission. Transmission in these settings warrants further study. Children Data on individuals aged 18 years old and under suggest that there is a relatively low attack rate in this age group (2.4% of all reported cases). Within Wuhan, among testing of ILI samples, no children were positive in November and December of 2019 and in the first two weeks of January 2020. From available data, and in the absence of results from serologic studies, it is not possible to determine the extent of infection among children, what role children play in transmission, whether children are less susceptible or if they present differently clinically (i.e. generally milder presentations). The Joint Mission learned that infected children have largely been identified through contact tracing in households of adults. Of note, people interviewed by the Joint Mission Team could not recall episodes in which transmission occurred from a child to an adult. The signs, symptoms, disease progression and severity Symptoms of COVID-19 are non-specific and the disease presentation can range from no symptoms (asymptomatic) to severe pneumonia and death. As of 20 February 2020 and 12 based on 55924 laboratory confirmed cases, typical signs and symptoms include: fever (87.9%), dry cough (67.7%), fatigue (38.1%), sputum production (33.4%), shortness of breath (18.6%), sore throat (13.9%), headache (13.6%), myalgia or arthralgia (14.8%), chills (11.4%), nausea or vomiting (5.0%), nasal congestion (4.8%), diarrhea (3.7%), and hemoptysis (0.9%), and conjunctival congestion (0.8%). People with COVID-19 generally develop signs and symptoms, including mild respiratory symptoms and fever, on an average of 5-6 days after infection (mean incubation period 5-6 days, range 1-14 days). Most people infected with COVID-19 virus have mild disease and recover. Approximately 80% of laboratory confirmed patients have had mild to moderate disease, which includes non-pneumonia and pneumonia cases, 13.8% have severe disease (dyspnea, respiratory frequency ≥30/minute, blood oxygen saturation ≤93%, PaO2/FiO2 ratio <300, and/or lung infiltrates >50% of the lung field within 24-48 hours) and 6.1% are critical (respiratory failure, septic shock, and/or multiple organ dysfunction/failure). Asymptomatic infection has been reported, but the majority of the relatively rare cases who are asymptomatic on the date of identification/report went on to develop disease. The proportion of truly asymptomatic infections is unclear but appears to be relatively rare and does not appear to be a major driver of transmission. Individuals at highest risk for severe disease and death include people aged over 60 years and those with underlying conditions such as hypertension, diabetes, cardiovascular disease, chronic respiratory disease and cancer. Disease in children appears to be relatively rare and mild with approximately 2.4% of the total reported cases reported amongst individuals aged under 19 years. A very small proportion of those aged under 19 years have developed severe (2.5%) or critical disease (0.2%). As of 20 February, 2114 of the 55,924 laboratory confirmed cases have died (crude fatality ratio [CFR2 ] 3.8%) (note: at least some of whom were identified using a case definition that included pulmonary disease). The overall CFR varies by location and intensity of transmission (i.e. 5.8% in Wuhan vs. 0.7% in other areas in China). In China, the overall CFR was higher in the early stages of the outbreak (17.3% for cases with symptom onset from 1- 10 January) and has reduced over time to 0.7% for patients with symptom onset after 1 February (Figure 4). The Joint Mission noted that the standard of care has evolved over the course of the outbreak. Mortality increases with age, with the highest mortality among people over 80 years of age (CFR 21.9%). The CFR is higher among males compared to females (4.7% vs. 2.8%). By occupation, patients who reported being retirees had the highest CFR at 8.9%. While patients who reported no comorbid conditions had a CFR of 1.4%, patients with comorbid conditions had much higher rates: 13.2% for those with cardiovascular disease, 9.2% for diabetes, 8.4% for hypertension, 8.0% for chronic respiratory disease, and 7.6% for cancer. 2 The Joint Mission acknowledges the known challenges and biases of reporting crude CFR early in an epidemic

1. “In the midst of chaos, there is also opportunity.” – Sun Tzu
New beginnings are a chance to make things right and make things better. Heading back to work may feel like chaos, but try not to look at it that way. You now have the advantage of having taken a step back, so you can now approach your work with a fresh perspective. Look at this as an opportunity to improve systems and processes and build a stronger team.

2. “What you do today can improve all of your tomorrows.” – Ralph Marston
Everything you do builds upon everything you have already done. So the small changes and improvements you make today will make tomorrow easier and enable you to continue to grow and improve.

3. “Don’t wait. The time will never be just right.’’ – Napoleon Hill
Instead of worrying about making sure everything is perfect, give it your best. You can miss out on a lot of great opportunities if you try to wait for perfection.

4. “The future depends on what you do today.” – Mahatma Gandhi
We will get through this and we will find a way to continue on in a safe and responsible manner. Going back to work and taking the time and precautions to ensure we do the best job we can is just one way we can ensure we have a brighter future.

5. “Everything will be okay in the end. If it’s not okay, it’s not the end.” – John Lennon
Such a simple quote from such an inspiring man. It may seem overwhelming as you go back into the workplace after working from home. Don’t worry, this quote from John Lennon reminds us that things will work out just fine.

6. “I am not a product of my circumstances. I am a product of my decisions.” – Stephen Covey
It does not matter what has happened to you during the quarantine. What matters is what lies ahead of you and what that will look like is completely and entirely up to you.

7. “Act as if what you do makes a difference. It does.” – William James
In today’s crazy world it can sometimes seem that small actions may not make an impact on anything important. This quote reminds us that we matter as to all of our actions.

8. “It’s OK to not be OK.” – Ed Sheeran
Don’t worry if every single day as you weave your life back into working 9 to 5 doesn’t feel like you’re doing okay. Give yourself some time to adjust to the new reality as we work our way back to normal.

9. “Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.” – Marie Curie
As you head back into the workplace, take time to educate yourself on the facts around COVID-19. Have a discussion with your HR department in order to ensure that you have the PPE your business needs for coronavirus so you’re comfortable each and every day in your workplace.

10. “Whatever you decide to do, make sure it makes you happy.” – Paulo Coelho
If working from home has you thinking that going back to work is not what is best for you and your circumstances, you owe it to yourself to find a way to do what makes you happy.

Philosophy does not offer tools for solving practical problems, but looks for a sense of concrete situations through a rational reflection. In the present case this sense focuses on: 1. human fragility (the virus can kill any human being); 2. human impotence (our situation is essentially identical with that of ancient epidemics: our defence reduces us to isolation); 3. limited efficiency of techno-science (the decisive therapy for this illness has not been found yet, despite the efforts of hundreds of laboratories and pharmaceutical companies); 4. rediscovery of common good and human solidarity (the protection of the individuals is needed for the protection of society and vice versa); 5. the incumbent presence of death (in the light of which the hierarchy of values orienting human existence can be reshaped).

The results of these reflections can point out responsibilities of the political power, and lead to hostility against philosophers and the effort of silencing their voice, reminding us of the example of Socrates

 “There is nothing to fear in life, you just have to understand it. Now is the time to understand more, so we can fear less”

Thinking about the pandemic? The very question takes us fully into the field of philosophy. We can think of the pandemic because we are alive. “cogito ergo sum” "I think, therefore I am" (Descartes, 2003). Being alive, we suffer the pandemic that threatens our existence and the very possibility of thinking about it. Although, it must be said, we do not all suffer the pandemic in the same way Is it possible to find an analogy between the spread of the virus and the spread of philosophical ideas? It is certainly possible: philosophy, for example, is similar to the virus in that it pushes us to set priorities and make us aware of our finiteness, but also in that it forces us to pose new problems. It is impossible to live without ideas, not because we have or stop having ideas, but because the ideas are having us. This happens because reality itself imposes certain ideas on us, whether we like it or not. In fact, even a simple virus can mobilize more ideas than a philosophy treatise (Benarde, 1973).

There are deeper reasons for this analogy and the first is that both are invisible and are transmitted from one person to another. Philosophy is transmitted through ideas most of the time in an oral form, and also viruses, such as covid-19, are transmitted through very small drops of saliva that come out of the mouth, while their diffusion is so rapid that even in the case of ideas it is used say that they have become "viral". The virus, entering the body, acts as a dangerous agent that puts our health at risk. Philosophy does not enter the body but into the mind, yet certain philosophical ideas can also be considered a threat to man, as happened during some historical occasions: Socrates was put to death, because his ideas were considered as a threat to the power structures of the time (Platon, 2003). The same thing happened with Spinoza (Waterfield, 2009), whose ideas led to excommunication from his congregation and social community. Jean Paul Sartre's philosophy was also considered a danger, so much so that in Great Britain his play The closed door was prohibited, as well as in the Soviet Union his play The dirty hands, while Pope Pius XII put all his works in the Index of prohibited books (Waterfield, 2002); Gabriel Marcel said that Sartre's thought corrupted the young people (Aloi, 2014), repeating the accusation formulated against Socrates at his time. These three examples alone are enough to mention philosophers whose thinking represented a public threat to many, just like viruses. In this way the philosopher appears (as well as the virus) an "epidemos" in the true Greek sense of the word, that is, someone who is in the "demos", who circulates among people of a certain community and endangers their lives. This is why philosophy and viruses, if taken in isolation, when they spread in societies can provoke and determine profound changes in mentality, when they recall previously neglected needs and awareness and in this way they can profoundly influence the course of history, for better or for worse.

Article  28H  clause  (1)  of  the  Republic  of Indonesia’s 1945 Constitution states, “...every person has the right to live prosperously both physically and mentally, to have shelter, to live in a good and healthy environment, and to obtain health services...” Then, clause (2) states, “... every person has the right to obtain ease and special treatment to acquire the same opportunities and benefits in achieving equity and justice...”.The regulations above are further regulated in Law No.   4 of 1984 on Infectious Disease Outbreak (hereinafter called the Law on Infectious Disease Outbreak) and Law No.   6 of 2018 on Health Quarantine (hereinafter called the Law on Health Quarantine). These two laws regulate the entrance and exit of individuals to sources of the outbreak, isolation, areal quarantine, vaccination, etc.Apart from that, Law No 36 of 2009 on Health (hereinafter  called  the  Law  on  Health)  stipulates the norms that regulate the public on health. This is absolutely  required  to  create  order  and  to  fulfill  the rights  of  the  people  as  health  service  users  and  as health workers. Rights occur due to the obligations of others and vice versa. This equilibrium must not be violated, as an imbalance will cause chaos [1].The  Philosophy  of  ethics  critically  analyzes how people must act in concrete situations or how they should think critically on right or wrong that may be given responsibility for, by considering various interests, rights,  and  responsibilities,  as  well  as  the  choice  to choose what can or cannot be carried out.The  case  of  equilibrium  between  rights  and responsibilities  stated  above  is  seen  in  the  current phenomena of the COVID-19 pandemic, where there are  clashes  between  individual  and  public  rights. In  this  case,  individual  rights  include  the  right  to undergo activities freely and to fulfill economic rights. Meanwhile, public rights include the right to live in a healthy environment and to achieve a good degree of health [2].The COVID-19 may spread through droplets when humans directly interact. In a short period, this virus has infected people in a hundred countries in the world [3]. The latest confirmed COVID-19 data up to June 27, 2021, states that 3,287,727 were confirmed as positively infected by the virus, 2,640,676 people healed, and 88,659 people died [4]. Although it can be said that COVID-19 is not as scary as the Black Death that hit Wittenberg in 1527, or the Plague of Cyprian in 249-262 AD that caused 5000 deaths a day [5].

Wardiono et al. Philosophy, Law, and Ethics Handling CovidOpen Access Maced J Med Sci. 2021 Nov 12; 9(E):1104-1108.1105The  COVID-19  is  a  self-limiting  disease  [6] that allows the human body to build its own antibody. Furthermore, this virus is easily transmitted from one person  to  another  [7].  The  spread  of  this  disease causes people to become worried and scared. Some people  rejected  COVID-19 patients  and  the  burial of their bodies [8]. Some health workers who treated the COVID-19 patients were also outcasted from their residential areas [9].As  the  formulator,  the  implementer,  and  the supervisor  of  the  regulations  on  social  protection,  the Indonesian government must consider many things, to achieve justice as a manifestation of patients’ and society’s constitutional rights. The law aims to achieve a sense of justice in society. Legal justice is not only formal procedural that is based on normative laws that are far from morality ethics or values of humanity. However, substantive justice is based on public morality values and human values that may bring happiness and satisfaction to society.The  government-made  health  regulations must consider ethical values [10]. Article 56 clause (2) letter of Law No. 36 of 2009 on Health is referred to in controlling the spread of the COVID-19. It states that the right to accept or to reject does not apply to disease sufferers whose disease may quickly and extensively infect the public. This article becomes a limitation to patients’ rights. It is also an effort to protect society from the chance to be infected by the virus from suffers. Thus, there is a dilemma between ethics, law, and justice. On the one hand, the patients have the right to accept or reject  treatment.  Meanwhile,  on  the  other  hand,  the consideration for social safety is more important when rights must be violated to achieve justice for everyone.According  to  the  philosophy  of  ethics  of Immanuel  Kant,  there  is  a  way  of  thinking  or  a perspective that takes ethical actions holistically and comprehensively, namely, deontological ethics. It is a method of ethical thinking that is based on objective norms or principles that must be applied in all situations and conditions [11], [12].A concrete manifestation during the COVID-19 is that ethics, law, and justice must be prioritized in the aim to extensively maintain the health and the protection of the public from the impacts of the COVID-19 pandemic. As in the “Salus Populi Suprema Lex Esto”principle, public safety is the highest law [13]. Based on the background, this research aims to explore the perspectives of ethical philosophy, law, and justice on the patients’ treatment rights during the COVID-19 pandemic in Indonesia.MethodsThis research uses the statute approach [14] that  is  comprehensive,  all-inclusive,  and  systematic toward the Law on Health to analyze the ratio legis [15] of  the  norm’s  application  to  prevent  the  spread  of infectious diseases as formulated in Article 56 of the Law on Health. It uses the philosophical approach [16] to  analyze  the  ethical,  legal,  and  justice  aspects  of that article. Then, the writer gives critical notes on its legal normalization and implementation with the hope to provide holistic, radical, and profound justice to the legal  interests  of  individuals  and  society  during  the COVID-19 pandemic.ResultsCOVID-19 treatment rights in the perspective of the philosophy of ethicsPhilosophically, the state ideal is written in the 1945 Constitution, namely, to protect all Indonesians and their struggles. It gives an understanding that the state must protect the citizens from all threats, including the COVID-19 pandemic.In  Indonesia,  the  regulatory  handling  of  the COVID-19 pandemic is based on the Law on Infectious Disease Outbreak. It is hoped to achieve the highest degree of health for the Indonesian people [17]. Then, the Law on Health Quarantine is also used to handle the COVID-19 pandemic.A similar thing is regulated in Article 56 of Law No. 36 of 2009 on Health, which states that:1. Every person has the right to  receive  or  to reject part or all treatment actions that will be carried out on them after fully receiving and understanding the information on the action2. The right to accept or to reject as stated in clause (1) does not apply to:a. Disease  sufferers  whose  disease  may quickly and extensively infect the publicb. A person who is unconscious; orc. A person with severe mental illness.The stipulations above implicitly acknowledge that all patients have the right to reject or to receive all types of treatments after obtaining the information delivered  by  the  health  workers.  This  right  is  also stipulated in Article 45 of Law No. 29 of 2004 on Medical Practices, where health workers are obliged to deliver information before undergoing medical action [18].The basic rights of the patients also include the right to participate, as stipulated in Article 32 letter k of Law No. 44 of 2009 on Hospitals, namely, “(Patients have the right) to give approval or to reject actions that will be carried out by health workers on the diseases they suffer”. Article  56  of  the  Law  on  Health  states  that the participative right of the patients on their decisions regarding themselves is ignored for the state to run its obligation to protect the people’s rights to be protected from being infected by the COVID-19. It is a greater responsibility  to  protect  the  safety  of  the  people  in general  [19].  The  Law  on  Health  clearly  regulates that patients’ rights are limited when they suffer highly infectious diseases (Article 56 clause (2) letter a).The health right is not merely fulfilled by the state carelessly. But it must fulfill certain standards of appropriateness  according  to  human  dignity.  This  is parallel to the stipulations of the Stockholm Declaration in  1972,  which  gives  patients  the  right  to  determine their own fate and the right to information. Karel Vasak divided three human right generations during the French Revolution, namely liberté, égalité, and fraternité. He also argued that the main aspect of the equality concept is communication and teamwork [20].According to the philosophy of ethics, the job of the civilization is to maintain a humane community of people through the management of law and justice. Ethically,  every  honor  includes  responsibilities  and obligations that are equal to that honor. According to the philosopher Cicero, the “neminem non laedere” principle is positioned as a principle of justice in social and legal lives, where justice means not disturbing other people’s rights. Respecting the rights of the public, society, and the state means that we have indirectly become just [21].As  a  legal  state,  Indonesia  has  determined the 1945 Constitution as its constitutional basis. Article 28D clause (1) states, “Every person has the right for just  legal  acknowledgement,  guarantee,  protection, and certainty and also the same acknowledgement in the face of the law”. Patients with infectious diseases have the same rights as other patients in general. The patients  of  these  infectious  diseases  still  have  their participatory rights protected, namely to participate in the treatment and to express their thoughts in the form of acceptance or rejection. It is protected in Article 28E clause (2), “Every person has the right to believe in beliefs, to express thoughts and attitudes, according to their conscience”.According to the philosophy of ethics, according to  Kohlberg,  one’s  ethical  awareness  is  divided  into three  stages,  namely:  (1)  Pre-conventional  (childish) that is oriented to punishments and moral actions are instruments, and (2) conventional, where one depends on oneself. The goodness or the badness of a person is assessed by other people and the law is objective, and (3) post-conventional, where the law that is issued must be complied with. It is oriented from the mind and the law is based on conscience (awareness of the mind) [21].Thus, based on the philosophy of ethics, there is the task to maintain humane community civilization through law and justice by upholding the principle to not disturb other people’s rights and to respect the rights of many. Social and stately rights may be morally taken accountability for.COVID-19 treatment rights in the perspective of lawThe Law on Health has a philosophical basis as ratio legis that answers why this law is issued. One of the aims of this philosophy is stated in the preamble letter b, “The activities in the effort to maintain and to increase the society’s highest degree of health are carried out based  on  the  non-discriminative,  participative,  and sustainable  principles  to  create  Indonesian  human resources, and to increase the nation’s resilience and competitiveness for national development”. The right to reject or to accept the health services that will be employed to a person is an important element in the protection of the patient’s rights for his/her body. This also includes COVID-19 patients.Article 56 clause (1) of the Law on Health states, “Every person has the right to receive or to reject part or all treatment actions that will be carried out on them after fully receiving and understanding the information on  the  action”.  This  clause  contains  a  participatory element, as all elements of the communication process and the right to express opinions is well-regulated in the Republic of Indonesia’s state constitution, the Law on Medical Practices, the Law on Hospitals, as well as the Declaration on Human Rights.The mandate of the Law on Health is created due to a juridical and sociological condition that the increase  of  the  society’s  highest  degree  of  health is  carried  out  based  on  the  non-discriminative  and participative  principles. Thus,  the  fulfillment  of  rights and the protection of the rights to reject or to accept part or all of the medical treatment that will be employed on a person becomes a fundamental element that is protected according to this Law on Health.A problem arises when this COVID-19 is easily transmitted  between  people. Thus, Article  56  clause (2) of the Law on Health letter exists to protect the public from the chance to be infected. This is faced with the individual rights to be involved in the treatment process on themselves and the social rights. There is a contradiction between the stipulation on clause (1) and that on clause (2) letter a, where there are exceptions on the right of the former. The right is cancelled when a person suffers from a contagious disease such as COVID-19. Legally, the state acts for its existence in carrying out its obligation to protect citizens from the COVID-19  pandemic.  This  is  according  to  the  ideal mandated by the Law on Health to achieve the highest degree of public health.COVID-19 treatment rights in the perspective of justiceThe Law on Health has included participatory rights  and  non-discriminative  rights  in  its  preamble. Then, some questions emerge, “How is the justice on the rights of the public to not be infected? Should not

rights of the public be protected, even by sacrificing the interests of some people?”This  theory  on  justice  has  been  discussed millennia  ago,  both  by  Plato  (427-347  BC)  and Aristoteles (384-322 BC). The former opines that the enforcement of justice is the highest law and it must become the aim of the state. Other theories on justice that  emerged  in  the  Modern  era  are  often  used  as solutions when choosing between individual and public interests [22].The  theory  is  known  as  the  Theory  of Utilitarianism justice. Even though the consequentialism concept that becomes the basis of this thought was developed by Richard Cumberland in the 17th century, it  was  then  continued  by  Francis  Hutcheson  up  to David Hume. Even so, Jeremy Bentham (1748-1823) is  the  figure  who  provided  the  most  understanding on this theory. This Utilitarianism theory believes that the good and the just are those that bring happiness, meanwhile the bad and the unjust are those that cause suffering. Bentham’s proposition, namely, “The greatest happiness for the greatest number” often becomes the benchmark of many justice theories [23].This theory received sharp critics. It is even regarded  as  unethical  and  unjust  by  Dworkin  and Nozick. They believe that utilitarianism that prioritizes the  majority’s  welfare  will  ignore  the  interests  of minorities  or  individuals  that  are  not  represented by the majority. Their rights will be violated or even eradicated [24].Ignoring individual rights for the sake of the public’s rights becomes a moral and justice issue that will never be resolved. Even, this utilitarianism justice contradicts  the  most  basic  concept  of  justice  that  is contained in ius romanum, namely, tribuere sun cuique, that  may  be  translated  freely  as,  “Giving  everyone their rights” [25]. During the COVID-19 pandemic, the quick  spread  of  this  disease  causes  many  fatalities. Thus, individual rights of patients must be ruled out to prioritize public rights, as stated in the principle, “Salus Populi Suprema Lex Esto” : let the welfare of the people be the supreme law —motto of Missouri where public rights are the highest law. The  juridical  note  on  the  norm  of Article  56 clause  (2)  letter  that  clashes  individual  rights  (the right  to  accept  or  to  reject)  and  public  rights  (the right to be protected from the threat to be infected) is an unresolvable point. This basic right (to accept or to reject) needs not to be eradicated, as it does not have to be interpreted as eradicating the obligation of that patient to not infect the disease to other people. The public’s interest is the highest law. It cannot be discounted, to prevent the spread of the coronavirus and to prevent the increase of fatalities (Table 1).Table 1: Law and health: A study on moral and justice relations during the COVID-19 pandemic in IndonesiaSubstancePerspective of Philosophy of EthicsPerspective of LawPerspective of JusticeThe right to accept or to reject treatment during the COVID-19 pandemicThinking critically to act according to situations and concrete conditions to not violate other people’s rights, respect the rights of the majority or the state that may be morally taken accountability forCitizen safety is the highest lawGiving everyone their rights, including social and stately rightsConclusionAccording to the perspective of the philosophy of  ethics,  the  right  to  accept  or  to  reject  treatment during  the  COVID-19  pandemic  teaches  us  to  think critically  and  to  act  according  to  concrete  situations and conditions by considering moral aspects that may be taken accountability for as tribuere sun cuique that may  be  translated  freely  as,  “Giving  everyone  their rights”. The legal perspective upholds the “Salus Populi Suprema Lex Esto” principle, namely, public safety is the highest law. Then, the perspective of justice regards justice as not disturbing other people and respecting the rights of many, as well as the social and stately rights as stated in Bentham’s ideal, “The greatest happiness for the greatest number”.

 

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What is philosophy for?
Let us leave the analogy aside and ask ourselves what philosophers are doing during the current pandemic. The frustration of feeling useless is a considerable and it is difficult to hide it. We remain at home to write our own articles, to read, to give classes and webinars, but we would like to do more while the world sinks. There are spontaneous questions that arise in the face of the current situation and which seem reducible to a single fundamental one: What is philosophy for? Or: "What have philosophers written in the past in the face of thousands of deaths caused by the event of an epidemic?" Some ask themselves more concretely in what philosophers can contribute, what effective contribution they have made or can give to the solution of the problems that are oppressing us, as if they were a caste of specialists. This perspective, rather than magnifying the figure of philosophers, diminishes them. Perhaps the pandemic will serve to remind us that philosophy cannot be reduced to any professional category. In fact, no philosopher before has written directly on epidemics or pandemics (perhaps with the sole exception of Camus who wrote The plague (Camus, 1947), although some such as Fichte, Hegel, William of Ockham, the Mexican Sor Juana Inés de la Cruz and very likely St. Augustine as well died during one of them.

But let's go back to the more direct and crucial question: "What is philosophy for"? Many people reply that "Philosophy is the thing with which or without which everything remains as it is". Instead, I like the answer given by Cornelio Fabro (Giannatiempo, 1995), which was the following: "Philosophy is not at service, but reigns". It was a somewhat aristocratic answer and almost a joke. However, it expresses something true: philosophy does not have the task of providing tools or instruments to be used in concrete life. This is the task of technology, but this does not mean that philosophy has no other task in front of even concrete situations. I will summarize this concept by saying that philosophy aims to give a sense to reality. From this it can then derive duties, concrete indications and guidelines for practice in the situations that lie ahead. How does philosophy this work? It does this through rational reflection. This is the methodology of philosophy in dealing with the different problems it deals with and that are not few. We will therefore try to identify which are, in the current situation, some themes on which philosophical reflection is focused.

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Some important topics
A first point concerns the fragility of man. The pandemic puts us in the presence of the fact that we can all be affected and killed without distinction, regardless of age, sex, even social conditions. The pandemic does not look at anyone and has shown that fragilty is a typical condition of the human being as such. This is important because, as modern man grew, he lost the sense of his fragility: he had the impression of gradually becoming the master of the world, of history and also, of life, through the progress of medicine, technology and ways in which he could organize his existence. On the other hand, we realize, and the pandemic has been very clear from this point of view, that this underlying fragility is not completely eliminated.

At this first point another one is connected: that of vulnerability. Vulnerability is partly synonymous with fragility, but with an extra accent, since who is vulnerable is the one who can be injured and this is important because it indicates that the human condition is also exposed, apart from its initial fragility, to be further affected. This is what is happening today: we are affected in our everyday way of living, we can no longer do what we used to do and this regardless of whether we have to go to hospital and maybe even lose our lives.

A third point is that of the impotence of the human being, which is different from what we have previously considered. Impotence means being in the condition of not being able to do anything substantial. Let's try to consider how we are behaving towards this pandemic and how people were behaving 200,300, 1000 years ago. Practically in the same way: the only defence that we are able to offer is isolation because, despite all our progress, this sudden appearance of a new, unknown virus is such that even the most advanced technologies we have available cold not help us. After all, when they tell us to go out with masks, respecting the safety distances and avoiding the contagions corresponds to what people did at the time of the Manzonian plague, of the plague mentioned by Boccaccio (Asor Rosa, 1992), of that narrated by Thucydides (1996) and so on … This fact is very significant because the man was gradually taking the attitude of the one who, giving time to time, could do everything. There was no longer a sense of intrinsic limits. Instead, this experience is showing us that in the most fundamental situations, such as that of surviving a particularly violent disease, we are unable to react much more effectively than by hiding, or isolating or protecting ourselves as our ancient ancestors did.

All this leads us to reflect on the reasons that gave man the impression of being omnipotent. We do not want to underestimate the progress of science or technology: there is no doubt that today we know much more and much better than our grandparents, great grandparents and ancestors; not only that, but that we can do many things that our grandparents did not even imagine. But all this must not give us the impression that we have become the masters of life and nature, that we have become the builders of our existence. No, man is not the builder of his own existence, man is still a creature, that is, a being, privileged from many points of view, but who is always part of creation, even if he has qualities that allow him to progress in a certain sense indefinitely. This must be especially emphasized today, when there are ideologies that even imagine proposing a future created by man himself through technology. I speak of transhumanism and posthumanism which even come to speculate that man can go beyond himself, thanks to technologies that he somehow incorporates. But where does he incorporate them? He incorporates them into his body and in this way he thinks of changing his ontological constitution, as is said in philosophy, that is, his true human substance.

Is all this possible? What we are experiencing now is showing us that, despite the great progress that exists, today we are not yet in possession of a precise and specific drug and not even a vaccine against coronavirus, despite the fact that there are hundreds of laboratories in the world working in those research, behind which are very powerful pharmaceutical industries that pay for these research with the prospect of obtaining large profits. Man cannot predict with certainty, for example, that within two years we will have the expected drug, rather than within four months. We will therefore say that the volume of our knowledge certainly increases, however, as it happens when we increase the volume of a sphere by inflating it, the surfaces, that is the border with the infinite space of the unknown, also increases, both from the point of view of knowledge and from the point of view of being able to do.

We do not enter into complicated discussions concerning the consequences of technological development, that is, the unpredictable consequences of many things that we are doing today. It is sufficient to reflect on the current pandemic, that cannot be addressed within the limited perspectives of the specialized approaches of single scientific and technological disciplines. The problem is not to have certain certainties but to understand the global scope and the fundamental situations,and the substance of things.

Another aspect on which we are invited to reflect in the current situation is that of solidarity, understood as the overcoming of individual selfishness to take into consideration the common good, because it has been realized that the individual alone cannot resolve his problems : one must be able to count on a community and therefore has responsibilities towards it. So the interest, the well-being of the individual ends up coinciding with the interest of society. On the other hand, we cannot think of promoting the progress of society without the participation of the individuals who make it up. We have seen this even in an elementary case, that of the obligation to go out with masks. The most common masks are not those that protect the wearer from contagion, but those that prevent one from bringing any pathogens to the outside. It may seem that the individual accepts the discomfort of the mask for the sake of society, but in reality it is clear that if everyone used the masks, he too would be protected from contagion. It is a very basic example that makes us understand how this coronavirus experience has made us discover a very important dimension and an essential value of our current life.

The last aspect of this pandemic that forced us to reflect was the presence of death always looming. Contemporary society has tried to marginalize death. Conversely, in these months death has been brought under our gaze continuously and this has also led us to recover the most precise sense of medicine. The aim of medicine was traditionally considered to cure and recover health, since it was obvious that death was an inevitable natural fact. Today, on the other hand, it seems that the main purpose of medicine is to defeat immediate death, to save the patient's life even at the cost of condemning the residual part to an extremely painful state from many points of view. The fact that in recent months we were put in the presence of so many deaths prompted us to reflect on the event of death itself, that is, to think that, once we arrive at that moment, we could ask ourselves what sense our life had, what are the things for which it was worth living and what instead those who have left no trace of themselves in our existence. This too is an aspect on which philosophy has long reflected, proposing hierarchies of values ​​of different type. The present stuation can help us reflect on how it is better to live well knowing that this life will have its end. In this sense, the role of philosophy would basically be to recognize one's biological limits, to teach to die (both literally and symbolically as a passage to a world different from what we have known so far). This is certainly a noble tradition of philosophy ranging from Plato, Cicero, Seneca, to Montaigne and Schopenhauer and beyond; however, it is based on the idea that in a difficult moment, as we have already pointed out, philosophy cannot do much because its task is not to find solutions to problems but simply to teach us how to accept them. "Whoever taught men to die would teach them to live," Montaigne observed (Montaigne De, 2012).

The topics mentioned so far are not part of the usual university teaching programs. What is at stake is our way of life, the society we would like to have, the way we have to educate ourselves and others, and it does not seem that the faculty programs, with their evaluation methods, their indexed journals, their conferences and accreditation committees are very open to these problems

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What help can we expect from philosophy?
Let's now return to our second initial question: what contribution can philosophers offer in the Covid-19 emergency? For philosophers who work in the field of ethics and bioethics this pandemic stimulates various reflections and probably opens up new fields of work. Let's start by simply acknowledging that there are no experts on Covid-19 at the moment: everything is being learned in the field. And very often the urgency puts doctors in front of difficult choices which they should not be obliged to make directly but relying on protocols established by a body of bioethics experts who should prepare new guidelines to make ethically responsible decisions and to know how to better spend limited available resources in order to improve the health of the population and rationalize the funds for medical care.

A final observation that I would like to underline (and with this I conclude) is that philosophy and the pandemic teach us that we are all passing through in this life, but also that the crisis (another Greek concept introduced in medicine by Hippocrates) leads to two possible outcomes: relapse or recovery. Hence there is not so much distance between learning to die and learning to live. The feeling of frustration and discouragement towards philosophy shouldn't win. The philosopher's task is not to find the meaning of life or to tell others how they should live but to provide conceptual tools useful to those who make difficult decisions, in communicating and explaining them to others. If we see philosophy in this way, then there is still much work for philosophers to do, not only in the current situation but also, and perhaps above all, in the future.

When Plato wondered how it was possible to ensure the best in the life of a state, he thought that this task should be entrusted to philosophers who, precisely because of their ability to encompass the good of each and every one, are able to establish needs and dictate public policies to meet them. This project seemed plausible because, at the time of Plato, the philosopher was in fact a scholar with knowledge also in the field, for example, of the natural sciences and mathematics, as well as exercised on reflection on the great themes of the meaning of life and moral responsibilities. Even today the public authorities, the political leaders to face the pandemic are assisted by committees of experts, but these are simply scientists and technologists, each capable of giving assessments from the narrow point of view of his competence but no one is able to offer the indications of wisdom and basic orientation that would be necessary and we are faced with the uncertainties and contradictions that we all know. Even today philosophy would still have its voice to express in the face of the difficult choices that must be addressed.

Michael Foucault described the ‘plague towns’ and street level administrative procedures for quarantine in the Middle Ages in terms of ‘strict spatial partitioning’ as an early form of panopticism. As he writes: ‘It is a segmented, immobile, frozen space. Each individual is fixed in his place. And, if he moves, he does so at the risk of his life, contagion or punishment.’ (Foucault 1975/1995: 195) Giorgio Agamben, basing his work partly on Foucault, by contrast, writes about the way Covid-19 has enabled the tendency to use a state of exception as a normal paradigm for government. He argues:

Faced with the frenetic, irrational and entirely unfounded emergency measures adopted against an alleged epidemic of Faced with the frenetic coronavirus…. why do the media and the authorities do their utmost to spread a state of panic, thus provoking an authentic state of exception with serious limitations on movement and a suspension of daily life in entire regions? (Agamben 2020a).

Some critics find Agamben’s suggestion that the measures taken were imposing an ‘authentic state of exception’ and that the ‘invention of an epidemic offered the ideal pretext’ for further limitations to basic freedoms too paranoid and far-fetched. The European Journal of Psychoanalysis provides a dialogue called ‘Coronavirus and philosophers’ that includes Foucault on ‘Plague towns’ and ‘panopticism’ as well as the brief reflection by Agamben with responses by J.L. Nancy, R. Esposito, S. Benvenuto, D. Dwivedi, S. Mohan, R. Ronchi, and M. de Carolis (Foucault et al. 2020). Agamben (2020b) elaborates his well-known argument about ‘state of exception’ to apply it to Covid-19. Nancy responds by emphasizing:

We must be careful not to hit the wrong target: an entire civilization is in question, there is no doubt about it. There is a sort of viral exception – biological, computer-scientific, cultural – which is pandemic. Governments are nothing more than grim executioners, and taking it out on them seems more like a diversionary maneuver than a political reflection. (Nancy 2020)

In Italy, the disaster struck because the government failed to act quickly enough or to pursue the right policies. As Pisano et al. (2020) point out: ‘In a matter of weeks (from February 21 to March 22), Italy went from the discovery of the first official Covid-19 case to a government decree that essentially prohibited all movements of people within the whole territory, and the closure of all non-essential business activities.’ It is a different situation in the USA and in the UK where Trump and Johnson discounted the virus threat, instituted a huge bail-out for business, and talk freely and against their own medical advisors of getting back to work by Easter. Maybe, in Italy, Agamben’s thesis applies. In other countries, the logic of government follows a different line based on propping up markets and the economy even at the risk and expense of large numbers of infections and deaths. The thesis must be able to take account of a nation’s health infrastructure—a fact that differentiates between social democratic models of public health and market-based forms like the USA where there is no universal provision. Trump wants to get everyone back to work as soon as possible and his government policies reflect this privileging of capital and the expense of labor. It seems likely that all the digital home-delivery companies and supermarkets that depend on cheap mostly Black and Latino labor that still able to operate in the USA will do so on the backs of low paid and temporary jobs.

In the US state with its continual state vs federal tensions government operates differently than Italy (or China, for that matter). The emphasis of the two trillion dollar ‘Coronavirus Aid, Relief, and Economic Security Act’ (CARES Act) (The Senate of the United States 2020) is to keep American workers paid and employed, to provide assistance to workers’ families and businesses, and to support the health care system, with an accent on public education and innovation prioritizing zoonotic animal drugs. Title IV—‘Economic stabilization and assistance to severely distressed sectors of the United States economy’ looks at emergency relief and taxpayer protections as well as debt guarantee and hiring flexibility. Surely the form of governmentality represents another example of the ability to use reverse logic of neoliberalism to socialize any losses and privatize gains? The stimulus package of two trillion is the biggest in American history. John Cassidy (2020) remarks ‘As a comparison, the Obama stimulus package that was passed in 2009 was about 4.5 per cent of G.D.P., or half as big.’ It’s too early to dismiss Agamben’s theory for it may well prove to be correct especially as the time of the US elections draw closely: it is entirely possible that Trump will use ‘state of emergency’ to take exceptional government powers to declare a postponement for a year or two.

In Pandemic! Covid-19 Shakes the World, Slavoj Žižek (2020) comments on the panic globally facing us in the times of Covid-19 when ‘We live in a moment when the greatest act of love is to stay distant from the object of your affection. When governments renowned for ruthless cuts in public spending can suddenly conjure up trillions. When toilet paper becomes a commodity as precious as diamonds.’ He touches a chord when he writes with customary irony:

An average consumer reason[s] in the following way: I know there is enough toilet paper and the rumor is false, but what if some people take this rumor seriously and, in a panic, start to buy excessive reserves of toilet paper, causing an actual shortage? So I better buy reserves myself. It is not even necessary to believe that some others take the rumor seriously – it is enough to presuppose that some others believe that there are people who take the rumor seriously – the effect is the same, namely the real lack of toilet paper in the stores. Is something similar not going on in the UK and California today? (Žižek 2020).

Toilet rolls are a prime example of bourgeoise Western culture, a pinnacle of consumer capitalism that provides thousands of choices of quality, material, perfume, strength, decoration etc. Indeed most of the world does not yet have Western style toilets let alone specialty toilet paper. The WHO reports that in 2017, only 45% of the global population (3.4 billion people) used a safely managed sanitation service and 2.0 billion people still do not have basic sanitation facilities such as toilets or latrines with many defecating ‘in the open, for example in street gutters, behind bushes, or into open bodies of water’ (World Health Organization 2019). The WHO makes the conclusion that poor sanitation is linked to transmission of pandemic diseases and reduces human well-being. If ever there is an indicative index of development, it would have to be closely connected with sanitation and the ability to manage human waste hygienically. No doubt in poor countries like India, Middle Eastern, and African countries where there is little or no national health infrastructure, we are about to witness the devastation of entire communities that will linger on well after conditions elsewhere improve and the global economy restarts. This will be the greatest generational setback for these countries.

Western panic buying of toilet rolls based on a viral rumor creates the problem of shortage, as I observed many times in New Zealand supermarkets at the beginning of the lockdown when Prime Minister Jacinda Ardern made public announcements that there are no shortages of any supermarket item. People stood for a long time in queues that stretched around the isles jammed up against one another contravening social distancing design to preserve individual isolation. Panic buying of toilet rolls in NZ had increased 87% over last year (Shaw 2020). Hoarding and panic buying are examples of herd behavior where conditions for a self-fulfilling prophecy operate to cause the shortage that most fear. Consumer behavior theory mostly addresses ‘single decision-makers faced with making economic choices in relative social isolation’ rather than ‘collective action such as fads and fashions, stock market movements, runs on nondurable goods, buying sprees, hoarding, and banking panics.’ As Strahle and Bonfield (1989) go on to note ‘[p]anic, as historically conceived, has been represented as a polar case of collective disorganization …. clearly resting beyond the explanatory power of economic theories which depend on the rationality assumption.’ I prefer to use the argument from ‘cumulative collective irrationality’ that contradicts the theory of efficient markets. Christoph J. Merdes in his dissertation on collective irrationality notes:

collective (ir)rationality finds application in all areas of human social life, and a better understanding of the phenomena, the underlying processes and the evaluative standards could greatly improve our ability to organize everything from markets over democratic government to cooperative scientific inquiry and the social norms of everyday life. (Merdes 2018)

Collective irrationality is an endemic feature of human life that has been around since the beginning of social life, predating capitalism but the market provides some classic examples and raises questions about the ability of the market to operate efficiently or rationally in times of disaster.

When Žižek suggested ‘that the coronavirus epidemics may give a new boost of life to Communism’ he has in mind what the World Health Organization is saying ‘We should mobilize, coordinate, and so on. .. like, my God, this is a dangerous situation. They’re saying this country lacks masks, respirators, and so on. We should treat this as a war. Some kind of European coordination. .. maybe even wartime mobilization. It can be done, and it can even boost productivity.’ He acknowledges that ‘the strong approach to the crisis by the Chinese state has worked – or at least worked much better than what is now occurring in Italy, the old authoritarian logic of Communists in power also clearly demonstrated its limitations.’ (Žižek 2020).

The Covid-19 virus infection began in China and despite Western skepticism about the number of confirmed cases, it seems that the number of new confirmed cases of the coronavirus originating within China as opposed to Chinese returning home has stopped indicating an effective period of social confinement of some 3–4 months. As David Cyranoski (2020) reports in Nature: ‘Researchers are studying the effects of China’s lockdowns to glean insights about controlling the viral pandemic.’ It seems obvious that China’s extreme lockdown has been successful in limiting the spread of the virus. The only problem was that the lockdown started too late and also that the free flow of important scientific information (and whistle blowing) was halted in the early stages.

Certainly the Covid-19 pandemic provides an ideal philosophical and political experiment not possible except in speculative terms during normal times, and Western governments have responded very differently from one another. In terms of political theory, the question is whether State-led policies work better in times of crisis and emergencies. Panagiotis Sotiris argues that the shift from the power of the sovereign as a right of life and death power to state guarantee of the population’ health and productivity

led to an expansion without precedent of all forms of state intervention and coercion. From compulsory vaccinations to bans on smoking in public spaces, the notion of biopolitics has been used in many instances as the key to understanding the political and ideological dimensions of health policies. (Sotiris 2020)

Biopolitics is Foucault’s depiction of the administration of life and a territory whose population is its subject, an administration the aim of which is to create conditions for life for survival and increase and above all for putting life in order economically and politically. An aspect of this paradigm that is missing from Foucault’s analysis—he died before the genomics revolution got under way—is bioinformation, and the bioinformational paradigm where these two forces of new biology and information coalesce, overlap, and intermingle in the logic that drives bioinformatics and bioinformational capitalism that is self-renewing in the sense that it can change and renew the material basis for life and capital as well as program itself.

The viral experiments of globalization, interconnectivity, and pandemic in the postdigital era, disastrous as it has been involving incalculable human suffering, at the same time provide the opportunity to raise some questions rather than embrace a theory dogmatically (see Peters et al. 2020). This is my theme of openness in philosophy that proceeds without too much dogma. These questions in no particular order may not be the best questions but they indicate a forward-looking experimental philosophy:

·         Which political system works best at quarantine and social isolation—American individualism or Chinese collectivism; democracy or one-party state; free-market or welfare state?

·         What are the bioinformational cross-border flows that postdate the nation state?

·         To what extent can financialization and finance capitalism, whether state-led or market-led, be seen as part of the bioinformational paradigm?

·         In neoliberal times, how well do Westerners vs Chinese cooperate, obey the rules, become compliant, and willingly work for the greater good?

·         What are the problems of the community ‘free-rider,’ or those who do not follow newly established community norms of self-isolation?

·         What are the complexities of individual self-interest vs community or public interest?

·         What are the new relations between virus pandemic and sustainability practices?

·         Can the freedom of information including scientific communication and open science outrun viral self-replication?

·         How have governments interacted and interfaced with science including examples of suppression of information and forms of disinformation?

·         What have been the government/science relationships during this pandemic?

·         To what extent has viral fake news, social media, and conspiracy theory generated public and global damages and to what extent is this an aspect of contemporary biopolitics?

·         In the innovation race to invent an anti-Covid-19 vaccine, where do the major advances come from and what organizations are well placed to make huge profits?

February 8, 2022
The beginning of Omicron’s retreat, while welcome, is certainly not the end of our fight with COVID-19. Yes, most Americans have probably (and unfortunately) been infected with SARS-CoV-2 at least once. As of last September, the Centers for Disease Control and Prevention estimated 147 million infections in the United States since the beginning of the pandemic, and we have seen about another 30 million reported cases since then (with tens of millions more likely unreported)—all at the unfathomable toll of over 890,000 lives. On the positive side, more than 60 percent of Americans have now been “fully” vaccinated against COVID-19, gaining good resistance against severe disease without risking death. Yet even though a solid majority of Americans has some protection against COVID-19 via vaccination, infection, or a combination of the two, the promised land of “herd immunity” does not lie before us, at least not as typically envisioned.

The number of lives lost annually to COVID-19 in the years to come depends in large part on actions we take today.

A great deal of public discussion in recent weeks has suggested that “endemicity”—a state where the virus continues to circulate in the population like scores of other respiratory viruses, with more predictability albeit probably still with seasonal surges—is around the corner. The Europe office of the World Health Organization (WHO), for example, recently stated that the continent may be entering the “plausible endgame” of the pandemic. But if long-term circulation is unavoidable, nihilism isn’t, and the number of lives lost annually to COVID-19 in the years to come depends in large part on actions we take today. As others have argued, there is an ongoing role for public health interventions to reduce transmission of the virus during surges, together with a need for massive investment in our nation’s underfunded public health infrastructure—for a “New Deal for Public Health,” as health law scholar Amy Kapczynski and epidemiologist Gregg Gonsalves outlined in these pages nearly two years ago. Yet less has been said about improving our medical care response itself, particularly in the new era. There should be little doubt: minimizing harm in an era of endemic COVID-19 requires us to reimagine key aspects of our medical system.

Since the pandemic began, many have hung their hopes on a misguided notion of “herd immunity,” implicitly assuming that at a certain threshold, immunity from infection and vaccination within a population could all but eradicate COVID-19, as it has for smallpox or measles. (The political right’s let-it-rip strategy is based on the idea that prolonging this process is futile, and we may as well rush to the endgame phase.) Clearly, this isn’t happening: instead COVID-19 is behaving, unfortunately but not surprisingly, much like other common respiratory viruses, which intermittently infect and reinfect people throughout their lives.

Respiratory viruses that behave this way—including influenza, respiratory syncytial virus (RSV), and four seasonal coronaviruses—tend to function as universal childhood illnesses that continue to beleaguer us throughout adolescence and adulthood, causing recurrent colds, flu-like syndromes, and sometimes even pneumonia. Influenza, for instance, infects 100 percent of children by age 7 yet even in adulthood infects 1 in 10 (or maybe more) of us each year, although vaccination helps. RSV and the seasonal coronaviruses act similarly, infecting virtually all of us as children yet continuing to cause respiratory infections through our lifespans.

In other words, even with repeated infections, none of these viral respiratory infections produces what scientists call “sterilizing immunity,” or durable protection against future infection—unlike brushes with (or vaccination against) measles or smallpox. All the evidence today points to SARS-CoV-2 being in the same boat. This is not to say vaccines or infections provide no protection at all, of course: immunity to viruses like SARS-CoV-2 certainly appears to durably reduce the risk of severe disease, making pneumonia—the syndrome that actually kills most people—less and less common. This phenomenon, in fact, is the basis of one theory of why the 1918 influenza pandemic “ended” even though the virus itself never really went away: its descendants still circulate today, but with sufficient population immunity the pathogens trigger more colds than bouts of pneumonia, rendering it indistinguishable from other influenza strains. Ultimately, this too is a type of “herd immunity,” albeit a less desirable one.

Long-term circulation may be unavoidable, but nihilism isn’t.

But if we can reasonably envision the broad outlines of COVID-19’s trajectory, we still don’t know the critical specifics. We can’t assume that SARS-CoV-2 will behave exactly the same as these other viruses or reach an equivalent level of virulence, and there’s not enough evidence at the moment to say how quickly we should expect that to happen, even if we think it will. And today, mass death is still ongoing. COVID-19 is now killing more than 2,000 people a day in the United States—a death rate simply incomparable to seasonal influenza. Two years into the pandemic, with a substantial majority of the population with some immunity, we still see COVID-19 patients with severe pneumonia coming to the Boston-area ICU where I work as a critical care physician. So while it is possible that at the endemic endpoint, the risk of severe pneumonia from SARS-CoV-2 infection could (happily) fall to that of the four seasonal coronaviruses now in circulation, or (less happily) to that of influenza, it’s also plausible that the human toll of COVID-19 will remain double or even triple that of seasonal influenza indefinitely (or even worse). And even if the novel coronavirus does eventually come to mimic influenza in its annual impact thanks to increasing levels of population immunity, it would still cause a large amount of additional illness and death, disproportionately borne by chronically ill and elderly people.

This should not be seen as acceptable or “natural.” In the years to come, a key defense against it should be a robust primary care–based medical response.

The lion’s share of the health benefits delivered by modern medicine comes from the practice of primary care in outpatient settings. Primary care clinicians’ provision of preventive care, along with their diagnosis and management of common chronic diseases like hypertension, probably has a larger health impact than anything else in medicine—including what I do in the ICU, along with the organ transplants, robotic surgeries, and sub-sub-specialties often seen as “cutting-edge medicine.” Primary care clinicians provide a personalized entry point into the health care system, offering preventive services including vaccinations, evaluating and mitigating the innumerable symptoms that pester and plague us throughout our lives, and serving as a long-term trusted source of counsel on health matters.

Unfortunately, for decades the balance between primary and specialty care has been growing more and more distorted in the United States. Per capita visits to primary care physician physicians have been declining for years, while the provision of specialty care is rising. One in four Americans lacks a primary care physician altogether, while the proportion of health spending devoted to primary care is shrinking. Relatedly, the number of primary care physicians per capita has been falling as the ranks of specialists continue to grow. These trends speak to the underlying profit-oriented dynamics of American medicine: capital-intensive forms of care tend to be the most lucrative. This is unfortunate for many reasons, including the fact that a far stronger primary care system could prove a powerful tool to minimize loss of life from endemic COVID-19.

For decades the balance between primary and specialty care has been growing more and more distorted in the United States.

Take COVID-19 vaccinations. In the future, annual COVID-19 booster shots may prove useful, as is the case with influenza vaccination. Yet even today, in the midst of a giant surge of death, a quarter of adults remain unvaccinated, and about 55 percent of fully vaccinated adults have not been boosted. Political polarization and misinformation explain some of this situation, but our fragmented, exclusionary, for-profit health care system that marginalizes primary care is also to blame—along with the weak response from the federal government, which has chosen to rely more on privatized vaccinated distribution through pharmacies like CVS and Walgreen’s instead of more robust public vaccination campaigns. A 2021 survey found that Americans rated their own physicians as their single-most most trusted source of information on COVID-19 vaccines. Yet longstanding relationships between patients and physicians are increasingly rare in our corporatized health care landscape, with ever-shifting insurance networks, onerous cost barriers, or the rapid expansion of for-profit urgent care centers and drug store “Minute Clinics.”

We could all greatly benefit from a trusted, committed, long-term primary care clinician who advises us when we have misgivings or fears about a booster and reaches out to remind us to come in when we forgot to be vaccinated. A recent study colleagues and I completed sheds some light on this possibility. In early 2021, uninsured people were very slow to be vaccinated against COVID-19, whereas those covered by the Veterans Health Administration (VA)—the integrated, publicly financed and owned, primary-care–heavy health system for veterans—were vaccinated somewhat more quickly, and substantially more equitably, than those with other forms of insurance, even though vaccines were free for all. Notably, veterans are also more likely to be vaccinated against influenza.

The significance of primary care doesn’t only lie on the preventive side, either: it is ideally situated to efficiently distribute therapeutics that prevent a SARS-CoV-2 infection from progressing to severe pneumonia. We now have two oral antiviral medications (molnupiravir and paxlovid), an intravenous antiviral (remdesivir), and one monoclonal antibody treatment that are effective at blocking the development of severe COVID-19 in the Omicron era, but in order to have these salubrious effects, these therapies must be given shortly after symptom onset. Together with vaccines, this suite of preventive pharmacologic interventions could theoretically thwart the development of the vast majority of cases of severe pneumonia after SARS-CoV-2. But their effectiveness requires that people quickly recognize cold symptoms as possible manifestations of COVID-19, get tested, obtain results, consult with a physician, receive a prescription, and make a trip to the pharmacy—all before swallowing the first pill within five days of symptom onset.

When the history of the COVID-19 pandemic is written, it is likely to show that the mental models held by scientists sometimes facilitated their thinking, thereby leading to lives saved, and at other times constrained their thinking, thereby leading to lives lost. This paper explores some competing mental models of how infectious diseases spread and shows how these models influenced the scientific process and the kinds of facts that were generated, legitimized and used to support policy. A central theme in the paper is the relative weight given by dominant scientific voices to probabilistic arguments based on experimental measurements versus mechanistic arguments based on theory. Two examples are explored: the cholera epidemic in nineteenth century London—in which the story of John Snow and the Broad Street pump is retold—and the unfolding of the COVID-19 pandemic in 2020 and early 2021—in which the evidence-based medicine movement and its hierarchy of evidence features prominently. In each case, it is shown that prevailing mental models—which were assumed by some to transcend theory but were actually heavily theory-laden—powerfully shaped both science and policy, with fatal consequences for some.

1. Mental models and the theory-versus-data question
As Coveney and colleagues have argued previously in this journal [1], the relative importance of empirical measurements (data) versus mental models (theory) has been a central preoccupation of philosophers of science since the days of Immanuel Kant, who famously observed that ‘Thoughts without content are empty, intuitions without concepts are blind’ [2]. This dictum is often interpreted to mean that science requires not just data but also the development and testing of mental models of causality (i.e. theories), though philosophers may argue that this is not strictly what Kant meant. Using big data as an example, Coveney et al. warn that however large and accurate the dataset, theory-free data-dredging will not provide meaningful or useful answers to scientific questions.

Empirical observation and measurement has long been viewed as the cornerstone of scientific inquiry and as a route to uncovering—or at least approaching—the truth. The Vienna Circle of logical empiricists (sometimes called logical positivists), for example, were concerned about the distortion of science by political and ideological forces (especially, at the time, Nazism) [3]. Members of the Circle adhered to the principle of verificationism—that only statements which are empirically verifiable are cognitively meaningful [4]. Through objective empirical study, they believed, science would transcend the distortions of thinking that came from metaphysics (literally, ‘beyond physics’—as they saw it, things constructed by the mind rather than things we can see and measure in the natural world).

While most of us would agree that ideology has no place in science, that is not the same as saying science can manage without mental models. Some philosophers of science have insisted that to measure something without seeking to understand and explain it is not science at all. As Sir Peter Medawar observed in his essay Induction and intuition in scientific thought [5], for example, scientists need to do more than ‘browse over the field of nature like cows at pasture’. This is because scientific reasoning is not merely the apprehension of facts but ‘an exploratory dialogue that can always be resolved into two voices: imaginative and critical’, hence ‘the initiative for scientific action comes not from the apprehension of facts but from an imaginative preconception of what might be true’ [5]. In Medawar's view, mental models and empirical data keep each other in check—he described them respectively as the ‘bride’ and ‘groom’ of science—and scientific progress in any discipline occurs by the back-and-forth dialogue between their two ‘voices’.

This view of science is compatible with the thinking of Thomas Kuhn (1922–1996), who introduced the notion of scientific paradigms—‘universally recognized scientific achievements that, for a time, provide model problems and solutions for a community of practitioners’ [6]. In other words, for any given scientific discipline, there is an agreed set of concepts and how they fit together, based on particular mental models of causality, which informs the framing and prioritization of research questions and how scientists should go about answering these questions. Science, Kuhn proposed, progresses within paradigms by the accumulation of data and refinement of theory, and—more radically—via the dialectical replacement of one paradigm by another when prevailing concepts, theories and methodologies become inadequate to address emerging questions, breakaway scientists form a new paradigm with different mental models and novel methodologies.

Other scholars of the scientific process, notably Bourdieu [7] and Knorr-Cetina [8], have theorized the paradigmatic differences between groups of scientists in more overtly political terms, noting that dominant mental models in science are linked to power (hence, influence) and resources. But the science–politics axis is a subject for another day [9]. In this paper, I want to focus on philosophical differences among groups of scientists in the relative emphasis they give to empirical data versus theory. I will contrast the assumptions and actions of scientists who assume that their experiments require little or no theory with those of scientists who develop and demand explicitly articulated theories to inform data collection and analysis. I will argue that all science is theory-laden and that trouble tends to emerge when empiricists claim to have transcended theory.

2. Cholera: miasma or waterborne?
One historical example of prevailing mental models and the influence that went with them is the extended length of time it took to replace the miasma theory of cholera (the assumption that it spread via the smell of sewage) with a waterborne theory in the mid-nineteenth century. Johnson [10] has described how public health experts of the day, notably the distinguished scientist and social reformer Sir Edwin Chadwick, were—at least for a time—convinced of the miasma theory. Policy decisions were explicitly built on this assumption. For a period in the 1840s and 1850s, cesspits in towns were banned and house and street refuse channelled directly into rivers. Physician John Snow imagined differently. He noted that cholera was transmitted among people who shared the same water supply, rather than people who shared the same air, and first published this information in 1849 [11]. But the statistical data gathered on deaths from cholera tracked only the factors that miasmists hypothesized to be important: elevation of the land, for example, because it was believed that miasma stayed low to the ground. However, in 1853 William Farr, who published the statistics in his Weekly Returns (lists of deaths) was interested in Snow's theory, so he added a new category: where victims got their water.

When a severe cholera outbreak occurred in Soho in 1854, Snow famously mapped the deaths to the water supply and showed that they could be traced to a single contaminated water pump in Broad Street; he was helped by local resident Henry Whitehead, who—using what has been termed ‘boots-on-the-ground epidemiology’—visited every house in the area and asked people where they had obtained their water in the days before the outbreak. Whitehead and Snow discovered that the physical distance from house to pump was not always useful, because some people deliberately walked further to their favourite pump, and some people had access to boiled water (via the brewery).

As is widely known, Whitehead and Snow got the handle of the Broad Street pump removed, quickly ending that particular cluster of cases. But as Johnson [10] describes, the same day the pump handle was removed, the national Board of Health ordered an investigation into the Soho outbreak—which was (unconsciously, I suspect) informed by their assumptions about miasma. They chose to look, for example, at such things as ventilation, smells (and whether people had complained about them), cleanliness of the houses, air temperature, weather conditions, whether the water looked and smelled clean and whether the containers used were clean. They did not ask which pump the victims had used, nor did they investigate whether the pumps could have been contaminated with water flow from elsewhere.

The authorities concluded that there was no evidence cholera was waterborne. As quoted in a relatively recent reprint [12]:

it has been suggested by Dr Snow, that the real cause […] lay in the general use of one particular well, situated at Broad Street in the middle of the district, and having (it was imagined) its waters contaminated with the rice-water evacuations of cholera patients. After careful enquiry, we see no reason to adopt this belief. We do not find it established that the water was contaminated in the manner alleged; nor is there before us any sufficient evidence to show, whether inhabitants of the district, drinking from that well, suffered in proportion more than other inhabitants of the district who drank from other sources [13].

This excerpt illustrates the powerful impact of an assumed theoretical model of causality on scientific thinking (and thence to policy decisions). The local public health authorities already ‘knew’ the mechanism of spread, so they found ‘no evidence’ to support an alternative theory—partly because they failed to look for it and partly because they overlaid empirical evidence with their existing mental model. It is not entirely clear why they believed that their own theory fitted the data obtained—but as Barnes & Bloor [14] observed, theory is underdetermined by data (in other words, the same data may be explained by multiple theories), so fit with one's preferred theory is not a sound reason for rejecting an alternative theory.

Using the rhetoric of scholarship (“after careful inquiry…”), but without actually rebutting Snow's arguments, the authorities of the day depicted Snow as unrigorous and mistaken. Academic peers were equally scathing in their reviews. While removal of the Broad Street pump handle is now seen as a landmark intervention in the history of public health, at the time the editor of the Lancet commented that ‘in riding his hobby [horse] very hard [Dr Snow] has fallen down through a gully-hole and has never since been able to get out again’ [15]. The two-sentence notice of Snow's death in the Lancet in 1858 did not even mention his contribution to cholera [16]. It was not until the devastating cholera outbreak of 1866, when 93% of the dead were customers of the contaminated East London Water company, that the miasma theory of cholera transmission was finally rejected by mainstream science and Snow's waterborne theory revisited, tested and accepted [10,16].

3. Evidence-based medicine: a method-focused, theory-light hierarchy of evidence
Those tempted to view the snail's pace march of science in nineteenth-century public health as a phenomenon of yesteryear should first consider how empiricist-dominated mental models continue to both shape and constrain science. One such model—evidence-based medicine (EBM)—has had particular influence in the COVID-19 pandemic. In the early 1990s, a group of epidemiologically trained doctors—the forerunners of the EBM movement—challenged the traditional way clinical decisions were made (essentially, mechanistic reasoning based on accumulated case knowledge) and introduced decision-making based on empirical evidence from randomized controlled trials (RCTs)—carefully controlled experiments in which participants are randomly allocated to ‘intervention’ and ‘control’ groups with systematic follow-up and measurement of predefined quantitative outcomes [17].

Initially seen as bold and heretical, EBM quickly became the new orthodoxy. Its declared mission was to strengthen medicine's empirical foundations while reducing its reliance on theoretical reasoning [18]. Central to its claim to legitimacy was the unique role of the RCT in reducing bias—that is, influences that could ‘deviate the results or conclusions … systematically away from the truth’ [19]. ‘Truth’ was seen as external and ascertainable through experiment and observation—and most especially, by doing RCTs correctly by following agreed methodological procedures. There was little or no recognition that facts are theory-laden and truth perspectival—for example, as scientists’ analytic gaze, and the questions they choose to ask, are shaped by the mental models with which they approach and communicate about the world [20].

EBM has long promoted a hierarchy of evidence with RCTs and meta-analyses of RCTs at the top and the so-called lesser forms of evidence below it [21]. This is, in reality, a hierarchy of empirical study designs, based on the assumption that some designs (notably, RCTs) are inherently more likely to bring scientists closer to the truth. An international network of EBM-inspired scientists, the Cochrane Collaboration, has developed a weighty handbook of instructions, based largely on technical criteria and checklists, for correctly undertaking and synthesizing RCTs [22].

Not everyone who aligns broadly with the EBM movement agrees that method should always and necessarily be privileged over theory. Indeed, there is a rich seam of philosophical writing on the need for EBM's ‘gold standard’ RCTs to be informed by causal explanations [23–25], and a recognized if somewhat niche sub-discipline within EBM is the study of mechanisms of causality [26–28]. Notwithstanding this literature, the maxim that researchers should develop and test theories of causality alongside undertaking RCTs, or that policymakers should take account of explanations when selecting and interpreting empirical evidence, is a rule that is honoured more in the breach than in the observance. The World Health Organisation's published summary of its guideline development process, for example, emphasizes EBM's hierarchy of evidence, RCTs and the over-riding need to eliminate bias, but makes no reference to explanatory theory [29].

The hierarchy of evidence, and the meticulous methodological rules and procedures developed to extend it, saved many lives during the pandemic. They facilitated the generation, at impressive speed, of definitive evidence from RCTs and meta-analyses on the efficacy and safety of drugs and vaccines [30,31]. Given that new drugs and vaccines may have toxic side effects which could conceivably be worse than the disease itself, it was wholly appropriate to require objective empirical evidence from RCTs of the benefit–harm balance before such products were approved for widespread use.

But as the next section describes, the same rules and procedures—and the empiricist assumptions which underpinned them—were used to justify a more questionable approach to research on the effectiveness of preventive measures such as facemasks in controlling spread of the virus.

4. The contested efficacy of facemasks in preventing spread of SARS-CoV-2
Along with other non-pharmaceutical interventions, facemasks were included in a Cochrane systematic review, Physical interventions to interrupt or reduce the spread of respiratory viruses, originally published in 2011 [32]. When the pandemic was declared, that review was rapidly updated and placed on a preprint server [33]. Unlike the 2011 version, the update excluded all evidence on facemasks except 14 RCTs, each of which had been systematically assessed for ‘risk of bias’ before being included in a meta-analysis. Only one of the 14 included trials related to use of masks by the lay public to prevent community transmission (the others related mainly to masks worn by healthcare workers in a professional setting), and that study was not in COVID-19. Since the meta-analyses did not reach statistical significance, the authors’ conclusion was that there was no firm evidence that facemasks work. They called for larger, better-designed RCTs.

The style and tone of the Cochrane review was what Bourdieu [7], following Gilbert and Mulkay, called the ‘empiricist repertoire’ [which] is characteristic of formal experimental research […]: the style must be impersonal and minimise reference to social actors and their beliefs so as to produce all the appearances of objectivity; reference to the dependence of the observations on theoretical speculations disappear; everything is done to mark the scientist's distance from his model; the account given in the ‘methods’ section is expressed in the form of general formulae…’. Yet in a highly accessed accompanying blog, the review's authors added some somewhat speculative theorizing about potential harms which revealed mechanistic—and empirically unsubstantiated—assumptions about a droplet mode of spread and risk compensation behaviour: ‘thinking you're protected means that you will put yourself at higher risk’ and that ‘[y]ou may also end up touching your face more often’ [34].

A group of Danish researchers, also hospital doctors trained in the EBM tradition and Cochrane Collaboration members, sought to fill the evidence gap flagged by Jefferson and Heneghan in their Cochrane review. They designed a masks-on versus masks-off RCT, which—after some months’ delay—was published in a leading medical journal [35]. The trial found no statistically significant difference in COVID-19 incidence in people who wore facemasks compared to those who did not. But it had numerous flaws. It was, for example, underpowered (i.e. too small by an order of magnitude to test its main hypothesis), conducted at a time when the incidence of COVID-19 was very low, had an intervention period of only one month (woefully inadequate given that the antibody test used took more than two weeks to turn positive after an infection), and addressed whether facemasks protected the wearer rather than the more important question of source control—whether they prevent transmission to others [36]. Despite these flaws, the Danish study was hailed in some circles as definitive evidence that facemasks ‘do not work’.

Both the Jefferson systematic review and the Heneghan–Jefferson commentary seem to reflect a mental model of extreme caution when introducing new treatments. But compared to a new drug or vaccine, the risk of serious harm from facemasks is extremely low, and the potential for benefit at population level could be high. Hence, it could be argued that the usual reasons for advocating caution in clinical trial research do not hold. Indeed, because of the very different balance of probabilities, there are strong arguments for reversing the usual assumption that avoiding harm is more important than striving for benefit. We should, perhaps, adopt the precautionary principle and recommend this intervention ‘just in case’ [37]. In philosophy of science terminology, this is sometimes known as the problem of inductive risk [38].

5. Philosophical challenges to the randomized controlled trial
The assumptions which placed the RCT in a bias-free class of its own have rightly been challenged [39]. Particularly when evaluating complex social interventions such as lockdowns, school closures, physical distancing or the wearing of masks to protect other people, a study design that requires the random allocation of people to intervention and control groups and their follow-up to measure particular predefined outcomes may be impractical, unethical, unacceptable, underpowered, overly narrow, insufficiently nuanced, impossible to undertake ‘blind’, or unable to generate definitive results either at all or within the required timeframe [40].

But there is a more fundamental—i.e. philosophical rather than methodological or practical—objection to the emphasis on RCTs to the exclusion of other kinds of evidence, and that is the assumption, based on what might be called naive empiricism, that data can be identified, collected, analysed and summarized without the need for theory. Academics in many other scientific disciplines emphatically reject the assumption that controlled experiments should always and necessarily over-ride mechanistic evidence, defined as evidence produced by multiple different methods which help illuminate and explain phenomena at a theoretical level [40,41].

Mechanistic evidence is, arguably, not inferior but complementary to evidence from RCTs (Medawar's ‘bride’ and ‘groom’). In order to refine an intervention to maximize its potential impact, we need to understand, at a theoretical level, the chain of causality linking intervention to outcome. While well-conducted RCTs may have high internal validity (i.e. they can produce strong evidence for the population from which the sample was drawn), their external validity may be low (i.e. their findings may not apply to other populations or settings). Mechanistic evidence allows scientists to elucidate the different steps in the causal pathways that help us anticipate why an intervention which worked in one setting is also likely work in a different setting—and also to reason why an intervention that did not work in one setting could still have an important contribution to a programme of interventions somewhere else.

For all these reasons, to build a robust knowledge base about interventions, and depending on the precise circumstances, it is sometimes necessary to draw on a wide range of evidence, both mechanistic and experimental, and use review methods that do not merely summate results, as in the Cochrane Collaboration's empirically driven systematic reviews [22], but also explain mechanisms and enrich our understanding, as in more theory-driven narrative reviews [42,43]. Ogilvie and colleagues use the telling metaphor of the brick wall for the Cochrane systematic review: every contributory RCT is a brick; ideally, all bricks should be the same in terms of the research question addressed, outcome measures used, and so on [43]. Brick by brick, the selected-for-similarity primary studies make their respective contributions to an overall grand mean through meta-analysis. By contrast, Ogilvie et al. depict the synthesis of mechanistic studies (the more heterogeneous the better) to produce a sense-making narrative review as the building of a dry stone wall—an artisan craft in which each stone is carefully selected to make a unique contribution to fill a particular shaped gap.

I undertook, with colleagues, a literature review on the benefits and possible harms of facemasks [37]. Our review methodology aligned with the dry stone wall metaphor, covered a vast array of mechanistic evidence including laboratory studies of aerosolization, natural experiments across different countries and regions, case studies of super-spreader events, qualitative studies of people's attitudes in different cultural contexts, and computer modelling studies. This review had limitations—for example, it fell short of a systematic examination of evidence for and against a range of different hypotheses. But within those limitations, we identified sparse, moderate and strong evidence from the different streams listed above—but no disconfirming evidence—that facemasks are effective in preventing community spread of SARS-CoV-2, and no evidence whatsoever that they cause serious harm. In addition, by drawing on mechanistic evidence, we were able to explain apparent discrepancies in the data, especially the ‘negative’ findings of the Danmask RCT.

6. A miasma theory of SARS-CoV-2 spread?
During 2020, in an ironic reversal of the paradigmatic battle between airborne (miasma) and waterborne explanations for the spread of cholera in the nineteenth century, key advisory groups including the WHO, US Centers for Disease Control and Prevention, European Centre for Disease Control and Public Health England all assumed that the dominant mode of transmission of SARS-CoV-2 was respiratory droplets. Just as in the 1850s, policymakers assumed the mode of transmission rather than seeking empirical demonstration of it. They dismissed claims from people who argued that the virus was—or could be—significantly spread through the air. And they ignored what philosophers of science might call ‘black swan’ evidence (i.e. real-world observations that cannot be explained by prevailing mental models) such as super-spreader events. The ill-fated performance of Bach's St John Passion in Amsterdam's Concertgebouw auditorium in March 2020, for example, soon after which 102 of 130 choir members developed symptoms of COVID-19 and four people died, simply cannot be explained by an exclusively droplet mode of transmission [44].

Droplets emitted in coughs and sneezes are relatively heavy and fall to the ground or onto surfaces quickly. A droplet mode of spread means that transmission of the virus will occur only when in close proximity to others—1 m according to the WHO; 1.5 or 2 m according to other bodies—and also via our hands (which are easily contaminated by droplets, for example when we touch our eyes, nose or mouth) and fomites (objects we may touch with contaminated hands, such as our mobile phones). ‘Contact and droplet mitigation strategies’ (preventive efforts built on droplet theory) include the physical distancing of shoppers in queues plus frequent and assiduous washing of hands and wiping-down of surfaces. Masks, according to the droplet hypothesis, need only be worn when physical distancing is impossible, and are viewed as a relatively minor component of the prevention package.

Despite the WHO's firm insistence on the droplet theory of transmission, this mental model was not universally accepted. Indeed, in China where the disease had emerged, the prevailing theory was based on recent historical experience with the SARS and MERS viruses, both of which had been shown to be airborne [45]. An airborne model of spread means that transmission occurs both at close range and at longer distances (via ‘shared air’), and that the chemistry of air composition, the physics of air flow and the architecture of the built environment are all influential in the model of spread. Using this mental model, masks, worn by everyone at all times when inside a building or vehicle, were a key factor that could keep the air virus-free—which is why, even before 2020, many people in Asian countries wore masks outside the home. Japan's highly successful ‘3Cs’ prevention policy—avoid crowded places, closed spaces and close contact—was based on an assumed airborne route of transmission [46].

But in the West, and throughout most of 2020, policy thinking was dominated by the empiricist conclusion that there was ‘no evidence’ for the efficacy of masks and by speculation, based on a droplet model of spread, that both risk compensation and touching the mask could cause harm [34]. Tellingly, these statements were not corrected even when empirical evidence emerged demonstrating no risk compensation [47] and no increase in face-touching [48] in people who wore facemasks.

Because different mental models informed very different policies in different countries, a vast natural experiment resulted. The findings were striking. Countries which had recommended facemasks for the public in the first 30 days from the first documented case (usually because key authorities accepted a miasma—airborne—theory of spread) had, on average, orders of magnitude fewer deaths from COVID-19 than countries which delayed such recommendations beyond the first 100 days [49]. But just as in the 1850s, publication of this mechanistic evidence led, in many settings, not to the immediate adoption of a new mental model but to a doubling-down on the old model.

7. Policy will ‘follow the science' of policymakers' mental models
The WHO's position on prevention of COVID-19 is based largely on advice from its Infection Prevention and Control Research and Development Expert Group for COVID-19. Most of its members are clinicians with a background in hospital-based infectious diseases and training in EBM; they are experts in topics such as wound management—for which droplet spread is predominant and handwashing is an effective intervention [50]. Throughout 2020, this group appear to have engaged only to a limited extent with the considerable volume of mechanistic evidence available at the time that the SARS-CoV-2 virus is airborne and is spread significantly if not predominantly by tiny aerosols (particles between 5 and 100 µm in diameter which account mainly for short-range transmission but which can travel several metres—beyond the limits of physical distancing measures) [51,52]. Speaking and singing, which produce few droplets, generate large numbers of aerosols. These reviews also offered evidence that fomites are unlikely to be a major route of transmission because almost everyone who has attempted to culture the virus from surfaces has been unsuccessful and the virus can remain viable in air for several hours and that under certain environmental conditions (notably, cold, poorly ventilated and extremes of humidity) it can travel many metres and persist for hours. They also argued that airborne transmission is strongly suggested by well-documented super-spreader events (such as singing performances) and nosocomial outbreaks (within healthcare facilities). The conclusions of these early reviews have been affirmed and strengthened by more recent summaries of the evidence [53,54].

Back in June 2020, over 200 aerosol scientists from around the world published an open letter addressed to international policymaking bodies summarizing studies undertaken by its signatories which had demonstrated ‘beyond any reasonable doubt’—so long, one might add, as one accepts the validity of mechanistic evidence—that the SARS-CoV-2 virus is released in tiny microdroplets small enough to be carried long distances in the air when people talk, cough and even just exhale [55]. Yet a few weeks later, WHO committee members published an article expressing the view that the virus ‘is not spread by the airborne route to any significant extent’ [56], a conclusion that was quickly challenged by post-publication peer review [57]. Mental models appear to have led to two errors by the paper's authors: dismissal of a new and potentially plausible theory because it failed to resonate with their methods-focused privileging of RCTs and rested heavily on mechanistic evidence which they did not value; and the logical error of conflating what they took to be lack of evidence in favour of aerosol spread with evidence refuting aerosol spread.

8. Distinguishing mental models from ideology and intellectual rigidity
While the Vienna Circle of logical positivists did not reject theoretical reasoning altogether, they placed little emphasis on it and identified some kinds of theoretical reasoning as potentially sinister and anti-science. They sought, for example, to purge science of German romanticism, a mental model which speculated that there was something pure and good about ‘German blood’, as they saw it serving the cause of political and ideological groups (specifically, justifying genocide) [3]. But the empiricist quest to produce a science free of ‘metaphysics’ in order to avoid the misuse of science by ideologically motivated movements was philosophically misplaced, since it—arguably—did not distinguish sufficiently between theories which are scientific (i.e. testable mental models of something that could be the case) with those that are non-scientific (things that cannot be tested or have already been shown empirically to be flawed). Medawar [5] reminded us that it is the possibility of truth that distinguishes the scientific imagination from the fanciful. The notion of the purity of German blood, for example, is a theory of sorts but not a scientific one, whereas waterborne transmission of cholera is a scientifically testable theory.

During the COVID-19 pandemic, libertarian groups drew heavily on what they took to be objective empirical data (especially the Danmask trial) and rejected mechanistic explanations based on indirect—and, they felt, low-quality—evidence. To a greater or lesser extent, people who aligned with the libertarian movement took the view that recommendations to stay home, maintain 2 m distance, wear facemasks and even get vaccinated were unwelcome intrusions of the state. They believed that segmentation should be practised instead of lockdown (that is, the old and vulnerable should stay at home in order that the young and less vulnerable could enjoy their freedoms and remain economically productive), that facemasks were harmful and an unacceptable infringement of personal freedom, and that this essentially mild disease should be allowed to wash over the population to achieve what was termed ‘herd immunity’ [58]. This combination of views, combined with distortions of Christian doctrines, proved particularly toxic in parts of the USA [59].

One explanation for why ideology and mental models became entangled in this example is that the Danmask RCT represented the closest to gold-standard evidence in the mental models that prevailed among the EBM community—namely, it used a study design from the top of the hierarchy of evidence and was ‘unbiased’. The libertarians were simply ‘following the science’ when they seized on the Danmask trial. But this does not explain why the trial's evident flaws were not acknowledged by many senior members of the EBM community. The Danmask trial, for example, was published without a CONSORT statement—the internationally agreed methodological checklist required by many journals as a condition for accepting a RCT for publication [60]. Unusually, the study's authors did not involve a clinical trials unit when designing their study, which may explain what some would describe as elementary flaws in its design. These near-universal checks and balances were, for some reason, not viewed as needed for this particular study.

A second explanation, then, is that the flawed RCT evidence on facemasks was either wilfully or unconsciously misinterpreted. Because one possible interpretation of its findings is that facemasks have no effect, ideological mental models came to align with scientific hypotheses in the minds of some libertarians (both lay and academic), who quickly deemed those hypotheses to be supported by ‘robust’ (i.e. RCT) evidence. While Medawar's writings imply that a scientific hypothesis can be readily distinguished from the fanciful, the facemask example suggests that this is not universally the case.

A reviewer of an earlier draft of this paper suggested that opposition by some individuals to the evidence on the efficacy of facemasks might be explained more in terms of sheer stubbornness than by recourse to mental models. This comment raises the question of whether the tendency to mistake ideological hypotheses for scientific ones may stem from intellectual vices. As Quassim Cassam has observed, academic effort can be understood in terms of intellectual virtues—defined as aspects of mind that promote effective and responsible intellectual inquiry, such as carefulness, flexibility, open-mindedness, conscientiousness and creativity—and intellectual vices—defined as aspects of mind that inhibit effective and responsible intellectual inquiry, such as excessive conformity, carelessness, rigidity, prejudice, closed-mindedness, dogmatism, complacency and arrogance [61]. The urgency of the pandemic, and the profound threats to our lives and lifestyles from both the virus itself and proposed containment measures, have brought out both the best and the worst in scientists. Both ‘sides’ in the facemask debate have been accused, by supporters and critics, respectively, of exhibiting both virtues and vices.

9. Conclusion
In this paper, I have argued that both the long delays in replacing flawed, miasma-driven approaches to cholera prevention in the nineteenth century and long delays in replacing an exclusively contact-and-droplet model of SARS-CoV-2 prevention with one that includes airborne transmission in the twenty-first both had a philosophical explanation in terms of which mental models of reality prevailed and the extent to which scientists and policymakers favoured data over theory. In the more recent example, ideological movements in the West drew—eclectically—on statements made by scientists, especially the confident rejection by some members of the EBM movement of the hypothesis that facemasks reduce transmission.

The WHO changed its stance to recommend the more extensive use of facemasks by the lay public in December 2020 [62]. By early 2021, it had begun to talk about the importance of ventilation—but at the time of writing, its advice is still focusing largely on contact and droplet measures such as surface cleansing and handwashing, and explicitly privileging the bricks of RCT evidence over the odd-shaped dry stones of mechanistic evidence.

While I disagree with the scientists who reject the airborne theory of SARS-CoV-2 transmission and the evidence for the efficacy of facemasks, they should not be dismissed as ideologically motivated cranks. On the contrary, I believe their views are—for the most part—sincerely held and based on adherence to a particular set of principles and quality standards which make sense within a narrow but by no means discredited scientific paradigm. That acknowledged, scientists of all creeds and tribes should beware, in these fast-moving and troubled times, of the intellectual vices that tempt us to elide ideology with scientific hypothesis.

 

For many of the medically vulnerable, disabled, and underinsured people at highest risk of developing severe COVID-19, jumping through all these hoops in rapid succession before the clock runs out is sure to prove impossible in our current fragmented system. It would make an enormous difference if we all had a well-resourced primary care physician to confer with when we developed symptoms that we might otherwise chalk up to allergies—who could administer a rapid turnaround test and provide or administer the appropriate preventive drugs, who would ensure prompt hospital evaluation if things went south, and who could later nag us into that annual booster if it becomes indicated.

Bolstered funding and support for a more robust primary care–based COVID-19 medical response could make a difference toward this goal even today, and it should be a priority for the Biden administration. For instance, increased funding and support for COVID-19 vaccination infrastructure and logistics in primary care practices might help in some locales. Blocking the projected expulsion of as many as 15 million people from Medicaid, as pandemic-related protections expire this year, is urgent. The full and permanent elimination of cost barriers for COVID-19-related care, partially achieved by federal legislation passed in early 2020, could also make a difference. (That legislation required insurers to cover COVID-19 testing and created a system for coverage of testing and treatment for the uninsured, but it also allowed providers to charge uninsured patients for care so long as they did not also partake in the federal system, leaving some with large bills. Meanwhile, private insurers’ voluntary waivers of co-pays and deductibles for COVID-related care are mostly a thing of the past). Other programs—like direct home delivery of antivirals, as New York City is doing—could help bridge gaps in pharmacy access.

We could all greatly benefit from a trusted, committed, long-term primary care clinician.

In the longer-term, further-reaching reforms could render our COVID-19 medical response far more comprehensive and effective. For instance, single-payer health care financing in conjunction with development of neighborhood-based primary care health centers could bring the full spectrum of COVID-19–related preventive care—including vaccine outreach, rapid turnaround testing, provision of high-quality masks, and direct administration of early treatment including antivirals and monoclonal antibodies—to every community, all under one roof. Such centers could also work closely with local public health agencies in infectious disease surveillance, the identification of hot spots (including workplaces), launching vaccination clinics at schools or community events, operating mobile vaccine outreach teams, and much more.

All of which is to say: our primary care system should provide “whole population care,” an approach to primary care espoused and practiced by the radical general practitioner and epidemiologist Julian Tudor Hart. In this model of care, the health of everyone within a geographically delineated community is the responsibility of the providers, not only those patients who happen to make an appointment and show up. Such an approach, as Hart famously found in his own decades of clinical work heading a National Health Service practice responsible for a deprived Welsh mining community, can greatly improve management of chronic health conditions, which remain grossly underdiagnosed and undertreated in disadvantaged communities, and improve overall population health. It can be similarly effective in the response to endemic COVID-19 and other respiratory viruses, as well.

As community health physician Wendy Johnson recently noted in these pages, such a radical and expansive vision of primary care was also expounded by the landmark declaration that emerged from the 1978 International Conference on Primary Health Care, organized by the WHO in modern day Kazakhstan. The Declaration of Alma-Ata called for “urgent action by all governments” in the realization of a sweeping vision of comprehensive primary care that brought “health care as close as possible to where people live and work,” and once inspired a whole generation of progressive health activists. Such a spirit could inspire us, once again, today.

Of course, improving primary care in the United States is not enough. Even with far more comprehensive community-based prevention and management of COVID-19, many patients will still require hospitalization. While most countries have faced supply strain during surges, much of the dysfunction in the uniquely well-funded U.S. system (which has some of the highest ICU beds per capita in the globe) has been unnecessary. Some important improvements can be achieved under our current financing system, but, again, others would require deeper reform.

For one thing, the fragmentation and privatization of our health system has impeded a more organized, integrated, and equitable operational response by hospitals to surges. In the United States, when hospitals are overloaded, we have relied on physicians to make relentless calls to every hospital they know of to track down a scarce bed, a ritual that colleagues and I have resorted to throughout the pandemic. A recent article in the New York Times describes an overloaded rural facility that made some 200 phone calls to track down beds, including to hospitals as far as 400 miles away. In contrast, other nations have used high-speed trains and collective air transport to bring patients from more to less overrun regions, together with centralized systems of bed management and allocation within regions to achieve “load balancing.” We could do much of the same today without overhauling the health care system, but it would require embracing a spirit of cooperation and planning rather than competition, which is far too often the motivating force in American health care. Such an approach would also require state and federal support to establish regional systems capable of real-time bed tracking across all hospitals and able to redistribute patients to available beds during surges and provide critical care consultative support to smaller institutions.

Financing reform could ensure that health care infrastructure goes where it is needed, not necessarily where it is most profitable.

A harder to fix problem is our maldistribution of health care infrastructure. Our profit-oriented health system encourages investment where it produces dividends while neglecting communities with high-needs but less potential for revenue generation—an imbalance between health care supply and needs Hart famously called the “Inverse Care Law.” Nearly half of low-income communities, for instance, have zero ICU beds, as a recent study found. So unsurprisingly, during the winter 2020–21 COVID-19 wave, the odds of critically high ICU occupancy (greater than 90 percent) were more than double for the most socially vulnerable counties compared to the most affluent. As part of our longer-term medical response, financing reform could ensure that we expand health care infrastructure—whether ICUs or primary care neighborhood health centers—where it is needed, not necessarily where it is most profitable.

Such reforms are possible under single-payer financing arrangements that socialize (and separate) expenditures on health care infrastructure from those used to cover providers’ operating costs, as is the case within the VA and Canadian national health insurance. In a far more limited (and inequitable) way, the 1946 Hill-Burton Act, which subsidized hospital construction in the United States in wake of World War II for several decades, was undergirded by the same basic idea. Such real-world policies and programs demonstrate that short-term reforms and longer-reaching transformations are indeed possible. The challenge going forward is to marshal the political will to make them a reality.

Acknowledging the endemic future of SARS-CoV-2 shouldn’t lead us to turn our backs on the medically vulnerable and embrace a “return to normal.” Instead, we must collectively insist on an effective, ongoing, and sustainable policy response—not only to support and protect those who are most at-risk for developing this particular disease, but to shore up the provision of medical care for us all.

The central lesson we should draw from our experience with COVID-19 is not that the U.S. health care system has been poorly equipped to respond to a crisis: it’s that it has been poorly equipped to serve many critical functions in the provision of meaningful and equitable health care to all Americans. In addition to public health measures outlined by others, the expansion of community-based primary care, the redistribution of health care infrastructure, and greater operational integration in our hospital system could form the backbone of a medical response that both minimizes the havoc wrought by COVID-19 and improves the provision of care for all conditions for decades to come.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Human Cost
The human cost of COVID-19 is significant, yet its true scale is still uncertain. In addition to its immediate negative health effects, it is likely that the pandemic will also lead to a number of long-term health problems such as persistent pulmonary damage, post-viral fatigue, and chronic cardiac complications.5 Furthermore, researchers have already connected policies aimed at reducing the spread of COVID-19 through social isolation to other negative outcomes, such as a spike in suicide rates.6 Moreover, it has become apparent that COVID-19 is having disproportionate effects on specific subsections of the population in many of the countries affected. Factors may include age, race and ethnicity, class, and gender, among others. It is well known, for example, that older people face a higher risk of experiencing severe illness from COVID-19.7 In many countries, aged care facilities have become hotspots of infection and residents experienced higher-than-average death rates.8 Gender also seems to be a factor in mortality rates. There is growing evidence that men are more likely to die from COVID-19 than women, although the reasons are not yet clear.9 Furthermore, public health experts estimate disproportionate effects on maternal and child mortality rates in lower- and middle-income countries as a direct result of the virus, the subsequent strain on health systems, and reduced access to food.10

When it comes to race and ethnicity, some groups have been affected more than others. For example, black Americans have been disproportionately susceptible to infection and died at higher rates early on in the pandemic.11 The Center for Disease Control (CDC) in the US found that racial and ethnic minority groups have been particularly affected by COVID-19 due to such diverse factors as discrimination; low levels of health insurance, access, and service utilization; disproportionate representation in occupations with greater exposure to COVID-19; educational, income, and wealth inequalities; and housing conditions that render prevention strategies more difficult to implement.12 Other categories of vulnerable people who have been especially affected by COVID-19 include prisoners,13 as well as asylum seekers and refugees in camps and detention centres.14

Social class has also had a profound effect on the ability of people to protect themselves or recover from the virus. Data suggest, for example, that wealthier people have the resources to better adhere to social distancing policies and norms; are less likely to suffer from pre-existing health conditions; can more easily afford to stock up on food, medical, hygiene, and cleaning supplies; and are more likely to perform higher-skilled jobs that allow them to work from home.15 At the extreme end of the wealth spectrum, global elites have been able to stockpile supplies and make use of remote properties16 or yachts17 to isolate from broader society during the pandemic.

Socio-economic inequalities have had an impact on the effects of COVID-19 not only within individual countries, but also on a global scale. Many lower- and middle-income countries face significant economic contractions in terms of growth and income levels as a result of the pandemic.18 However, the challenges go beyond economic production and outputs. In some cases, healthcare systems already under stress have faced additional pressure. Furthermore, in the case of India, to cite just one example, the government has had a limited capacity to reach rural areas and experienced political pressure to limit testing to keep official case tallies low.19 The effects have been disastrous, with infection rates and death tolls well beyond the reported numbers. This will have carry-on effects on social welfare services aimed at those in need as resources are diverted to help combat the pandemic. But there are also success stories. Cuba, for example, has been able to respond to the pandemic promptly and efficiently, at least compared to other countries in the Caribbean and their Central and South American neighbours. Its free universal healthcare system proved crucial, combined with the highest doctor-to-population ratio in the world and the presence of an efficient national emergency planning structure.20

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The Economic Cost
In addition to the human costs, COVID-19 has also taken a significant toll on the global economy, particularly due to severe travel restrictions and lockdown measures aimed at reducing its spread. A significant number of workers across various sectors have lost their jobs, and this trend is likely to continue for the foreseeable future.21 From early on, the World Bank predicted the worst global recession since WWII, with the global economy expected to shrink drastically.22

The pandemic has also disrupted international trade relationships. For example, it rendered post-Brexit trade negotiations between the United Kingdom (UK) and the European Union (EU) more challenging23 and has exacerbated existing tensions in the trade relationship between the United States (US) and China.24 Furthermore, some regional markets (e.g. in Latin America) are experiencing significant economic downturns as a result of the pandemic.25 Moreover, financial markets have become increasingly volatile26 and the pandemic has also significantly disrupted global supply chains.27 Economic downturns in states like Victoria, Australia may be especially strong compared to other parts of the country. Waves of coronavirus cases have resulted in border closures that make interstate and international migration nearly impossible in Australia. The tourism, hospitality, and education sectors that rely heavily on migrant labour and international travel have been the most affected.28

Some sectors of the economy have been particularly affected by the pandemic and are experiencing significant contraction, as is the case with higher education. In some countries, such as the US, the UK, and Australia, many universities rely heavily (from a financial point of view) on the recruitment of international students, who generally pay higher enrolment fees than their domestic counterparts. Travel and visa restrictions during the pandemic have resulted in withdrawals and lower enrolment numbers among international students, with significant financial implications for the universities most affected.29

The creative arts sector has also struggled to cope with and adapt to the pandemic. Many music venues, theatres, and cinemas around the world were forced to keep their doors closed in the first half of 2020 due to social distancing rules and to reduce risks associated with the spread of COVID-19 in indoor environments. Some places reintroduced these measures during subsequent waves of the pandemic. The music industry has been significantly affected, with shows and festivals cancelled and album releases postponed.30 Unable to perform in person, production companies have had to reimagine theatrical performances for online audiences that still want to see a live show.31 Furthermore, many major theatres and opera houses across the world have made some of their performances freely available to the public via online streaming platforms.32 The global film industry has also been severely hit by the pandemic, with many cinemas closed, film festivals cancelled or moved online, and significant delays in the release of major motion pictures for fears that studios would be unable to recoup investments.33 The movie industry has been forced to evolve as movie theatre chains have responded to these challenges by negotiating agreements with movie studios on how to release films and charge audiences for access.34 In some cases, cinemas have tried to adapt to the new social distancing rules by rearranging their spaces and implementing strict health and safety checks.35 In other cases, we have witnessed unexpected changes, such as the revival of drive-in cinemas.36

The transportation sector will also feel the economic impact of the pandemic for the foreseeable future. Industry experts forecast a record-breaking financial loss for the commercial aviation sector. International flights in and out of many countries have been severely restricted, demand for air travel has plummeted, and airlines must take costly safety precautions to limit proximity to other passengers such as leaving middle seats empty. Cruise ship operators have not been immune to the pandemic either, especially due to people’s concerns regarding difficulties in abiding by social distancing rules in confined spaces.37 Likewise, those working in the ‘gig economy’ as drivers for rideshare services like Uber or Lyft face restrictions and lowered demand for service.38 Yet, some industry operators have benefitted from changing travel patterns and preferences among the general public. For example, sleeper trains have regained popularity among European travellers who are reluctant to fly between different cities and countries.39

Relatedly, the tourism industry faces unprecedented economic challenges due to travel restrictions and lower levels of disposable income among consumers who have been financially hit by the pandemic, resulting in hundreds of billions US$ in losses across the sector.40 The hotel industry has suffered similar hardships due to a sharp decline in hotel bookings.41 COVID-19 will force the entire tourism industry to rethink its focus and priorities to reduce susceptibility to shocks related to the pandemic and looming crises tied to global warming.42 The public may be forced to reimagine how it travels and start to prioritize local destinations, transforming the economic outlook of the sector.43

The restaurant and food services sectors have faced significant obstacles to profitability, and many businesses have been forced to shutter their doors. In some cases, the government has stepped in to force temporary closures or implement measures that require significant adjustments to a standard restaurant business model. Restaurants have had to contend with a severe reduction in consumer demand, a lower capacity to seat patrons, and unexpected expenditures to address safety concerns like adding plastic partitions to protect staff or redesigning seating arrangements, sometimes by prioritizing outdoors spaces.44 Many of them have adapted to this new environment by finding new ways to reach their customers. For example, an employee at one restaurant in Melbourne explained:

We knew that our restaurants would be very quiet so we immediately pushed our online orders when COVID-19 restrictions came into play. We’re lucky that we manufacture all our own pasta, sauces, pizzas and other products so pushing [these products] through clever marketing worked well for us. We introduced our ‘Door-to-Door Service’ which saw us visiting various suburbs on various days and this was very well received… It’s something our customers love and therefore something we’ll continue even when restrictions lift… We also decided to hold an online event. Like a dinner dance, but streamed online where customers purchase tickets to watch the entertainment and then they also have the option of purchasing a dinner pack that’s delivered to them before the event. This has also been well received.45

Following the easing of restrictions after the first wave of the pandemic, some governments stepped in to provide financial support for the industry by encouraging people to dine out.46 Cafes and the coffee industry have also been negatively impacted from an economic perspective.47 Conversely, grocery stores have generally benefited from changes in consumer behaviour as more people eat at home. However, they have also had to adapt their business model to the changing retail environment, prioritizing online shopping, expanding delivery services, and even exploring the potential to introduce mobile stores to replace brick-and-mortar markets.48

The sports industry has also been significantly affected by the pandemic, with major sporting events cancelled or postponed all over the world. Mass gatherings and large-scale events generate crowds where the risk of COVID-19 transmission rises exponentially. In March 2020, Japan’s Prime Minister and the president of the International Olympic Committee announced the postponement of the 2020 Tokyo Games, marking the first time the Olympics have been rescheduled for a reason other than war.49 The pandemic has forced diverse forms of professional and college sports leagues to halt play or devise alternative ways to reach audiences if they are to weather the storm. Many leagues and franchises have been unable to generate previous levels of advertising revenue because of postponements and find themselves in dire financial straits. Players themselves have been apprehensive about resuming play and moving forward with seasons. Sports like Major League Baseball could suffer losses in the billions of dollars, leading to tense negotiations between team owners and players regarding compensation and risk, with some asking whether athletes should be seen as ‘exploited workers or greedy millionaires’.50 US and Australian rules football leagues have faced similar challenges, with some players simply deciding to opt out.51 Football (soccer) leagues throughout Europe made the decision to simply suspend or cancel their seasons in 2020.52 When play resumed, it generally occurred behind closed doors. As sports teams and players suffer the financial costs of these disruptions, the public should be aware of the disparate capacity elite men’s clubs may have to contend with the financial challenges compared to women’s clubs, as is the case of English football.53

The agricultural sector has also faced considerable challenges. At the early stages of the pandemic, the prices of agricultural goods fell significantly, particularly due to lower demand from hotels and restaurants.54 While growing demand from grocery stores seems to have gradually offset those initial losses, farmers face new difficulties resulting from labour shortages and from the need to adapt to new social distancing rules.55 Labour shortages may also result in higher prices for fruit and vegetables.56 Furthermore, the meat industry has been particularly hard-hit by the pandemic. Many meat-processing plants have been the epicentres of COVID-19 outbreaks, resulting in shutdowns and meat shortages in the food supply chain.57

In addition to the areas examined in the foregoing analysis, other sectors that have been affected by COVID-19 include the manufacturing industry, the financial sector, the healthcare and pharmaceutical industry, and the real estate and housing sector.58 Other businesses on the economic fringes have also been hard-hit, especially those related to vice. For example, gambling hotspots in Las Vegas had to shutter their doors for some time, but gambling online has thrived even while sports betting has declined.59 Illicit drug trafficking and local distribution markets have faced novel challenges in supply chain and consumer demand too.60

Sex workers have also been affected by the social distancing restrictions implemented during the pandemic, given the central role that physical contact plays in the industry. Moreover, the stigma and discrimination that those working in this industry already experience has increased during the pandemic, further contributing to economic hardship across the sector. Some have responded by either demanding government support or by adapting their business model to emphasize other online services.61 The Australian Sex Workers Association clearly articulated the difficulties for sex workers who have been ‘placed in the impossible position of having to balance the need to protect [them]selves and the community against the prospect of no income and no access to financial relief’.62

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The Social Cost
In addition to its extensive economic implications, COVID-19 has also had a drastic effect on social life around the globe. Government measures related to social distancing rules, stay-at-home orders, business lockdowns, and curfews have in many cases eroded community relationships by drastically reducing opportunities for physical face-to-face interaction. These measures have significantly affected family life, both by increasing proximity among those forced to shared confined spaces during lockdowns63 and by keeping families apart to prevent risk of infection. For example, one grandmother we spoke with who lives in California described what interactions with her granddaughter looked like during the pandemic:

[My husband and I] were both looking at her and she’s looking at us and she’s hugging a dolly. And they’re through the glass. It was her birthday. And she came up to the glass, she puts her hand up [to ours] and she kissed the glass and I kissed the glass. We kissed each other through the glass and it was just heart-wrenching… I said, ‘I wish I could hug you, I miss you, I’m gonna throw you kisses’. We would go out into the yard and we stayed far away. We kind of did it all. [At first] we just did FaceTime. Then we started between the windows—we could at least see her there.64

Likewise, a grandmother in Italy whom we also interviewed explained:

The pandemic has taken away spontaneity from normal gestures of affection. There is fear but, at the same time, there is also a desire to hug grandchildren, children, and friends during the lockdown. [The pandemic] has taken away physical contact and people have had to replace this with video calls or messages, both with relatives and friends, in an attempt to exorcise fear.65

The pandemic has clearly rendered relationships among family and friends more difficult for many.66 However, it has also brought some people closer together thanks to greater flexibility in time schedules, alternative working arrangements, and reduced opportunities for other social activities.67 Relationships with both family and friends have also been sustained by the use of communication technologies during the pandemic.68 Furthermore, social media have played a key role in reducing isolation for both older69 and younger70 people, even though these platforms have also contributed to spreading rumours and misinformation.71 Romantic relationships and dating have also had to adapt to the new social distancing and travel restrictions. Some dating apps, for example, have altered user guidelines and introduced new video technology options so users can continue to interact with others while minimizing risks and adhering to social distancing guidelines.72 More generally, COVID-19 has had an impact on romantic love,73 and in some cases contributed to increasing stress among romantic partners, compounding factors that may lead to greater infidelity.74 Big social events like weddings had to be postponed in places like metropolitan Melbourne, Australia during its strict Stage 4 lockdown.75

Relationships between humans and non-human animals, and social practices surrounding them, have also been impacted. For example, data show that there has been a significant increase in pet ownership and adoption, as pets help reduce stress and loneliness, or encourage healthier and more active lifestyles.76 There has also been contention around the implications of the pandemic for certain animals. For example, the dog racing industry in Victoria, Australia saw an exemption from strict Stage 4 lockdown measures amid debates about potential animal welfare issues.77

The pandemic has also resulted in a housing crisis, as many people can no longer afford their rent or mortgage payments, thus risking eviction and homelessness.78 This has sometimes generated extreme and violent responses.79 In other cases, it has compounded pre-existing social harms like increased violence between intimate partners and other forms of abuse. Early indicators show that households in Brazil, Spain, the UK, and Cyprus saw spikes in domestic and family violence.80 A study in Dallas, Texas found a spike in domestic violence during the first two weeks of the stay-at-home order that subsided afterwards.81 The long-term isolation, stress, and uncertainty during the pandemic may also exacerbate alcohol and drug consumption. Furthermore, these conditions can increase the likelihood of relapse among recovering alcoholics and drug addicts too.82 There has also been a rise in online gambling.83

COVID-19 has also changed social practices in various everyday environments due to the need to re-imagine spaces and people’s interaction within them in ways that comply with social distancing norms.84 There are obvious logistical challenges to in-person education and how to manage students on school campuses. Options have included a combination of closures and social distancing practices.85 Educational institutions now rely on online learning to a greater degree, raising new challenges.86 For example, we spoke with a school teacher in Italy who explained that the transition to distance learning had several advantages, but suffered from a number of shortcomings. The new teaching format was not always suitable for younger pupils or students with disabilities. Furthermore, online teaching tended to sharpen the ‘digital divide’ between families with different levels of access to suitable spaces in the home, tablets, and highspeed Internet connections. He also described ongoing unruly behaviour and cheating among students, then added:

When our school reopened… the space was reorganized with single-seat desks… pupils always had to wear surgical masks and could only remove them in ‘static’ moments, sitting at their desks. They could not move nor could they pass materials among themselves… The interaction between teachers also profoundly changed. Teachers used to gather in the faculty lounge, which could no longer be used due to COVID-19. Opportunities for meetings and interactions with colleagues were clearly reduced; at the same time, teachers began to meet in online spaces like Google Meet, especially to share teaching practices. Yet, the ability to interact was decidedly reduced.87

Universities have also been forced to adjust courses and curricula for online delivery. While this is practically feasible, students may have fewer opportunities to participate in the off-line social networking that is crucial for career development.88 Furthermore, many universities may not survive the financial hit resulting from the pandemic.89

The pandemic has also affected the way people eat and drink. Restaurants, for example, have had to undergo several changes, including redesigning their spaces, accommodating lower numbers of customers in order to respect social distancing rules, making greater use of smart technologies (e.g. for menus and meal orders), and expanding their takeaway and delivery services.90 Some of them have adopted creative strategies in order to guarantee social distancing between patrons.91

Likewise, government restrictions have forced some bars to close for extended periods of time in many locations. Those that have reopened or remained open had to reimagine how they serve customers and manage interactions between staff and patrons. Complex rules around indoor and outdoor spaces, as well as food service as it relates to the sale of alcohol, affect whether we visit these establishments and our experiences while there.92 An array of ‘multi-touch’ items like menus, salt and pepper shakers, cutlery, and coasters are now kept away from customers.93 One Irish pub in Spain’s Canary Islands used humour to communicate some of the real dangers associated with social practices in bars, putting up a notice that patrons should avoid singing the Neil Diamond hit ‘Sweet Caroline’ at all costs. Employees wrote some lyrics on a chalkboard explaining that, as a health precaution under COVID-19, ‘[t]here will be no: touching hands, reaching out, touching me, touching you’.94

Cafes have been forced to respond to the pandemic in creative ways as well, with some selling their stock as groceries and expanding their takeaway and delivery services.95 Furthermore, in many countries the pandemic has undermined the role of cafes as ‘third spaces’ between home and work, crucial for socializing and networking.96 The pandemic may have long-term effects on coffee culture around the globe.

Barbershops and hairdressers have also been at the epicentre of public debate concerning lockdown measures during the pandemic, with disagreement as to whether they constitute ‘essential’ businesses that should be exempt from lockdown restrictions. Barbershops traditionally serve important social functions for some cultural groups as spaces for community building, leisure and entertainment, gossip and local political engagement,97 as well as local education initiatives.98 They can also be important for men’s mental health.99 Likewise, hair salons can provide ‘a comforting source of self-care and community’100 and serve as ‘an important channel between members of the community and services such as family violence shelters’.101 This partly explains why many customers opposed and, in some cases, managed to revert government decisions to close down these businesses during the pandemic.102 In one extreme case, an armed militia group helped keep a barbershop open in a small US town in the state of Michigan.103

Beyond its direct effect on people’s health, COVID-19 has also indirectly affected people’s ability to stay healthy. For example, lockdown and social distancing restrictions aimed at reducing its spread have changed the way people exercise,104 with online streaming classes and programmes becoming a popular way for people to connect and participate in workout activities.105 Furthermore, when they have not been forced to close down, gyms have had to comply with strict health and safety measures, including the introduction of ‘hygiene marshals’.106 Partly due to risks associated with exercising in closed spaces, outdoor exercise has become increasingly popular.107 However, research shows that overeating and other unhealthy eating behaviours have also increased, thus posing additional challenges to individual and public health.108

The pandemic has affected other areas of social life related to leisure and recreation. Event-based social networks like Meetup, for example, have been forced to transition to virtual platforms in order to interact.109 A recent study in Australia found that activities within Meetup decreased by 86% during the pandemic. The researcher explains:

Participants in this study mentioned that Meetup was one of the main avenues in which they were exposed to new, potential relationships and that, due to lockdown measures, they had no way of expanding their social networks and thus making new friends. COVID-19 also had an amplifying effect on existing relationships within Meetup groups in the sense that close relationships became closer, and weak ones, weaker. Where relationships were strong enough, participants often used other social networking sites such as Facebook, WhatsApp and Instagram to maintain contact during lockdown, which highlights the importance of polymedia use.110

The way people travel for holidays and tourism has also changed.111 For example, both customers and business owners at beach destinations face unprecedented challenges that include new social distancing rules as well as stigma and public shaming for those who fail to respect them.112 People’s ability to access and experience national113 and local114 parks, as well as public spaces more generally,115 has also been deeply affected by the pandemic.

Travelling by public transport now includes additional demands to maintain social distance on crowded buses and subways. Passengers must also take new precautions to avoid handles and other surfaces that could spread the virus. Forward-thinking researchers will need to develop safer public transport infrastructure116 and new transport technologies to prevent an unsustainable shift back to a car-driven transport system.117 When it comes to pedestrians, proposed measures to contain the spread of the virus include touchless pedestrian crossings118 and crowd simulation technology to encourage social distancing.119 Rideshare services such as Uber have had to find ways of responding to reduced customer demand. For example, at times they have emphasized food delivery rather than taxi service to help keep drivers working and to mitigate issues of food insecurity.120 However, disruptions to their business model have had important social implications for sectors of the population with disabilities who normally depend on rideshare transportation services.121

The broader social effects of COVID-19 also concern the tensions that may arise between different individuals and social groups. Instances of social hoarding were particularly common at the onset of the pandemic, with people fighting over such products as toilet paper, hand sanitizer, flour, and pasta in shops and supermarkets.122 There have also been incidents of extreme rage over facemask policies, leading to the death of innocent bystanders and fatal confrontations with law enforcement.123 Furthermore, ageism and intergenerational tensions are on the rise in online spaces, especially between the ‘millennial’ and ‘baby boomer’ generations.124 Social stigma targeting infected people and those who have recovered from the illness, as well as doctors and health workers, has also become a widespread phenomenon.125 COVID-19 has also fuelled racism and xenophobia.126 Hate speech, hate crimes, and discriminatory practices targeting people with Chinese and East Asian backgrounds,127 Muslims,128 Jews,129 and Romani communities130 have been especially common. At the international level, the pandemic has generated negative attitudes towards countries with high levels of infections.131 One study, for example, revealed spikes in incivility directed at China on South Korean social media.132

What important lessons can we take after the New Corona Virus (SARS-CoV-2) swept the world within approximately 8 months? As commonly known, the outbreak of the virus began in December 2019. It emerged and triggered an epidemic striking against acute respiratory syndrome (COVID-19) in humans, which was centered in Wuhan, China [1]. Within only 5 months period, the virus has spread to more than 213 countries, with 24.537.560 cases and 832.879 deaths, as of 29 August 2020 [2]. The explosion and escalation of the virus is so fast and deadly that not only the World Health Organization (WHO) declared it as a global pandemic, but it also shattered the foundations of the world economy, especially in business sector. Quoting reports from the World Economic Forum [3] and the International Labor Organization [4], that the COVID-19 crisis has affected communities and economies worldwide, and has resulted in crises and economic shocks, the impact of which is not only decreasing supplies (production of goods and services ) but also demands (consumption and investment). Production disruptions, which started only in Asia, have now spread to supply chains around the world. All businesses, regardless of size, face serious challenges, especially those in the aviation, tourism and hospitality industries, with real threat of significant declines in income, bankruptcy and job losses in certain sectors. Amid tremendous challenges and uncertainties, and countless personal tragedies, country leaders and C.E.O's various business ICETLAWBE 2020, September 26, Bandar Lampung, Indonesia Copyright © 2020 EAI DOI 10.4108/eai.26-9-2020.2302674 firms are under pressure to make decisions in their attempts to manage the immediate impact of the pandemic and its consequences. For example, recent data from UNIDO's seasonally adjusted Industrial Production Index [5]. (April 2020 vs December 2019) show that lower and upper middle income countries have been significantly affected by the COVID-19. Responding to this problem, there are at least three strategic steps that we can take to become a starting point for making solutions to the impact of the Covid-19. First, one of the few investments from the pandemic is that this period in history will have profound influence on our generation and how we live our lives in the future. In a few short weeks we've already had to rethink how we work, how we interact and even how we care for our families. Economic theorists have started to look at how this period may change our habits and our mindsets in the coming years [6]. Second, The pandemic Covid-19 shows that our health depends on the health of others and that the health of others depends on our health. The policies of physical distancing in turn show that our well-being depends on the well-being of others and that the well-being of others depends on our well-being. There are no individual solutions to this health, economic and social crisis; the solution must be collective [7]. Third, using social humanities and behavioral science to support the COVID-19 pandemic response. The COVID-19 pandemic represents a massive global health crisis. Here we discuss evidence from a selection of research topics relevant to pandemics, including work on navigating threats, social and cultural influences on behavior, science communication, moral decisionmaking, leadership, and stress and coping [8]. Of the three strategic steps presented above, this article will only review the third strategic step, namely using social humanities and behavioral science, with scientific emphasis on philosophy and business. Therefore, this paper aims to explore strategic perspectives and philosophical steps to respond to the problems most affected by the Covid-19, namely the business problem. Why is philosophy used to respond to business problems? Borrowing the language of Anders Paulsen [9]. Many business people fail, not because they do not have an entrepreneur mentality, not because they do not understand the principles of doing business, but because they fail to see the problem in different angles or various nuances. In the expression of Jerry Kirkpatrick [10]. Therefore, this research will focus on two main problems: 1. what is business philosophy? And what is the significance in addressing the Post Covid-19. 2. Methods Essentially, this type of investigation is social and humanities research which is grounded on literature study. According to Soerjono Soekanto [11] social research is an in-depth examination of social facts which is aimed to seek a solution to problems that arise in the symptoms concerned. Meanwhile, according to the Big Indonesian Dictionary (KBBI) of the Ministry of Education and Culture, humanities are sciences that are aimed to make humans more humane, in the sense of making humans more cultured, [12] applying descriptiveanalytical and philosophical methods. The first one is meant to take a problem or to focus attention on the problem as it is, then processed and analyzed to draw conclusions. Meanwhile, the second is philosophical. It is a perspective or paradigm that aims to explain the essence or wisdom of something behind the object. In other words, a conscious effort is made to explain what is behind something that appears [13]. 3. Result and Discussion Important questions to start this section are: What is Business Philosophy? To answer this question, I'm not trying to explain it academically, it must be very complicated, and tedious. For these very reasons, many people are not interested in studying philosophy because they consider it as a subject that is difficult to understand. In a business context, philosophy is not really like that. Therefore, for the purpose of simplifying it, so that it could be easier for us to understand, especially in relation to business, I would like to state that philosophy is simply having a world view, "the way they see and understand the world" , the way we see and understand the world. , or someone's point of view to interpret the world. For more details, I would like to give an example by quoting my book Business Philosophy: Ways to Succeed in Building Your Business [14]. In this book, it is explained that "All successful people in this world must have a philosophy or world view, without exception. No one is successful, unless he certainly has a world view. This world view can come from anywhere, inspire someone, then he becomes the basis for thinking, acting and making decisions. That is what is meant by philosophy. Bill Gate, for example, the inventor of the "magic creature" coined the word Microsoft in 1975. He discovered that this Microsoft, with his friend Paul Allen, did not just appear. He drew inspiration from Dr. Henry Edward Roberts, an early personal computer developer, died Thursday in Georgia at the age of 68, after seeing an article about the MITS Altair 8800 on Popular Electronics. Some of his inspirational quotes are: "Don't compare yourself with anyone in this world ... if you do so, you are insulting yourself". He also once said: “Success is a worthless teacher. It seduces smart people into thinking they can't lose”. Likewise Warren Buffett, he was not one of the most successful investors of all time alone. He has mentors, teachers and colleagues who help him develop a smart investing style over time. The likes of Benjamin Graham, David Dodd and Phil Fisher helped him develop the tools needed to build his $ 92.5 billion business empire. Buffets' inspirational words that we can make our world view, include: “It takes 20 years to build a reputation and five minutes to ruin it.”You can't make a good deal with a bad person.”. “It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction. " From this explanation, if it is related to business, it can be concluded that what is meant by business philosophy is a set of principles and beliefs that are owned by a company or every business actor [businessman] to move and navigate the company to achieve success. This navigation or world view serves as a blueprint for the operation of the entire business, which affects its vision-mission and objectives. A business philosophy might also list company values that are important to its founders, executives, and employees. The philosophy for the company reflects the values of its leaders, helping businesses to feel more personal and uphold collectivity. Business philosophy can also be understood as a motivational system or basic principles that serve as the basis for a company's beliefs or actions. Those involved in corporate management may wonder how this definition relates to success in the business world. Managers and company owners may be surprised to learn that a strong philosophy is the cornerstone of success in business. As you begin to understand and develop a philosophy for your business, it becomes easier to build a productive and cohesive organization that can handle any challenges that may arise. In this way, business philosophy is akin to a roadmap for a company. If you are visiting a new city, it can be frustrating trying to navigate without a GPS or map. You don't know how to get to various places or how long it takes to get there. This same analogy can be applied to a company without a solid business philosophy. On the basis of the above thoughts, and to answer the two research problems, which are related to the significance of business philosophy in responding to the Covid-19 problem, I would like to recite Ander Poursen's [14] question: Why Do Future Business Leaders Need Philosophy? I deliberately raised this, to describe how philosophy plays a very important role in solving the various challenges and economic crises faced by business people in the postCovid-19 era. According to Poursen, after the financial crisis, an era of severe turbulence, there has been an increase in the rapid changes and complexity of life. Black clouds hang over the last decade's economic prosperity and global consumption habits, fundamentally challenging business objectives. Often the approaches to business practice are onedimensional, lacking richness and depth. This is true for both supporters and critics of current business practices. In these times, it is important to be able to see the world in many nuances. Citing Thomas Hurka, professor of philosophy at the University of Calgary and Payscale's latest research results, Poulsen not only raises the case of a philosophy graduate who, after being hired, progressed faster than their peers with only business degrees, but also Thomas Hurka, strongly recommends the younger generation to consider philosophical thinking, if they want to be successful in business. This is supported by recent research by Pay scale, which shows that while philosophy graduate starting salaries may be lower than those for business degrees, mid-career, philosophy graduate salaries exceed those of marketing, communications, accounting, and business management. Taking this into account, it seems that having a proper business degree from a prestigious business school does not guarantee a successful career in business. Following this line of thinking, Matthew Stewart, former management consultant for the Mitchell Madison Group said, "If you want to be successful in business, don't get an MBA. Study philosophy instead." In his experience, MBA programs basically involve, "taking two years of life and get you into debt, all for the sake of learning how to keep a straight face when using phrases like "thinking outside the box," "win-win situations," and "core competencies. "While this arguably exaggerates the current state of business education, it is hard to ignore the truth: the concept of 'business as usual' in management education is rapidly becoming obsolete, while global socio-economic challenges are only for the mature [adult] way of thinking. In many countries, labor market conditions are deteriorating with unemployment rates to unprecedented levels. For younger generation, job prospects are declining, as they are often the 'last in' and 'first out' of the labor market. Nowadays, it's a common joke that the phrase most philosophy graduates use is "Would you like French fries and a Coke?. It's a joke in the West to explain that philosophy graduates find it difficult to find jobs. But is this an actual representation of the real world? Surprisingly, a study conducted by CNN showed that only 5% of people who recently earned their philosophy diploma had problems finding a job. In addition, many well-known entrepreneurs such as Reid Hoffman, Peter Thiel and Carly Fiorina attribute their overall success to their education in philosophy. How does philosophy respond to global economic shocks and crises, especially business problems due to Covid-19? In my book Philosophy of Pandemic: Response to Religious Social Problems in the Covid-19 Period [15], it is described very long and clearly. In this article, I will briefly state that starting from human fears due to the impact of the Wuhan phenomenon. This phenomenon even though it had not spread throughout the world at that time, had psychologically affected the feelings of all mankind, affected the tissue cells in their brains, and then alarmed the body of the danger and threat of death, then what happened was anxiety, fear and panic. For example, the Covid-19 can really make people panic, but a proactive person is not affected by the situation, on the contrary he with his free will or his own choice responds in a positive way, that this condition is God's way of training himself to be a strong person and understand suffering and appreciate how this life is very important and meaningful. With the Covid-19, we are taught to come back to ourselves. It turns out that the remote control in our life is not in other people or social media, but within ourselves. Never let your thoughts, views, or news on social media regarding the Covid-19 influence your perception. Eleanor Rosevelt once expressed her view, "No one can hurt you without your consent". Or Gandhi's words, "they cannot take our pride, if we don't give it to them". Since the remote control of your life is in your own hands, decide positively what you will think. The seeds you sow will produce similar yields. Socrates said, if you plant apple seeds, you will get apples. Likewise with the mind, if you cultivate negative thoughts, the results you get will be negative results. If you plant the seeds of love, pleasure and happiness, then the results you get will be the same as the seeds you plant [15]. How to reflect this awareness in today's concrete situations, especially in the post-Covid19 period, I want to discuss this issue by looking at the answers of Amie Thomasson, philosophy professor, Dartmouth University, when she was asked about the anxiety and alienation of society due to the Covid-19. She answered as following [16] : “It's no surprise that so many people are feeling bad through the isolation - not just worried for themselves or their loved ones, but more deeply, feeling a kind of meaninglessness. Heidegger talked about two sorts of things that are distinctive of our being human, and that give our lives the only kind of meaning we can hope for: One is our projects - the things we care about, work toward, are engaged in - and the other is our being with others. The pandemic, and the isolation it has brought, has cut most of us off from our projects - whether it's baking cakes for weddings, teaching first-graders or cheering on the Rays. And it's cut us off from much of our normal ways of being with other people. Once we get disengaged, there's also the threat that the things we once cared so much about no longer seem important. And that can bring on the feeling that it's not just a temporary state - it's not just that life feels meaningless now, while we're stuck inside, but maybe it was never meaningful to" The same is expressed by Kevin Scharp, philosophy department, University of St. Andrews, Scotland [17] . He Said: “This is not an existential crisis in the sense of Homo sapiens going extinct. That is not going to happen. Even the direst predictions estimate no more than 5 percent of the population will be dead. Nevertheless, it is also worth emphasizing that many things about our identities will change, and these could be thought of as existential changes. I'm thinking about personal identities ("I'm a world traveler") and societal identities ("We're a tourist destination"). In a sense, the COVID-19 has forced every person on earth and every society and humanity itself to go through a transformative experience. That means we get to make up new identities for ourselves to some extent. Let's go with "we are environmentally responsible," and "we care about everyone's rights and quality of life." The views of these two philosophers in responding to the Covid-19 show their ability to cultivate critical and innovative thinking systems, which Makunda Raghavan [17] calls one of the most important skills gained from studying philosophy. The former is something that most people expect from learning philosophy but not the latter. Studying philosophy requires you to reason through your assumptions and the ideas of others, finding the problems in both and also finding a solution. This is the key point of Philosophy: the idea of finding problems and solutions for those problems, some of these problems are theoretical and other problems are practical and real. This is what innovation requires, the finding of a problem that exists in the world and also finding or creating a solution. Weber Shandwick [6] said that" One of the few inevitabilities from the pandemic is that this period in history will have profound influence on our generation and how we live our lives in the future. 4. Conclusion In the 21st century, the discourse on health and disease is no longer the monopoly of medicine, because there are other factors outside of clinical reality that influence that matters, especially socio-cultural factors. Many philosophers, biology, anthropology, sociology, medicine, and other fields of science have tried to provide a better understanding of the concept of health and illness in terms of their respective disciplines. The problem of health and illness is a process related to the ability or inability of humans to adapt to the environment both biologically, psychologically and socio-culturally. This paradigm of thinking also applies in the field of economics, especially in business. Business people, cannot see business practices as one-dimensional, but must be multi-dimensional, especially those related to business philosophy as the driving force for navigating the company to success. This navigation or world view serves as a blueprint for the operation of the entire business, which affects its vision-mission and objectives.

The Political Cost
The global pandemic has generated a range of international and domestic political problems. The COVID-19 health crisis constitutes an exogenous shock to the broader international system, disrupting international politics and creating new tensions between adversaries and allies alike. It will undoubtedly have profound implications for and lasting effects on geopolitics for years to come.133 Political leaders from major powers like the US and China may seek to use the crisis to find advantage in an ongoing contest for hegemony in the global political order.134 In many contexts, states have been left scrambling to secure sufficient supplies and resources to effectively contend with the virus, prioritizing national interest and the well-being of their own citizens. The US, for example, requested that the firm 3M refrain from selling protective masks to Canada and countries in Latin America to keep them for domestic use.135 A form of ‘vaccine nationalism’ took hold in a race to develop a vaccine for the virus that created barriers to cooperation and prioritized domestic delivery when mass production got underway. In 2020 COVID-19 affected almost all countries and more than 50 million people around the world. It has governments operating in a context of radical uncertainty, and faced with difficult trade-offs given the health, economic and social challenges it raises. By spring 2020, more than half of the world’s population had experienced a lockdown with strong containment measures. Beyond the health and human tragedy of the coronavirus, it is now widely recognised that the pandemic triggered the most serious economic crisis since World War II. Many economies will not recover their 2019 output levels until 2022 at the earliest (OECD, 2020[1]). A rebound of the epidemic in autumn 2020 is increasing the uncertainty. The nature of the crisis is unprecedented: beyond the short-term repeated health and economic shocks, the long-term effects on human capital, productivity and behaviour may be long-lasting. The COVID crisis has massively accelerated some pre-existing trends, in particular digitalisation. It has shaken the world, setting in motion waves of change with a wide range of possible trajectories (OECD, 2020[2]).

This paper highlights the strong territorial dimension of the COVID-19 crisis. Subnational governments – regions and municipalities – are at the frontline of the crisis management and recovery, and confronted by COVID-19’s asymmetric health, economic, social and fiscal impact – within countries but also among regions and local areas. For example, the health of populations in some regions is more affected than in others. Large urban areas have been hard hit, but within them deprived areas are more strongly affected than less deprived ones. Over the past few months, the health impact has spread towards less populated regions in some countries. In the United States for instance, the highest increase in the number of deaths occurring in October were in the rural counties not adjacent to a metropolitan areas. The various risks vary greatly depending on where one lives. This regionally differentiated impact calls for a territorial approach to policy responses on the health, economic, social, fiscal fronts, and for very strong inter-governmental coordination.

Many governments at all levels have reacted quickly, applying a place-based approach to policy responses, and implementing national and subnational measures for in response to the COVID-19 crisis:

·         On the health front, many countries are adopting differentiated territorial approaches, for example on policies surrounding masks or lockdowns.

·         On the socio-economic front, governments are providing massive fiscal support to protect firms, households and vulnerable populations. They have spent more than USD 12 trillion globally since March 2020. Many countries, and the EU, have reallocated public funding to crisis priorities, supporting health care, SMEs, vulnerable populations and regions particularly hit by the crisis. In addition, more two thirds of OECD countries have introduced measures to support subnational finance – on the spending and revenue side – and have relaxed fiscal rules.

·         Many governments announced large investment recovery packages – already much larger than those adopted in 2008 – focusing on public investment. These investment recovery packages prioritise three areas: strengthening health systems; (ii) digitalisation; (iii) accelerating the transition to a carbon neutral economy.

This paper provides good practice examples on policy responses to help mitigate the impact of the crisis on regions and municipalities in all OECD countries, and beyond. Below are ten early takeaways on managing COVID-19’s territorial impact, its implications for multi-level governance, subnational finance and public investment, as well as points for policy-makers to consider as they build more resilient regions.

·         Introduce, activate or reorient existing multi-level coordination bodies that bring together national and subnational government representatives to minimise the risk of a fragmented crisis response.

·         Support cooperation across municipalities and regions to help minimise disjointed responses and competition for resources. Promote inter-regional or inter-municipal collaboration in procurement especially in emergency situations. Promote the use of e-government tools and digital innovation to simplify, harmonise and accelerate procurement practices at subnational level

·         Cross-border cooperation should be actively pursued and supported at all levels of government, in order to promote a coherent response recovery approach across a broad territory (e.g. border closure and reopening, containment measures, exit strategies, migrant workers).

·         Consider adopting a “place based” or territorially sensitive approach for measures to fight the pandemic

·         Strengthen national and subnational-level support to vulnerable groups to limit further deterioration in their circumstances and to strengthen inclusiveness, including by simplifying and facilitating access to support programmes, ensuring well-targeted services, introducing adequate and/or innovative fiscal support schemes, and identifying the needs for revising fiscal equalisation policies.

·         Foster continuous dialogue between national and subnational governments regarding COVID-19’s fiscal impact on subnational budgets using shared evidence and data and taking into account the differentiated impact of the crisis. Help subnational governments reduce the gap between decreasing revenues and increasing expenditures during the COVID-19 crisis to avoid underfunded and unfunded mandates and possible sharp cuts in subnational spending. Special grant schemes could help close these gaps.

·         Explore and introduce other temporary or permanent, fiscal tools and measures, including tax arrangements, easier access to external financing (debt), and more flexible, modern and innovative financial management tools. Focus on reviewing subnational financial management and strengthening expenditure and revenue effectiveness, as a means to contribute to restoring fiscal stability over the medium and long terms.

·         Integrate a territorial dimension in national investment recovery strategies and involve subnational governments in their implementation early on, and not only municipalities but regions as well.

·         Draw some lessons from the 2008 crisis in the implementation of investment recovery strategies to avoid some mistakes which were made at that time. Among the risks to avoid are to atomise the allocation of the funding in a myriad of small infrastructure projects to spend the money rapidly at the expense of long-term priorities (e.g. sustainability and resilience).

·         Use public investment across at all levels of government to support COVID-19 recovery over time: avoid using it as an adjustment variable; minimise fragmentation in the allocation of investment funds targeting COVID-19 responses; ensure allocation criteria are guided by strategic regional priorities; integrate social and climate objectives into recovery plans designed by all levels of government; and consider introducing a resilience-building criteria for the allocation of public investment funding for all levels of government.

The territorial impact of COVID-19
Introduction
The COVID-19 crisis has governments around the world operating in a context of radical uncertainty, and faced with difficult trade-offs given the health, economic and social challenges it raises. Within the first three months of 2020, the novel coronavirus developed into a global pandemic. Schools and universities were closed in spring 2020 for more than one billion students of all ages. By November 2020, COVID-19 spread to almost all countries and affected more than 50 million people around the world, resulting in more than 1.25 million deaths. More than half of the world’s population has experienced a lockdown with strong containment measures – the first time in history that such measures are applied on such a large scale.

Beyond the health and human tragedy of COVID-19, it is now widely recognised that the pandemic triggered the most serious economic crisis since World War II. All economic sectors are affected by disrupted global supply chains, weaker demand for imported goods and services, a drop in international tourism (OECD, 2020[3]), a decline in business travel, and most often a combination of these. Measures to contain the virus’ spread have hit SMEs and entrepreneurs particularly hard (OECD, 2020[4]). Unemployment levels and the number of aid seekers have increased, sometimes dramatically. Many countries “exited” virus containment measures to mitigate the impact of the economic crisis only to face a rising wave of cases in autumn 2020, jeopardising recovery The exit strategy from the crisis is not linear, with possible “stop and go” strategies of lockdowns until a treatment or vaccine or cure is available.

Estimates released by the OECD in September 2020 indicate that real global GDP is projected to decline by 4.5% in 2020 before picking up by 5% in 2021. OECD unemployment is projected to rise to 9.4% in Q4 2020 from 5.4% in 2019. The projections assume that sporadic local outbreaks of the virus will continue, with these being addressed by targeted local interventions rather than national lockdowns; wide availability of a vaccination is not expected until late in 2021.

Given the multi-faceted nature and unprecedented scale of the COVID-19 crisis, comparisons with past crises, including the 2008-2009 financial crisis, have significant limitations. COVID-19 is proving unique in its generation of both a supply side and a demand side shock, and its impact on all sectors and regions of the world. The uncertainty is also much higher. Governments face a difficult trade off: managing the economic recovery and mitigating the impact of a second wave of the virus.

The COVID-19 crisis has a strong territorial dimension with significant policy implications for managing its consequences. Two central considerations for policy makers are:

·         The regional and local impact of the crisis is highly asymmetric within countries. Some regions, particularly the more vulnerable ones, such as deprived urban areas, have been harder hit than others. Certain vulnerable populations, too, have been more affected. In economic terms, the impact of the crisis is differing across regions, at least in its initial stages. Differentiating factors include a region’s exposure to tradable sectors, its exposure to global value chains and its specialisation, such as tourism.

·         Subnational governments – regions and municipalities – are responsible for critical aspects of containment measures, health care, social services, economic development and public investment, putting them at the frontline of crisis management. Because such responsibilities are shared among levels of government, coordinated effort is critical.

The COVID-19 pandemic will have short- medium- and long-term effects on territorial development and subnational government functioning and finance. One risk is that government responses focus only on the short term. Longer-term priorities must be included in the immediate response measures in order to boost the resilience of regional socio-economic systems.

The territorial impact of the health crisis
COVID-19, like all pandemics, has a spatial dimension that needs to be managed (McCoy, 2020[5]). By November 2020, it is clear that the impact of the COVID-19 crisis differs markedly not only across countries, but also across regions and municipalities within countries, both in terms of declared cases and related deaths. In the People’s Republic of China (hereafter ‘China’), 83% of confirmed cases were concentrated in Hubei province. In Italy, the country’s north was hardest hit, and one of the wealthiest region in Europe, Lombardy, registered the highest number of cases (47% as of November) (Italian Government Covid-19 Data Platform, 2020[6]). In France, the regions of Île-de-France and Grand Est were the most affected with 34% and 15% of national cases respectively (French Government Covid-19 Data Platform, 2002[7]). In the United States, New York the largest share of federal cases (14.6%), followed by Texas (8%). In Canada, the provinces of Quebec and Ontario accounted for respectively 61% and 31% of total cases as of November (Canadian Government Covid-19 Data Platform, 2020[8]). In Chile, Metropolitan Santiago accounted for 70% of cases as of November (Chile Ministry of Health, 2020[9]). In Brazil, Sao Paulo registered 25% of cases as of November (Brazilian Government Covid-19 Data Platform, 2020[10]). In India, the State of Maharashtra registered 21% of confirmed cases in India and in Russia, Moscow represented 24% of total cases as of November.

COVID-19-related mortality rates also exhibit a strong regional concentration (Figure 2). Within-country, COVID-19 deaths per 100 000 inhabitants can vary greatly, particularly in most hard hit countries. For example, in Italy, Calabria is the least affected region with 5.5 deaths per 100 000 inhabitants against 171 per 100 000 inhabitants in Lombardy, the most affected. Similarly in the United States, Vermont recorded 9.3 deaths per 100 000 inhabitants versus 184 in New Jersey. In Brazil, Minas Gerais recorded 41.8 deaths per 100 000 inhabitants while Distrito General death toll reached 120 per 100 000. Regions in South Korea and New Zealand were less affected overall. Sejong recorded 0 deaths per 100 000 while Daegu recorded 8.1 deaths per 100 000.

Note: The 24 countries are OECD countries plus Brazil. Among the 37 OECD countries, Estonia, Latvia and Luxembourg have no regions at NUTS 2 level; there are no data at NUTS 2 level for Iceland, Ireland, Israel, Finland, Greece, Hungary, Lithuania, Norway, Slovak Republic and Slovenia. For New Zealand, data is available by District Health Boards. For Canada and Japan, one province (Prince Edward Island) and one prefecture (Iwate) respectively are missing. For the United States, only the 50 States are considered. Data were retrieved between 24 October and 2 November.

Source: (Australian Broadcasting Corporation, 2020[11]; Austria Federal Ministry of Social Affairs, Health, Care and Consumer Protection, 2020[12]; Belgium Infectious Diseases Data Exploration Platform, 2020[13]; Brazilian Government Covid-19 Data Platform, 2020[10]; Canadian Government Covid-19 Data Platform, 2020[8]; Chile Ministry of Health, 2020[9]; Colombia National Institute of Health, 2020[14]; Czech Republic Ministry of Healthcare, 2020[15]; Dutch Ministry of Health, Welfare and Sport, 2020[16]; French Government Covid-19 Data Platform, 2002[7]) (Italian Ministry of Health, 2020[17]; Japanese Covid-19 Data Platform, 2020[18]; John Hopkins University Centre for Systems Sciences and Engineering, 2020[19]; Mexican Government Covid-19 Platform, 2020[20]; New Zealand Ministry of Health, 2020[21]; Poland Ministry of Heath, 2020[22]; Robert Koch Institute, 2020[23]; South Korea Ministry of Health and Welfare, 2020[24]; Spanish Ministry of Health, 2020[25]; Statens Serum Institut, Denmark, 2020[26]) (Swedish Public Health Agency, 2020[27]; Swiss Government Covid-19 Data Platform, 2020[28]; United Kingdom Government Covid-19 Platform, 2020[29])

There are a number of factors that contribute to the differentiated impact of COVID-19, which also may explain the disparities observed in countries as diverse as Canada, Chile, Korea and the UK. One factor relates to how the first “clusters” of cases developed and highlights the difficulty in typifying or anticipating where the virus may start. In many instances, large cities, with their dense international links – including international markets, business travel, tourism, etc. – were often the entry points for the virus and were particularly affected. Contagion can spread more quickly in large urban areas, due to proximity, if preventive, protective or containment measures are not introduced early enough. However, it is not possible to establish a clear correlation between density and incidence of the disease. Some very densely populated Asian cities, such as Hong Kong (7.5 million), and Seoul (9.8 million) Singapore (5.6 million) and Tokyo (9.3 million) saw limited diffusion of COVID-19 thanks to early and very proactive measures, mask wearing and extensive testing (OECD, 2020[30]). It appears that the problem is more a combination of density plus other factors such as a lack of appropriate measures such as contact tracing, poor housing conditions, or limited access to health care.

Rural areas also experienced “first clusters”, and regions with high numbers of elderly people were affected. Rural regions tend to be equipped with fewer hospital beds. Overall, metropolitan areas and their adjacent regions are better equipped in terms of hospital beds than regions far from metropolitan areas. In 2018, regions close to metropolitan areas had almost twice as many hospital beds per 1 000 inhabitants than remote regions. This gap has grown significantly since 2000 (OECD, Forthcoming[31]).

While often the virus first took hold in urban areas, over the past few months some countries saw the health impact spread towards less populated regions. In the US for instance, the highest increase in the number of deaths (as a share of a county’s population) occurring in October 2020 were in rural counties not adjacent to a metropolitan areas. The latter are under strain as daily deaths have continued to increase, reaching 0.86 per 100 000 in October, compared to 0.11 in May 2020. Daily deaths rate in metro areas counties of above 1 million people peaked in May 2020 at 0.49 and have remained at or below 0.35 since then (Figure 3).

Density per se is not the problem. The problem is density associated with poverty, poor housing conditions and limited access to health care (Basset, 2020[32]). Poverty and access to hospitals are more important indicators than density. Within cities, some neighbourhoods are also more affected. These are often areas with lower incomes, such as the Bronx in New York City, or Seine-Saint-Denis in the Paris region. New York City Health Department data indicate that Manhattan, the borough with the highest population density, was not the hardest hit. Deaths are concentrated in the less dense, more diverse boroughs. Factors that do seem to explain clusters of COVID-19 deaths in the US include household crowding, poverty, socio-economic segregation and participation in the work force (Basset, 2020[32]).

Deprived areas are the most strongly affected
According to the United Kingdom (UK) Office for National Statistics (ONS), there is evidence that more deprived areas in England and Wales are experiencing a disproportionate rate of deaths due to COVID-19 compared to less deprived ones (Iacobucci, 2020[33]). The ONS study underlines that poverty and population density significantly increase the risk of death due to the coronavirus. For example, in Wales, the most disadvantaged areas had registered around 45 COVID-19 deaths per 100 000 people, while areas with less deprivation have experienced close to 23 COVID-19 deaths per 100 000 inhabitants (Iacobucci, 2020[33]) between January and April 2020.

In France, mortality rates are twice as large in municipalities in the first quartile of the national income distribution than in municipalities in higher quartiles (Brandily, 2020[34]). This heterogeneity maybe explained by municipal differences in housing conditions and occupational exposure.

In the US, lagging counties have recorded more deaths (60 COVID-19 deaths per 100 000 people) than wealthier ones (48 COVID-19 deaths per 100 0000). In the first income quintile of per capita GDP, new COVID-19 deaths were significantly higher than in other quintiles between August and October (Figure 4). While density associated with poor housing conditions plays a role in the spread of the virus, it is worth noting that mortality rates are also determined by the health system capacity, and pre-existing health conditions (e.g. high blood pressure, obesity, and diabetes), which themselves tend to be correlated to income and education.

Figure 4. COVID-19 deaths per county group (GDP per capita), United States

COVID-19 daily deaths (7-day rolling average) per 100,000 population, United States, by counties according to county GDP per capita (2018)

 

Note: United States counties are classified according to GDP per capita quintiles based on data from the BEA for 2018. Data on COVID-19 deaths span from January 22 to October 22, 2020.

Source: Author’s elaboration based on data from: Bureau of Economic Analysis, Local Area Gross Domestic Product, 2018

Figure 5. The asymmetric impact of the health crisis

 

Note: For United Kingdom, Isles of Scilly cases combined with Cornwall

Source: (Italian Government Covid-19 Data Platform, 2020[6]); (Canadian Government Covid-19 Data Platform, 2020[8]); (BBC, 2020[35]) based on (United Kingdom Government Covid-19 Platform, 2020[29]); (Mexican Government Covid-19 Platform, 2020[20]); (BBC, 2020[35]) based on (United Kingdom Government Covid-19 Platform, 2020[29]); (New York Times, 2020[36]) based on (New York City Department of Health and Mental Hygiene, 2020[37]);

Most regions were underprepared for a crisis of such magnitude
Most countries, regions and cities were not well prepared for this pandemic for several reasons: i) they underestimated the risk when the outbreak emerged; ii) many did not have crisis management plans for pandemics (with the exception of Asian countries that battled the SARs pandemic, and some others, such as the Nordic countries, where crisis management plans are required); iii) they lacked basic, essential equipment, such as masks; and iv) they absorbed reduced public expenditure and investment in health care/hospitals. Since the start of the “Great Recession” launched by the 2008 financial crisis up until 2018, the number of hospital beds per capita decreased in almost all OECD countries, declining 0.7% per year, on average.

Not all regions are equally equipped to battle the crisis. Regional disparities in access to health care are quite high in some countries when measured by the number of hospital beds per 1 000 inhabitants (Figure 6). These disparities appear to be regardless of whether health care spending is decentralised. It should be noted, however, that the number of hospital beds alone is a limited measure for real health care capacity and quality. Much depends on health worker density and distribution, and the quality of hospital equipment. Some research suggests that regional disparities in health outcomes in Spain and Italy have not increased after the decentralisation of health care spending (Lopez-Casasnovasa, Costa-Font and Planas, 2005[38]; Bianco and Bripi, 2010[39]). Furthermore, a recent OECD Fiscal Federalism Network study showed that hospital costs are lower in countries with a higher degree of administrative decentralisation, even after controlling for particular treatments (Kalinina et al., 2019[40]). The decentralisation and concentration debates need to be distinguished for the different categories, notably basic health and intensive care. For the most advanced care, there are obvious quality arguments for concentrating (although not necessarily centralising) services. In such cases, however, there remains a need to ensure that travel times to care centres do not prevent service use.

Figure 6. Large regional disparities in access to health services

Hospital beds per 1 000 inhabitants by region, 2018

Subnational governments at the frontline of crisis management
Since the outbreak of the pandemic in early 2020, regional and local governments have been at the forefront of managing the COVID-19 health crisis and its social and economic consequences. Together with central governments and social security bodies, they have significant responsibilities in the different areas affected by the COVID-19 crisis. In many countries, subnational governments are responsible for critical aspects of health care, from primary care to secondary care, including hospital management, accounting for 25% of total public health expenditure, on average

 

Note: The OECD average (unweighted) is calculated for 33 countries (no data for Canada, Chile, and Mexico). The functional areas correspond the Classification of the Functions of Government (COFOG), which distinguishes 10 areas. The total of general government spending is non-consolidated.

Source: (OECD, 2018[41])

Since the beginning of the crisis, regions and cities are facing urgent social care demands from the elderly, children, disabled, homeless, migrants and other vulnerable populations – all of whom are directly and/or indirectly affected by the coronavirus. In many countries, subnational government are also responsible for welfare services and social transfers. In addition, subnational governments play a large role in delivering education, representing 50% of public education spending. Regional and local governments are managing the closing and re-opening of schools under very strict health measures.

Subnational governments are also ensuring the continuity of public services in a crisis context, adapting these as necessary, and protecting their own staff. Citizens expect seamlessness in essential public services, such as water distribution and sanitation, waste collection and treatment, street cleaning and hygiene, public transport, public order and safety, and basic administrative services, and the proper delivery of many of these are fundamental in managing the pandemic. In some countries, emergency services and police are managed by state, regions and municipalities, and they have been called upon during confinement periods to ensure control, security and rescue.

Regional and local governments are responding by maintaining essential services, if not at full service-levels then at adjusted ones, and by developing or providing better access to tele-services (tele-health consultations, tele-education). Finally, the emergency situation has led many subnational governments to take initiatives in areas outside the scope of their responsibilities, either upon request by the central government or because they decided to do so in response to emergencies that arose.

The territorial impact of the economic crisis engendered by COVID-19
Many comparisons have been made between the COVID-19 crisis and the 2008 global financial crisis, but they differ radically in scope, origin (endogenous in 2008 versus exogenous in 2020), and consequences. Both crises are also very different in their impact on territories, with the 2020 crisis having a more differentiated impact than that of 2008.

The economic impact of the COVID-19 crisis differs across regions, depending on the region’s exposure to tradable sectors and global value chains. For example, regions with economies that are heavily dependent on tourism will be more affected by the coronavirus than other regions. Capital regions or other metropolitan regions show a relatively higher risk of job disruption than other regions (OECD, 2020[42]). In the US for example, analysis of county-level infection by Brookings and economic data shows that the nation’s COVID-19 case load not only remains heavily concentrated, but that the hardest-hit counties and metropolitan areas constitute the very core of the nation’s productive capacity. According to Brookings, the 50 hardest-hit US counties “support more than 60 million jobs and 36% of its GDP” (Muro, Whiton and Maxim, 2020[43]).

The crisis’ impact on regional employment may also vary significantly across regions within countries. Regions with large shares of non-standard employment can help explain within-country differences arising from the COVID-19 crisis. Evaluating the share of jobs potentially at risk from a lockdown is one way to assess the territorial impact of the COVID-19 crisis. These shares can be estimated based on the specific sectors of activity considered to be at risk in a region, following an OECD note on the economic impact of containment measures (OECD, 2020[44]).

Regional disparities in the share of jobs potentially at risk in the short term as a result of confinement measures are stark. In May 2020, the OECD estimated that these shares ranged from less than 15% to more than 35% across 314 regions in 30 OECD and 4 non-OECD European countries (Figure 8). In one out of five OECD/EU regions, more than 30% of jobs are potentially at risk during a lockdown (OECD, 2020[42]). In the short term, tourist destinations and large cities are suffering the most from COVID-19 containment measures. The importance of tourism and of local consumption – including large retailers, general-purpose stores, and businesses in the hospitality industry, such as coffee shops and restaurants – partially explains this. The extent to which activities have recovered during the high tourist season is an important factor to determine the actual economic decline in tourist destinations.

Figure 8. Share of jobs potentially at risk from COVID-19 containment measures

 

Source: (OECD, 2020[42]) [calculations done in May 2020]

The longer and more stringent the containment measures, the higher the risk for regional economies. In summer 2020, targeted (localised) lockdowns were adopted in a number of countries to minimise the costs of national lockdowns. In autumn 2020, some countries are going back to national confinement measures to mitigate the impact of a second wave of cases. Possible stop-and-go measures are expected in the coming months, until a vaccination is available. The full impact for 2020 is yet to be calculated. Previous OECD work shows that the recovery of OECD regions after the 2008 global financial crisis took years. In more than 40% of OECD and EU regions, even seven years after the start of the crisis, per capita GDP was still below pre-crisis levels.

Mitigating the impact of confinement and facilitating social distancing: the impact of telework
The extent to which occupations can be performed remotely is an important mitigating factor with respect to economic impact and cost of COVID-19 containment measures. Occupations amenable to remote working depend strongly on the nature of the tasks carried out, which can differ significantly even within the same workplace. For example, academic researchers in universities can often continue working during a lockdown or under social distancing requirements, while canteen staff working in the same university may be forced to cease or strongly reduce their activities.

The OECD recently estimated the share of occupations amenable to remote working in OECD regions based on the task performed by workers1. This work reveals that the potential for remote working is unevenly distributed within countries. Urban areas a nine percentage point higher share of occupations that can be performed remotely than rural areas (OECD, 2020[45]).

In most cases large cities and capital regions offer highest potential for remote working within countries (Figure 9). Such a capacity might contribute to a territorial differentiation in resilience. On average, there is a 15 percentage point difference between the region with the highest and lowest potential for remote working in a given country. This difference reaches more than 20 percentage points in the Czech Republic, France, Hungary, and the U.S., driven by comparatively high levels of potential remote working in their capitals. It is important to note that these findings hold under the assumption that all workers – regardless of location – have access to an efficient internet connection and to the necessary equipment. As a consequence, differences across space arising from disparities connectivity and available equipment might determine the extent to which the potential to telework translates into an actual opportunity.

Figure 9. The possibility to work remotely differs among and within countries

Share of jobs that can potentially be performed remotely (%), 2018, NUTS-1 or NUTS-2 (TL2) regions

 

Note: The number of jobs in each country or region that can be carried out remotely as the percentage of total jobs. Countries are ranked in descending order by the share of jobs in total employment that can be done remotely at the national level. Regions correspond to NUTS-1 or NUTS-2 regions depending on data availability. Outside European countries, regions correspond to Territorial Level 2 regions (TL2), according to the OECD Territorial Grid.

Source: (OECD, 2020[45])

A strong and asymmetric fiscal impact on subnational governments
The impact of the COVID-19 crisis and related policy responses (e.g. public health measures, lockdowns, emergency economic and social measures) on subnational government finance is significant. A June-July 2020, a survey jointly conducted by the OECD and the European Committee of the Regions (CoR) with 300 representatives of regional and local governments in 24 countries of the European Union (CoR-OECD, 2020[46])indicates that in the short and medium terms most subnational governments expect the socio-economic crisis linked to COVID-19 to have a negative impact on their finances, with a dangerous "scissors effect" of rising expenditure and falling revenues. Beyond the European Union, other surveys report the same negative effects of COVID19 on subnational finance. For example, the US National League reports a severe and long-lasting impact on US cities with a loss of own-source revenue reaching 21.6% in 2020 (US National League of Cities,, 2020[47]).

The impact of COVID-19 on subnational finance is differentiated among countries, among levels of government, among regions and among municipalities. The varying effects on subnational finance depend on five main factors, all of which need to be taken into account to analyse and compare the fiscal impact of COVID-19 on regions and municipalities:

1.  1.

the degree of decentralisation particularly the assignment of spending responsibilities as the role of regions and cities in managing the crisis can vary depending on the scope of their responsibilities;

2.  2.

the characteristics of subnational government revenues, in particular their degree of sensitivity to economic fluctuations;

3.  3.

“fiscal flexibility” i.e. the ability of subnational governments to absorb exceptional stress, their capacity to adjust their expenditure and revenues to urgent needs;

4.  4.

the fiscal health or financial conditions i.e. the current budget balance and debt situation of a given local government, the level of cash treasury and set-aside reserves;

5.  5.

the scope and efficiency of support policies from higher levels of government.

It is extremely difficult quantify the impact of the COVID-19 crisis on subnational finance as there are many uncertainties surrounding its severity, duration, variability across territories, and the effectiveness of the support mechanisms introduced by international, national and subnational public authorities. Moreover, the new waves of infections and new lockdowns may continue to strongly affect subnational government finances.

With new waves of infection, the evolution of the crisis reveals itself to be non-linear. Countries must manage combined shocks and their cascading effects in parallel, as well as implement recovery plans. Many countries have introduced expansionary fiscal measures. Withdrawing them too quickly and introducing tight fiscal consolidation measures is risky as it could result in public investment becoming an adjustment variable. This happened after 2010, leading to a strong and persistent drop in public investment and hampering growth in many in many OECD countries. The effects of this “systemic” crisis on subnational finance occur at two levels: on subnational government “stocks” (assets and liabilities) and on “flows” i.e. on subnational government expenditure, revenues and access to new borrowing

The impact on subnational government assets and liabilities
The effects on stocks are on the assets owned by subnational governments and on their liabilities. Physical or financial assets and liabilities will likely be affected but this will depend on a variety of factors, such as the evolution of real estate prices, insurance reserves, pension funds, local company values, etc. For example, in the US, the crisis and the stock market collapse have exposed the fragility of public pension systems, exacerbating the solvency crisis of many pension systems and jeopardising the future retirement benefits of state and local public-sector workers. Public pension plans closed in fiscal year 2020 with virtually no change in their average funded ratio despite the high volatility in asset prices in the first half of the year. However, decreasing state and local governments revenues will hamper their ability to make their required pension contributions in the near term (SLGE, 2020[48]).

Local public companies are also exposed to the COVID-19 crisis. Some categories suffered from the cessation or slowdown of activity, particularly in the tourism, culture, leisure and transport sectors. Business failures and threats to capitalisation and equity affect subnational governments as shareholders (FEPL, 2020[49]).

Subnational government budgets will continue to be strongly affected
Subnational governments face strong pressure on expenditure and reduced revenue, thus increasing deficits and debt. While the crisis has already put short-term pressure on health and social expenditures and on different categories of revenue, the strongest impact is expected in the medium term. National governments, associations of local governments, and individual entities have started estimating the short and medium term fiscal impact, in order to prepare and adjust budgets, and to design appropriate support measures (Box 1). As already underlined, these estimates are still tenuous and need to be regularly updated, given the context of uncertainty. COVID-19’s second wave adds to the uncertainty as new confinement measures will again negatively affect subnational government finance. This second shock may be stronger for those subnational governments that drained all their fiscal reserves to resist the first shock; while they may still be under the effects of the previous shock.

Box 1. First insights into COVID-19’s fiscal impact on subnational government

·         In Austria, the COVID-19 crisis is strongly affecting state and municipal budgets. A 7%-12% drop in state tax revenues is forecasted. Behind this is a postponement of tax payments, which will result in tax collection being delayed. At the same time, it is expected that all state governments will be equally affected by the decrease as a result of Austria’s fiscal equalisation system, which has a levelling effect across regions (S&P Global Ratings, 2020[50]). At the municipal level, it is estimated that the crisis will cost up to EUR 2 billion in 2020 because of additional spending needs. This corresponds to a 5%-11% loss in revenue compared to 2019 (Wiener Zeitung, 2020[51]). Contributing to this is an expected 10% decrease in the municipal share of federal taxes (sales tax, wage tax, corporate tax), and a 10% and 12% drop in municipal tax revenue (local and tourist tax, fees from services such as childcare, etc.).

·         In Canada, municipalities may have lost between CAD 10 billion and CAD 15 billion in revenue over the first three quarters of 2020 and unanticipated costs including public safety measures and support for vulnerable populations (Federation of Canadian Municipalities, 2020[52]). Estimates show that provincial governments may have a revenue shortfall of CAD 35 billion in 2020/21 compared to 2019/20 (representing CAD 1 000 per person) (Tombe T., 2020[53]).

·         In Finland, in April 2020, the Ministry of Finance estimated the cost and lost revenue effects of COVID-19 to municipalities to be between EUR 1.6 billion and EUR 2 billion for 2020 i.e. around 4% of total municipal revenues (Ministry of Finance of Finland, 2020[54]). The economic effect of COVID on municipalities will spread over several years. The negative effect of COVID-19 will amount to EUR 1.7 billion in 2021 according to the Association of Finnish Municipalities. The support from the central government will amount to EUR 2 billion in 2020 and at least EUR 0.9 billion during 2021 to compensate for lost tax revenue and extra spending. By the end of 2020, it appears that COVID-19 will not reduce municipal tax revenues as sharply as was predicted in the spring. The relatively good development of municipal tax revenues is partly due to the fact that the state increased the share of municipal corporate tax in 2020 and 2021 as one of its first support measures, particularly benefiting the largest cities.

·         In France, according to the Cazeneuve report \, at the end of July 2020, net lost revenue among subnational governments could reach EUR 5 billion in 2020 (i.e. 2.4% of subnational operating revenues) while net additional spending would reach EUR 2.2 billion in 2020 (Rapport Cazeneuve, 2020[55]). Among revenues, tax revenues will be the most affected (70% of revenue lost), the other being user charges and fees. Among subnational governments, the loss in revenues will be larger in municipalities (46% of subnational government net losses), followed by départements (36%) and regions (18%). Net revenue loss accounts for around 2% of municipal operating revenues but 2.7% of départements operating revenues and 3.1% of regional operating revenues. Tax revenues most impacted are the tax on real estate transactions (DMTO), the tax on business value-added (CVAE), the tax on transport, the value-added tax (VAT, though this will be limited thanks to a guarantee mechanism) and the tax on energy consumption (TICPE).

·         In Germany, many state governments will see a sharp deterioration in their budgetary performance in 2020, given falling revenues and rising expenditure. Behind this are packages adopted by the regions to support local economies and the wish to maintain, and even increase, public investment. It is expected that most states will revert to debt financing to cover their budget deficits, increasing their borrowing needs (S&P Global Ratings, 2020[50]). Data published by the Federal Ministry of Finance in May 2020 indicated a loss of tax revenue of about 11% for the Lander and 15% for the municipalities compared to estimates made in November 2019. The local level is especially affected by a 25% drop in local business tax receipts, a tax that represents 44% of municipal tax revenues. According to the Association of German municipalities, the municipal share of income tax will also fall by 7.4% but transfers from the state governments have increased by 20%. Overall, the funding gap between income and expenditure of municipalities is estimated at EUR 10 billion in 2021, depending on the measures that are taken to mitigate the decrease of municipal revenue in 2021 and 2022 (Association des Régions de France, 2020[56]),

·         In Iceland, a report released in August 2020 estimates that municipal revenues will decrease significantly in 2020 due to the COVID-19 crisis, with a total shortfall of over ISK 33 billion, accounting for 8.5% of total municipal expenditure in 2019 (and 1.1% of GDP). Municipal tax revenues, their largest single source of revenue, will shrink significantly. In general, the impact of COVID-19 is the most significant in tourist areas, and in municipalities which assume the most expenditure on social services and financial assistance sectors (Ministry of Transport and Local Government, 2020[57])

·         In Italy, the Association of Italian Municipalities (ANCI) developed three scenarios for the loss of municipal revenues due to COVID-19. A low risk scenario with a loss of revenue among municipalities of about EUR 3.7 billion (down 9% compared to 2019). This is based on a relatively rapid exit from the emergency beginning in May 2020, where the largest losses would be concentrated on the sectors directly exposed to the crisis, with other sectors recovering relatively quickly in 2020 or by 2021. A medium risk scenario, with an estimated municipal revenue loss of about EUR 5.6 billion (a decrease of 14% from 2019). Finally, a high risk scenario estimating a loss of EUR 8 billion (a drop of almost 21% over 2019). In this scenario, COVID-19 triggers a major and long running national and international economic crisis that causes recovery difficulties for all economic sectors (ANCI, 2020[58]). Regional governments also face financial difficulties. Most of their expenditure is concentrated on health (85% on average), which will increase. To this is added a drop in receipts from the regional tax on productive output (IRAP), the regional surtax on the personal income tax and the regional tax on vehicles.

·         In Japan, prefectural spending to contain the novel coronavirus, amounting USD 9.5 billion in July 2020, has drained the reserve funds of most of Japan's prefectural governments by more than half, limiting their financial resources to combat a second wave. According to an Asahi Shimbun survey, all 47 regions had already used 58% of their reserves (Asahi Shimbun, 2020[59])

·         In Switzerland, individual cantons and cities may see noticeable differences in COVID-19’s impact on their revenue and expenditures, depending on their economic structure and the resilience of their tax base. Cantons and municipalities tax revenue could drop by an average 6%-8% year on year in 2020 if the country's GDP contracts by 6.5%, as currently forecast. The drop will continue in 2021 as Switzerland's tax collection is spread out over several years. Cantons’ health expenditure have significantly increased as they pay 55% of the invoiced cost of in-patient health care treatment for their residents, and are in charge of hospitals and implementing public health measures. Cantons have also started to support local economies. The crisis will generate additional borrowing needs by around 20%. However, most Swiss subnational government had balanced budgets before the crisis (S&P Global Ratings, 2020[60]).

·         In the UK, local government finance is facing a difficult future. Recent analysis estimate that local councils face a 7.9% increase in expenditure of compared to pre-crisis expenditure in 2020, and a 5.1% decrease in their revenue. On the expenditure side, local councils face a 12% expenditure increase for housing and homelessness, 10% for adult social care, 10% on finance and corporate services, and 9% in culture and leisure (Institute for Fiscal Studies, 2020[61]). Income loss – council tax and business rates – account for 60% of projected income losses and the losses from fees, charges and commercial income account for another 40%.

·         In the US, according to a recent study released in July 2020 by the Council of State Governments, states face a combined estimated revenue shortfall of between USD 169 billion and USD 253 billion in general fund receipts in fiscal years 2020 and 2021 as a result of the COVID-19 pandemic and its economic impact. According to another estimates, personal income taxes declined by 63%, sales taxes dropped 15.8% and corporate income taxes fell 63% (Urban Institute, 2020[62]). This revenue loss is only part of the “fiscal shock” that awaits legislators as in 2021, Medicaid spending will increase by an estimated USD 29 billion ( (Council of State Governments, 2020[63]).

·         At the local level, recent research estimates a drop in municipal revenue of 5.5% (USD 34.2 billion) under the less severe scenario and 9% (USD 55.3 billion) under the more severe scenario (Chernick, Copeland and Reschovsky, 2020[64]). This drop occurs through the decline in own-source revenue but could also occur with the (expected) decline in transfers from states to local governments, and changes in the federal government’s direct and indirect assistance to city governments. These losses could lead to significant cuts in critical public safety services, parks and recreation, and pay and jobs cuts. This could also affect infrastructure investment (US National League of Cities,, 2020[47]).

All subnational government transactions are likely to be highly affected by the crisis in the short and medium terms. A detailed analysis of the expected impact on expenditure, revenue, debt management and access to new borrowing permits identifying their contribution to changes in subnational government finance (Figure 11).

Overall, surveyed regions and municipalities in the European Union expect the crisis to have a slightly larger impact on revenue than on expenditure. Large municipalities expect a larger impact: about two third of respondents from cities of populations above 250 000 inhabitants forecast the impact to be highly negative, against 41% where the population is below 10 000 inhabitants ( (OECD-CoR, 2020[65]).

Figure 11. Impact on subnational finances, by transaction

 

Source: (OECD-CoR, 2020[65])

The impact on subnational government expenditure
This crisis is calling on regions and cities to increase their expenditure in many areas. The impact of this, however, will vary according to their spending responsibilities. In many countries, subnational governments are responsible for critical aspects of health care systems, including emergency services and hospitals. In 2018, health expenditure accounted for 18% of subnational expenditure in the OECD, on weighted average. Additionally, subnational governments have expenditure responsibilities in social protection, which is particularly affected by the COVID-19 crisis, including social assistance and social benefits (14% of subnational expenditure). Beyond health and social responsibilities, subnational governments are involved in key areas impacted by the crisis, including education (the first spending item at 24%), public administration (15%), economic development and transport (13%), public order and safety (7%), utilities (waste, water, etc.), etc. In the context of the crisis, subnational governments are confronted with a number of complex and costly tasks. They have first managed the full or partial closure of certain services and facilities and then their reopening while having to ensure the continuity of essential public services, adapt services either physically (public transport, collection of waste, cleaning of public spaces) or virtually (tele-health consultations, remote education arrangement, local tax payments, access to government information, etc.) and enable officials and employees to work remotely. Finally, in many countries, subnational governments are involved in delivering support policies for SMEs and the self-employed, as well as infrastructure investment.

Although some expenditure items are temporarily reduced (related to the slowdown of public services, the cancellation of events, and decrease in intermediate consumption, for example petrol) or deferred in time, most subnational spending items tend to increase in the short term (emergency expenditure), and also in the medium-term in response to exit strategies and recovery programmes.

According to the OCDE-CoR survey, anticipate significant expenditure increases in social services and benefits, support to SMEs and the self-employed, and public health. More moderate expenditure increases are expected in education, information and communication technologies, adapting local public transport, adapting administrative services and public order and safety. Regions in the EU are more likely than municipalities to experience increased spending on health services, support to SMEs and the self-employed, and adaptation of public transport, likely reflecting their broader responsibilities in these areas (OECD-CoR, 2020[65]).

Figure 12. COVID-19 pressure on subnational expenditures, by area

 

Source: (OECD-CoR, 2020[65])

The impact on health expenditure will be significant
In a number of OECD countries, states, regions, and municipalities are responsibility for public health services and hospital spending. Subnational governments account for about 24.5% of total public health expenditure in the OECD2 (Figure 7) and 12% of subnational government expenditure3. However, the degree of decentralisation in the health sector varies markedly. The OECD developed the typology to indicate the level of decentralisation in the health sector in OECD countries (Box 2) based on the combination of three subnational expenditure spending ratios: i) as a share of total public health expenditure (Figure 7); ii) as a share of total subnational expenditure; iii) as a share of GDP.

Box 2. Decentralisation in the health sector in OECD countries

Three groups of countries with high, medium and low levels of decentralisation in health provision are identified (Figure 13). Most federal countries (except Belgium and Germany) and some unitary countries (Italy and three Nordic countries) have highly decentralised health care sectors. At the opposite end, 15 unitary countries, plus Belgium and Germany, are in the group where health care is mainly managed by central/federal or social security funds. This interpretation can be nuanced, as health expenditure in unitary countries can be a delegated expenditure made on behalf of the central government, with little or no choice as to how expenses are allocated. In federal countries however, state governments can still have shared decision-making responsibilities with the federal government (OECD, 2019[66]; Beazley et al., 2019[67]; OECD, 2020[68]). The public part of health expenditure may also be funded by social insurance schemes, and not directly by the central or federal government. In Belgium, Luxembourg, Germany and France, social insurance accounted between 85-95% of public expenditure in 2017. It is also important to recognise that while health care provision is usually a public sector responsibility, the private sector often plays a large role in service production, side-by-side with public sector producers.

Figure 13. The level of decentralisation in health care in the OECD countries

 

Note: No data for Canada, Chile and Mexico; * Switzerland: subnational government health expenditure accounts for less than 20% of subnational government expenditure and 4% of GDP; ** Latvia: subnational government expenditure is 8% of subnational government expenditure; *** Slovenia: subnational government expenditure is around 1% of GDP and 12.4% of subnational government expenditure.

Source: OECD based on (OECD, Forthcoming[69])

Regional and local governments have differentiated responsibilities in health services. Therefore, this crisis will have differentiated impact within the subnational government sector. In most federal countries, health care is a major responsibility of state governments, which are responsible for secondary care, hospitals and specialised medical services. In unitary countries, where health care is almost exclusively a regional-level responsibility, the role of regional governments may be also significant (e.g. Denmark, Italy and Sweden). The role of municipalities in health care generally concentrates on primary care centres and prevention. However, in some countries, municipalities or inter-municipal cooperation bodies may have wide responsibilities in healthcare services and infrastructure.

While it is too early to present fiscal data, this health crisis has led to significant increases in subnational government health expenditure. The pressure on public health expenditure is particularly high for regions (69% versus 44% for municipalities), most likely reflecting their broader responsibilities in this area in many EU countries (OECD-CoR, 2020[65]). This is linked to spending to acquire healthcare equipment and consumables (masks, ventilators, tests, protective equipment, etc.), cover staff costs (employment of temporary medical staff, overtime payments, bonuses), pay for additional tasks such as the cleaning and disinfection, construction and conversion of temporary emergency facilities, medical transport, etc. Local governments are also distributing masks and participating in testing and contact-tracing programmes in partnership with regional and national governments.

The impact on social expenditure is significant and will be long-lasting
The COVID-19 crisis is placing significant pressure on social protection spending given its impact on population groups with diverse and frequently complex needs. These include elderly and dependant people, those with chronic or long-term illnesses, the poor and low-income families, the homeless, uninsured households, informal workers, migrants, youth, students and children at risk, people with disabilities, isolated people, and women and/or children at risk of domestic violence and indigenous population.

Among OECD countries, social protection represents 14% of total public social expenditure (Figure 7), though this is much higher in countries where subnational governments have significant social protection responsibilities (e.g. Austria, Belgium, Germany, Japan, the Nordic countries, and the UK). There are large disparities in social protection spending among OECD countries. For example, social protection expenditure accounts for 56% of subnational expenditure around 35% in Ireland and the UK but less than 10% in 10 OECD countries. This indicates that subnational governments are not mobilised in the same way for social services, despite the fact that local governments are often the first resort for citizens in need. Even if social protection is not a subnational government’s responsibility, it often has to respond to social emergencies.

During the emergency, subnational governments have undertaken proactive initiatives to provide social/community support to vulnerable populations (OECD, 2020[70]). In the longer term, social expenditure will certainly continue to increase as more welfare benefits are included due to the rise in unemployment and the number of aid seekers. Unemployment payments, guaranteed minimum revenue, family support, housing subsidies, emergency aid, ageing, etc. will add to the pressure on subnational government social expenditure.

The impact on economic affairs expenditure
Economic affairs4 represents 13.6% of subnational spending in the OECD on average. Subnational governments in the OECD account for approximately 34% of total public spending in this area (Figure 7), although in some countries it is more than 50% (e.g. Australia, Belgium, Japan, and Spain), and in the US it has reached 69%. Some state and regional governments, as well as local governments took early action to support their local economies, focusing mainly on SMEs, the self-employed, and informal workers, as well as on sectors that were highly affected, such as tourism, trade, restaurants, etc. In the longer term, as major public investors, subnational governments may be further mobilised to participate in stimulus packages targeting public investment, in order to compensate for a decline in private investment (see Part 2).

The impact on subnational government revenues
The COVID-19 crisis will likely generate a large drop in subnational government revenue. This would arise from drops in tax revenue, user charges and fees and income from physical and financial assets. The impact on subnational governance finance, however, will depend on the mix of these revenue sources. In countries where subnational governments are largely funded by central governments transfers (e.g. Estonia, Lithuania, Mexico, the Slovak Republic), the negative impact may be small, especially if the central government decides to maintain their level, or even increase them in order to help subnational governments cope with the increased costs resulting from the crisis5. However, in some countries, especially federal countries where most of transfers to local governments come from the state governments, there is some concern about the ability of states to sustain their transfers. (Chernick, Copeland and Reschovsky, 2020[64]). In countries where subnational government revenue comes mainly from taxes, user charges, fees and income from assets, the impact may be larger (Figure 14), although this depends on their degree of sensitivity to economic fluctuations and policy decisions.

Figure 14. Sources of subnational government revenues vary across countries

Breakdown of subnational government revenues by category (% of total revenue, 2018)

 

Note: 1. Australia and Chile: estimates from IMF Government Finance Statistics; 2. 2017 data

Source: (OECD, 2020[71])

Among subnational governments, tax revenue is anticipated to be the most affected revenue source, followed by user charges and fees (OECD-CoR, 2020[65]). Grants and subsidies, as well as revenue from assets are expected to decrease to a lesser extent. There is however, an expectation that grants and subsidies from higher levels of government will remain unchanged or increase (Figure 15) (OECD-CoR, 2020[65]).

Figure 15. Impact on subnational revenue, by revenue source

 

Source: (OECD-CoR, 2020[65])

The impact on tax revenue
The COVID-19 pandemic is expected to result in a strong drop in both shared and own-source tax revenue. Declining economic activity, employment and consumption arising from COVID-19, and particularly containment measures, will automatically reduce receipts from personal income tax (PIT), corporate income tax (CIT) and value added tax (VAT). In addition, measures such as tax breaks, exemptions, deferrals and a drop in rates that were decided within the framework of recovery packages by national and subnational governments as counter-cyclical tax measures, could amplify the mechanical decline in tax receipts. Many regional governments and municipalities have adopted tax relief measures to support firms and households. A majority of these include a number of tax measures that will result in decreased tax receipts for subnational government budgets. Increased delinquencies could also contribute to tax revenue decline. As subnational government revenues are often based on the previous year’s activity (e.g. income taxes), most will see the situation worsen in 2021 and even 2022, regardless of the degree of national-level recovery. Beyond shared or own-source national taxes – many other subnational taxes may be affected by the economic decline and tax decisions as well. Among these are:

·         Taxes on business. Examples include the municipal business tax in Germany (Gewerbesteuer, 44% of municipal tax revenue) and Austria (Kommunalsteuer, 68% of municipal tax revenue), the municipal trade tax in Luxembourg (impôt commercial communal, 91% of municipal tax revenue) and the “territorial economic contribution” in France, comprising a real estate tax (contribution foncière des entreprises or CFE) and a tax on business value-added (contribution sur la valeur ajoutée des entreprises or CVAE).

·         Taxes on economic activities, such as the regional tax on productive output (IRAP) in Italy, the local income tax in Korea and Japan, and Japan’s resident tax levied on individual and business income.

·         Taxes linked to real estate activity, e.g. real estate transaction taxes, building permits and rights, etc.

·         Taxes related to household and business consumption, e.g. sales tax, motor fuel taxes, taxes on energy products, taxes on cars, taxes on leisure, tourist tax, advertising tax, gambling tax, etc.

·         Tax proceeds from commodity sectors.

The recurrent property taxes on land and building should be less affected as they are a less volatile source of revenue. However, if the property tax is calculated on the basis of the market value of property, there may be a risk of decline, but the reduction in property values will be reflected in budgets later (2021 or 2022). In addition, there is likely to be a drop in business-property tax revenues as a result of business bankruptcies. A drop in revenue could also come from exemptions and write-offs for some categories of tax payers in financial distress, as well as from increased delinquencies. Subnational governments will need to cope with property tax-payment deferrals. Potential delays that extend through a new fiscal year could pressure budgets and stress liquidity in countries where the property tax is the main source of municipal tax revenue (e.g. Australia, Canada, Estonia, Ireland, Israel, Lithuania, the Netherlands, the US and the UK) (OECD, Forthcoming[72]).

The impact on user charges and fees
Subnational governments may also suffer from a large decrease in user charges and fees resulting from the closure of public facilities (e.g. cultural, recreational, educational and sport venues like swimming pools, golfs, etc.) and reduced demand for local public services, such as public transport, school meals, car parks, tolls, kindergarten fees, administrative fees, etc. Drops in such revenue could be compounded by a rise in delinquent or unpaid fees (e.g. garbage collection, sewage, water provision, etc.). For example, in the US, the public transport sector is experiencing dramatic revenue drops, while also seeing significantly increased costs as a result of COVID-19. According to a study prepared for the American Association of Public Transport, US transit agencies are facing an overall funding shortfall of USD 48.8 billion between Q2 2020 and the end of 2021. Nationally, transit ridership and fare revenues were down in April 2020 by 73% and 86% relative to April 2019, respectively (APTA/EBP, 2020[73]). 76% of municipalities and 63% of regions are forecasting lower revenues from user charges and fees. User charges and fees, resulting from the delivery of local public services, are a more important source of revenues for municipalities than for regions.

The impact on assets-based revenue
Income from physical and financial assets could be also affected. This can include drops in rental revenues, lost dividends from local public companies, less revenues from sales of land, and lower royalty revenues resulting from the downturn (e.g. decreased prices for raw material, and lower production). Subnational governments dependent on revenue from oil producers may also experience a substantial revenue decline (e.g. in Australia, Canada, Mexico, Norway, and Russia) (S&P Global Ratings, 2020[74]). About two thirds of subnational governments are anticipating a decline in revenues from assets.

The impact on subnational government budget balance and debt
A strong decrease in revenues, combined with a continuous increase in expenditure (e.g. in social spending and investment) could result in a scissor effect, leading to subnational government deficits, as was the case in 2007-2008 (OECD, 2020[75]; OECD, 2013[76]). This situation could increase subnational government debt, while a crisis in debt capital markets could affect the current subnational debt stock. For example, in Norway, the coronavirus outbreak has led to turmoil in the capital markets, and some municipalities face difficulty refinancing their loans. The Government of Norway proposed to Norway’s Parliament to grant the Norwegian financial agency for Local Governments Kommunalbanken (KBN) an additional NOK 750 million of equity capital “to help the markets to function as well as possible and to prevent municipalities’ refinancing of short-maturity securities from contributing to further stress in the markets”. This capital increase would enable KBN to lend up to an extra NOK 25 billion to the local government sector (KBN, 2020[77]). 

Short-term borrowing to bridge delays in revenue and cover a lack of liquidity has already significantly increased in some countries. Many governments have facilitated the access to short-term borrowing and credit lines, including specific COVID-19 credit lines. Long-term borrowing is also expected to significantly increase, in particular as a result of subnational government activity recovery programmes and public investment stimulus plans. In addition, several governments have relaxed regulatory constraints on long-term borrowing and eased access to long-term borrowing, notably on capital markets (e.g. in China).

Some estimates expect subnational borrowing to grow in 2020 and decline a bit in 2021, with annual borrowing increasing 10% on average to reach about USD 2.1 trillion worldwide. A significant increase in subnational debt is expected in Australia, Canada, China, Germany, and Japan because subnational governments, particularly regions and large cities, will likely apply a countercyclical fiscal policy to support local economies, maintain employment, and increase (or at least sustain) investment in infrastructure (S&P Global Ratings, 2020[78]). In China, local government debt issuance could reach a record of nearly CNY 3 trillion for the first five months of 2020, compared to CNY 1.9 trillion in 2019 (SCMP, 2020[79]). The recovery policies will spur annual average regional and local government borrowings by 6%-9% in Germany and Japan and by 20% in Canada in 2020-2021 (S&P Global Ratings, 2020[78]). The increased borrowing will lift global outstanding debt of local and regional governments to a new record high of about USD 14 trillion by the end of 2021. In this framework, a substantial increase in bond issuance is expected, especially in China and developed markets, with the exception of the US. Global issuance could reach USD 1.7 trillion in 2020-2021 (S&P Global Ratings, 2020[78]).

Going forward, subnational government borrowing will depend on the depth and longevity of the crisis, the availability of additional transfers from the central government, and the appetite of subnational governments to pursue a counter-cyclical financial policy. It will also depend on the fiscal capacity of subnational government to access new borrowing. Many regions and municipalities are already weakened by lower fiscal performance and creditworthiness. In some cases, the capacity to borrow is limited by the current level of indebtedness of subnational governments. All other things held equal, the higher the debt of a subnational government, the higher the interest rate that it must pay to service the debt, which can further reduce their room to manoeuvre in critical situations, in particular more difficulty to roll out debt. (OECD, 2020[68])

Asymmetric and time-delayed effects
Asymmetric effects are observed at different scales: between countries, between levels of government within country and between individual entities. Between countries, the effects largely differ to depending on their multi-level governance framework, and particularly the importance of the economic and social role of subnational governments. In countries where the level of decentralisation is high, the impact on subnational government expenditure will be higher, particularly in spending areas most affected by the crisis (i.e. health, social protection, education, utility services, economic development, etc.). This is also true for revenue. This is confirmed by the OECD-CoR survey which shows that subnational governments in medium and highly decentralised countries are more likely to anticipate experiencing higher losses in revenue as a result of the COVID-19 crisis than in more centralised countries (OECD-CoR, 2020[65])

Moreover, extent of the impact also differs according to subnational fiscal health before the crisis. In a number of countries, the fiscal situation of subnational governments was relatively good before the COVID-19 crisis (e.g. the Czech Republic Denmark, and Switzerland). They enjoyed good fiscal health and had sufficient reserves and liquidity to face the crisis. In Switzerland most cantons and municipalities had balanced budgets before the crisis and are robust enough to absorb the higher 2020 deficits (S&P Global Ratings, 2020[60]).

In multi-tiered countries, there are also an asymmetric impact between levels of governments (Box 3). Depending on their spending responsibilities and revenue structure, the regional level may be more affected than the local level, and vice-versa. In countries with three subnational government levels, the intermediate government level may be also affected depending on its responsibilities and resources (e.g. départements in France). There may be effects that are delayed over time depending on the level of government. For example, the immediate impact may be stronger for municipalities than for regions, but it may be greater in the medium term for regions than for municipalities. Again, these staggered effects depends on the structure of their expenses and their revenues. For example, in many countries it is estimated municipalities will feel the financial shock mostly in 2020, as the loss of revenue mainly comes from the decrease in tariffs and user charges and/or local taxes, but it may be temporary (tourist tax) or delayed (deferrals). Municipalities could be spared in the future compared to regions, whose revenues depend more on taxes sensitive to economic activity, consumption or personal income. The fiscal shock on many regions could be delayed to 2021, and even 2022.

Finally, the impact may be differentiated at an individual level between regions or between local governments in the same country. There are different reasons for this, such as geographic localisation (e.g. located in an area particularly hit by the health or socio-economic crisis, in urban or more rural areas, in large metropolitan areas or smaller cities, isolated or close to borders of highly affected countries, etc.), its socio-demographic profile (importance of elderly or vulnerable groups, etc.) and its economic activities (tourism, manufacturing, mining, etc.). All these characteristics have implications for the nature of subnational expenditure and revenues, and then on the degree of fiscal exposure to the crisis.

Some market sectors that are currently experiencing the shock will be able to count on carry-over effects for the rest of the year (consumer durables), or a possible rebound over time. In other sectors, for which there is no possible carry-over, the lockdown results in deadweight losses (services and consumer non-durables such as transports, air transport and arts and entertainment (McKinsey & Cie, 2020[80])). Some substitution effects are taking place at the moment (e-commerce, home delivery, online cultural products, etc.) but they will not compensate for non-recoverable losses.

In the end, subnational governments will be more or less vulnerable to the crisis depending on their economic profile, the resilience of their local economies and the resilience of their tax base. For example, touristic regions and municipalities, be they urban or rural, are particularly affected by domestic and international travel restrictions, the closure of hotels, exhibition and congress centres, tourist sites (museums, natural parks, leisure establishments, etc.), restaurants and cafes, festivals and other cultural facilities. Additionally, since the deconfinement, the impact of hygiene and social distancing measures on touristic activities and attendance also have an incidence. Coastal regions and ski resorts in Austria, France, Italy, and Switzerland, as well as urban tourist destinations suffer from travel disruptions, closure of facilities and reduction in tourist attendance (Box 3 below). Port cities are particularly hit by the crisis, not only because of declining cruise activities, but also because of the strong slowdown in port activities as a whole (maritime transport, fishery, shipyards, etc.), despite the fact they kept terminals open to boats and ensured a minimum level of continuous activity. By contrast, regions and cities where non-market activities are significant as well as those depending on food industry have suffered less.

The state of the local government fiscal health prior to the crisis also play a role on the differentiated degree of resilience to the crisis. Some subnational governments may have a low level of indebtedness and important cash reserve. In France, for example, the good financial health of large cities at the end of the 2019 fiscal year allows them to have, in the immediate future, sufficient cash to meet the commitment of exceptional expenses. On the other hand, the coming months could reveal difficulties for some due to the increase in expenses and lower revenue (France-Urbaine and INET-CNFPT, 2020[81]). In the US, the level of preparedness for a recession is mixed, with certain states possibly lacking sufficient reserves to absorb the fiscal stress beyond the immediate short term. Some states are most exposed to pressure derived from exogenous shocks given their comparatively weaker credit metrics, including lower reserve levels, cyclical revenue streams, and elevated fixed costs e.g. pensions, debt service, other postemployment benefits (Standard&Poors, 2020[82]).

Finally, the existence of strong and efficient horizontal or vertical equalisation mechanisms may mitigate the differentiated impact of COVID-19 among subnational governments. For example, according to S&P, individual Swiss cantons and cities may see noticeable differences, depending on their economic structure and the resilience of their tax base to the economic shock. However, the Swiss national fiscal equalisation scheme will have difficulties to level differences within the year, as it is far less extensive than the German or Austrian schemes. The Swiss scheme employs a look-back period of four to six years to calculate relative equalisation entitlements. Meanwhile, Germany's system of interstate revenue equalisation transfers will ultimately spread the revenue shortfalls across all the states (S&P Global Ratings, 2020[60]). Although equalisation systems might help mitigate regional disparities, the effect could be limited and dependent on the equalisation system’s distribution formula. In addition, as many equalisation systems are funded either by appropriations from central government revenues or horizontal transfers among subnational governments, both of which may be susceptible to contractions in economic activity, there are some concerns about the sustainability of equalisation systems. According to a survey by OECD Network on Fiscal Relations, 8 out of 17 country respondents anticipate a fall in total equalising transfers, whereas only Canada anticipates an increase to one of its two equalising transfers (i.e. the Territorial Financing Formula). Overall, this suggests that equalisation systems may have a pro-cyclical impact on subnational finance (OECD, 2020[68]).

Box 3. The differentiated impact of COVID-19 among subnational governments

·         In France, the impact of COVID-19 on municipal revenue will be very uneven. While for 69% of municipalities the loss of operating revenues will be less than 1%, for 5% of municipalities, it will exceed 3%, and even 10% for 58 municipalities. Municipalities located in the Ile-de-France region and in coastal areas will be among the most negatively affected (Partenaires Finances locales, 2020[83]). It is estimated that nearly 4 000 touristic municipalities are classified as “at risk” because of the sensitivity to certain revenues such as tourist tax or from casinos, horse racing and other seasonal activities (Sénat,, 2020[84]). In France, the tourist tax will likely drop by 40% in 2020. Overseas territories are also considered at risk. Subnational governments in (Guadeloupe, Guyane, La Réunion, Martinique, and Mayotte) are particularly affected because their revenues are especially sensitive to economic fluctuations ( e.g. a local VAT on imports, tourist tax, etc.) and they have high social expenditures (AfD, 2020[85]). Similarly, some départements will suffer more than others from rising social spending. Finally, French Metropolitan cities will suffer from the strong decrease of one of their main source of revenues, a contribution paid by companies to finance public transport, called Versement Mobilité, which will decline by 20% in 2020.

·         In the UK, forecasts concerning England’s local revenues vary significantly across councils. For example, income loss may account for less than 5% of pre-crisis expenditure for 30% of local councils, while it may decrease by up to 20% of pre-crisis expenditure for 17% of local councils. Most affected councils are shire districts, which are particularly reliant on income from fees and charges on transport and from commercial activities, whose revenue are expected to decrease by 23% of their pre-crisis level. (Institute for Fiscal Studies, 2020[61])

·         In the US, the impact on states and local governments varies among state and local governments, with several risk and resiliency factors explaining why:

o    Concentrated economic activities, particularly in leisure, tourism, energy, and trade are a risk factor. States most dependent on tourism are likely see credit pressures due to revenue losses, spikes in unemployment, and reduced economic activity, and may face a significant lag during the recovery. For example, Hawaii and Nevada are considered to be the most severely affected states based on tourism's share of their economies (S&P Global Ratings, 2020[86]).

o    The level of budget reserves and liquidity and the possibility to access alternative sources to address short-term cash needs (lines of credit, rainy-day-funds, and other liquidity facilities). For example, a number of US states lack sufficient reserves to absorb the fiscal stress beyond the immediate short term, although most states, following the global recession of 2008, prioritized building up rainy days funds for a potential downturn. Average state reserves grew by 170% to about 13% of budgeted expenditures between 2009 and 2019 (National Association of State Budget Officers, 2019[87]).

o    The importance of volatile sources of revenues in budget also puts immediate pressure on subnational governments. For example, the largest revenue shortfalls are expected for cities more reliant more on transfers from states, and more reliant on local sales and income taxes than on property taxes which are less volatile ( (Chernick, Copeland and Reschovsky, 2020[64]).

o    Additional risk factors include pension fund investment performance, the level of debt, increased Medicaid expenditures, remaining unemployment benefits, as well as the level of preparedness for a recession (Council of State Governments, 2020[63]).

Managing the territorial impact of the COVID-19 crisis and recovery
The economic, fiscal and social impact of the COVID-19 crisis on territories is differentiated, and its diverse risks vary greatly depending on location. This regionally differentiated impact calls for a territorial approach to policy responses on the health, economic, social, fiscal fronts, and for very strong inter-governmental coordination.

Many governments at all levels have reacted quickly. A combination of national and subnational measures contribute to an effective response to the COVID-19 public health and economic crisis. Leadership and coordination by national government is critical. Subnational governments – regions and cities – have also launched a wide range of actions to manage the public health and economic impact (OECD, 2020[70]). Effective coordination mechanisms among levels of government are essential. “Strong coordination between all actors in charge of the response at central and regional levels is the basis of an effective response” (WHO, 2020[88]).

On the health front, many countries have adopted territorial approaches, for example on policies surrounding masks or lockdowns. On the economic front, governments have provided massive fiscal support to protect firms, households and vulnerable populations. They have spent more than USD 12 trillion globally since March 2020. Many countries, and the EU, have reallocated public funding to crisis priorities, supporting health care, SMEs, vulnerable populations and regions particularly hit by the crisis. In addition, more two thirds of OECD countries have introduced measures to support subnational finance – on the spending and revenue side – and have relaxed fiscal rules.

While immediate fiscal responses concentrated on protecting workers, unemployed and vulnerable populations, many governments also announced large recovery packages – already much larger than those adopted in 2008 – focusing on public investment. These investment recovery packages prioritise 3 priority areas accelerated by the crisis: (i) strengthening health systems; (ii) digitalisation; (iii) accelerating the transition to a carbon neutral economy

Given the territorial differentiation of COVID-19’s impact, it is crucial for recovery strategies to have an explicit territorial dimension. Although this seems to be more visible in some countries, it is still a challenge in many. It is also crucial to actively involve subnational governments in the implementation of these strategies early on, and not only municipalities, but regions as well.

This section focuses on six categories of measures taken by national and subnational governments to offer territorial responses to the crisis and the recovery:

1.  1.

Health care responses

2.  2.

Economic and social responses

3.  3.

Using digital tools

4.  4.

Supporting subnational public finance

5.  5.

Public investment recovery strategies

6.  6.

Inter-governmental coordination

A territorial approach to the health crisis
The importance of a place-based approach in the response to the health crisis has consistently grown for over the past months. In many countries specific measures regarding masks, school and restaurant closures, and full lockdowns are adopted for specific localities or territories, rather than applied nationally in order to limit the economic impact. Testing and tracing are at the heart of all crisis management strategies, as recommended by the WHO. Effective testing strategies, combined with social distancing, are ways to limit the large costs of confinements

Testing and tracing
Testing is an essential component of exit strategies from containment. Since the pandemic’s early stages, the WHO recommends massive testing to fight the coronavirus (WHO, 2020[89]). Frequent virus testing helps identify and isolate people who are infectious before the symptoms develop and prevent the risk of second waves. To reduce the risk of new waves of COVID-19 outbreaks, the OECD highlighted that 70%-90% of all people who have been in contact with an infected person need to be traced, tested and isolated if infected (OECD, 2020[90]). This requires a massive increase in testing and can be costly. Yet, the challenges and costs associated with doing so pale in comparison to the costs lockdowns. (OECD, 2020[90]).

The WHO recommends massive testing to fight the coronavirus (WHO, 2020[89]) by identifying infectious people and isolating contagious contact-cases before symptoms develop. Testing and contact tracing was at the core of Korea’s successful strategy in to manage the first wave of infections and prevent a second one, with local governments responsible for COVID-19 screening stations allowing for quick and safe testing and monitoring of those in self-quarantine. European countries have considerably increased their capacities and generalised testing for suspicious cases between April and October 2020 (Figure 16). In the EU27, official data shows that more than 6 million RT-PCR tests are taken every week in October compared to 1.5 million in April (ECDC, 2020[91]).

Subnational governments play a leading role in implementing the “track, isolate, test and treat” strategy. In more decentralised contexts, while central governments need to ensure financial resources and coordination, the actual policy delivery will be the responsibility of regional and local governments. In countries with more centralised health service delivery, local and regional governments contribute to organising testing and isolation measures. In either context – decentralised or centralised – it is important to leave room for local initiatives and experimentation. Doing so contributes to managing the pandemic’s asymmetric impact, which often requires quick local-level reactivity to identify and control clusters.

Figure 16. European countries have increased testing capacity

Average weekly number of tests per 100 000 inhabitants

 

Note: ECDC publishes weekly RT-PCR testing rate based on several data sources. The main source is case-based data submitted by Member States to TESSy, however, when not available, ECDC compiles data from public online sources.

Source: European Centre for Disease Prevention and Control https://www.ecdc.europa.eu/en/publications-data/covid-19-testing

Regional disparities in testing capacities could put the national testing strategy at risk if people that have potentially been exposed to the virus in some regions are not identified early enough to break the contamination chain. For an effective contact tracing strategy, tests results must be handed over as early as possible, which requires that test kits and reagents are available. Contact cases must be contacted as quickly as possible. The multiplication of cases prompts an increasing share of tests results to be handed over late, making it more difficult to timely trace and isolate potential contagious people.

Social distancing
Social distancing is at the core of crisis management. National health authorities and the WHO set out detailed recommendations to limit contagion. Among these are the need to ensure minimum distances between people. Advice on physical distancing affects public transport, schools, and urban mobility. One of the biggest challenges for local governments has been to organise the return to school under the best possible conditions, respecting social distancing rules amid soaring cases. Also, the use of protective equipment to prevent the transmission of the virus has considerably increased. Many subnational and national governments are recommending the use of masks in public transport, shops, and other commercial or public spaces.

The timing of restriction measures matters at least as much as their duration. During the first outbreak in March 2020, countries that acted early managed to limit COVID-19 fatalities. Large-gathering adjustments (WHO, 2020[92]) and mandatory face mask covering (WHO, 2020[93]) need to be in place where the level of transmissions increase and place additional strain on the healthcare system. This requires accurate data and efficient testing strategies at the local level. To limit the spread of the virus and restore economic activity, the WHO recommends radically increasing testing as a means to better target social distancing.

Local and national lockdowns
Many countries have adopted measures of localised lockdowns, to limit the huge costs of national confinements. This is true in Aberdeen (Scotland), Auckland (New Zealand), Barcelona (Spain), Melbourne (Australia), certain provinces in India, and some German districts, for example. Such a differentiated territorial approach can avoid the huge costs of a national confinement, while providing more targeted responses to the problems where they occur. In federal countries, policies are defined at the state level and thus are differentiated by definition. Effective coordination between local authorities, health agencies and the central government are essential to manage local outbreaks.

Country Examples
·          

o    In China, on 17 February, the State Council published the guidance that subnational governments should adopt a differentiated territorial approach to organise the recovery plans (except for Hubei Province, the most affected province and Beijing, the capital). The Provincial governments should identify municipalities and counties in high, medium and low risk, and update them continuously, and adopt measures accordingly. In practice, many provinces have categorised their counties (municipalities and districts) into different levels (four or five in many cases), according to the number of confirmed cases, new cases, cluster of cases, and other indicators.

o    In France, on 11 May 2020, the government announced a progressive exit from a very strict lockdown subject to conditions of decreased coronavirus infections. The deconfinement took differentiated territorial approach, classifying départements as green or red regions, depending on whether the virus was under control. Inter-departmental travel to and from red zones was limited to imperative professional or personal reasons for the first three weeks. A second phase of deconfinement started on 2 June. The Ministry of Health and Santé Publique France introduced a measure of vulnerability to the virus by départements to allow préfectures to restrict mass gatherings and decide where face masks are mandatory. In September, as the number of cases rapidly rose, the prefecture of Bouches-du-Rhone imposed forced closures of restaurants and bars and made wearing a face mask mandatory in the municipalities of Aix-en-Provence and Marseille. Beginning on 17 October 2020, the central government gradually extended restrictions to other areas with local nightly curfews in 54 départements deemed at high risk, including the Paris area. On 27 October, only 5 départements remained on the moderate risk list while 95 départements were on the high risk list. On 28 October, the central government decided to impose a nationwide lockdown on the mainland and Corsica starting on 30 October 2020, for at least 4 weeks. Testing, tracing and isolating remain the main strategy until a vaccine is available.

o    In Germany, coronavirus testing has increased considerably since the beginning of the crisis, and the country can now carry out half a million tests per week. It will be able to increase testing to 200 000 tests per day. The dense network of laboratories across Germany helped organise the testing relatively quickly and on a large scale. RKI, the federal health agency, revised its testing strategy on 3 November 2020 to focus on the vulnerable population rather than systematically testing all suspect cases. Exit measures are recommended at the Federal level but implemented with a varying schedule in the different Länder. In Germany, the first local lockdown was put in place in Berchtesgadener Land in Bavaria in the third week of October. On 28 October 2020, the federal government and Länder agreed to introduce new lockdown measures limiting large gatherings to 10 people and ordering the closure of restaurants and bars starting on 2 November 2020, for at least 4 weeks.

o    In Italy, testing all 3 300 residents of the town of Vò-Euganeo facilitated taking containment measures that eventually stopped all new infections. Vò-Euganeo was one the first centres of Italy’s coronavirus outbreak, and the location of Italy’s first virus-related death on 22 February 2020. Testing all residents regardless of whether they were exhibiting symptoms resulted in effective quarantining the infected and their contacts once infection was confirmed. This helped the health authorities build a full picture of the pandemic situation and completely stop the spread of the illness in the town. Testing occurred in two rounds. The first round was carried out on the town’s entire population in late February, finding 3% of the population infected. Half of the carriers were asymptomatic. All of those infected were isolated. The second round was carried out 10 days later, with results indicating that the infection rate had dropped to 0.3%. Asymptomatic individuals identified in the second round were quarantined. Based on Vò-Euganeo’s experience, the Veneto region extended the use of tests (RFI, 2020[94]), and its approach has successfully controlled the pandemic. Its approach included:

§   

§  Extensive testing: People with symptoms and people who were asymptomatic were tested whenever possible.

§  Proactive tracing: If somebody tested positive, everybody they live with was tested or, if tests unavailable, they were required to self-quarantine.

§  Emphasis on home diagnosis and care: Health care providers went to the homes of people suspected of being ill with COVID-10 and collected samples so they could be tested, keeping them from being exposed or exposing others by visiting a hospital or medical office.

§  Monitoring medical personnel and other vulnerable workers: doctors, nurses, caregivers at nursing homes, and grocery store cashiers and pharmacists were monitored closely for possible infection

§  On 8 October 2020, Italy’s Lazio region decided to put the province of Latina under special measures, including a 14-day lockdown with restrictions on restaurants and bars, religious ceremonies, a ban on visitors at hospitals and care homes but travelling to or from the province was still allowed. Italy is divided into three zones to manage the outbreak at the regional level. On the basis of the increased pressure on hospital beds, the central government imposed new lockdowns in and travel bans from six regions (Lombardy, Piedmont, Aosta Valley, Calabria, Puglia and Sicily), starting on 6 November 2020.

o    In Japan, local governments are in charge of implementing the testing strategy through local institutions, and local outpatient and testing centres. These are responsible for testing, deploying medical workers to Outpatient Services for Returnees and Contact Persons, and providing drive-through and walk-through medical care facilities in large tents and prefabricated buildings (Prime Minister of Japan and His Cabinet, 2020[95]; Government of Japan, 2020[96]).

o    In Korea, specific Subnational Centres for Pandemic Countermeasures were established in local governments to implement containment measures and help coordinate local measures with central authorities. Local governments play a large role in the Korean massive testing strategy for combating the coronavirus, including setting up the roadside testing facilities (Chung and Soh, 2020[97]; Business Insider, 2020[98]). Multiple municipalities, led by Goyang, have set up “drive-thru” COVID-19 testing pods where medical staff in protective clothing take samples from people in automobiles. A localised outbreak in Daegu was dealt with specific control measures and tracing jointly by the Ministry of Health and Welfare and the local government.

o    In Spain, the deconfinement strategy in June was gradual and asymmetric across Autonomous Communities, and coordinated along with the regional authorities. Areas where the virus was still circulating could remain under local lockdown during the summer: the government of Catalonia placed the county of Segria under lockdown in July. As new cases surged in October, the central government imposed a state of emergency in the Madrid area. Partial regional lockdowns imposed in Catalonia and Navarra were followed by a nationwide curfew.

·         In the UK, the government is providing a funding package of GBP 300 million for local authorities to develop tailored outbreak control plans, working with local NHS and other stakeholders. Plans will focus on identifying and containing potential outbreaks in places such as workplaces, housing complexes, care homes and schools. As part of this initiative, local authorities will need to ensure testing capacity is effectively deployed to high-risk locations. Data on the virus’ spread will be shared with local authorities through the Joint Biosecurity Centre to inform local outbreak planning, so teams understand how the virus is moving, working with national government where necessary to access the testing and tracing capabilities of the new service (UK Government, 2020[99]). In October, more than half of the people in the UK were under local lockdowns. In England, the government set three tiers of local COVID alert levels (medium, high and very high) to ensure that the right measures are taken in the right places to manage outbreaks (UK Government, 2020[100]). In very high alert areas, stringent measures apply and can locally be reinforced with additional measures in consultation with local authorities. Cross-boundary decisions are implemented at local authority level (UK Government, 2020[101]). Liverpool City and Greater Manchester regions were under tier 3 alert in October while London, Essex, Elmbridge and York remained under tier 2. Local authorities pay for COVID-19 marshals in England to enforce social distancing rules although they do not have powers of arrest. From 5 November, tougher national restrictions have been imposed in England with stay at home orders. Devolved governments in Wales and Scotland have applied additional restrictions, including a national lockdown in Wales. (UK Government, 2020[102]).

·         In the US, as of 28 October 2020, seven state governments started reversing their reopening and another three paused the lifting of restrictions. California classifies counties in four tiers (minimal, moderate, substantial and widespread infectious risk) in order to decide where and how to reopen. It uses county adjusted case rates, positive test rates and an equity index to exempt small counties from the most disadvantageous measures (LA Times, 2020[103]). New York’s governor imposed targeted two-week lockdowns for schools and non-essentials businesses in Brooklyn and Queens, New York City’s hardest hit neighbourhoods in October (The New York Times, 2020[104]). The Colorado state government introduced a new framework to open the state on a regional basis in September (Colorado Department of Public Health & Environment, 2020[105]).

Pointers for action

·         To reduce the risk of new wave of COVID-19 outbreaks, the OECD highlighted that 70%-90% of all people who had contact with an infected person would need to be traced, tested and isolated if infected (OECD, 2020[90]).

·         To allow for an effective contact tracing strategy, contact cases must be contacted as quickly as possible and tests results must be handed over as early as possible, which requires that test kits and reagents are available..

·         When relevant, introduce flexibility in the rules according to the severity or spread of the virus in a region, for example through localised approaches to lockdowns, .

·         Encourage local initiatives and experimentation to better match exit-strategy implementation with local or regional characteristics and populations, thereby managing the differentiated impact of the pandemic.

·         Clearly and regularly communicate the exit strategy to citizens, establishing easily understood and explicit guidelines for behaviour, and creating platforms for questions, answers and exchange.

A territorial approach to the economic and social crisis
Support to SMEs and the self-employed at regional and local levels
Across the OECD, small and medium-sized enterprises (SMEs) account for 99% of all businesses and between 50% and 60% of value added. SMEs are particularly vulnerable during the crisis (OECD, 2020[4]). In addition to SMEs, the self-employed represent a considerable share of total employment in a number of OECD countries. Amounting to slightly less than 15% on average, self-employment is particularly prevalent in Greece, Italy, and Turkey where it exceeds 20% (OECD, 2020[4]). The self-employed are often less protected by unemployment benefits compared with standard workers.

The restrictions put in place to tackle the epidemic directly and indirectly affect local businesses and the self-employed. Some businesses, such as restaurants and cafes, close during lockdowns, while other small and medium sized businesses and self-employed can continue operating but with considerably reduced demand. Some have laid-off or even dismiss their personnel. In many countries, local businesses were able to restart in large scale in June 2020, however new lockdowns across Europe, and targeted lockdowns elsewhere, hamper the recovery, particularly in the service sector.

To help avoid running into liquidity bottlenecks and bankruptcies among local business and self-employed workers, most national governments have taken strong actions to support SMEs and micro-businesses, self-employed, artisans, liberal professions, retailers. This is especially the case in highly affected regions, for example those where there is a predominance of SMEs, such as in Northern Italy (OECD Trento Centre for Local development, 2020[106]) or whose economies depend significantly on tourism, culture, leisure and recreation, transport, construction, wholesale and retail trade, accommodation and food services, real estate, professional services, and other personal services (e.g. hairdressing), etc. (OECD, 2020[107])

Many subnational governments also took early action to support their local economies by supporting SMEs, artisans, retailers and self-employed affected by the crisis. Emergency measures taken by regional and local government cover a wide range of areas, from financial support to more indirect support schemes, including:

·         Financial support: non-repayable grants, concessional loans at low or zero interest rates, liquidity loans, facilitating access to external financing through guarantees, deferring loan instalments,

·         Dedicated measures to support start-ups (which are often the most affected (bridge financing, guarantees, loans, tax measures, liquidity support, direct equity investment, capital risk funds, etc.)

·         Fiscal support: deferring tax and fees collection, granting exemptions and tax reliefs

·         Administrative support: introducing more flexibility in administrative procedures, relaxing certain restrictions easing regulations and permits required from businesses,

·         Public procurement: simplification and acceleration of procedures

·         Temporarily lowering rents (deferment or reduction of rent payments for tenants when premises belongs to subnational governments) and advancing payments to service providers

·         Technical assistance and support services to local economic actors: free or reduced consultancy services for businesses, promotion of webinars and similar training activities to contribute to business development, collaborative online platforms e.g. to promote "buying local" and regional/local marketplaces, creating labour pools, etc. (EU Committee of the Regions, 2020[108]).

In several countries, support packages for the self-employed has been delegated to subnational governments because they are best informed about local conditions and needs. Since such support is comparable to social welfare for families and individuals, for which subnational governments are responsible in normal times, subnational governments are appropriately organised to carry out these measures (OECD, 2020[109]).

In the EU, based on the OECD-CoR survey, 30% of subnational government respondents indicated that they were providing large direct support to businesses and self-employed (e.g. subsidy schemes, regional funds for capital risks), in addition to coping with the health emergency. Moreover, 28% declared that they largely provided technical assistance and support services to local economic actors, 26% that they have already granted tax incentives and relief to businesses and self-employed (e.g. exemptions, reduced or deferred rent payments for the business premises owned by local governments) and finally 25% indicated that they supported them indirectly, by offering advantageous credit lines, guarantee schemes or repayable advances, for example (OECD-CoR, 2020[65]). In this area, regional governments and large municipalities (OECD, 2020[110]) were more active than smaller ones, reflecting their broad responsibilities in economic affairs, particularly in the most decentralised countries.

Country examples
·         In Austria, all nine Bundesländer set up aid packages for SMEs that complement and expand the measures taken by the federal government. These include non-repayable grants (Burgenland to cover fixed costs and rental costs, Tyrol hardship fund, Vienna, Upper Austria), guarantees and bridge loans to support the liquidity of SMEs (Burgenland, Styria, Vorarlberg, Vienna, Upper Austria), deferrals of states taxes and waives interest (Carinthia, Salzburg), coverage of consultancy costs for SMEs that need support to apply for federal support measures (Carinthia), coverage of infrastructure costs to switch to telework (Styria new "Telearbeit!Offensive" support programme) and digitisation of SMEs (Tyrol). In addition, Upper Austria has developed a start-ups support package consisting of a special consulting service by the regional start-up consulting and support council "tech2b Inkubator" and a deferral of active start-up loans from "tech2b Inkubator" (OECD, 2020[107]).

·         In Belgium, the Brussels capital, Wallonia and Flanders regional governments adopted several measures such as non-repayable subsidies for companies that have to close during the lockdown, tax deferrals (Brussels, Flanders) and waiver of utility payments (e.g. energy bills) (Wallonia, Flanders), guarantees on bank loans and easier access to credit, prohibition of evictions (Flanders) (OECD, 2020[107]; EU Committee of the Regions, 2020[111]).

·         In Canada, the federal government established the Regional Relief and Recovery Funds (RRRF). With nearly CAD 1 billion committed the RRRF will help to mitigate the financial pressure experienced by businesses and organisations to allow them to continue their operations, including paying their employees and support recovery business projects. RRRF are channelled to the different localities through the national network of six Regional Development Agencies. Provinces have also developed their own support programmes. For example, the provincial government of British Columbia, as part of its COVID-19 Action Plan, launched income supports, tax relief and funding for people, businesses and services in response to the COVID-19 pandemic. As a next step, it has develop an Economic Recovery Plan, called “StrongerBC” focusing on supporting businesses among other objectives. StrongerBC introduces new supports to help businesses in B.C. reopen, adapt, hire, rehire, and grow. Supports include a new Small and Medium Sized Business Recovery Grant, a 15% Increased Employment Incentive tax credit, a 100% PST rebate to buy select machines and equipment, and fast-track skills training programs. British Columbia has also granted Rebate on Select Machinery and Equipment on the temporary provincial sales tax (PST) program to help corporations recover from the financial impacts of COVID-19 (Government of British Columbia (Canada), 2020[112]).

·         In Finland, municipalities are responsible for delivering lump sum aid to the self-employed who can apply for support from the municipalities where they are located. The aid is to ensure that the company can continue to operate profitably after the crisis caused by the coronavirus. Additionally, municipalities will be compensated by the central government for the support they pay to the self-employed. Many municipalities also try to help their local SMEs and self-employed by deferring fee collection, easing regulations and permits required from businesses, temporarily lowering rents and advancing payments to service providers. For example, the City of Helsinki decided to suspend the rents of commercial and other business premises leased from the City up to three months.

·         In France, joint action was taken between national and regional governments to manage the crisis as part of the new Economic Council Etats-Régions established in December 2019. This included regional task forces that incorporate development banks (BPI) in order to accelerate support measures for businesses. In addition, regional governments unlocked EUR 250 million (in addition to EUR 750 million allocated by the State) to participate in the National Solidarity Fund for artisans, retailers and small businesses. This National Fund has two components: i) monthly aid to very small enterprises, self-employed people, micro-entrepreneurs and liberal professions experiencing turnover losses of more than 50%; ii) a one-time additional payment for the most fragile small businesses. Almost all French regions have developed support programmes for SMES and the self-employed (BPI France, 2020[113]). Several regions have additional regional funds that complement the National Solidarity Fund set up by the French government and the regions. For example, The region Pays de la Loire created a Territorial Resilience Fund (Fonds Territorial Résilience). The Region Grand Est has set up Platform called “To be Stronger Grand Est” (Plus Forts Grand Est) to facilitate the connection between around 50 innovative companies and communities, companies, associations, healthcare establishments etc. in the regional to identify innovative products and service that could help overcome the crisis and rebound (regional governments websites and (BPI France, 2020[113])

·         In Germany, almost all Länder implemented support programmes targeting micro-enterprises, SMEs and the self-employed. Some of these, such as the “Corona Emergency Aid Programme”, are topping up the federal emergency aid programme. Among the main instruments are direct non-repayable grants (Hesse Thuringia, Schleswig-Holstein, Brandenburg, North Rhine-Westphalia, Hamburg, Bavaria), loans (Rhineland-Palatinate, Saxony, Schleswig-Holstein), liquidity loans or grants (Baden-Württemberg, Bremen, Mecklenburg-Western Pomerania), guarantees (Baden-Württemberg) or a mix of all these (e.g. Saxony-Anhalt Lower Saxony (Deloitte, 2020[114]). Baden-Wûrttember also supports start-ups affected by the COVID-19 crisis though development loans and its Start-up BW Pro-Tect". This programme, an expansion of the “Start-up BW Pre-Seed” early -stage funding, helps bridge short-term liquidity bottlenecks until the next financing round (Baden-Württemberg State Government (Germany), 2020[115]).

·         In Greece, the Thessaly regional government provides a support package of EUR 160 million (through the Thessaly NSRF 2014-2020) to support local companies manage the impact of the COVID-19 crisis. This package includes EUR 80 million through the programme “Reinvest and Invest in Thessaly”, EUR 50 million for employees of closed companies, and EUR 30 million as a non-repayable subsidy to strengthen the working capital of small businesses affected by the coronavirus pandemic (ΑΠΕ-ΜΠΕ, 2020[116]).

·         In Italy, simplification measures were introduced by 14 regions to streamline administrative and regulatory procedures for SMEs. These include deferring the application deadlines for public funding programmes and for reporting on investment plans subject to public incentives, and simplifying public procurement (OECD Trento Centre for Local development, 2020[106]). Many regional governments also established and strengthened complementary regional sections to the National Guarantee Fund for SMEs established by the central government. Many regions have adopted specific measures to support their SMEs, which be divided into six policy macro-areas: facilitating access to bank credit and reducing related cost; public financing; simplified procedures; labour and welfare; tax relief and planning and budgeting (OECD Trento Centre for Local development, 2020[106]). Among examples are Liguria which adopted specific measures to support tourism, trade and craft SMEs; Sicily with the “Sicily Fund” to increase SMEs liquidity, bank guarantees, bank moratoria and late payment schemes; Piedmont (e.g. Finpiemonte single fund and “Bonus Piemonte); Friuli-Venezia Giulia (subsidised loans, suspended payments on revolving funds, non-refundable grants for the tourism, commercial and craft sector, development of smart (tele)working plans); and Campania with its "Plan for the Socio-economic Emergency" focusing largely on micro-enterprises, SMEs and self-employed, etc. (OECD Trento Centre for Local development, 2020[106]; EU Committee of the Regions, 2020[111])

·         In Mexico, 26 of the country’s 32 federative entities designed fiscal measures to support companies and vulnerable populations face the economic impact of COVID-19 mitigation measures. Mexico City launched the “Integral Program of Contingent Support and Economic Reactivation to Address the COVID-19 pandemic in Mexico City”. It consists of an increase of MXN 500 million in the Social Development Fund that will serve to grant 50 000 credits of MXN 10 000 each to micro companies.

·         In the Netherlands, as part of the third economic support package announced on 28 August 2020, it is planned for municipalities to offer new services to independent entrepreneurs, such as additional training and reorientation starting in January 2021. This is part of the Programme “Temporary Bridging Scheme for Independent Entrepreneurs” (Tozo) (Dutch Government, 2020[117]).

·         In Sweden, support for SMEs and the self-employed (e.g. cash aid, loans and guarantees, and deferred tax payments) is the responsibility of central government agencies and ministries (Government of Sweden, 2020[118]). Meanwhile, regions and municipalities focus on giving “indirect” support to SMEs in their areas, such as providing expert support for restructuring the day-to-day business or preparing new business models (Region of Skane, 2020[119]). Municipalities have also deferred SME payments of fees and invoices for municipal services, introduced free parking, eased permissions and regulations, and advanced payments to their suppliers.

·         In Spain, regions actively support local economies and develop comprehensive responses to support SMEs and self-employed, complementing measures adopted by the Government of Spain, contained in Royal Decree-Law 8/2020. The Principality of Asturias for example provides a non-repayable aid to freelancers, grant a tax deferral for self-employed entrepreneurs, SMEs and micro-SMEs and a new credit line fully guaranteed by Asturgar to improve business liquidity to SMEs. The regional government of Madrid has passed a financial support plan of EUR 220 million for SMEs and self-employed, to help them cope with the economic impact of the crisis (economic aid and financing schemes). The Basque Country launched a set of measures including an extraordinary fund for SMEs and the self-employed, an emergency credit line at zero cost through the Basque Institute of Finance (IVF), a line of working capital guaranteed by the region at zero cost, refinancing and adaptation of the conditions on repayable advances, technical advice on the implementation of teleworking to freelancers and SMEs (EU Committee of the Regions, 2020[111]).

·         In Switzerland, to secure bank loans to qualified start-ups, the cantons pay 35% of the guarantee to complement the federal guarantee (65%) (OECD, 2020[4]). (OECD, 2020[107]).

·         In the UK, in addition to the support provided by the UK government in England, devolved administrations have received support to counter the effects of the outbreak, in particular help them support their regional economy. Wales set up an Economic Resilience Fund (ERD) whose third phase also includes a Lockdown Business Fund which will be delivered by local authorities to eligible small businesses. Impacted by the crisis (Welsh Government, 2020[120]). The Scottish government launched a helpline for small business to cope with the outbreak and set up a rescue package for business, which includes business rates relief for retail, hospitality and leisure sectors, grants to small businesses in sectors facing the worst economic impact of Covid-19, a Newly Self-employed Hardship Fund, a Pivotal Enterprise Resilience Fund (PERF), to support vulnerable SMEs which the government deems as vital to Scotland’s economic future, or to the economies of local areas throughout the country (OECD, 2020[107]).

·         In the US, in addition to the support measures included in the Coronavirus Aid, Relief, and Economic Security (CARES) package, many States and local governments have established their ow programmes for small businesses, including New Mexico, Ohio, Maine, Massachusetts, Michigan, New York, Oregon, Wisconsin and Florida. Several cities adopted measures to halt or defer financial burdens placed on small businesses such as paying utilities, taxes, or licensing fees by waiving for example financial penalties for late tax payment or deferring payment (Seattle, New Orleans, San Francisco). Other support measures are the creation a local relief fund with a blend of financing options such as Jersey City (redeployment of State Community Development Block Grant (CDBG) funds to small businesses), City of Philadelphia (Small Business Relief Fund to provide grants and zero-interest loans to impacted businesses), San Francisco zero-interest loan fund and city Resiliency Fund), Chicago (Small Business Resiliency Fund) or else Denver (Small Business Emergency Relief). Some cities also have created a central, online repository for resources and information for SMEs, providing enhanced consultancy support to businesses app or granted zero-interest emergency loans repayable (New York City, Los Angeles). (US National League if Cities, 2020[121]; OECD, 2020[107])

Pointers for action

·         National governments are well positioned to ensure “equal treatment of equals”, i.e. ensuring that similar SMEs in different parts of the country are treated in the same way, while regional and local are best informed of local circumstances and well-positioned to support their local businesses. Given the role of subnational governments in supporting SMEs, it is vital that national and subnational governments coordinate the policy responses to avoid duplication and loss of transparency in public measures.

·         Consider direct financial and fiscal support for local entrepreneurs and workers in the short-term, and turn to other forms of economic support in the medium- and long-terms, such as favourable pricing of land and buildings, eased loan and guarantee arrangements, easing permits and regulations, and equity financing.

·         Consider developing further structural policies to help SMEs adopt new working methods, including teleworking, digital technologies and green practices to strengthen their resilience and that of the region.

·         Adapt public procurement systems to provide adequate responses in the case of emergency and force majeure and support SME development.

Territorial approaches to support vulnerable populations
Vulnerable populations are doubly affected by the crisis. First, because they are often more at risk with from a health standpoint. Second, because they are particularly hard hit by the economic crisis. Subnational governments have undertaken proactive initiatives to manage the emergency and support vulnerable groups, including elderly people, people with chronic or long-term illnesses, disabled, poor households, homeless, underprivileged children and students, migrants, and other vulnerable populations, etc. Households without health insurance are also particularly vulnerable as they may be unable to access medical treatment, and may not be included in the case count. Indigenous communities are also particular fragile. Given the conditions in which these communities live, the threat of COVID-19 is aggravated due to factors ranging from poor health conditions and overcrowding, to the lack of access to adequate sanitation facilities. Indigenous populations are often also the most vulnerable in terms of economic consequences (Lustig and Tommasi, 2020[122]).

Social protection is a key responsibility of subnational governments (see section 1). In particular, municipalities, which are closer to the population, play a crucial role in social protection of the most fragile groups, which are physically and economically more exposed to the pandemic (OECD, 2020[110]).

Support measures to vulnerable groups are very diverse and include food/nutrition programmes for children and the elderly, meal and pharmaceuticals delivery, special care for the elderly and disabled people, emergency shelters and housing, vouchers to purchase essential goods, installation of sanitary facilities, exemptions or deferrals from rental payments for residents of social housing, mortgage payment assistance, waiver or relief of utility payments e.g. energy or water bill, emergency phone lines, engaging unemployed people in socially useful work, direct subsidies to pay for social services (e.g. early childhood services for children), prohibition of housing eviction, distribution of masks, etc. Subnational government expenditures related to social services and social benefits in EU regions and municipalities is anticipated to be the number one expenditure most impacted by the crisis (OECD-CoR, 2020[65]).

In some countries, local governments have worked with national government authorities, as well as with NGOs and community volunteers to meet the social challenges. In several countries, subnational governments also provide financial support to ensure the proper functioning of services provided by social economy organisations (EU Committee of the Regions, 2020[108]). These organisations have also been highly affected by the crisis, and they play a crucial role in in addressing and mitigating the impact of the COVID-19 crisis on vulnerable populations ( (OECD, 2020[123]).

Country Examples
·         In Australia, State and Territory governments announced fiscal stimulus packages amounting to AUD 11.5 billion (0.6 percent of GDP), which include cash payments to vulnerable households (IMF, 2020[124]).

·         In Canada, while the federal government doubled the Reaching Home Program that provides funding for the homeless, provinces and municipalities are also establishing emergency funding through family and community support services. Indigenous Services Canada (ISC) is working closely with the Public Health Agency of Canada, other departments, and provincial and territorial counterparts to protect the health and safety of First Nations and Inuit communities to support them in responding to public health threats, including the novel coronavirus.

·         In France, subnational governments, particularly the départements and municipalities, are monitoring and addressing the specific needs of vulnerable populations, including migrants. The départements have actively supported the most vulnerable since the beginning of the crisis to ensure the continuity of social services and protect and support the most vulnerable in the face of the health emergency. They support purchasing masks, reinforcing human and financial resources in retirement homes creating of emergency centres for youth and children in difficulty, setting up dedicated telephone numbers, etc. (Assemblée des Départements de France, 2020[125]). French cities are also major social actors, in particular through their municipal centres for social action (CCAS). For example, Rennes is implementing an emergency plan for the most disadvantaged, Nantes is strengthening aid to local NGOs that support vulnerable groups, and Toulouse, together with the national government, developed an emergency plan for homeless (France Urbaine, 2020[126]).

·         In Greece, the Ministry of Interior Initiative, in cooperation with the Central Union of Municipalities of Greece and with the support of the Ministry of Digital Governance, launched #CitySolidarityGR to help vulnerable citizens access supplies and services offered by organisations that expressed interest in contributing to the effort. Also in Greece, under the current emergency measures, local authorities must create a record of citizens requiring assistance, including the indigent. Vulnerable households will be assigned care workers who will ensure that such households receive necessary medicines and household supplies, as well as ensuring access to basic sanitation and health services.

·         In Iceland, the central government and local authorities established a contingency fund to provide scope for the necessary actions in social services and specific services for vulnerable groups to address the effects of COVID-19 (SAMBAD, 2020[127]).

·         In Ireland, on 2 April 2020 the government launched The Community Call to link local and national government with the community and voluntary sectors. The Community Call is overseen and managed by Local Authorities, led by the county Chief Executives. The forum involves an extensive list of state and voluntary organisations, and initially focuses on the elderly and vulnerable groups (Government of Ireland, 2020[128]). Several Councils (e.g. Offaly and Cork) established a centralised community support programme with a single phone number and email address to coordinate the work of statutory and voluntary agencies that help people in vulnerable situations,.

·         In Italy, the Government passed a EUR 25 billion package of economic measures to help Italian businesses and families, in March 2020. It includes an envelope of EUR 4.3 billion for municipalities allocated through the Municipal Solidarity Fund in the form of an instalment of the ordinary annual transfers to the municipalities. EUR 400 million were allocated to the 8 000 municipalities for food emergency to provide food/shopping vouchers for people in need.

·         In Korea, the government plans to consider medical service accessibility a critical element in the National Minimum Standards for Living Infrastructure, scheduled to be introduced in 2020, so that medical services will not be neglected in lagging regions. These Standards, part of a central and regional governments support for vulnerable groups, are designed to ensure that all people across the nation have easy access to infrastructure that is essential to their daily lives.

·         In Portugal, Lisbon provided financial support to various organisations that offer social support services to vulnerable groups (e.g. homeless, persons with disabilities, families with lower incomes, children, etc.), enabling them to ensure the continuity of their services throughout this crisis. The city increased the Social Emergency Fund for families, and created a network of volunteers to support the to performs various tasks that could support most vulnerable sectors of the population (i.e. senior citizens, persons with disabilities, patients under quarantine, etc.), including shopping for food and medication, pet care and maintaining social contact (e.g. as a way of preventing or detecting cases of domestic violence) (PES Group of the CoR, 2020[129]).

·         In Slovenia, municipalities are encouraged to cooperate with a network of professional and voluntary social service providers within their jurisdiction to provide services to vulnerable groups.

·         In Spain, local governments can allocate up to EUR 300 million from the 2019 budget surplus to finance expenses corresponding to social services, such as proximity home services, home telecare, homeless people assistance, purchase of individual protection equipment (masks etc.), or to guarantee income for families.

·         In the US, the CARES Act included USD 4 billion for Emergency Solutions Grants to help local governments and homeless providers to take action to reduce the risk of spread of COVID-19 in the homeless community and those at risk of homelessness, as well as to respond quickly where the problem presents itself most severely. An additional USD 65 million was dedicated to the Housing Opportunities for Persons With AIDS program that provides support for a particularly vulnerable population; USD 5 billion in supplemental funds for the Community Development Block Grant (CDBG) was allocated to fill the gaps not covered by other sources, with a particular focus on serving low- and moderate- income households and an additional USD 200 million allocated to Indian Housing Block Grant (IHBG) for tribes and USD 100 million for Indian CDBG (ICDBG) imminent threat funding that can be targeted to tribes with the greatest need.

Pointers for action

·         Consider providing additional grants to subnational governments to finance expenses corresponding to increased social service needs. In particular, establish temporary formula-based grants to compensate subnational government support given to vulnerable groups during the COVID-19 crisis. If necessary, such grants could be complemented with discretionary grants and other financial measures aimed at reducing financial burden of the most vulnerable populations.  

·         Clearly and regularly communicate the support available to vulnerable populations and how to access it, and simplify its allocation.

·         Provide financial support to social economy or civil society organisations that help vulnerable populations and mobilise networks of volunteers.

·         Ease administrative burden on services that ensure the continuity of core local services and are most effective in helping vulnerable groups (e.g. normative and fiscal regulations that hamper services for vulnerable groups). Ensure that measures are simple and speed up administrative processes during crisis and recovery.

·         Develop programmes targeted at indigenous communities.

·         Facilitate horizontal cooperation among municipalities to address the growth in vulnerable populations, and their shifting profiles.

Upscaling the use of digital tools in regions and cities
The COVID-19 crisis has accelerated several mega-trends and transformations, such as digitalisation. Digital government policy response to COVID-19 crisis spans different time horizons: react in the short term, resolve in the medium term and reinvent in the long term (UN, 2020[130]). Information-sharing, e-participation and two-way communication through the use of digital platforms permitted accurate reactions to the crisis in the short term. Public services, such as education and health care, shifted to a digital mode within in a few weeks’ time. Meanwhile, remote working is proving effective to reinforce social distancing and mitigate the economic impact of the crisis. COVID-19 has accelerated the digitalisation of public administration and public services delivery in regions, cities, and rural areas. In the medium term, subnational governments should leverage this experience to upgrade government digital services and enhance digital partnerships with other levels of government and the private sector. Nevertheless, unprepared and incomplete digitalisation poses significant challenges for regional and local governments, and the capacity to deal these varies significantly. The current crisis may widen these disparities, as many subnational governments were not necessarily prepared to go digital. In more remote and rural regions, digitalisation is likely to be particularly challenging if adequate IT infrastructure is lacking. In the long-term, greater convergence in the access to digital infrastructure would help address the urban-rural divide and increase the resilience of healthcare and public service delivery (UN, 2020[130]).

Subnational governments and the use of digital tools to track the pandemic
Regional and local governments are increasingly mobilising digital tools to track and stop the spread of the coronavirus. Expanded use of digital tools for tracking and information purposes in the pandemic has served to: (i) inform decision-makers, helping them adopt appropriate measures and contain the pandemic; (ii) to communicate with citizens transparently, strengthening trust, which is key to ensure compliance with containment measures.

Digital tools have been crucial for regions and cities to better manage their immediate response to the crisis. Some new applications helped reduce the spread of COVID-19, and supported the gradual lifting of confinement measures by informing citizens if they were in proximity of people infected by the virus, and if so, encouraging them to inform health authorities, isolate and request support. Data tracking, as well as accurate and timely reporting, are essential components of crisis management, and can help prevent – or at least minimise – additional waves. Strong network effect may be at play as digital tools efficiency is increasing with the number of users.

The use of these tools has also raised challenging questions regarding data protection and confidentiality. While acknowledging the benefits that tracking apps may bring to crisis management, they also affect the privacy of information. While in many countries the legal framework does not permit this type of data use, in others the use has been easier to implement. In order to minimise the risks regarding privacy and data protection, the European Commission, for example, has developed guidelines and a toolbox for developing COVID-19 related apps aiming to guarantee sufficient personal data protection.6

Making use of digital tools for data monitoring and reporting is also proving essential to keep citizens well informed and improve the interaction between citizens and governments. Many jurisdictions have developed specific web sites to disseminate information on the crisis’ development, communicating daily, for example, the number of cases and new measures adopted. Even when there is no dedicated website, most cities and regions around the world provide information about the pandemic situation on their own website, and provide links to their Ministry of Health’s website, their country’s national COVID-19 platform, or to the WHO website. The realisation of the potential benefits of digitalisation in this matter depends crucially on the relevance, quality and user-friendliness of the information being generated by the digital systems and made available to the public. To ensure a good and efficient use, it is important to involve key stakeholders (CSOs and other groupings of users of public services) early in the process of designing these systems.

Accelerated digitalisation of services at the local level and digital divides across places
Confinement measures have accelerated the digitalisation of services, broadening the range of services provided on-line, including online administrative services, e-education and e-health. Trends towards the digitalisation of services were increasing even before the COVID-19 crisis. Across OECD countries, access to government services through digital portals has tripled since 2006 (de Mello and Ter-Minassian, 2020[131]). Prior to the crisis, the results of a survey on the use of digital information systems by local governments suggested that, on average, the degree of digitalisation was larger for local services in spatial planning, construction, tourism and culture and sports, and smaller for social services.

·         Digitalisation of education: with more than 1.5 billion children outside of school during the confinement in spring 2020 (over 60% of the world’s student population) according to UNESCO, the COVID-19 crisis led to a massive shift towards e-education and online courses since March 2020 (UNESCO, 2020[132]). In a number of countries, local governments have broad responsibilities for delivering education policy. This puts them in the lead with respect to the digitalisation process, including in the current crisis context. Before the crisis hit, some regions and cities were spearheading the digital transition of education, particularly in Europe’s northern and western cities. Northern European regions, for example, provide a very wide range of digital services with online applications for admission, online monitoring of progress, and online learning materials (de Mello and Ter-Minassian, 2020[131]). With schools being closed, cities have been increasingly promoting the use of digital tools to continue classes. The challenge for local governments is twofold, as on the one hand they need to ensure online classes, and on the other they need to ensure equal access for all – a striking challenge especially in more disadvantages areas. Some cities (e.g. Fuenlabrada, Gdansk the Hague, and Madrid) are working to ensure equal opportunities for all pupils by providing low-income families with digital devices for their children to follow online school courses from home.

·         e-Health services: in a context in which social distancing is a critical containment and prevention factor, e-health services offer important benefits, and their use has increased significantly since March 2020. This is especially true of e-prescriptions and telemedicine. In the US, some preliminary research shows that as the number of COVID-19 cases increases, so does the population's interest in telehealth. Local and regional governments can encourage such developments, especially in countries where health care is more decentralised. While e-health may be also a way to deal with territorial inequalities in access to health, support from the central level is crucial to ensure that the distribution of e-health is balanced throughout the territory by supporting the development of institutional and technical capacities. Some barriers to wider use, like access to broadband, will be difficult to tackle in the short term, highlighting the need to strengthen health care provision in rural and low-resource settings (OECD, 2020[133]).

Digital divides across regions and across urban-rural areas
The pandemic has also helped reveal the digital divides within countries and has, in some cases, accelerated digital inclusion responses. In OECD countries, access to, and use of, the internet varies significantly within countries. Regional differences in the percentage of households with broadband access are strongly pronounced both in countries with a high ICT penetration, such as France, Israel, the United States and New Zealand, and countries with low average ICT access such as Mexico or Turkey (OECD, 2018[134]). In the US, for example, nearly 25% of 15 years old with disadvantaged backgrounds have no access to a computer. In the poorest regions of Italy, 42% of families have no access to a computer/tablet at home and 20% of 6-7 year-old children are in that same situation. In addition, substantial gap remains in access to high quality internet among urban and rural households. Across OECD countries, 85% of urban households vs 56% of rural households have access to high quality Internet (OECD, 2020[135]). This inequality gap risks being accentuated as some municipalities do not have the capacities to follow the digital transition in the short and medium term. To reduce this risk, local initiatives need to be accompanied by nation-wide initiatives to tackle the digital divide (de Mello and Ter-Minassian, 2020[131]).

e-Democracy at the local level
While there was a growing tendency among governments to adopt e-democracy tools (e-government, e-governance, e-deliberation, e-participation and e-voting), the pandemic has accelerated it. Regional and local governments, which were often reluctant to adopt such measures, have been forced by the circumstance to overcome this in order to ensure the continuity of their work. Proof of this is that many regional and local councils, for example, have moved to permit on-line debating and voting (de Mello and Ter-Minassian, 2020[131]).

Country examples
Use of digital tools to track the pandemic
·         In France, the Ministry of Health is leading the Programme Répertoire opérationnel des ressources (ROR) to develop an automatic-updated data repository for health resources (such as the availability of beds in each hospital). The ROR is managed in a decentralised manner, so each region has an ROR solution, but these solutions are interoperable so that the exchange across regions is ensured. During the COVID-19 pandemic, this programme is further tailored to identify and map out care units dedicated to coronavirus cases and normal health care resources to ensure a normal provision of health care (Ministry of Health, 2020[136])

·         In Italy, several regions developed different digital solutions for tracking and containing infection based on the analysis of movements and gatherings generated by anonymous data. For example, Lazio activated a portal for reporting gatherings called “Unique Alert System”. The Lazio Region also launched Lazio DrCovid, an app that provides secure bidirectional text-audio communications via smartphone between the citizen and their doctor. In some cases, it is also accompanied by diagnostic kits for home monitoring. Liguria, Lombardy, Sardinia and Umbria have started analysing phone records and interactions. Citizen health status is monitored in regions like Lombardy, which created the “LOM Alert” app. Piedmont has designed "COVID-19 Piedmont Region Platform" for the Regional Crisis Management Unit to track and monitor all the activities concerning patients with COVID-19. Puglia and Tuscany also have regional web platforms that support assistance, care and monitoring of patients from a distance.

·         Korea has developed and operated the COVID-19 Smart Management System to support epidemiological investigation. This system is based on the country’s smart city data hub technologies for collecting and processing a large volume of urban data. Korea has implemented this system for a wide range of statistics analysis to backtrack the movements of infected persons, identify transmission routes, or locate an infection source in a large-scale outbreak. The location data of the infected persons before they were diagnosed is collected from mobile base stations, credit card transactions, etc. within the permitted range under the Infectious Disease Control and Prevention Act. With full consideration of privacy, information deemed necessary is provided anonymously to the public so that people themselves can check whether they have crossed paths with the infected persons, and get tested if necessary.

·         In Mexico, the majority of the federal entities have activated contingent phone numbers to assist and inform permanently about COVID-19. In Chihuahua, Nuevo León and Querétaro, apps were developed to inform, register and guide people with symptoms or people already infected. In the case of Mexico City, the system “SMS COVID-19” was activated, in which the people with symptoms answer some questions that allow the identification of possible cases (acute or severe) of coronavirus.

·         In Norway, the government launched a mobile application called Smittestop, to help health authorities limit the transmission of the coronavirus. Using the data provided by the application, the Norwegian Institute of Public Health can analyse movement patterns in society and develop effective infection control measures.

Informing and engaging citizens
·         In Estonia, Järva Vald is using their community engagement app to info citizens on national and local level actions and guidelines to prevent and stop the spreading of the coronavirus. The engagement app publishes targeted question cards, feedback, calendar events, social media content and notifications. City officials can also detect how many users have seen the shared info and when (Open Government Parnership, 2020[137]).

·         In Korea, an interactive and up-to-date webpage was created, mapping out COVID 19-cases within the country, as well as the places that patients reported having visited. Authorities identified high-priority cases and back-tracked the routes of infected persons thanks to artificial intelligence and data driven measures via location data collected from mobile base stations, credit card transactions and data-mining of CCTV footage, then published extremely detailed lists of their whereabouts. Massive testing has also been the major strategy for combating the coronavirus (Government of Korea, 2020[138]).

·         Norway has developed digital solution to making the relevant data available to inform policy at both national and regional levels on COVID-19. The Norwegian National Institute of Public Health (NIPH) collaborated with The Norwegian Association of Local and Regional Authorities (KS) to generalize the use of the District Health Information Software 2 (DHIS2). This mobile phone application permits offline data capture, making it possible to generate analyses from data on health in real time (Skjesol and Tritter, 2020[139]).

Moving towards e-governance and digital services
·         In Canada, the province of Ontario developed its own website where businesses can directly indicate their ability to furnish emergency products (e.g. ventilators, masks, etc.), submit innovative solutions to fight COVID-19 by supporting virtual mental health services, provide financial advice for small businesses, or submit a proposal for ideas, other products or services that could help Ontarians. Canada has also introduced legislation that permits municipalities to fully conduct Council, local board and committee meetings electronically in local and province-wide emergency situations, empowering the municipalities to respond quickly when in-person meetings cannot be held.

·         In Germany, the city of Bamberg established an online platform with exercises and working materials for students. These serve a dual function, as they also relate to Bamberg’s cultural heritage. Dusseldorf is also turning to the internet and telephone for education support, as well as having developed a hotline for the elderly and other high risk populations to get help and advice ( (Eurocities, 2020[140]).

·         In Italy, Bologna’s Institution for Education and Schools (IES) has been offering online educational resources to families with children aged 0-6, to help and keep them entertained, educated and exercised without leaving the house. The municipality of Palermo, through its innovation office has created a “digital toolbox” that provides the tools, procedures and information necessary to work online. It includes essential information for municipal staff to work remotely at home. Some of the information included in the toolbox includes instructions for the management applications to work remotely at home, tutorials for using digital signature, to manage video meetings, to draft and share documents with colleagues on Google Drive, among others (Eurocities, 2020[141]).

·         In Netherlands, the law on digital decision making within municipality council meetings allows municipal councils to take legally binding decisions through a digital meeting.

·         In Spain, legislative adjustments were made to permit representative and governing bodies of local entities to hold remote sessions by electronic or telematic means.

Addressing digitalisation challenges: bridging the digital divide
·         In Iceland, the central government is taking measures to strengthen digital services and coverage within local authorities in the framework of the Second Phase of Economic Response Package to the COVID-19 Crisis. Vulnerable areas across the country are currently being identified and mapped (Government of Iceland, 2020[142]).

·         In Italy, the city of Milan has used dashboards to understand where citizens were located on the city map and how they could connect them to private sector offering services. Based in this data, and in partnership with a telecommunications company, the city was able to provide free internet access to vulnerable families connected to the internet (UCLG, 2020[143]). On 4 August, the European Commission approved a EUR200 million voucher scheme to help low-income households’ access high-speed broadband services and cover the provision of the necessary equipment. It aims to narrow the digital divide by supporting teleworking activities and granting increased access to educational services.

·         In Spain, in September 2020, nine Spanish regions benefited from a EUR 1.2 billion reallocation from the European Regional Development Fund to strengthen their healthcare system capacity, support SMEs, and develop ICTs in education in response to COVID-19.

·         In Portugal, in October 2020, the European Commission approved the reallocation of EUR 1 billion from EU Cohesion policy funds to support seven Portuguese regions, in response to COVID-19. Funds will support the digitalisation of schools, SMEs, and the tourism sector.

·         In the US, several States have adopted measures to bridge the digital divide. The NYC Education Department is making 300 000 internet-enabled iPads available to the highest-need students via an online survey or hotline; the City of Los Angeles is partnering with the California Emerging Technology Fund and EveryoneOn to provide options for low-cost internet, access to computers, and digital literacy services to its residents through its Get Connected program, as well as device and digital training resources; The City of Louisville has created a free internet for students page outlining free internet offers to families with students by ISPs operating in the area. The City of San Antonio (Texas) has announced a plan to invest over USD 27 million to address the digital divide in the city (NDIA, 2020[144]).

Pointers for action

·         Collect and share information and data among all levels of government in a timely, transparent, and regular fashion.

·         Support data and information dissemination across jurisdictions to help manage the inter-jurisdiction disparities and uncertainties generated by a crisis, and to promote knowledge-sharing and good practice exchange.

·         Strengthen the quality of micro-level data within and between regions to improve understanding of the crisis and its impact.

·         Take advantage of the insights that digital tools and big data offer to track and stop the spread of the coronavirus, but give equal consideration to matters of data privacy and data protection.

·         Use digital opportunities (e.g. e-health, e-education) to help ensure continued service delivery, being sensitive to territorial, economic, and social disparities in access. Encourage good practice exchange in this area among local authorities, and frequent users (e.g. medical professionals, teachers, students, etc.).

·         Introduce measures to overcome the digital divide in crisis recovery strategies plans and investment plan and strengthen the support from the central level for the digitalisation processes especially for SMEs, poorer urban, and remote, rural communities.

·         Create incentives for subnational government cooperation to build digitalisation opportunities across jurisdictions, for example through financing possibilities.

·         Encourage the development of pilot projects on digitalisation at the local level to test, experiment and encourage innovation by local governments.

Supporting subnational finance
The expenditure effects of COVID-19 on subnational governments are considerable, especially in countries with decentralised service provision, and the revenue effects are even greater. Without sufficient compensation for the extra spending and the revenue losses caused by COVID-19, many subnational governments could be forced to implement sharp cuts on operating and capital spending. This could endanger the efforts for a coordinated recovery response, and weaken the equity and quality of service availability among subnational governments.

Many central governments have announced considerable fiscal measures to help subnational governments cope with the fiscal shocks. State governments in federal countries have also announced measures to support local governments. Two-thirds of OECD countries have adopted measures in support of subnational government finance.

The measures implemented in countries can be classified into four categories (Figure 17). They include revenue-side measures), expenditure-side measures (e. financial management measures and measures related to fiscal rules and debt, including to facilitate the use of debt for short and long term needs. Fiscal rules, whose purpose is to mitigate subnational fiscal risks through the imposition of constraints on fiscal policy, are susceptible to pro-cyclical tendencies if they are too rigid or subject to short time frames. During a crisis, it may be possible to relax such rules along two lines, either formal escape clauses that can be triggered by prescribed circumstances, and/or an effective suspension of the rules in practice when it is unreasonable to expect subnational governments to comply (OECD, 2020[68]).

Revenue-side measures and more flexible fiscal rules seem to be the more frequently applied measures, although measures to improve financial management are also quite widespread. For example, 46% of CoR-OECD survey respondents –– report that some fiscal rules have been relaxed or are planning to be (18%) in the near term (OECD-CoR, 2020[65]).

Figure 17. Four main categories of fiscal instruments to support subnational finance

 

Source: Authors” elaboration

These measures can be further divided according to the time span of the effects. For example, subnational governments grant permit a relatively quick compensation of lost tax revenue and increased expenditure. Transferring or creating new taxes or providing more taxing powers to subnational governments are effective in the medium and long terms, but not always adequate for responding to immediate needs. Also transferring service responsibilities from subnational governments to central governments is likely to be slower than transferring additional resources to subnational governments to secure service provision. Some measures are meant to be temporary, others can be implemented in a more permanent way.

Increases in central or state government transfers are likely to be insufficient to fully offset decreased revenues from taxes, user charges and tariffs, and property income. Furthermore, in the longer term, central government transfers will probably be cut to rebalance public budgets and restore fiscal stability, for example through future austerity measures. While in the short term the support from higher levels of government may help fill the fiscal gap created by the crisis, subnational governments need to prepare for the crisis recovery phase, and possible consolidation plans. The crisis is likely to have negative medium and long term effects on subnational government finances. Reforms that ensure the stability, the operational capacity and the resilience of subnational finance are important, and should be carefully planned and implemented.

Support to subnational government finance can also be indirect, by supporting related entities, such as public transport agencies, energy companies and other utility companies. In Germany, the federal government will take over the costs of housing benefit for welfare recipients from the municipalities (EUR 4 billion) and support local public transport networks (EUR 2.5 billion) (BNP Paribas, 2020[145]). In Latvia, municipal capital companies, whose turnover has decreased by 50% due to the COVID-19 crisis, may receive a state budget loan to increase the company’s share capital in order to finance its maintenance costs. In the US, the CARES Act includes USD 25 billion for transit agencies to compensate for part of the revenue gap.

The methods used to prepare these measures vary from country to country, depending on existing inter-governmental fiscal relations, and the culture and practices of dialogue and negotiation between the central and subnational governments. In countries where fiscal coordination is already well developed and effective, support measures have been developed and discussed between the different responsible ministries and representatives of subnational governments. In several countries, the discussions about urgent support, compensation schemes and other financial measures have been discussed and agreed upon with the national associations of subnational governments, resulting in formal agreements or more informal deals.

Country examples
·         In Australia, the Australian Government, States and Territories signed a cost sharing arrangement at the start of the COVID-19 crisis to cover the public health costs incurred by States and Territories in treating the virus. On 29 May 2020, a new 2020-2025 health reform agreement was signed by the Commonwealth and the states and territories. It includes a guarantee to all states and territories that no jurisdiction is left worse off as a result of the COVID-19 pandemic (Federal Ministry of Health, 2020[146]). In addition, the Australian Government, in co-operation with the state jurisdictions and local government, is further examining and discussing methods of identifying the pandemic’s impact at the small area level (sub-state regions, local governments) and developing targeted recovery and reconstruction assistance that might be required in the medium and longer term.

·         In Belgium, regional governments announced support measures for local finance. Wallonia’s municipalities are now allowed to increase their budget deficit, and encouraged to use their reserves or to borrow to boost local economic recovery (La Libre Belgique, 2020[147]). In Flanders, the Flemish Government adopted several measures to support municipalities, for example: a grant of EUR 15 million for poverty reduction as a result of the COVID19 pandemic; an emergency fund of EUR 87 million to support local authorities in the culture, youth and sport sectors; and a fund to stimulate sustainable mobility (e.g. local improvements for walking and cycling). Flexibility has been allowed for the local budgets (subject to monitoring coronavirus impact) (Flemish Government, 2020[148]).

·         In Brazil, the federal government announced a package of measures for states and municipalities amounting to BRR 85.5 billion to face the impact of the COVID-19 pandemic. On April 1, the Ministry of Economy relaxed the rules for entering into contracts with states and municipalities and loosens rules around processes for payment of these contracts. On April 13, a new package of measures for states and municipalities was adopted bringing total support up to BRL 127.3 billion. It includes additional combination of direct transfers, suspension of debts with the federal government for six months and suspension of payment of debts with public banks in 2020 (BNP Paribas, 2020[145]).

·         In Bulgaria, as part of the 2021 Draft Budget Proposal released in October 2020 the central government plans to provide additional transfers to municipalities to compensate their costs in relation to the adverse impact of the COVID-19 crisis. To this end, an additional BGN 15 million will be transferred to the municipalities in 2020, and BGN 30 million in 2021. (National Association of Municipalities of Bulgaria, 2020[149]).

·         In Canada, the federal government announced a CAD 2.2 billion aid package to help municipalities. The aid will come via an advance through the Federal Gas Tax Fund. This is a fund that municipalities receive twice a year but the federal government is making the 2020/21 payment in full. Municipalities have been asking for CAD 10-15 billion to help them offset negative effects of COVID-19 layoffs, property tax, and other shortfalls like transit and road projects. The federal government said that the Federal Gas Tax Fund advance is just the first step in helping the cities and that it is necessary to discuss with provincial governments to decide what happens next. Provinces, which have jurisdiction over the municipalities, have also started to provide exceptional support to municipalities. For example, on 27 July 2020, the Ontario government, in partnership with the federal government, provided up to CAD 4 billion in urgently needed one-time assistance to its 444 municipalities. This funding will help Ontario’s local governments maintain the critical public services, including public transit, over the next six to eight months. This funding is part of the province's Made-in-Ontario plan for renewal, growth and economic recovery (Province of Ontario, 2020[150]).

·         In Colombia, on 21 May 2020 the Colombian government announced a series of fiscal measures, including: more flexibility in the use of several sources of income to finance extraordinary operating expenditure (which are normally earmarked); the possibility to use resources from the National Pension Fund of Territorial Entities (Fonpet); the possibility to contract short-term borrowing (credit lines) that will not be counted in indebtedness ratios; and a relaxation of debt rules.

·         In the Czech Republic, a bill to mitigate the impact of a decline in 2020 municipal tax revenues was adopted on June 8. Each municipality should receive a bonus of CZK 1 200 per inhabitant, wamounting to almost CZK 13 billion (EUR 0.5 billion) (Government of the Czech Republic, 2020[151]).

·         In Denmark, fiscal rules have been temporarily eased for municipalities, as municipalities are allowed to exceed expenditure ceilings in case of coronavirus-related operating expenditures (Information, 2020[152]). To support investment, expenditure ceilings for investment are lifted. Following a concertation between the central government, the national association of local governments and Danish regions, it has been agreed that the regional transport companies will receive full compensation for additional expenses and loss of income as a result of COVID-19 throughout 2020. (KL, 2020[153])

·         In Estonia, municipalities will receive a financial support package of EUR 100 million from the central government to compensate the loss of revenue, to cover extraordinary direct costs of the crisis borne by municipalities, and to finance additional public investment that can stimulate economic recovery.

·         In Finland, the government decided in June 2020 to support municipalities and hospital districts with EUR 1.4 billion in the fourth supplementary budget of the state government. The compensation scheme for municipalities is based on formulas, which aim to take into account the extra costs and revenue losses experienced by municipalities. In addition to direct support to municipalities, the government will compensate directly to hospital districts the extra care costs caused by coronavirus treatments. This will ease the burden of individual municipalities because hospital districts are joint municipal authorities (Ministry of Finance of Finland, 2020[54]).

·         In France, an emergency plan of EUR 4.5 billion will take into account the fiscal situation of the different levels of government and within the context of particular category e.g. touristic municipalities. The emergency plan will focus first on municipalities (EUR 1.8 billion) and departments (EUR 2.7 billion), to help them meet increased social spending requirements. The emergency plan comprises three main components: i) subnational governments will have the possibility to record COVID-19 related operating expenditure in a special account and to amortise them over three years or even to finance them through borrowing; ii) the current Support Grant for Local Investment (Dotation de soutien à l’investissement local or DSIL) will receive an additional EUR 1 billion; iii) guaranteed resources in 2020 for municipalities, based on government compensation for the loss in tax revenues and a portion of user charges (e.g. car parks), calculated by comparing the revenue in 2020 to the average for 2017 to 2019. Fiscal measures in favour of the regions have been announced in a State-regions agreement signed between the regions and the central government, which provides, among others, he transfer of a portion of VAT to the regions to replace the regional share of CVAE.

·         In Germany, the federal and state governments have decided in September 2020 on an aid package to support cities and municipalities during the COVID-19 crisis. This measure aims to maintain municipalities’ investment capacity in the coming years. In particular, German municipalities have been strongly hit by a decrease in trade taxes, their main source of revenue. According to this aid package, the central government should cover for half of the municipalities' local business tax losses for 2020, and Länder should cover for the other half. In addition, the central government will further contribute to the costs of accommodation and heating of municipalities. The government also decided on a permanent higher federal share in municipal welfare spending, additional capital grants for Kindergarten, hospitals, public transport, digitalisation and local health services. This federal support comes on top of support provided by the Länder to the local governments. In particular, the Länder have decided to loosen the fiscal rules applied to municipalities by suspending the balanced budget rule, suspending the duty for cutback measures and for spending freezes. In addition, regulation for short term credits has been eased. For the Länder, the Federal Government compensates declining revenues and provides additional grants to compensate crisis spending.

·         In Iceland, in the framework of the Supplementary Budget for 2020 the central government is providing municipalities with an extra grant of ISK 30 million to address the challenges posed by Covid-19 in social services and child protection. This grant is dedicated to the most sparsely populated municipalities of the country (Ministry of Transport and Local Governmment of Iceland, 2020[154])

·         In Italy, financial support to local authorities has been allocated mainly by the decree-law n. 34/20 ("relaunch decree") and by decree-law n. 104/20 ("August Decree"). Some measures include compensations for additional costs incurred by municipalities, provinces and metropolitan cities facing the pandemic (EUR 3.2 billion). Most recently, the central government dedicated EUR 40 million to support those municipalities particularly affected by the health emergency exercise their social and economic functions. In addition, the fund allocates EUR 400 million to local public transport companies and regional railways. The Technical Committee allocated an additional EUR 1.7 billion and EUR 2.6 billion to regions and autonomous provinces, respectively, on the basis of the respective loss of tax revenues. These funds are targeted to finance essential expenses in health care, assistance and education and lost tax revenue (IRAP). Finally, a fund was established to support the financial recovery of municipalities with a structural deficit. The Decree N°34/20 also supports the debt of local authorities, by enabling municipalities to renegotiate or suspend mortgages and other forms of loans contracted with banks, financial intermediaries and Cassa Depositi e Prestiti during 2020, and established a fund of EUR 12 billion to ensure an advance of liquidity for the payment of certain liquid and due debts of regional, autonomous provincial and local authorities and national health service bodies in 2020. (Chamber of deputies, n.d.[155]).

·         In Korea, the government implemented several financial packages to stimulate the economy, including measures to support local governments. The First Financial Stimulus Package of KRW 4 trillion included a policy support related to internal and local tax. The 2020 Supplementary Budget amounted to KRW 11.7 trillion including support to most severely hit areas for Daegu City and North Kyeongsang Province (MOEF, 2020[156]; Government of Korea, 2020[138]). Support to local governments, in particular for the recovery, are also included in the Korean New Deal.

·         In Luxembourg, in a circular of May 2020, the Ministry of Interior indicated the possibility of activating several mechanisms to limit municipal budget deficits and offset and cope with spending needs, including the use of rainy days funds and borrowing.

·         In Mexico, the Stabilisation Fund for Federal Entities (Fondo de Estabilization de Ingresos de las Etidades Federativas (FEIEF) is a rainy day fund managed by the federal government. It provides additional revenues to federated entities when grants from the central government are reduced in times of fiscal stress. Its resources come from oil revenues and federal contributions, which are declining. In addition (Fitch Ratings, 2020[157]). However, the government is considering additional measures to ease the financial pressure on state and municipal governments, including federal transfers and modifying some regulations to allow greater access to financing on capital market.

·         In the Netherlands, the government and the association of municipalities (VNG) concluded agreements on the compensation of various additional costs and lower income due to the coronavirus measures. For the moment, this involves approximately EUR 1.5 billion. In some areas, specific agreements have been made about how compensation levels from fellow authorities will move with the crisis, such as compensation for loss of income, extra costs of regional municipal health services (GGD) and safety; extra costs arising from the Temporary COVID-19 Act, including in ​​Supervision and Enforcement; extra costs related to public transport; and temporary self-employment income support and loan scheme (Tozo).

·         In Norway, municipalities were compensated for the effects of the COVID-19 outbreak with a total of NOK 6.5 billion. This includes a compensation scheme of NOK 1 billion for pre- and after-school care and day care. Compensation to county authorities amounts to NOK 1.5 billion, related to loss of revenue in public transport (Government of Norway, 2020[158]). In April 30, the Norwegian Association of Local and Regional Authorities (KS) estimated the extra expenditure and revenue loss in 2020 would amount to NOK 12.5–20 billion for municipalities and NOK 5.5–6.8 billion for county municipalities (KS, 2020[159]).

·         In Portugal, municipal expenditures incurred to combat the COVID-19 crisis will fall outside the debt limits provided for in the Local Finance Law. The relaxation of balanced budget rules and spending rules were also approved. Furthermore, the authorisation of short-term loans was simplified and recourse to medium long term borrowing was facilitated (i.e. no prior authorisation needed from the municipal assemblies). In addition, local authorities can request advanced/early transfers of their portion of state taxes. Support to municipal treasuries also includes the possibility of using accumulated fiscal year balances of past years.

·         In the Slovak Republic, the Lex Korona Package announced on March 31 provides support measures to cities, municipalities and higher territorial units (regions) in order to help them finance extraordinary expenses and fill the loss of tax revenues. Until the end of 2021, local governments will be able to use reserve funds, capital income and loans for their current expenditures. In addition, several budgetary rules have been softened, such as the possibility to receive advances from public funds, relaxation of fiscal discipline rules, including possibility to incur a budget deficit (Slovak Republic Ministry of Finance, 2020[160]).

·         In Slovenia, the draft budget for 2021 mentions the adequate financing of municipalities, and highlights their needs. It recognises that the country’s development is based on the development potential of municipalities, and their role in the absorption of European funds. In November 2020, the Committee on Internal Affairs, Public Administration and Local Self-Government discussed and approved the proposal for the Financial Relief of Municipalities Act (ZFRO). The basic proposal of the ZFRO is that the state will take over the financing of compulsory health insurance from municipalities for unemployed Slovenian citizens and foreigners. Other measures include additional funding for municipalities with Roma settlements, enabling municipalities to borrow for “soft” investment European projects, and the more flexible use by municipalities of investment subsidies from the state, to be used as current transfers ( (ZMOS, 2020[161]; Republic of Slovenia, 2020[162]).

·         In Spain, the Royal Decree-Law 8/2020 on extraordinary urgent measures to face the economic and social impact of COVID-19 includes a measure to support local finance. Local governments are allowed to use their surplus to finance expenses corresponding to social services. An Extraordinary Social Fund was also created. At the regional level, the “shock plan” presented by the government includes several measures to provide the Autonomous Communities with more resources to combat the coronavirus and mitigate the emergency’s economic effects.

·         In Sweden, in September 2020, the central government presented amendments to the 2020 budget and its budget proposal for 2021. It approved an additional SEK 10 billion in general transfers to municipalities (receiving 70% of the total subsidy) and regions (30%) for 2021 and SEK 5 billion for 2022. This is in addition SEK 5.5 million in support to municipalities to cover COVID-19-related costs in 2020, including enhanced crisis support, counselling and trauma support for staff working in health care and elderly care. The government is also investing SEK 250 million for 2021–2023 to establish a new municipal delegation. The purpose is to support individual municipalities and regions with major challenges (Ministry of Finance of Sweden, 2020[163]).

·         In the UK, additional resources for devolved administrations are allocated to the three devolved nations to cover health expenditure, local government support, and public transport expenditure. The global envelope of almost GBP 7 billion of funding is broken down into GBP 3.5 billion for the Scottish Government, GBP 2.1 billion for the Welsh Government and GBP 1.2 billion for the Northern Ireland Executive. The devolved administrations decide how to respond to COVID-19 in their areas (COE, 2020[164]).

·         In the US, in the framework of the Coronavirus Aid, Relief, and Economic Security (CARES) package of USD 2 trillion, USD 150 billion in grants were set aside to help state and local governments cover costs directly related to the coronavirus. It established the Coronavirus Relief Fund (CRF), of USD 150 billion, and the Education Stabilization Fund, of USD 30.75 billion, both of which provide funding to state and local governments. The CRF can be used in support of not previously budgeted expenditures related to the coronavirus that are incurred between March 1 and December 30, 2020 (Driessen, 2020). This may include for instance extra costs in the area of housing (homelessness and rental assistance), food assistance, and public health. In addition, the Families First Coronavirus Response Act, raised the share of Medicaid allocated to States by 6.2 percentage points. Furthermore, to help state and local governments manage cash flow stresses caused by the coronavirus pandemic, the Federal Reserve established a Municipal Liquidity Facility that will offer up to USD 500 billion in lending to states and municipalities (Federal Reserve, 2020[165]).

Pointers for action

·         Foster multi-level and multi-stakeholder dialogue and fiscal coordination, including with national associations of subnational governments and other consultative bodies, on the crisis’ fiscal impact, using shared evidence and data, and a forward-looking perspective.

·         Help subnational governments reduce the gap between decreasing revenues and increasing expenditures resulting from  the COVID-19 crisis to avoid underfunded and unfunded mandates and possible sharp cuts in subnational operating and capital expenditure, and help subnational governments participate in recovery plans: 

o    Develop special grant schemes by central governments, and states in federal countries to help close fiscal gaps.

o    Explore fiscal tools and measures, including tax arrangements, easing fiscal rules and access to external financing (debt), and introduce more flexible, modern and innovative financial management tools. Some measures should remain temporary while others could be more permanent.

o    Focus on reviewing subnational financial management and strengthening expenditure and revenue effectiveness as a means to contribute to restoring fiscal stability over the medium and long terms.

o    Undertake a comprehensive subnational government finance review to improve fiscal resilience and flexibility, through a better balance in revenues sources (between taxes, grants, debt, and other revenue sources) and spending assignments, sufficient autonomy, and reactivity to adapt to spending needs and revenue shortfalls especially in times of crisis.

·         Consider the differentiated impact of the crisis in national-level support to subnational governments:

o    Evaluate the degree of asymmetry and differentiate aid schemes to align with the asymmetric impact of COVID-19.

o    Distribute fiscal support to subnational governments in a transparent manner.

o    Consider giving greater weight to subnational governments with higher shares of elderly, children and poor, in order to account for the higher costs of service delivery during the COVID-19 emergency.

o    Review and strengthen existing equalisation mechanisms to smooth the impact of crisis and reduce regional and local disparities and promote greater social inclusion.

·         Ensure that that COVID-19 assistance packages support subnational government services past 2020 and promote multi-year approaches:

o    Design support packages that can be implemented and adjusted over several years to account for time-delayed effects.

o    Assess the effectiveness of support measures.

o    Promote multi-year planning and budgeting at subnational levels to enable fiscal systems to adapt to changes in revenues and evolving spending needs.

o    Establish stabilisation or rainy day funds, or encourage subnational governments to do so individually.

·         Improve the collection, dissemination and exchange of reliable and transparent fiscal data on subnational government finance (financial flows, assets and liabilities).

·         Encourage subnational governments to conduct prospective/foresight fiscal analysis and to prepare fiscal emergency plans

Invest in ICT and e-government tools for fiscal and financial management and skilled financial managers to help financial decision and management, especially in times of fiscal crisis

Public investment recovery strategies
National investment recovery strategies
Immediate fiscal responses to COVID-19 focused on supporting firms and households. Since June, many national governments have announced large economic recovery packages, focusing largely on public investment. These investment recovery packages prioritise three areas: (i) strengthening health systems; (ii) digitalisation; (iii) accelerating the transition to a carbon neutral economy. The OECD and the IMF have made a strong call to scale-up public investment to address the challenges for COVID-19 recovery, and subnational governments play a key role as they are responsible for 57% of public investment in OECD countries.

Quality infrastructure investment is part of the answer to the COVID-19 crisis. National and subnational governments need to invest more – by better exploiting the existing and potential fiscal resources for investment and mobilising private investment. The IMF Fiscal Monitor estimates that a 1% GDP increase in public investment in advanced economies and emerging markets has the potential to push GDP up by 2.7%, private investment by 10%, and to create between 20 and 33 million jobs, directly and indirectly (IMF, 2020[124]). Local, regional and national governments also need to invest in a smarter way, by prioritising needs, focusing on post crisis priorities in health, digital and environment infrastructure and better managing public investment at all levels of government (OECD, Forthcoming[166]).

The demand for infrastructure was already high before the COVID-19 crisis, not only for new construction but also for operating and maintaining existing stock. The OECD estimates that USD 95 trillion in public and private investment will be needed in energy, transport, water and telecommunications infrastructure, globally, between 2016 and 2030 (OECD, 2017[167]). Cities and regions have important needs for maintenance and new investment in renewable energy, low-carbon buildings, energy efficiency, waste and pollution management systems, and clean public transport. Developed countries will have to invest heavily in infrastructure, in particular to maintain, upgrade or replace existing (and often obsolete) infrastructure. US infrastructure, for example, is in need of investment, according to the American Society of Civil Engineers, which estimates that the US needs to spend some USD 4.5 trillion by 2025 to repair the country's roads, bridges, dams and other infrastructure, such as schools and airports. Similar issues are evident in Europe. In Germany, for example, the KfW, Germany’s state investment bank, calculated that municipalities need to spend at least EUR 138 billion to bridge the backlog of urgent infrastructural investments.

Investment recovery strategies need to be well targeted to a few priority areas, and how these strategies are managed largely determines their outcomes, as highlighted by the OECD Recommendation on Effective Public Investment across Levels of Government (OECD, 2014[168]). Recovery investment strategies should align with ambitious, long-term policies to tackle climate change and environmental damage. Post-crisis recovery strategies are a unique opportunity for governments to allocate recovery funds to sustainable initiatives and take measures to reduce the carbon-intensity of economic activities. Technologically advanced, sustainable and resilient infrastructure can pave the way for an inclusive post-COVID economic recovery (WEF, 2020[169]). It is also essential to look beyond physical infrastructure investment, and consider investment needs in skills development, innovation and R&D. It is particularly important to ensure that investments from stimulus packages do not impose large stranded asset costs on the economy in coming decades, for instance because they bet on declining technologies or place projects in high-risk flood zones (World Bank, 2020[170]).  It is important for these investment recovery strategies to have an explicit territorial dimension. Although this seems to be more visible in some countries, for example in Australia, Canada or France, it is still a challenge in many. It is also crucial to actively involve subnational governments in their implementation early on, and not only municipalities but regions as well.

It is important to draw some lessons and avoid mistakes made with the 2008 crisis when considering investment recovery strategies associated with the COVID-19 crisis (OECD, 2020). While many public investment projects can be launched in the short-term, care must be taken not to focus on speed as the only criteria. The risks are also to atomise the allocation of the funding in a myriad of small infrastructure projects to spend the money rapidly, at the expense of long-term priorities (e.g. sustainability and resilience). In the implementation of investment recovery strategies in 2008-09, a large part of the funding was fragmented into small projects at the municipal level – rather than the regional level. For example, while Spain’s 2008 investment recovery plan allowed for joint applications through the state fund for local investment, most municipalities did not use this option. Only six out of more than 1 000 associated municipalities applied for project funding (OECD, 2013[27]). For COVID-19 recovery, intermediary levels of government – regions, states, provinces – should be included in implementing national investment recovery strategies.

The European Union Recovery Plan
The EU has redirected a significant level of funds to help Member States tackle the COVID-19 crisis, for example:

·         EUR 37 billion from the EU budget is available to support healthcare systems, SMEs and labour markets through the Coronavirus Response Investment Initiative;

·         up to EUR 28 billion in structural funds from 2014-2020 national envelopes not yet allocated to projects are eligible for crisis response;

·         up to EUR 800 million from the EU Solidarity Fund are directed at the hardest hit countries by extending the scope of the fund to public health crises.

The EU also adopted measures to ensure additional flexibility in the use of structural funds. Through the Coronavirus Response Investment Initiative Plus, Member States can transfer money between different funds to meet their needs. Resources can be redirected to the most affected regions, thanks to a suspension of the conditions on which regions are entitled to funding. Finally, Member States can request up to 100% financing from the EU budget between 1 July 2020 and 30 June 2021 for programmes dealing with the pandemic’s impact.

The EU has enabled maximum flexibility in the application of EU rules on:

·         state aid measures to support businesses and workers

·         public finances and fiscal policies, e.g. to accommodate exceptional spending

Unlike in 2008, in 2020 the EU strongly mobilised cohesion policy to address the COVID-19 crisis, lifting or modifying the rules that apply to European Structural and Investment Funds.. As of October 2020, more than100 programmes were changed to respond to the COVID-19 crisis.

On July 21, the EU announced that EUR 390 billion would be distributed as grants and EUR 360 billion would be available in loans to Member States, in this way introducing the fiscal stimulus package of EUR 750 billion announced in late May 2020. To fund the package, the EU proposes borrowing up to EUR 750 billion on financial markets (European Council, 2020[171]).

Supporting subnational public investment
The risk of using public investment as an adjustment variable is high post COVID-19, given the contraction of self-financing capacities and increasing deficits (OECD, 2020[17]). The scissor effect on subnational public finance, i.e. an increase in expenditure and a decline in revenue, could lead to increased deficits and short and long-term debt. This may lead to fiscal consolidation plans in the medium term, as after 2010, leading to potential cuts in public investment and undermining recovery.

To a large extent, the fiscal impact of the COVID-19 crisis on subnational governments depends on the support provided by central or federal government to maintain, or boost subnational investment through stimulus packages (capital transfers), as well as to build the capacity of subnational governments to access long-term borrowing. While watching the sustainability of public finances over the longer-term, it is important for countries to avoid replicating the scenario that took place after 2010, when drastic cuts in subnational public investment created a pro-cyclical effect impeding the recovery. In some regions and cities, public investment projects are already cancelled or postponed.

In June/July 2020, 31% of EU subnational governments respondents to the OECD-CoR survey were active providing public investment stimulus measures (OECD-CoR, 2020[65]). Regions were more active at providing public investment stimulus than municipalities, with 40% of regions having done so to a large extent compared to 26% of municipalities COVID-19 exit plans and recovery strategies are being used by 42% of subnational government respondents to promote the greening of their agenda, and 28% are considering to do so. Regions (50%) and large municipalities are particularly interested. More than two-thirds of regional and municipal respondents state that the transition to a sustainable and low-carbon economy should shape long-term regional development policy to a large extent. This contrasts with the fact that less than 50% of respondents are considering the use of exit plans and recovery strategies to promote a greening policy or sustainability agenda. It is critical that subnational governments make the most of their recovery strategies by integrating green and climate priorities.

Different instruments are being activated to maintain, or even accelerate, public investment projects at the subnational level (Figure 18). In addition to improving self-financing capacity i.e. gross savings, these include various classical fiscal instruments: relaxing budget rules, increasing capital transfers and subsidies, easing the access to long-term projects on both credit and financial markets and supporting projects preparation and implementation. Other financing mechanisms may be activated in the future such as public-private partnerships schemes or equity financing.

Figure 18. Boosting public investment at subnational level

 
Source: Authors’ elaboration
Country examples
National investment recovery strategies
·         In Australia, the AUD 1 billion COVID-19 Relief and Recovery Fund supports regions, communities, and industry sectors that have been most strongly affected by the COVID-19 crisis. This includes a regional package of more than AUD 550 million to support regions to recover from the impact of COVID-19 (as part of the 2020-21 Budget), mainly targeted at regional tourism recovery, the improvement of broadband and health services in rural areas, primary industries, and agriculture. In addition, in June 2020, the Australian Government announced a AUD 1.5 billion stimulus package in response to COVID-19 for local road and community infrastructure projects to be delivered by local governments.

·         In Estonia, part of the EUR 100 million government financial support package helps municipalities finance additional public investment that can stimulate economic recovery.

·         In Germany, at the beginning of June, the federal government adopted a “package for the future”. It targets investment in digital and clean technologies, education and the health sector. Additional spending will focus on R&D projects, e-mobility, e-government, and mobile and broadband networks. With the new package, the government uses the recovery as an opportunity to boost investment and address some of Germany’s longer term challenges, such as digitalisation and climate change.

·         In Iceland, the government and local municipalities are initiating a special investment programme within the framework of the economic response package to the COVID-19 crisis. The investment programme will focus on transport, public construction, and technology infrastructure. It also includes financial support for the tourism sector. Additional measures aim to facilitate municipal investment. These include a temporary VAT refund for work performed until end of 2020, special support for municipal sewage projects, and grants from the Local Government Equalisation Fund to finance construction projects to improve access for people with disabilities to municipal property, structures and outdoor areas. Municipalities are authorised to temporarily deviate from the budget balance and debt rules in order to have more leeway to investment (Parliament of Iceland, 2020[172]).

·         In Korea, the Korean New Deal, announced on July 14, plans to invest KRW 160 trillion (to create 1.9 million jobs by 2025 based on two policies:, the Digital New Deal and Green New Deal, offering overarching policy support to strengthen employment and social safety net. The Korean New Deal includes projects such as the renovation of around 230 000 buildings to be energy-efficient and the production of 1.13 million electric cars over the next years (Korean Minister of Economy and Finance). The President announced that the Korean New Deal will take a regional approach to rebalance territorial development in regions outside of the greater Seoul. The government plans to add balanced regional development to the economic plan, including digital and green initiatives. Projects included will be developed by local governments and by state-run organizations located across the country. Local projects will include projects such as smart-city development and natural disaster management systems. Over 130 local governments are developing or implementing New Deal projects, such as Gangwon Province’s project to develop hydrogen-fuel related technologies. The central government will support local governments in handling issues related to the Korean New Deal by establishing a body dedicated to balanced new deal programmes and aid local governments in hiring staff specialising in related issues. The central government will fund the majority of the spending, covering KRW 42.6 trillion, or 57%, while local governments will match those funds with a total of KRW 16.9 trillion. The remainder will come from private sector investment (The Korea Herald, 2020[173]).

·         In Lithuania, the government established an economic recovery package that includes EUR 1 billion to “boost the economy”. The Economic and Financial Action Plan supports accelerating investment programmes, speeding up payments and increasing the intensity of funding.

·         In Mexico, the Mexican Federation Expenditure Budget Project 2021 (Proyecto de Presupuesto de Egresos de la Federación, PPEF) details public investment expenditure, which amounts to around MXN 830 million. Of this, 85% (MXN 707.7 million) corresponds to budgetary physical investment; 2% (MXN 14.4 million) is dedicated to subsidies for the social and private sectors, and for the states and municipalities; and the remaining 13% (MXN 107.2 million) goes to other investment projects.  Investments are made in programmes for urban enhancement, the (continued) construction of the General Felipe Ángeles airport, road construction, and the construction of the inter-urban train between México and Toluca (Mexican Secretariat of Finance and Public Credit, 2020[174]).

·         In the Netherlands, the cabinet has released EUR 255 million to co-finance EU programmes dedicated to regional development, innovation, sustainability and digitalisation.

·         New Zealand’s Infrastructure Fund for Economic Recovery includes sustainable infrastructure projects such as flood protection, storm water infrastructure, cycleways and walkways, and transformative energy projects.

Specific measures to support subnational public investment
·         In Austria, a EUR 1 billion package was established to support municipal investment by increasing federal capital transfers from 25% to 50% of municipal investment. It can be used for projects that start between June 2020 and December 2021, as well as for projects initiated after May 2019 but which were suspended directly as a result of the COVID-19 crisis (Parliament of Austria, 2020[175]).

·         In Canada, the Safe Restart Agreement (July 2020), a federal investment of more than CAD 19 billion, helps provinces and territories to safely restart their economies. It focuses on several key priorities over a 6 to 8 month period, including: testing and contact tracing; healthcare system capacity; childcare for returning workers; sick leave; and support for municipalities, including for public transit. In addition, funds from the Regional Relief and Recovery Fund (RRRF), a federal initiative, are channelled to the different localities through the national network of six Regional Development Agencies (Government of Canada, 2020[176])

·         In China, quotas for local government domestic bond issuance have been increased. In May 2020, the Ministry of Finance indicated that it would advance another CNY 1 trillion in the quota of local government special purpose bonds to fund infrastructure projects.

·         In Denmark, the investment ceiling for municipalities and regions was lifted, a move that was estimated to increase public investments in 2020 by 0.1 per cent of GDP. Projects that can be started quickly and, as a benchmark, can be completed in 2020 are targeted as a means to support employment. Regions and municipalities are encouraged to bring forward investment projects which were planned for 2021 or 2022 (Denmark Stability Programme 2020).

·         In France, as part of its emergency plan and recovery measures, the government will increase the current Support Grant for Local investment from EUR 0.6 billion to EUR 1.6 billion, placing particular emphasis on financing green and the health sector investments. The Association of French Regions proposes substituting “recovery contracts” for the “contrats de plan Etat-Régions” (Association des Régions de France, 2020[56])

·         In Italy, a series of norms of the DL n. 104/2020 targets investment spending by local authorities for the 2020-2024 period. The resources allocated from the central government to municipalities for 2021 were increased by EUR 500 million for investments destined for public works in the field of energy efficiency and sustainable territorial development (Art. 47 of Legislative Decree N°104/20)

·         In Poland, the government will establish special fund to finance public investment in local roads, digitalisation, modernisation of schools, energy transformation, environment protection, reconstruction of public infrastructure. The fund consists of national resources, independent from EU support. However, the flexibility proposed by the EU in the use of cohesion funds could be also mobilised.

·         In Portugal, in October 2020, the European Commission approved the reallocation of EUR 1 billion from EU Cohesion policy funds to support seven Portuguese regions, in response to COVID-19. Funds will support the digitalisation of schools, SMEs, and the tourism sector.

·         In the US, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides the U.S. Department of Commerce Economic Development Administration (EDA) with USD 1.5 billion for economic development assistance programs to help communities "prevent, prepare for, and respond to coronavirus." The EDA works directly state and local governmental entities, institutions of higher education, not for-profit entities, and federally recognised Tribes to catalyse locally developed strategies to build capacity for economic development based on local business conditions and needs. The EDA’s recovery grants will support a wide variety of assistance including: Planning and Technical Assistance to EDA's Economic Development Districts (EDDs), Tribal Grantees, and University Centers, and others; Capitalization and Recapitalization of Revolving Loan Funds (RLFs), which provide access to capital for businesses; Innovation grants and construction of infrastructure and other economic development projects

A number of states and regional governments are also developing initiatives to support public investment in their areas, and to support local government investment projects.

·         In Belgium, the Flemish Minister for Mobility and Public Works announced EUR 2.2 billion in mobility investments for 924 different projects in 2020. The objective is to provide a social and economic boost to the road and hydraulic engineering sector, but also to the entire economy, as part of the COVID-19 recovery. The priorities are road safety, waterways and rail systems, public transport (hybrid buses, trams, e-bus charging systems) and climate and noise measures, including switching from lighting to LED, installing functional plants and noise barriers, tree control, etc. (Intelligent Transport, 2020[177])

·         In Germany, Bavaria, Baden-Wuerttemberg or Hesse, North-Rhine Westphalia, Saxony-Anhalt and Saxony announced comprehensive packages that include measures to support infrastructure investment.

·         In Italy, the Lombardy region has introduced a three-year investment plan worth EUR 3 billion. EUR 400 million is earmarked for local authorities and EUR 2.6 billion targets support for the local economy (including EUR 400 million for strategic investments). Of the EUR 400 million for local authorities, Milan and surrounding areas will receive EUR 51 million for public works (roads and schools); the remainder can be spent by other communities on energy efficiency, renewable energy, urban re-development and sustainable development, sustainable mobility, heritage, and hydro-geological works, for example. Separately, the region foresees using the “Lombardy Bond” to finance EUR 10 million for producing medical and personal protective equipment, and EUR 82 million in bonuses for health workers who have been involved in combating the epidemiological emergency (European Committee of the Regions, 2020[178]) (Varese News, 2020[179]) (First Online, 2020[180]).

Pointers for action

Implementation of national investment recovery strategies

·         Investment recovery strategies should have an explicit territorial dimension to manage the differentiated impact of COVID-19 and to allow complementarities across sectors, as highlighted by the OECD Recommendation on Effective Public Investment across Levels of Government (OECD, 2014[168]).

·         It is also crucial to actively involve subnational governments in their implementation early on, and not only municipalities but regions as well.

·         Lessons from the 2008 crisis should be drawn and applied to the COVID-19 crisis and its investment recovery strategies in an effort to avoid the mistakes of the past. It

·         Fund allocation criteria should be guided by strategic regional priorities, and care should be taken to avoid fragmenting fund allocation into a myriad of small infrastructure projects in order to spend the money rapidly, at the expense of quality investment and long-term priorities (e.g. sustainability and resilience).

·         Align the short-term emergency responses with long term-economic, social and environmental objectives as well as international obligations (e.g. the Paris Agreement, the SDGs, etc.).

·         Help target public investment strategies to green and inclusive priorities by introducing conditionalities.

·         Encourage regional and local authorities to invest in digital infrastructure targeting full territorial coverage, and ensuring adequate weight is given to regional digital inclusion.

·         Balance infrastructure investment with public investment in skills development, innovation, R&D, and other forms of “soft infrastructure”. .

Supporting subnational public investment

·         Avoid using public investment as an adjustment variable in the wake of the COVID-19 crisis

·         Upscale public investment to enhance regional resilience

·         Identify the different levers to support subnational public investment. In addition to improving self-financing capacity, these include various classical fiscal instruments, such as relaxing budget rules, increasing capital transfers and subsidies, easing the access to long-term projects on both credit and financial markets and supporting projects preparation and implementation. Other financing mechanisms may be activated in the future such as public-private partnerships schemes or equity financing.

Inter-governmental coordination: an essential driver
International co-operation is proving essential for tackling this global challenge, and so is domestic coordination among levels of government, particularly for addressing regional and local socio-economic issues and long-term recovery. A coordinated response by all levels of government can minimise crisis-management failures. Effective coordination between national and subnational governments, and across jurisdictions, is required in all countries, be they federal, unitary, centralised or decentralised, and for all dimensions of the crisis – health, economic, social and fiscal.. In the OECD-CoR,, 71% of EU subnational government respondents surveyed in the European Unionhighlighted that the lack of coordination (vertical and horizontal) with other levels of government is among the biggest challenges they face in managing the health crisis (OECD-CoR, 2020[65]).

Vertical coordination among the national and subnational governments
Coordination among the national and subnational governments is the “first step of an effective response”, as stated by the World Health Organisation (WHO) at the pandemic’s outset. Non-coordinated action among levels of government can generate collective risks, such as “passing the buck”, and conflicting responses. In places where subnational governments operate with high degrees of autonomy, policy responses are more likely to be fragmented. In countries where bottom-up coordination and communication is weak, there is a greater possibility of operating with one-size-fit-all measures that may not address local needs. These problems can be avoided or curbed through effective vertical coordination.

Many countries have experienced coordination challenges between national and subnational governments. Less than half (49%) of respondents representing subnational governments in the EU believe that vertical coordination mechanisms with the national government have been effective in managing the COVID-19 crisis in their country (OECD-CoR, 2020[65]).

Associations of regional and local governments are playing an important role in supporting vertical coordination. On the one hand, they act as interlocutors between national and subnational governments On the other hand, they continue to coordinate efforts, identify solutions, and support the implementation of emergency measures. Regular dialogue between the national government and these associations can be particularly valuable to address crisis-generated social and economic damage throughout a country.

Country Examples
Health responses: vertical coordination

·         The Australian Government introduced a National Cabinet to address health and economic issues related to managing the COVID-19 crisis and recovery, bringing together the Prime Minister and the First Ministers of each Australian State and Territory. The National Cabinet is advised by the Australian Health Protection Principal Committee, a parallel group composed of all state and territory Chief Health Officers, and chaired by the national Australian Chief Medical Officer. In May, the National Cabinet released a three-step exit strategy, which provides a pathway for jurisdictions to move towards COVID safe communities in a way that best suits local specificities. States and territories are able to move between the steps on the pathway at different times, in line with their current public health situation and local conditions, and make decisions as to when each step will be implemented locally (Prime Minister of Australia, 2020[181]).

·         Canada has developed a “whole-of-government action” based on seven guiding principles including collaboration. This principle calls on all levels of government and stakeholders to work in partnership to generate an effective and coherent response. These principles build on lessons learned from past events, particularly the 2003 SARS outbreak, which led to dedicated legislation, plans, infrastructure, and resources to help ensure that the country would be well prepared to detect and respond to a future pandemic outbreak (Canada, 2020[182]).

·         In Chile, the government established the Social Committee for COVID-19 (Mesa social por COVID-19) formed by representatives of municipal associations (mayors), government authorities, academics and professionals from the health sector. The Committee meets twice a week to help strengthen the Action Plan COVID-19 (Government of Chile, 2020[183]). This Committee has been replicated at the regional level (Government of Chile, 2020[184]).

·         In Korea, the government strengthened the “whole-of-government approach” in the fight against COVID-19. The Prime Minister chairs the Central Crisis Management Committee, on which are represented all relevant central government ministries, as well as Korea’s seventeen provinces and major cities (Government of Korea, 2020[138]).

·         In Portugal, the Government established a contact line for municipalities to answer questions from other municipalities. The contact channel is operated by the General Directorate of Local Authorities (DGAL) of the Ministry of State Modernization and Public Administration. The DGAL published guidelines for municipalities, making these available on the Autárquicoa Portal. It also requested that municipalities, metropolitan areas and inter-municipal bodies prepare contingency plans in line with the guidelines issues by the DGAL.

·         In Spain, the Conference of Presidents is a multi-lateral cooperation body between the Government of the Nation and the respective Governments of the Autonomous Communities. It has become the operative instrument for multi-level dialogue and facilitates communicating containment measures, and coordinating resources based on territorial needs.

·         In Turkey, development agencies at the regional level are implementing the "Covid-19 Struggle and Resilience Financial Support Program” (resourced with approximately EUR 30 million). They will support projects that prioritise: (i) containing and mitigating the spread of the virus; (ii) emergency preparedness and public health responses; (iii) reducing the impact the epidemic on the country and regional economy. Agencies will also identify the social and economic impact of the epidemic in the provinces and will provide strategies for areas where intervention is required.

Economic and social responses: vertical coordination

·         In Australia, the Prime Minister has announced a new National Federation Reform Council (NFRC) to replace Council of Australian Governments (COAG) meetings, with the National Cabinet to remain at the centre of the NFRC. The NFRC has been agreed to by Premiers, Chief Ministers and the Prime Minister. Once a year, National Cabinet, the CFFR and the Australian Local Government Association (ALGA) will meet in person as the NFRD to focus on priority national issues. It is intended that the new model will streamline processes, enabling improved collaboration, communication and effectiveness.

Coordinated fiscal responses

·         In France, the Cazeneuve report promotes the creation of an observatory for the follow-up of the crisis and its impact on local finances based on a real-time sharing (updated every two months) of financial statements, and a common methodology for calculating the costs of the crisis.

·         In Italy, the Ministry of Economy and Finance established a Technical Committee (Tavolo tecnico) in May 2020, chaired by the State Accountant General, and with mixed State/region membership. It is tasked with examining the impact of the COVID-19 emergency on fulfilling fundamental functions, with reference to the possible loss of revenue relating compared to the expenditure needs of each entity7.

·         In Sweden, County Administrative Boards are responsible for coordinating the state, the regions and the municipalities in terms of infection control aspects, and for ensuring that important societal functions are maintained in the country. To deal with the COVID-19 outbreak, the Public Health Agency of Sweden relies on these Boards to know about the specific challenges and conditions prevailing in each area. On July 1, 2020, the Swedish Government established a Corona Commission, responsible for evaluating COVID‐19 actions by the Government, Government agencies, regions and municipalities, and for comparing the Swedish strategy to that of other countries. An initial report is anticipated in late November 2020, with a final report in February 2022 (Government Offices of Sweden, 2020[185]).

Pointers for action

·         Introduce, activate or reorient existing multi-level coordination bodies in order to minimise the risk of a fragmented crisis response. Use such bodies to refine strategies, develop solutions, and agree on decisions with profound economic, social, and societal implications.

·         Foster coordination across levels of government to agree on joint solutions and enhance acceptation of measures at all levels

·         Mobilise coordination bodies to coordinate and communicate response, exit and recovery strategies throughout government and across a territory. Technical bodies that can help transform strategic thinking into operational plans should also be considered and consulted.

·         Clarify roles and responsibilities among different levels of government to optimise crisis response, exit and recovery strategies, as well as resource deployment.

·         Establish coherent guidelines for each level of government to follow, while also ensuring sufficient flexibility for adjustment to situations ‘on the ground’.

·         Work with national associations of regions and/or municipalities to strengthen vertical coordination in a crisis context – for example to disseminate information, identify and share solutions to pressing problems, to support the implementation of emergency measures and agree on fiscal support packages. Encourage knowledge sharing among members

Supporting cross-jurisdiction cooperation
Horizontal cooperation across jurisdictions – be they countries, regions, or local governments – is just as important as vertical cooperation, particularly in in decentralised and federal countries, which have more differentiated approaches across territories. Externalities linked to the coronavirus are so high, that no single jurisdiction, or country, can manage these on its own. Coordination across regions is essential to avoid disjointed or contradictory responses, which pose a collective risk to a country’s population. For example, in federal systems, there may be limited incentive for cross-jurisdiction cooperation (e.g. sharing equipment, skilled personnel, etc.) if supporting a neighbour jeopardises one’s own ability to adequately respond to a crisis situation. Cooperation is an imperative – and not an option. The role of national governments is essential in minimising coordination failures and ensuring a coherent approach, even in federal countries.

Cooperation across jurisdictions is fundamental to limit the risks of new waves of infections or to mitigate the impact where cases have already rebounded. Information about new cases and clusters needs to be communicated extremely quickly to avoid propagation – across states and regions, and especially among municipalities belonging to the same functional area. Cross-jurisdiction cooperation also supports recovery efforts, including by avoiding a fragmented approach to public investment recovery strategies.

The assessment by EU subnational governments on the effectiveness of horizontal cooperation mechanisms is very heterogeneous across categories: 75% of inter-municipal groupings (IMC bodies) and 55% of regions consider they have been effective in managing the crisis compared to 42% of municipalities (Figure 19) (OECD-CoR, 2020[65]).

Figure 19. The effectiveness of horizontal coordination mechanisms among subnational entities

 

Source: OECD (2020)

Such cooperation extends across-borders, too. A critical issue emerged in cross-border regions where cooperation has been made more difficult because of borders closure, restrictions on mobility in particular for cross-borders workers, and the lack of effective coordination arrangements. In many cases, EU Member States have implemented uncoordinated border closures and unilateral measures. In the OECD-CoR, the lack of cross-border coordination was the strongest coordination issues. Around one-third of respondents reported that cross-border cooperation between subnational governments was broadly ineffective or non-existent, while only 22% found such cooperation effective or very effective (OECD-CoR, 2020[65]). However, several cross-border cooperation mechanisms did function well through the crisis and, arguably, allowed for increased resilience and paving the ground form reinforced cooperation (EU Committee of the Regions, 2020[108]).

Country examples
Many countries, regions, cities and associations of subnational governments have put in place specific measures to support horizontal and cross-border cooperation. A few examples are highlighted below.

Cooperation across municipalities

·         In Denmark, municipalities have joined forces to purchase protective equipment for their personnel. With the Aarhus Municipality taking the lead, the Municipal Protective Equipment Purchasing Unit collaborative (Kommunalt Værnemiddel Indkøb) was created for joint procurement of protective equipment on behalf of Denmark’s 98 municipalities (Aarhus Kommune, 2020[186]).

·         In France, inter-municipal cooperation bodies have large responsibilities and budget, based on own-source tax revenues. In the front line of the crisis, inter-municipal groupings have multiplied initiatives to support their member municipalities, citizens, NGOs and local economic actors. Through their federative capacities, their skills and their technical or financial means, they often play a role as a platform, but also as operational actor in direct contact with the local needs (Assemblée des Communautés de France, 2020[187]).

·         In Israel, local authorities share knowledge via the Ministry of the Interior, the Union of Local Authorities and the National Initiative 265 for Development and Knowledge-sharing to Advance the Digitization of Local Authorities. This website was developed in collaboration with the Ministry of the Interior. Additional forums devoted to inter-local authority topics operate on an informal basis for exchanges of information and joint projects. This includes the advisory group of strategic planning and work plan managers in local authorities, which holds frequent consultations (Tel Aviv-Yafo Municipality, 2020[188]).

·         In Latvia, eight municipalities have established strong common working relations during the ongoing pandemic in order to better deal not only with COVID-19 but also its aftermath. Thanks to their joint efforts and by sharing supplies among each other, South Kurzeme’s municipalities managed to provide free protective equipment to seniors in the region (Stoyanov, A., 2020[189]).

·         In Sweden, the four largest municipalities have joined forces with a guarantee for a credit of half a billion, which is issued by Kommuninvest to SKL Commentus. The credit will be used for the purchase of protective equipment for all Swedish municipalities and the equipment will be distributed based on the needs compiled by the County Administrative Board in their coordination assignments.

Cooperation across regions

·         In Belgium, federal authorities and federated entities agreed on more intensive coordination in the overall distribution of personal protective equipment to the care sector, for example, by sharing information on reliable suppliers, stock levels, orders, deliveries, etc. They also created a solidarity stock, available to all federated entities to meet urgent and acute needs in their regions.

·         In Switzerland, the Conference of Cantonal Governments (KDK) coordinates activities related to the COVID-19 crisis with the Federal Council and among cantons. In particular, the KDK is coordinating specialised conferences with all 26 cantons in order to meet regularly and discuss topics related to the crisis (Conference of Cantonal Governments (KDK), 2020[190]).

·         In the US, there have been cross-region coordination initiatives among states. For example, the governors of New York, New Jersey, Connecticut established a common set of guidelines on social distancing and limits on recreation, which Pennsylvania subsequently joined as well (New York State, 2020[191]).

Cross-border cooperation

·         Cross-border transfers of COVID-19 patients have been made possible in the context of pre-existing cooperation agreements among France (Grand-Est), Germany (Rhineland-Palatinate and Baden-Württemberg), Switzerland and Luxembourg.

·         In Germany, the minister-president of Rhineland-Palatinate created a cross-border task force with Dutch and Belgian regions to coordinate actions against the novel coronavirus. In France, both the central government and the Grand-Est region are involved in this cooperation.

·         The European Region Tyrol-South Tyrol-Trentino at the Italian-Austrian border faced several challenges posed by the mobility restrictions implemented by both the Italian and the Austrian national authorities, resulting from the lockdown and the closure of the borders. Despite the situation, the regions of Tyrol, South Tyrol and Trentino managed to maintain a very high level of cooperation during the crisis. A coordination unit was set up in February within the Euroregion. South Tyrol sent protective equipment to Tyrol and Trentino and hospitals in the Tyrolean towns of Innsbruck, Hall and Lienz took care of South Tyrolean patients in need of intensive care. In June 2020, the Euroregion executive board approved several new projects to reinforce cross-border cooperation, including a new Euregio2Plus-Ticket for public transport within the three regions, a joint health project to collect information on the psychological effects of isolation on the local population during the pandemic, new marketing strategies and standards for safe and healthy tourism environment. In addition, a new masterplan to guarantee lower CO2 emissions and greenhouse gases by 2030 was approved, as was to develop renewable resources within the Brenner corridor.

·         In the EU, associations and institutions of regional and local governments involved in cross-borders cooperation [e.g. European Committee of the Regions (CoR), the Transfrontier Operation Mission (MOT), the Association of European Border Regions (AEBR) and the Central European Service for Cross-Border Initiatives - CESCI)] joined forces to propose a “European Cross-border Citizen’s Alliance” (EU Committee of the Regions, 2020[192]).

Pointers for action

·         Strengthen cooperation across municipalities and regions to help minimise disjointed responses and competition for resources during a crisis.

·         Facilitate inter-municipal cooperation to support recovery strategies by ensuring coherent safety/mitigation guidelines, pooling resources, and strengthening investment opportunities, for example through joint borrowing..

·         Promote inter-regional or inter-municipal collaboration in procurement, especially in emergency situations (e.g. purchasing alliances, networks, framework agreements, central purchasing bodies). Promote the use of e-government tools and digital innovation to simplify, harmonise and accelerate procurement practices at subnational level

·         Actively pursue and promote cross-border cooperation in order to promote a coherent response recovery approach across a broad territory (e.g. border closure and reopening, containment measures, exit strategies, migrant workers).

Navigating the emergency: a challenge in sequencing
The COVID-19 pandemic is requiring all levels of government to act in a context of great uncertainty and under heavy economic, fiscal and social pressure. Since mid-2020, and especially with the onset of a second wave of infections in many countries, a new challenge has been revealed: the limited ability to sequence policy action. National, regional, and local governments find they cannot count on following a straight or linear course of policy action to manage, exit and recover from the crisis. Instead, governments must act on all fronts simultaneously and in synchrony. This need – for flexibility and adaptability – is leading governments to reconsider their multi-level governance systems, to revaluate their policy tools, and to reassess their regional development priorities. Success depends on mobilising and coordinating multiple policy sectors and all levels of government, and adopting place-based approach. It relies on clear leadership, balanced with effective coordination, consultation, and a collaborative approach among government and non-government actors. It also depends on reinforcing trust in public institutions and harnessing the power of regular communication with stakeholders and citizens. The responses to COVID-19 are revealing a potential in regional development priorities – emphasising greater regional resilience, including through more accessible basic services, narrower digital divides, adjusted global value chains and industrial policy, and broader climate action.

How COVID-19 is shaping the future of multi-level governance
The COVID-19 crisis highlights the importance of effective multi-level governance in managing this crisis. It is leading countries to re-evaluate their multi-level governance systems and regional policy instruments in an effort to make them more “fit for purpose”, more flexible, and better able to respond to the differentiated needs of regions. Doing so could mitigate the sequencing difficulty, helping subnational governments simultaneous manage new eruptions of the virus or other emergencies, recover from the crisis, and achieve greater resilience. The balance between centralised and decentralised territorial management is being reconsidered, as are coordination mechanisms. The COVID-19 crisis underscores the fundamental need for a coordinated response to emergencies and their aftermath, and accentuates the risks associated with uncoordinated and/or heavily bureaucratic approaches to crisis management – regardless of whether a country is federal or unitary, centralised or decentralised. Coordination is just as necessary across and among levels of government as it is between government and non-government actors, including citizens. Successfully managing the pandemic’s differentiated impact rests with differentiated responses, emphasising the potential advantages of experimentation and a place-based approach to exit and recovery strategies. Success also depends on a strong partnership between national and subnational governments, as well as with the private and third sectors, civil society and citizens. Effective central-level leadership, particularly in setting strategy and guidelines to support coherent responses and minimise competition among jurisdictions, a clear assignment of roles and responsibilities, and subnational governments well-capacitated to act in a manner coherent with meeting the immediate needs and long term priorities of their territories are contributing factors to an effective partnership.

It is also reinforcing how national governments can best support regional and municipal authorities manage and recover from a crisis. Among the 300 EU regional and municipal governments surveyed by the OECD and the Committee of the Regions (CoR) in June 2020, 75% indicated that funding was one of the most helpful levers for addressing the next crisis (OECD-CoR, 2020[65]). This highlights the increasing importance of subnational finance and well-funded mandates. On the one hand it can lead to a re-evaluation of traditional budget sources, just as it could mean identifying external funding possibilities. Clearly established roles and responsibilities among levels of government (58%), and offering incentives for pilot policies or programmes in sectors increasingly important since COVID-19 (52%) were also identified as areas where higher-level government support is particularly welcome (Figure 20). A change in how responsibilities are assigned and financed among levels of government, including for crisis response and management, and more experimentation though pilot policy actions and initiatives could result in more flexible multi-level governance systems and facilitate territorially differentiated responses.

Figure 20. Multi-level governance policy reforms

 

Notes: N=300 EU regional and municipal governments; Original question asked: How helpful would the following national government measures be to manage the next crisis.

Source: (OECD-CoR, 2020[65])

A centralised or decentralised approach in equilibrium
COVID-19 reveals the advantages and disadvantages to both highly centralised and highly decentralised approaches. For instance, a centralised approach to managing aspects of the public health emergency can support a rapid and uniform response across a country, overriding potential inequalities, be they in resource capacity or in the treatment of individuals (e.g. quarantining those who traveling from a specific country, state, region or province). This is evident in the ability of national governments to transfer patients from hospitals in highly affected regions to less affected ones, as seen in France. In the early days of the pandemic, for example, the French government transferred patients from hospitals in the most affected regions, such as Grand-Est to those less affected in the South. It can also facilitate quick information and knowledge sharing, which is essential in times of crisis (Silberzahn, P., 2020[193]). On the other hand, a decentralised system can support greater flexibility and experimentation in the face of uncertainty, making room for “bottom-up”, innovative approaches (Silberzahn, P., 2020[193]) that can be applied elsewhere, if successful and appropriately adapted. The multi-pronged “Veneto approach” to controlling the COVID-19 virus originated in a single Italian town, Vò-Euganeo, extended to entire Vento region and eventually was adopted, in part or in full, by other Italian regions. Additionally, decentralised approaches create space for regional and local governments to react and respond quickly. The decentralised networks of German laboratories were instrumental in realising the proactive testing strategy put in place by the country.

Furthermore, COVID-19 is reinforcing centralisation/decentralisation as a means to achieve objectives and not an end-state (OECD, 2019[194]). A good illustration is the fact that some governments are temporarily recentralising while others are temporarily decentralising in order to manage the crisis. Many countries adopted state-of-emergency laws, giving central or federal governments the right to take over some subnational responsibilities. By contrast, some countries decided to decentralise additional powers to subnational governments, at least temporarily. For example, Switzerland has temporarily recentralised health management in response to the crisis. In the early days of the pandemic, the UK temporarily decentralised health management, and as the pandemic continues the government is evaluating how to engage more with devolved governments.

Successful short, medium and long term responses to the coronavirus-induced crisis does not depend heavily on whether a country is federal or unitary or on its degree of decentralisation. Rather, it depends more on the coordination mechanisms applied, as well as on the ability of government actors to align priorities, implement joint responses, support one another, and foster information sharing, including with citizens (OECD, 2019[194]). The crisis is also accentuating the importance of a risk management strategy, a clear assignment and understanding of responsibilities among levels of government, particularly in responding to a crisis, and of ensuring properly funded mandates at the subnational level. This contributes to meeting the immediate needs that keep arising, but also to ensuring future capacity to do so.

Emergency or crisis situations demand rapid response capacity to prevent escalation and control damage. The ability to adapt to uncertainty and change, and to course correct as needed becomes central to successful crisis management. Because an emergency’s immediate impact is felt locally, regional and local governments need room to act quickly, effectively and responsibly – regardless of whether they operate in centralised or decentralised contexts. Such capacity, however, can frequently depend on having sufficient flexibility and discretion to mobilise resources, for example, or to make and enact decisions that can help mitigate or prevent further crisis-induced damage. It can also mean temporarily or permanently reducing burden and red-tape surrounding administrative procedures, making it easier for subnational governments to fulfil responsibilities and take decisions, and for eligible businesses and citizens to apply for and receive emergency support.

Finally, managing COVID-19’s differentiated impact requires a degree of flexibility to allow for territorial responses that are place based and adapted to the most pressing needs and the preparedness of specific localities. This is can support a region in taking non-sequential but coherent action – addressing the emergency, containment and recovery demands based on the pandemic’s status in a region. This differentiated territorial approach is as apparent and relevant in federal or highly decentralised countries as it is in unitary or highly centralised ones. The importance of a place-based approach in response to the health crisis has consistently grown. In many countries specific measures regarding masks, closure of schools or restaurant closures, and full versus partial lockdowns are adopted for specific localities and territories, rather than applied to the national level, to limit the economic impact.

Good coordination minimises the risk of crisis management failures
A coordinated response by all levels of government, in both federal and unitary systems, can minimise crisis-management failures. Many countries with past experience in crisis management seem better prepared to tackle the COVID-19 crisis in terms of coordination. The main risk of non-coordinated action in a crisis is to “pass the buck” to other levels of government, which can result in a disjoined response and generate collective risk. For example, in federal systems, there may be limited incentive for cross-jurisdiction cooperation (e.g. sharing equipment, skilled personnel, etc.) if supporting a neighbour jeopardises one’s own ability to adequately respond to a crisis situation. Horizontal coordination is essential to minimise coordination failures and avoid disjointed responses that can lead to collective risk. Countries are approaching this in a variety of ways and at different levels of government.

When consulted on how to manage a successful exit strategy, respondents indicate coordination and financial resources as of utmost importance: 90% of subnational governments report that coordination in the design and implementation of measures among all levels of government is very important, and 79% cite additional financial resources for subnational entities is very important. Communication with the public and the possibility to adapt measures to the local situation are also considered as key in a successful exit strategy (Figure 21). While results are broadly homogeneous between the different subnational government categories, regions and municipalities have slightly different priorities. Regions place more emphasis than municipalities on adapting exit measures to the local context (76% versus 68%), while municipalities are more likely than regions to highlight the need for additional human resources (48% versus 33%).

Figure 21. Policy tools at the core of a successful exit strategy

 

Source: (OECD-CoR, 2020[65])

Many critical aspects of crisis response – such as containment measures, health care, social services, economic development and public investment – are shared among levels of government, reinforcing the need for effective vertical coordination. Federal and unitary countries alike have been introducing or mobilising vertical coordination mechanisms to ensure a coherent crisis response. Multi-level coordination bodies are commonly being used for this purpose, for instance the National Cabinet in Australia, the COVID-19 Social Roundtable (Mesa Social COVID-19) in Chile, and the Conference of Presidents in Spain. The more decentralised the country, the greater the need to mobilise coordination platforms to minimise the risk of a fragmented policy response. National associations of subnational governments are also playing a role to ensure vertical coordination efforts – disseminating information, identifying and sharing solutions, and supporting the implementation of emergency measures by their members. Effective crisis response highlights that robust vertical and coordination mechanisms are more important than ever.

The value of partnerships and communication for crisis management and beyond
No single government, or level of government, can meet the demands of crisis management alone. The COVID-19 crisis, given its scope and magnitude, is challenging all levels of government to reinforce their partnerships – with each other, with the private and third sectors, and with citizens. If priorities are mutually identified and agreed upon, and initiatives are designed with sufficient information exchanged between the developers and implementers, then the likelihood of an effective support programme will be greater. While this certainly requires coordination, it also means a clear delineation, understanding and agreement of roles and responsibilities, and mutual respect, in the short, medium and long term.

Quickly mobilising necessary public, private and third sector actors can help governments respond to a crisis more effectively. Countries are applying this insight in various ways. Asian countries, for example Korea, are drawing on their experience with SARS. In Attica Greece, the regional government is working with the Medical Association of Athens to establish preventive measures against the coronavirus (European Committee of the Regions, 2020[195]). Crisis management plans used in Asia and in the Nordic countries, for example, can help rapidly mobilise diverse actors to meet crisis-induced challenges, such as those arising from this pandemic.

Clear, transparent, rapid, and accurate communication among all parties is fundamental on many levels. First, it helps government and emergency personnel respond in a targeted manner. New Zealand’s COVID-19 Local Government Response Unit (New Zealand Government, 2020[196]) such activity. Second, it can promote knowledge sharing which then leads to the application of more effective solutions. Portugal’s General Directorate of Local Authorities established a contact line to support information exchange and peer learning among municipalities. The Local Government Association in England provides communications templates to help City Councils share good practices and exchange information (Local Government Assocciation, 2020[197]). Third, and perhaps most importantly, it contributes to trust in the institutions and people leading the crisis management effort, which in turn can mitigate the crisis’ negative impact. Effective crisis communications depends on the relationships across all levels of government and with the public and private sectors. It means communicating early, clearly, regularly and with a coherent message. Subnational governments need to know what they are facing and what is expected of them – their role must be clear. Citizens and businesses need to be reassured that the government has a strategy for each stage of the crisis Like subnational governments, they too need to know what is expected of them, and feel reassured that they are supported through a difficult period (Smith, N., 2020[198]). There is evidence that in the face of COVID-19 people expect government to lead in all areas relevant to the pandemic: containment, information dissemination, economic relief and support, helping people cope, and getting the country back to normal (Edelman, 2020[199]). Less is expected of business, NGOs and media.

One of the most powerful aspects of a partnership the ability to generate agreed upon objectives, priorities and plans. Taking unilateral decisions can lead to non-compliance with measures at a minimum and larger-scale demonstrations or conflict at a maximum, as seen in France (Marseille), Italy, Spain, the UK and the US during this crisis. Bringing together a territory’s various levels of government to identify objectives and design measures in collaboration can lead to stronger implementation of containment and recovery efforts. It is also important to ensure sufficient and timely consultation with other stakeholders, including business owners, service providers, teachers and parents, and civil society. This can increase the possibility that measures are followed, despite “virus-fatigue”, and can lead to more locally appropriate, more innovative initiatives. A September 2020 survey on the perception of EU citizens regarding the role of regional and local authorities in managing the COVID-19 crisis, and subnational government influence in EU politics and policies more broadly indicates that about two-thirds of Europeans think that regional and local authorities have insufficient influence on decisions made at the EU level (EU Committee of the Regions, 2020[108]). Specifically Europeans would like their regional and local authorities to have more influence on policies related to health (45%), employment and social affairs (43%), and education, training and culture (40%). Furthermore, 58% of surveyed Europeans think that greater influence of regional and local authorities would have a positive impact on the EU’s ability to solve problems (EU Committee of the Regions, 2020[108]), and, implicitly, those associated with the coronavirus.

The importance of trust in government
There is evidence that, in some countries, trust in national government is increasing during this crisis. Where it is not, the gap is often filled by increased trust in local government (which tends to be higher even in non-emergency times) (Edelman, 2020[199]). This holds true at the European level, as well. More Europeans trust regional and local authorities (52%) than they trust the EU (47%) or their national government (43%) (EU Committee of the Regions, 2020[108]). More Europeans (48%) trust that regional or local authorities are taking, and will continue to take, appropriate measures to overcome the economic and social impact of COVID-19 crisis than the European Union (45%) or national governments (44%). Citizen trust in government can help mitigate the impact of “virus-fatigue” that contributes to a more lax uptake of virus control measures (e.g. confinement, social distancing, wearing masks), and jeopardise the success of emergency and containment actions.

This further highlights the importance of successful multi-level governance. Each level of government depends on the other for different aspects of policy and service design and delivery to manage the impact of COVID-19. At the same time, ensuring policy success will depend heavily on subnational governments and their ability to deliver solutions. Citizen trust can play a role in ensuring compliance with containment measures and mitigate the impact of “virus-fatigue”. It becomes that much more important, then, to ensure that subnational governments have appropriate and adequate support from higher levels of government the to deliver solutions.

Furthermore, trust in government may play a role in COVID-19 related health outcomes. In some countries, COVID-19-related fatality rates are higher where governments enjoy lower degrees of trust (Figure 22). This is particularly the case in Brazil, Chile, Colombia, Italy, Mexico and the US. While many factors are at play, including health and social system capacity, deprivation levels, etc., it could signal that governments facing lower degrees of trust may have difficulty enforcing containment measures and ensuring their population’s compliance with public health measures. Moving forward, these governments may be less likely to benefit from any uptick in trust generated by the crisis.

Figure 22. The relationship between trust in government and COVID-19 fatalities

 

Note: Data for COVID-19 deaths have been retrieved for OECD countries, Brazil, Russia and South Africa on 8 November 2020.

Source: Authors’ elaboration, based on data from: Johns Hopkins University Coronavirus Resource Centre, OECD Trust in government database

While this crisis may be generating record levels of trust in government, the challenge for public officials will be to maintain the trust. All levels of government may want to take stock, evaluate the trust-building actions adopted during the pandemic, and consider the opportunities they offer, post-pandemic. While it can take many years to build trust, it can be rapidly lost (Edelman, 2020[199]).

More resilient regions: a regional development policy priority post COVID-19
COVID-19’s differentiated impact on individuals, communities, and regions and the potential risk of its accentuating territorial disparities lends new urgency to a place-based approach to regional development and generating greater inclusiveness. The role of effective partnerships and trust among different sets of actors, the need for flexibility and adaptability, and the importance of an equilibrium between top-down and bottom-up action serve to reinforce this urgency. It has also rekindled policy dialogue around regional resilience. The pandemic and the demands it places on all levels of government is generating a shift in regional development priorities towards reinforcing regional resilience

 

The pandemic has the potential to exacerbate ongoing political conflicts between states. For example, COVID-19 risks inflaming tensions between India and Pakistan over Kashmir. As political leaders in both countries focus on fighting the virus, we could see further entrenchment of the militarized status quo, as well as local efforts to highlight the inadequacy of Indian governance in Kashmir. There is the potential that hardline Indian nationalist policies might be used to divert public attention from the COVID-19 crisis. However, the scale of the pandemic threat will most likely shift attention in India and Pakistan to the immediate demands of public health services and the need to alleviate economic hardship domestically.137

Polities with supranational governance structures like the European Union have experienced discord over new policies. EU member states eventually managed to compromise on an economic recovery plan in July 2020, despite tensions during the negotiation process, especially due to concerns of so-called ‘frugal’ countries about the cost of the plan.138 However, tensions within the EU have also been driven by disputes concerning seasonal migrant labour, with some business, especially farmers, demanding access to foreign workers, and some populist leaders calling instead for tighter restrictions on immigration.139

The pandemic has also compounded pre-existing international problems related to the movement of people. Asylum seekers and refugees have been particularly affected,140 especially since the pandemic risks exacerbating existing humanitarian crises.141 The pandemic has also had an impact on temporary economic migrants, particularly as a result of the economic downturn that has forced many companies to lay off employees. Even when governments have introduced economic measures to support businesses, temporary migrants have often been excluded from these programmes.142 Some governments are also considering changes to migration rules143 and taking drastic steps in modifying the way they address asylum claims, including limitations to face-to-face interviews, introducing new physical barriers, or even encouraging applicants to ‘bring [their] own black or blue ink pens’.144 Internal migration has also been affected by the pandemic, as many governments have imposed restrictions on internal travel.145

The public health crisis is also affecting domestic political divisions in multiple contexts. For example, during post-Brexit negotiations between the UK and the EU, some politicians exploited the pandemic for partisan political gain.146 In some cases, politicians have challenged the authority of experts, undermining citizens’ trust in evidence-based knowledge.147 They have also mischaracterized or appropriated scientific expertise around issues like mask wearing to advance their positions.148 Debate about the pandemic in some countries has been driven by and exacerbated pre-existing political polarization, stoking tensions between regional/state and national/federal political authorities. However, calls for unity and coordinated action has sometimes also helped to reduce ideological and partisan divides.149

The pandemic poses unique challenges to state stability and could compound risks of political violence, internal armed conflict, and incidents of state failure. Rebel groups and other militant actors have seized opportunities to expand control, advance political objectives, and demonstrate a capacity to govern and enforce rules. For example, armed actors operating along the southwest coast of Colombia made public declarations that curfew violators would be treated as ‘military targets’.150 COVID-19 has provided a chance for armed opposition groups to scale up attacks and target government opponents in some cases, while in others groups have seized on the opportunity to improve claims of legitimacy and demonstrate their capacity to provide public services and govern. For example, the Islamic State, the Taliban, and al-Qaeda affiliates have all provided guidance and local support to contend with the pandemic.151

Political participation has also been affected by the pandemic. Protest politics, for example, has been at the epicentre of public debate. On the one hand, citizens in some countries have taken to the streets to protest against government restrictions to contain the virus, such as lockdown and stay-at-home orders.152 On the other hand, protests such as those organized by Black Lives Matter activists around the world became a topic of contention as citizens and political leaders disagreed as to whether those gatherings may have contributed to new COVID-19 outbreaks.153

The effects on political participation also extend to electoral politics. For example, in some countries local and national political authorities decided to postpone elections154 or reimagine electoral procedures and practices. Governments have taken steps like increasing the use of postal voting155 or introducing measures to guarantee social distancing, health, and safety during the voting process.156 There has also been an impact on campaign practices due to the need to restrict traditional rituals and habits like shaking hands.157 Furthermore, political rallies constitute extreme health risks for the spread of the virus.158 This point became especially prominent after former US President Donald Trump resumed large political campaign events shortly after his hospitalisation from COVID-19 treatment.159 Other politicians experimented with virtual rallies and events to mark important milestones in campaigns like the Democratic Party’s announcement of a presidential candidate in August 2020.160 The content of political campaigns and party politics has also evolved as a result of COVID-19. Issues such as public health and socio-economic and racial inequality, for example, have become more salient,161 and parties traditionally divided over fiscal responsibility and public spending have sometimes converged on more similar positions.162

Trust is an important aspect of political life as it relates to politicians, law enforcement, and the media, among others. High-profile incidents of politicians who ignore their own stay-at-home orders163 or who publicly contradict or undermine health experts164 can lead to general confusion and the erosion of trust in public officials. The politicization of issues like mandatory mask wearing illustrates how a lack of consensus and divergent policies can frustrate public health measures and lead to greater distrust not only towards politicians but also towards law enforcement officials tasked with ensuring compliance. In extreme cases, law violators have lashed out in violence against police officers enforcing these new laws.165 In a particularly sensational case, members of an extremist militia were arrested in relation to alleged plans to kidnap Michigan’s Governor and put her on ‘trial’ for restrictive pandemic policies.166 Furthermore, the media can have a compounding effect on public trust (or lack thereof), by employing framing techniques167 or prioritising specific content as they deliver information to the public.168 Social media can further complicate political trust, as they are a popular channel for politicians to spread misinformation about COVID-19 and related policies.169

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Conclusion
This chapter provided an overview of the human, economic, social, and political costs of the pandemic. The world faces unprecedented challenges related to COVID-19, including an immense strain on relationships and the way people interact with one another in different aspects of their lives. Uncertainty and disruptions to social and political life will require a better understanding as to how the broader public needs to prepare and respond. Politicians and other decision-makers will face increasing pressure to come up with policies that are effective at containing the pandemic, limiting its economic impact, and minimising harmful social and political consequences. They face the difficult task of balancing diverse interests, values, and demands, while also having to ensure that they rely on sound scientific evidence. In the remainder of this book, we will examine all these challenges through the lens of civility.

The ILO’s preliminary assessment of the impact of COVID-19 on specific social and economic sectors and industries is captured in a series of sectoral briefs.

The briefs also contain policy responses and measures taken by ILO constituents – governments, employers and workers – as well as available ILO tools and responses at the sector-specific level.

The intended audience is ILO constituents at the national, sectoral, regional and global level, as well as international organizations and other partners in the effort to advance decent work for women and men in specific social and economic sectors.

The briefs will be updated regularly.

Constituents are invited to comment on and contribute to the briefs so that they can serve as repository of good practices and lessons learned in pandemic responses in order to “build back better” in the post-pandemic future.​

Please share your views with covidresponsesector@ilo.org 

 
COVID-19 and the port sector 
Ports provide key infrastructure in support of international trade and the global economy. They vary in size from wharves handling at most a few hundred tonnes of cargo a year to large international ports or multi-modal hubs combining a broad range of logistical services, from warehousing to total supply chain management. During the COVID-19 pandemic, ports have had to adjust to the reality of lower volumes, worker shortages, the implementation of occupational health and safety measures for dockers and shore personnel, and the adoption of teleworking and remote operations for office workers. In some countries, calls by cruise ships have come to a halt. This policy brief summarizes the issues relating to COVID-19 and decent work challenges in the port sector.
 
COVID-19 and the meat processing sector 
The COVID-19 pandemic is continuing to exert pressures on the agri-food industry both from the business and workers’ sides, with some sectors shouldering a particularly high burden. The meat processing sector is one of them. As the effects of the pandemic on our food systems continue to unfold, the learnings from the outbreaks in processing plants in several major meat-producing countries are catalysing reforms that should contribute to the sustainable development of the sector.
 
COVID and the construction sector 
The COVID-19 pandemic has had a significant impact on the construction sector, which is sensitive to economic cycles. Yet, on the upside, construction holds much potential to stimulate recovery, thanks to its potential to create jobs; and in turn, recovery measures can support the sector’s transformation towards sustainability and digitalization. Tripartite cooperation and social dialogue, together with international labour standards, are key to promote a human-centred recovery of the construction sector from the crisis.
 
COVID-19 and care workers providing home or institution-based care 
The COVID-19 pandemic has drawn attention to the already overburdened and understaffed home and institution-based care sector in many countries. This brief highlights the challenges faced in the recruitment, deployment, retention and protection of sufficient numbers of well-trained and motivated care workers. Sustainable investment in health and social care systems, including in the workforce itself, and in decent working conditions are needed to ensure the preparedness and resilience of the sector in times of crisis and beyond. Ensuring that care workers, together with their employers and other relevant stakeholders have an opportunity to make their voices heard is critical if they are to play a full and active role in the global response to the COVID-19 pandemic.
 
COVID-19 and Urban Passenger Transport Services 
This policy brief seeks to summarize the issues relating to COVID-19 and urban passenger transport workers. The brief discusses the mains impacts of the pandemic in the sector. It also includes information on the tripartite and sectoral measures that employers, workers and governments have taken to support the sector and its workers, and on the ILO’s principles and tools, including international labour standards.
 
Hand hygiene at the workplace 
Workplaces, particularly those that employ migrant workers and those in the informal economy, have taken centre stage in the containment of the COVID-19 virus.  Since the ILO Centenary Declaration for the Future of Work, adopted by the 108th Session of the International Labour Conference (Geneva, 2019), emphasizes that safe and healthy working conditions are fundamental to decent work, we dedicate this policy brief to hand hygiene in workplaces.  The main message is that all workers must have the facilities to wash their hands safely and adequately at work in order to prevent or reduce the spread of COVID-19.
 
COVID-19 and the media and culture sector 
This brief highlights the impact of COVID-19 on the media and culture sector, hit hard by unemployment and closed productions. It analyses how the sector’s diversity in terms of contract types and occupations creates challenges  in accessing social protection, safety and health, and economic relief programmes. The brief also offers policy options, drawing from countries’ examples and initiatives from workers’ and employers’ organizations, to mitigate the economic impact of the pandemic on the sector.
 
COVID-19 and the forest sector 
The COVID-19 pandemic is affecting public health and causing unprecedented disruptions to economies and labour markets, including for workers and enterprises in the forest sector. It has exacerbated existing challenges, with many enterprises and workers suffering as a consequence. In response, governments, employers’ and workers’ organizations, and other forestry stakeholders around the world, are collaborating to mitigate the impact of the pandemic with a view to protecting businesses and livelihoods, including through social dialogue and the promotion of international labour standards.
 
COVID-19 and the Public Service 
Besides health and education workers, all public servants play a role in halting the spread and recovering from the pandemic. This is true regardless of their occupation: whether in the administration of the state like tax collectors, police or correctional officers; implementing economic and social policies like labour inspectors; providing services to the community like waste collectors; or supporting compulsory social security systems like social workers. As custodians of public goods, public servants are indispensable conduits for the recovery. The COVID-19 pandemic demonstrates the crucial importance of disaster preparedness and that private-sector partners cannot manage alone the scope of interventions needed now.
 
COVID-19 and road transport 
The road transport sector is essential to social and economic development and guarantees mobility across jurisdictions and countries. But in order to curb the spread of COVID-19, many countries around the world have placed restrictions on domestic transit and/or closed border crossings for road freight transport services. Urgent action by governments, the social partners and parties to road transport supply chain parties – including shippers, receivers, transport buyers and intermediaries – will be critical in addressing decent work challenges for these key workers to tackle the crisis effectively.
 
COVID-19 and Public Emergency Services 
This policy brief addresses issues relating to public sector workers who perform frontline duties in confronting the COVID-19 crisis in the name of the State, often described in statutes as essential services. The brief discusses their role in dealing with the crisis, the measures that governments have taken to support their work and the ILO principles and tools, including international labour standards, that protect them.
 
COVID-19 and the automotive industry 
The automotive industry has been hit by a triple whammy: factory closures, supply chain disruption, and a collapse in demand. Just-in-time manufacturing processes have propagated the impact across the globe. Small and medium enterprises are among those hardest hit and millions of jobs are at risk. Automakers are key to kick-starting the global economy. Not only by producing life-saving ventilators and facemasks. Sustainable industrial policies and targeted support and are key to a lasting recovery – to building back better – with decent work for more women and men.
 
COVID-19 and food retail 
Food retail workers have emerged as a new category of frontline services during this pandemic. While essential to guaranteeing food security, they are themselves at high risk of exposure to infection and play a key role in food safety. To ensure adequate numbers of food workers, they need access to and training on personal protective equipment and hygiene protocols, as well as working conditions that provide adequate wages and access to social protection, including paid sick leave.
 
COVID-19 and the textiles, clothing, leather and footwear industries 
The viability of the textiles, clothing, leather and footwear industries is unravelling, as workers are told to stay at home, factories close, and global supply chains grind to a halt. The cancellation of orders has hit thousands of firms and millions of workers particularly hard. We urgently need solidarity and joint action across the industries’ supply chains. The ILO is committed to supporting governments in protecting the health and economic well-being of workers and businesses in the textiles, clothing, leather and footwear industries.
 
COVID-19 and civil aviation 
To curb the spread of COVID-19, a combination of flight cancellations and restrictions have almost entirely halted international travel. The impact of the pandemic on employment has been immediate and significant. Cost-reduction strategies may include a wide range of policies that will have an impact on employment and decent work in the civil aviation sector. The ILO has accumulated experience from previous crisis situations to help the sector recover from this shock.
 
COVID-19 and the health sector 
The COVID-19 crisis is drawing attention to the already overburdened public health systems in many countries, and to the challenges faced in recruiting, deploying, retaining and protecting sufficient well-trained, supported and motivated health workers. It highlights the strong need for sustainable investment in health systems, including in the health workforce, and for decent working conditions, training and equipment, especially in relation to personal protective equipment and occupational safety. Social dialogue is essential to building resilient health systems, and therefore has a critical role both in crisis response and in building a future that is prepared for health emergencies.

COVID-19 and the education sector 
Teachers have had to adapt to a world of almost universal distance education as nearly 94 per cent of all learners have faced school closures. Most teachers and their organizations have embraced this challenge, although in many developing countries teachers lack the skills and equipment to provide distance education effectively. As governments consider reopening school as confinement measures are relaxed, the safety of learners and teachers should be paramount, and social distancing of learners, access to personal protective equipment, and regular virus testing will be key.

COVID-19 and maritime shipping & fishing 
Shipping carries most world trade, and fishing provides essential food. The pandemic impacts the safety and well-being of seafarers and fishers, their ability to join their vessels and return home, and the future of their jobs. Seafarers on cruise ships, which have often barred from entering port, are particularly hard hit. The ILO is working to protect these key maritime workers as the world seeks to protect public health.

COVID-19 and the tourism sector 
Tourism is a major driver of jobs and growth. But COVID-19 has dramatically changed this. The impact on tourism enterprises and workers, the majority being young women, is unprecedented. Timely, large-scale and, in particular, coordinated policy efforts both at international and national levels are needed in consultation with governments, employers’ and workers’ representatives, taking into consideration relevant ILO international labour standards.

COVID-19 and agriculture and food security 
While working to feed the world, many agricultural workers are unable to lift themselves out of poverty and food insecurity. As the pandemic spreads, the continued functioning of food supply chains is crucial in preventing a food crisis and reducing the negative impact on the global economy. Coordinated policy responses are needed to support agribusiness and the livelihoods and working conditions of millions of agricultural workers in line with relevant international labour standards.
 

 

 

From Pandemic to Endemic, Singapore Creates Model for Living With Covid-19
As vaccinations rise, the city-state plans to move to a new stage in which the virus ceases to paralyze daily life
 

SINGAPORE—For months, this city-state has enforced strict rules to keep corona virus infections as close to zero as possible. Its border remains largely sealed. In the past two weeks, it has recorded between four and 20 new local cases a day—high enough by its low-risk standards that residents aren’t permitted to eat at restaurants in groups of more than two.

Now, with nearly 40% of its population fully vaccinated, Singapore is making plans to shift to a new phase—one in which it no longer tries to track down every case and end all transmission it can find. Instead, Covid-19 becomes a less threatening disease, like the flu, ceasing to paralyze daily life. In other words, it becomes endemic, as many public-health experts have long said it would.

People are battle-weary, a group of Singapore government ministers wrote in a recent editorial in the Straits Times newspaper. “All are asking: When and how will the pandemic end?” they added.

Covid-19 testing at public housing in Singapore in June after an outbreak nearby.PHOTO: CAROLINE CHIA/REUTERS

“The bad news is that Covid-19 may never go away,” they wrote in response. “The good news is that it is possible to live normally with it in our midst.”

The U.S. and several other countries have been easing Covid-19 restrictions at higher rates of infection than Singapore’s to boost economic recovery. The city-state’s planned shift comes as more governments accept that even with vaccines, Covid-19 isn’t going to be wiped out soon, if ever. The original virus has spawned many variants, some of them tougher to stop than earlier versions, and a slow vaccine supply to developing nations is giving the pathogen yet more room to thrive and evolve.

But policy makers also see that vaccines can make the disease far less menacing by sharply reducing severe cases, hospitalizations and deaths.

In the U.S., where 46% of the population is fully vaccinated, daily Covid-19 deaths are down to below 300 a day, their lowest point since March 2020, according to Our World in Data. In the U.K., despite a recent rise in infections fueled by the highly transmissible Delta variant of the virus, deaths have remained relatively low. The U.K. official overseeing vaccine deployment, Nadhim Zahawi, said in May that the government was making plans for next year “to deal with Covid, as we deal with flu, through annual vaccination programs.”

A shop worker arranging rapid-test kits at a pharmacy in Singapore.PHOTO: EDGAR SU/REUTERS

Singapore’s plan to transition from pandemic to endemic looks like this: Most of the city-state’s 5.7 million residents will be vaccinated—it aims to fully cover two-thirds of its population by early August—making it harder for the virus to transmit and, more important, harder for it to kill. Some people will still fall sick with Covid-19, but most will recover at home. Authorities will track and trace much less, quarantine far fewer people and end the daily ritual of tabulating new cases, switching instead to measuring how many Covid-19 patients are in intensive-care units and how many need intubation for oxygen.

Post-pandemic Singapore won’t exactly feel like a throwback to 2019. Travel, for instance, won’t soon be friction-free, though it might become easier for those armed with vaccine certificates. Covid-19 testing will be everywhere—airports, office buildings, shopping malls, universities—but instead of swabs, it will come in the form of quick alternatives, such as breathalyzers.

 

Singapore’s Jewel Changi Airport entertainment and retail complex recently reopened after being closed for a month because of Covid-19 concerns. WALLACE WOON/EPA/SHUTTERSTOCK

In planning the shift, Singapore is looking at real-world data from highly vaccinated countries such as Israel, said Yik-Ying Teo, dean of Singapore’s Saw Swee Hock School of Public Health. Of particular interest, he said, was data on the proportion of vaccinated people infected with Covid-19 who were coming down with asymptomatic or mild infections to those facing severe disease or death. So far a recent rise in Israel’s cases isn’t accompanied by a jump in deaths.

“If vaccination works, or indeed if certain vaccines work better than others, in allowing countries to now disentangle infection numbers from hospitalization numbers, that is exactly the type of data that the world needs to get out of the overall pandemic situation,” Prof. Teo said.

Still, the path will be long and messy. Although some wealthy nations are beginning to put the worst of the pandemic behind them, the virus isn’t under control across much of the world. Sparsely vaccinated populous countries such as Indonesia and Bangladesh are battling new surges. India is warning that another wave is possible. Cases and deaths are rising in many parts of the African continent. Globally around 8,000 people are still dying every day.   That means Covid-19’s prevalence and death toll will vary from country to country for a long time.

“Countries which are able to achieve a high uptake of effective vaccines will be in a better state to exit this pandemic,” said Prof. Teo. “For some of the lower- and middle-income countries, they may be forced to continue to adopt a pandemic posture for much longer simply because they have yet to be able to access safe, effective vaccines for the bulk of their population.”

Disinfection at a Singapore market after a positive test for Covid-19.PHOTO: EDGAR SU/REUTERS

Catherine Bennett, chair in epidemiology at Australia’s Deakin University, said a global effort was needed to help all countries be vaccinated at high levels. “We can’t call off a pandemic because our corner of the world is sorted,” she said, adding that allowing rampant transmission raised the risk that more variants would emerge.

“The worst-case scenario for this time next year is that we have helped create a variant that escapes vaccines and we’re kind of back to square one,” she said.

Assuming that doesn’t happen, she said the disease was on track to becoming endemic, though governments and public-health experts would need to keep an eye on it—not by tracking every infection or even knowing how much virus is in the community, but by staying on top of which variants are circulating, for instance. Newer generations of vaccines might be developed that are better at stopping infections and slowing the mutation clock, she said.

In this phase, countries such as Australia would need to change their zero-tolerance approach to the disease, she said. Australia is currently experiencing relatively low vaccination rates, new outbreaks and fresh lockdowns. “Anyone who is in denial still and thinks it is possible that you don’t need to be vaccinated because you can keep the virus out now has to think differently,” she said.