The Impact of COVID-19 on Households and Firms in the MENA Region

The six selected research projects provide a wide variety of evidence in the context of research on the short-term socio-economic effects of the Covid-19 pandemic:

• The first article (by V. Hlasny & S. Al Azzawi) explores the effects of the pandemic on workers’ employment outcomes in Egypt and Jordan. They estimate logit models of workers’ job loss and multinomial logits of workers’ labour market statuses, investigating who has been most affected among the working population. They show the COVID regime stringency having affected negatively employment and labour market participation of most groups of workers – particularly youths, even if they were not disadvantaged pre-COVID. Higher education is associated with the retention of a better employment status, conferring consistently high returns in terms of remaining an economically active individual, or remaining employed, and in formal employment. Workers’ pre-COVID employment status affects their outcomes amid COVID, implying strong employment-status dependence. Those laid off amid COVID come predominantly from among those without (formal) employment pre-pandemic. Between mid-2020 and mid-2021, men’s employment prospects gradually improved, but women faced a stagnation, by being largely excluded from work opportunities. Youths trailed non-youths early during the pandemic, but have caught up during recovery. In sum, youths and women have been affected more adversely than non-youths and men at the height of the pandemic. They face higher risks of getting laid off, and have a harder time returning to work – supporting the ‘last in’ if not the ‘first out’ hypothesis.
• The second article (by Z. El-Sahli & M. Alsamara) investigates the effects of the pandemic on small and medium-sized enterprises (SMEs) in four non-oil-exporting MENA countries (Jordan, Morocco, Tunisia, and Egypt). MENA SMEs resorted to wage and work hours reductions more often than layoffs in the wake of the pandemic. Within SMEs, larger firms are more resilient, recover faster, and adapt more often. At the sectoral level, the accommodation and food services sector is the worst affected in most of its outcomes. There is, however, clear recovery in Q2 2021 (versus Q1) across sectors and countries. Furthermore, SMEs that switch to remote work are less likely to face closures, they recover faster, and adapt more frequently, signalling higher resilience and adaptability. On the other hand, participation in government assistance programs does not improve firm outcomes, whereas firms that participate in international trade are more resilient and adaptable in the face of the shock. 
• The third article (by A. El-Shal, E. Moustafa, N. Rostom & Y. Abdelfattah) looks at social safety nets (SSNs) and emergency transfers from NGOs during the onset of the pandemic, estimating if and to what extent SSNs have mitigated food insecurity in MENA between November 2020–June 2021 in Egypt, Morocco, Jordan and Tunisia. Using a difference-in-differences approach, the authors show that those who received non-usual government support in Tunisia were 15 percentage points (ppts) less likely to be unable to buy their typical amount of food due to price increases than those who did not receive support. No significant effects are observed in Egypt, Jordan, and Morocco. Non-usual social support from non-governmental institutions had greater effect. Individuals who received non-usual support from non-governmental institutions in Morocco and Jordan were, respectively, 22 ppts and 15 ppts less likely to report being unable to buy their typical amount of food due to decreased income. Their estimates also show that government SSNs have mitigated the negative effect of food insecurity on resorting to adverse coping strategies during COVID-19, especially selling assets
• The fourth article (by A. Spinardi, N. Isamiddinova, I. Clavijo & K. Henkens) investigates the associations between factors affecting households during the pandemic, such as food insecurity and gender mental health inequalities in Egypt, Tunisia, Morocco, Jordan, and Sudan. Using data from the World Health Organization (five-question module to measure mental health and well-being) and the ERF COVID-MENA Monitor Household Survey, it inspects gender mental health gap and quantifies the relative contributions of some COVID-19 related shocks and changes on gendered mental health inequality. The results indicate a statistically significant difference in the mental health well-being between men and women, with women’s mental health being significantly poorer than that of men. Women, on average, worry more over the health consequences of the pandemic and the household’s economic situation. They report higher levels of food insecurity in their households, and this variable significantly explains the observed difference in mental health outcomes between genders. 
• The fifth article (by L. Idres & M. Lassassi) analyses the populations’ behaviour toward COVID-19 safety measures in Algeria, Morocco and Tunisia, specifically inspecting which safety measures are observed and what category of people is most likely to observe them. To answer these questions, ERF COVID-MENA Monitor Household Survey are used for Morocco and Tunisia, whilst for Algeria a household survey collected from the Research Center of Applied Economics for Development (CREAD) is used. There are some similarities among the population’s behaviour of these countries, such as the fact that women are found to be those who most observe the safety measures. The educational level also plays a role in determining behaviour, but its impact differs from country to country. Moreover, an ordered probit model is estimated to identify the determinants of the observed safety measures intensity in each country. Women and the elderly mostly comply with the barrier methods, but men and youth are those who use these measures more intensely. Furthermore, a simulation analysis shows that the percentage of Moroccans observing three safety measures converges to 80%, against 59% in Tunisia, and only 5% in Algeria.
• The sixth article (by S. Nour) proposes a country case study for Sudan, using two distinct sources of data. The World Bank and Sudan Central Bureau of Statistics High Frequency COVID-19 Survey (2020) data shows that the impact of COVID-19 on employment status is manifested in a loss of jobs for the majority and nearly two-thirds of households during June - July 2020. The employment loss, the unemployment and even the change of employment of households are mainly explained by the closure of businesses and administrations due to the restrictions applied in response to the pandemic. The impact of COVID-19 is also manifested in loss of income for almost a fifth of households, and reduction of livelihoods or sources of income. The ERF COVID-19 MENA Monitor Household Survey (2021) shows an increase in temporary or permanent layoffs/suspensions of workers, reduced hours, reduced wages, delays in payment of wages for workers and a limited provision of social insurance to workers.