Developing Social Security Schemes for Small Island Economies: Lessons from Fiji's COVID-19 Experience

Abstract

COVID-19 has triggered deep economic damage and devastated livelihoods to an extent never before experienced. It has revealed socio-economic vulnerabilities and so can be used as a learning platform in preparing for future shocks. In particular, it has exposed the vulnerability of households to sudden, severe, and prolonged income shock, the significance of social security as a shock response tool, and the importance of household resilience for macroeconomic stability. This study uses the pandemic as an opportunity to understand the resilience of Fijian households to profound and prolonged income shocks, given these households' social, cultural, and economic setting. It evaluates national response strategies, household coping mechanisms, and gaps in the current social security measures in Fiji. This evaluation reveals several key lessons for a systematic response to any future shocks. The lessons may prove beneficial not only for Fiji, but also for other similar economies in the region. Policy makers can build on the operational learning and capacity developed during the pandemic, reinforce existing social security systems, and be better prepared for future income shocks. Fiji and other Pacific Island economies are highly vulnerable to climate-related risks and have endured the adverse economic effects of some extremely intense natural disasters. It is important for these economies to strengthen household resilience and develop sustainable and broad-based programs for social protection.