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The coronavirus will accelerate the social and economic inequality by a strong increase in unemployment, among other factors. This is one of the conclusions drawn from the analysis “Inequality in the context of the crisis of the Covid-19” Amundi -first asset manager in Europe, where it is predicted that the inequality -already latent before the eruption of the pandemic – it will multiply in the months and years to come. “This is crucial because the answers in the short-term the public authorities remodelarán without a doubt, the economic scenario in terms of fiscal policies and redistribution, wage policies, regulation and consumption habits, among others. Against this background, investors will need to include the dimension of the inequality in their analysis of companies and their policies of engagement,” warn the authors of the cited report
In line with this, the experts of the asset manager reviews the negative impacts that results from inequality within a country such as a lower potential for economic growth and risks political and macroeconomic associated with the growing social differences, that, in turn, can cause tensions that undermine the functioning of liberal democracies. “The growth of social disparities is a fact of economic important since 1980 and its consequences are well known. For this reason. Investors had already begun to integrate these issues into their investment decisions before the crisis of the coronavirus,” reads the study.
In the current context of economic crisis resulting from the pandemic, the inequality will increase by a number of factors: the imbalance between countries in addressing the pandemic with the regions and social groups at a disadvantage paying the worst consequences; the differences in accessing the health care system in certain states, and, finally, the inequality at the time of applying measures of response to the pandemic. At the working level, the analysts reveal that the unemployment trigger in the developed countries at the same time that poverty and social exclusion. The division of labor in two groups also is increasing among those that base their performance in high levels of education and that provide a value of intellectual versus manual workers as those employed in the industry, part of the services sector and agriculture.
To address these differences, make urgent social measures that help the groups most affected by the economic crisis. The experts of Amundi propose, in this sense, policy of revaluation to the salary of the lowest-income and putting in brand policy “to increase the contribution to the effort of reconstruction of the economic and social groups more favoured.
Effects on investment
After sorting out these arguments, the analysis focuses on the points to keep in mind when investing in this scenario. A priori, the more it has plunged a country in inequality before the crisis, the greater the response at the end: investors should consider this factor in its assessment of the economic situation relative to the different countries. “As expected, the returns to capital decline as a result of these changes, there will be a new hierarchy of asset classes , which will be discussed in future publications”, as extracted from the report.
therefore, the authors of the report believe that investors should incorporate the issue of inequality in its assessment of companies according to their contribution to the public finances, their policies for those that gain more and their wage policies and policies of participation in the benefits. “Ultimately, we believe that the social problem, which was already becoming more important in the eyes of investors, it will become a central focus in the coming years”, sentenced.