The financial crisis, which began in the United States and Western
Europe swiftly expanded into an economic crisis throughout developing
countries. The Eastern Europe and Central Asia region was hit harder
than any other region in the world. Deteriorating macroeconomic
conditions led to deteriorating household welfare, as unemployment
increased. Those workers who kept their jobs took home smaller
paychecks. Men became more highly represented among the unemployed, and
youth struggled to secure their first job.
Confronted by an income shock, families tried two strategies. First,
families took steps to increase incomes, by inserting non-working
members of the family into the labor force, by increasing the number of
hours of work, borrowing, and tapping formal and informal safety nets.
Second, families took steps to reduce expenditures, but some of those
measures (food expenditures, health care utilization) could have an
impact on nutrition and health in the long run. More positively, most
households kept their children in school.
Many countries took steps to protect human welfare and long-term
human capital. Measures included gearing up automatic stabilizers such
as unemployment insurance, scaling up active labor market programs,
strengthening last-resort social assistance, or increasing minimum
pensions. These measures, however, only covered a minority of those in
need and some programs responded more slowly than necessary. In
addition, evidence from a few countries shows steps to ensure access to
health and education services, especially for the poorest in the
The report finds that governments in the region can improve their
crisis responses by making automatic stabilizers more responsive and
broad based; adjusting program parameters to the conditions on the
ground; and starting new programs to fill coverage gaps that emerge.
However, to enable an efficient and flexible crisis response,
governments can benefit from fiscal discipline during good times and
reliable and timely monitoring systems.
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