World Economy

Millions of LatAms Risk Sliding Back Into Poverty

Millions of LatAms Risk Sliding Back Into PovertyMillions of LatAms Risk Sliding Back Into Poverty

The main threat to progress in Latin America and the Caribbean is the relapse of millions of families back into poverty.

The economic slowdown is part of the story, but not the only cause of such a setback, says the United Nations Development Program’s Human Development Report for Latin America and the Caribbean, launched with more than 60 congresspersons at the regional parliament, UNDP reported.

To continue to advance and prevent reversals in the social, economic and environmental fronts, the report highlights key policy recommendations, in line with the Sustainable Development Goals.

In the report titled Multidimensional Progress: Well-being beyond income, UNDP expresses particular concern over the 25 to 30 million people in the region—more than a third of those who left poverty since 2003—who risk falling back into poverty. Many are youth and women, with precarious employment in the service sector.

They are part of a larger group of over 220 million people (38% of the population, or almost two in every five in the region) who are vulnerable: officially they are not poor (living on less than $4/day) but have been unable to rise to the middle class (living on more than $10/day).

However, the report argues that it is essential that a new generation of public policies strengthen the four factors that prevent setbacks: social protection, care systems (particularly for children and older persons), physical and financial assets (such as owning a car, a home, savings or bank accounts that act as ‘cushions’ when crisis hit), and labor skills.

  The 2030 Agenda

The HDR calls on Latin Americans to rethink the region’s progress along multidimensional lines, inspired by the 2030 Agenda for Sustainable Development. New metrics beyond per capita income, economic growth rates and gross domestic product are needed to measure development. Nothing that reduces the rights of people and communities or threatens environmental sustainability can be considered progress, the report highlights.

“Right now, on the one hand, we must protect the region’s past achievements, including preventing millions of people from falling back into poverty; on the other hand, we must also promote inclusive policies and comprehensive strategies for populations suffering from historical discrimination and exclusion.”

The annual average of Latin Americans lifted from poverty was nearly eight million between 2003-2008 and five million between 2009-2014, according to the regional HDR. However, in 2015 and 2016, for the first time in decades, the region saw a rise in the number of poor women and men.

This reversal is not due to the economic slowdown alone. It also results from the limits of labor and fiscal expansions in the region, and the substantive number of informal jobs. More than half of the 300 million workers in Latin America and the Caribbean work either in micro-enterprises with fewer than five employees, or as self-employed unskilled workers or earning no income (apprenticeship programs, for example).

  Tax Burden

The report also points out that the tax burden on the region’s poor is so high that it usually overrides the benefits received by social transfer programs. The HDR stresses that improving the effectiveness and progressiveness of the tax system is an urgent challenge for the region.

Investing in women and care policies is key if the region is to leap forward, the report argues. Although the proportion of women with university degrees in the region was higher (17.3%) than the corresponding proportion of men (14.8%), in 2013, women earned an average hourly wage 16.4% lower in relation to men.

In addition, women work three times more at home than men. Demographic trends and the absence of care mechanisms (especially for children and older persons), combined with the increase in the number of women in paid works, restrict better participation of women in the labor market and the families’ income generation, the report stresses.