ECLAC Estimates that Nine Million People Will Fall in Poverty in 2009 Due to Crisis
This year, the number of poor and indigent in Latin America will rise by 1.1% and 0.8%, respectively, with regard to 2008.
(19 November 2009) The current global crisis will cause nine million people in the region to fall in poverty this year, according to the ECLAC report Social Panorama of Latin America 2009, released today.
In the study, the Economic Commission for Latin America and the Caribbean estimates that poverty in the region will increase by 1.1% and indigence by 0.8% with regard to 2008. Thus, people living in poverty will reach 189 million by the end of 2009 (34.1% of the population), compared to 180 million in 2008. Also, indigence will reach 76 million (13.7% of the population), up from the 71 million last year.
These numbers depart from the trend towards poverty reduction until now prevalent in the region. The nine million poor and indigent represent almost a fourth of the population that had already overcome poverty between 2002 and 2008 (41 million people), due to greater economic growth, the expansion of social spending, the demographic bonus and better income distribution.
The study was presented today by ECLAC Executive Secretary Alicia Bárcena, who stressed the urgency that the region develop a new long-term social protection system.
"We can't say that all that was attained between 2002 and 2008 has been lost. It is not a lost period. However, the rise in poverty calls us to action: we need to rethink social protection programmes with a long-term, strategic perspective and measures that make the most of human capital and protect the income of vulnerable families and groups," she said.
The projected increase in poverty for 2009 will delay the compliance of the first Millennium Development Goal of eradicating extreme poverty and hunger by 2015: the 85% of progress on this goal in the region in 2008 will drop to 78% by the end of 2009.
Some countries may experiment a greater increase in poverty than the regional average, such as Mexico, due to lower GDP and deteriorating employment and salaries.
The current crisis will nevertheless have less impact on regional poverty than prior crises, such as the "Mexican crisis" in 1995, the "Asian crisis" in 1998-2000 and the Argentine and "dot.com crisis" in 2001 and 2002. For now, the region has been able to maintain the purchasing power of salaries and low inflation.
Income distribution in the region improved significantly from 2002 to 2008. During that period, inequality improved in seven of the 18 countries included in the study and worsened in only three.
Governments in the region have made great efforts to increase social spending. Between 1990 and 2007, public social expenditures per capita rose from 43% to 60% of average total public spending in Latin America.
"This shows that it is possible to grow and redistribute, expand social spending and be fiscally prudent to significantly improve the living conditions of the population. Latin America is not condemned to be poor or unjust," stated Bárcena.
For the future, ECLAC suggests reforming social protection systems and adopting both urgent short-term measures as well as strategic long-term ones. In doing so, governments should avoid fiscal irresponsibility and rigid labour markets, increase taxes progressively, redistribute social spending and extend coverage of social services.
Likewise, ECLAC recommends strengthening government assistance transfer programmes, among them conditional transfer programmes (CTPs). There are CTPs in place in 17 countries in the region, encompassing over 100 million people; that is equivalent to more than half the population living in poverty in Latin America.