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ECLAC Calls for Protecting Progress and Preventing Social Rollbacks in Light of Potential Increase in Regional Poverty

According to projections by the United Nations regional organization, 175 million people were living in situations of poverty in late 2015 in Latin America.
22 March 2016|Press Release

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La Secretaria Ejecutiva de la CEPAL, Alicia Bárcena, durante la presentación del informe Panorama Social de América Latina 2015.
Photo: Carlos Vera/ECLAC.

Poverty and indigence rates measured by income held steady in Latin America in 2014 versus the prior year (at 28.2% and 11.8% of the region’s population, respectively) and both are estimated to have increased in 2015, according to the report Social Panorama of Latin America 2015 presented today at a press conference in Santiago, Chile. In light of this, the Economic Commission for Latin America and the Caribbean (ECLAC) asked countries to protect the progress achieved in recent years and prevent social rollbacks amid a scenario of lower economic growth.

In absolute terms, the number of people in situations of poverty grew by around two million in 2014 compared with 2013, totaling 168 million persons, of whom 70 million were indigent, ECLAC indicated. According to the organization’s projections, in 2015 the regional poverty rate likely rose to 29.2% of the region’s inhabitants (175 million people) and the indigence rate to 12.4% (75 million people).

The increase in the number of poor people verified in 2014 occurred basically among the non-indigent poor, and was the result of uneven national results, rising in some countries and falling in a significant number of others, according to the document.

“If we want to achieve the first Sustainable Development Goal, which calls for putting an end to poverty in all its forms, Latin America must create more quality employment, with rights and social protection, safeguard the minimum wage and protect social spending, which is showing a slower pace of growth,” sustained Alicia Bárcena, Executive Secretary of ECLAC.

“It is urgent for countries to explore new sources and fiscal mechanisms of financing that can ensure the sustainability of social policy and the progress achieved in the last decade,” the senior official emphasized, noting that between 2002 and 2012 poverty dropped by 15.7 percentage points.

In the early 1990s (1991-1992), social spending represented 12.6% of the region’s Gross Domestic Product (GDP) as a weighted average, rising to 19.5% of regional GDP by 2013-2014.

This increase in social spending as a percentage of GDP (6.8 percentage points between 1991 and 2014) is due firstly to growth in spending on social security and social assistance programs (3.5 percentage points), followed by education (1.9 percentage points) and health (1.5 percentage points).

In this edition of the Social Panorama of Latin America, ECLAC dedicates a chapter to analyzing the demographic transition taking place in the region. According to data included in the report, in 2023 the region will go from being a “youthful society” to a “young adult society”; in 2045, the stage of an “adult society” will begin and in 2052 it will be an “ageing society”, with significant differences among countries.

According to the organization’s estimates, in the majority of Latin American countries the so-called demographic dividend (the period in which the working-age population grows faster than the dependent population) will remain in effect over the next 15 years, which opens opportunities for investment in areas such as education and health. Nevertheless, the magnitude of this demographic dividend projected to 2030 is smaller than what has been seen in the last 15 years, and several countries are close to concluding this positive stage of the demographic transition and to beginning a phase of increased costs related to aging.

The document launched today also analyzes the evolution of income distribution and the persistent inequalities seen in the educational system and in the labor market.

Between 2002 and 2014, the great majority of countries achieved improvements in income distribution according to the Gini coefficient (where 0 means full equality and 1 maximum inequality). The coefficient went from 0.497 in 2013 to 0.491 in 2014, while in 2010 it was 0.507. Despite this decline, in 2014 the per capita income of persons in the top 10% of highest incomes was 14 times greater than that of people in the 40% of lowest incomes.

In the study, inequality is also measured according to education levels in various income groups of the population. Despite important progress in terms of access and graduation rates, particularly regarding primary and secondary education, significant gaps persist: while 80% of young people from 20 to 24 years of age in the highest-income quintile had finished secondary school in 2013, only 34% of the persons of the same age in the lowest-income quintile had done the same.

These inequalities, ECLAC contends, become even clearer upon crossing other variables. If one measures, for example, average monthly wage income according to sex, race, ethnicity and years of education completed, it can be observed that the average wage income of non-indigenous and non-Afro-descendent men quadrupled that of indigenous women and doubled that of Afro-descendent women.

According to the Commission, 80% of total income in Latin American homes comes from work. For that reason, quality employment, with rights and social protection, “is the key to equality, the cornerstone of social and economic integration and a fundamental mechanism for the construction of autonomy, identity, personal dignity and an enlarged citizenship,” the study indicates.

The report reviews 58 public programs for labor and productive inclusion in 21 countries of the region, that seek to expand work opportunities for the population in situations of poverty and vulnerability. These are important initiatives, the organization says, but their success depends both on increasing the scale of the programs as well as coordinating them with other instruments of social, economic, productive and labor market policy.

Throughout the region, ECLAC says that efforts to promote decent work should continue, including those that encourage formalization of employment and of businesses and that strengthen minimum wages and access to social protection, with the objective of gender equality cutting across them all.

Finally, the report examines the existing institutional structure for social development in the region. Along with highlighting its progress in the last 25 years, it emphasizes the need to strengthen it further to improve the quality of policies in terms of their impact, efficiency, sustainability, participation and transparency. The study likewise underscores that an essential element is advancing towards the construction of comprehensive care systems as a fundamental pillar of social protection in Latin America.