To cope with the socioeconomic effects of the crisis caused by the coronavirus (COVID-19) disease, the Economic Commission for Latin America and the Caribbean (ECLAC) proposes that governments ensure immediate temporary cash transfers to meet basic needs and sustain household consumption, which will be crucial for achieving a solid and relatively quick reactivation. In addition, in the long term, the organization reiterates that these transfers should be made permanent, extending beyond people in situations of poverty and reaching the broad social strata of the population that are very vulnerable to becoming poor, which would enable moving towards a universal basic income to guarantee the basic right to survival, according to a new report unveiled today by the Commission’s Executive Secretary, Alicia Bárcena.
The senior United Nations official presented this Tuesday, May 12, the Special Report COVID-19 No. 3, entitled The social challenge in times of COVID-19, which gives an estimate of the social impact and related challenges that the current crisis is seen having for Latin American and Caribbean countries in the short, medium and long term. At a virtual press conference transmitted live from Santiago, Chile, Bárcena also revealed the details of ECLAC’s proposal for a basic emergency income (BEI) that should be implemented immediately, with a view to keeping it in place over time, depending on each country’s situation. This is especially relevant because overcoming the pandemic will take time and societies must coexist with the coronavirus, which will hamper the reactivation of the economy and production.
“The pandemic has exposed structural problems in the economic model and the failings of social protection systems and welfare schemes that are very costly to us today. Hence, we must move towards the creation of a welfare State based on a new social compact that takes into account fiscal, social and production-related matters,” Alicia Bárcena indicated.
ECLAC proposes providing a basic emergency income (BEI) equivalent to one poverty line (the per capita cost of acquiring a basic food basket and meeting other basic needs) over the course of six months to the entire population living in poverty in 2020 (meaning 215 million people, or 34.7% of the region’s population). This would entail additional spending of 2.1% of GDP to reach all the people who will find themselves in situations of poverty this year.
The report takes stock of the social effects that the COVID-19 pandemic is expected to have. In the short term, it will cause an increase in poverty, extreme poverty and inequality in the region, due to the context of low economic growth. In light of the -5.3% drop in GDP and the 3.4 percentage point increase in unemployment forecast by ECLAC in Special Report COVID-19 No. 2 (see the April 21 press release), poverty in Latin America is seen increasing by at least 4.4 percentage points (28.7 million more people) in 2020 versus the previous year, reaching a total of 214.7 million people (34.7% of the region’s population). Among these people, extreme poverty is expected to rise by 2.6 percentage points (15.9 million more people) to end up affecting 83.4 million people in total.
Furthermore, in line with the increase in poverty and extreme poverty, inequality will also grow in all the region’s countries. ECLAC forecasts increases in the Gini index of between 0.5% and 6.0%. Once again, the worst results are expected in the region’s biggest economies.
The report adds that in this scenario of more poverty and inequality, broad strata of the region’s population are living in chronic conditions of economic insecurity and are very vulnerable to a loss in labor earnings. Thus, ECLAC estimates that around 10% of people who found themselves in situations of non-extreme poverty in 2019 (11.8 million people) will likely see their economic situations worsen and will suffer extreme poverty. A sharp deterioration in the position of people who belonged to the middle strata is also foreseen.
According to the report, the groups especially vulnerable to the socioeconomic crisis are women, people from low income and low-middle income strata, informal workers, paid domestic workers, children and adolescents, young people, older persons, the rural population, indigenous peoples, Afro-descendant people, persons with disabilities, migrants, and homeless people.
The study explains that starting on March 13, governments in the region began announcing social protection measures in reaction to the sharp drop in worker and household income. They have included cash transfers, transfers in kind (such as food, face masks and medication), the suspension or exemption of payments for the provision of basic services (water, electricity, natural gas, telephone, Internet, etc.), social protection measures for formal workers, and other direct benefits for people and families (such as tax relief and price controls, among others).
To date, 126 social protection measures have been applied in 29 countries for the population that is currently poor and vulnerable. Among them, cash and food transfers are reaching 90.5 million households, which is to say, around 58% of the region’s population.
“The pandemic has intensified difficulties for meeting basic needs, particularly on the part of the poorest and most vulnerable population. That is why it is necessary to guarantee income, food security and basic services to a broad group of people whose situation has become extremely vulnerable and who were not necessarily included in the social programs existing prior to the pandemic,” ECLAC’s Executive Secretary stressed.
To articulate social protection in the short, medium and long term, ECLAC indicates that in addition to implementing immediate measures to address the emergency, it is necessary to overcome operational challenges, such as those related to the population’s use of banks, by completing social records and updating and interconnecting them. In the medium and long term, the exercise of rights should be guaranteed by strengthening the welfare State and the universal provision of social protection, introducing a care system, and through the gradual implementation and search for sustainable, innovative financing mechanisms.
“Given the sizeable historical gaps that the pandemic has worsened, ECLAC reiterates that now is the time to implement universal, redistributive and solidarity-based policies with a rights-based approach,” Alicia Bárcena underscored. “Providing emergency responses based on social protection to avert a severe deterioration in living conditions is inescapable from the perspective of rights and well-being.”
“Building the welfare State and universal social protection systems is key to averting another lost decade,” she emphasized. “A central element in the forging of a welfare State is the right to health. Overcoming the current fragmentation, hierarchical organization and commodification of health systems will be one of the lessons that the pandemic leaves behind,” she stated.
“To come out of this crisis, it is necessary to rethink the development model and consolidate the economic, social and environmental dimensions of sustainable development, leaving no one behind, as set forth in the 2030 Agenda for Sustainable Development and through a new social-fiscal compact,” ECLAC’s Executive Secretary said in conclusion.