Poverty Declines Slightly in Latin America and the Caribbean, in Spite of Global Financial Crisis
Perspectives for next year are somber, however: employment will stagnate and will severely impact independent and informal workers.
(9 December 2008) During 2008, the percentage of the population living in poverty in Latin America and the Caribbean dropped to 33.2% (182 million people) from the 34.1% (184 million) the previous year. However, extreme poverty or indigence rose mildly, from 12.6% in 2007 (68 million people) to an estimated 12.9% (71 million) this year.
These are some of the conclusions of the annual ECLAC report Social Panorama of Latin America 2008, launched today by Commission Executive Secretary Alicia Bárcena. The report asserts that efforts to reduce poverty and indigence in 2008 were less effective than in the 2002-2007 period, when the number of people living in poverty or indigence dropped by 9.9% (37 million people) and 6.8% (29 million), respectively.
Estimated figures for poverty and indigence reflect the impact of rising inflation since early 2007, and particularly escalating food prices, although food and fuel prices in the region have ceased climbing in recent months.
ECLAC expects the global economic deceleration to impact the region through a weaker demand for commodity exports, declining investment in productive sectors, lower migrant remittances, and international financial market constraints for emerging countries.
Employment is expected to stagnate during 2009, while average real wages are to remain unchanged or diminish slightly. Economic forecasts suggest that average household incomes will deteriorate, particularly among independent and informal workers whose jobs are most sensitive to movements in economic cycles. In this context, poverty and indigence will most likely increase moderately, continuing the negative trend begun in 2008.
The ECLAC report emphasizes that the situation will differ among groups of countries. The most seriously affected will probably be those countries that are most dependent on remittances, or that have more direct links with the United States market, as well as those with scantly diversified export structures that rely on the commodity markets that have suffered most of the impact of the global crisis, as well as countries with weak financial systems.
With regard to the factors that bear on poverty reduction efforts, the region continues to show a significant disparity in income distribution, with the average per capita income of households in the tenth decile about 17 times greater than that of the poorest 40% of households. Most progress in lowering poverty during 2002-2007 was due to an increase in the average income of the poorest households, mainly labour income.
In terms of unemployment, the Social Panorama notes that it remains high, and that as of 2006, the rate continues to be 2.4 points higher than in 1990. However, unemployment has dropped in most urban areas since 2002. Nevertheless, sharp inequalities persist, and these are reflected in higher unemployment rates among the poor, women and youths. In this context, the report examines the new target of the first Millennium Goal: "to achieve full and productive employment and decent work for all, including women and young people."
The third chapter of the report deals with the opportunities provided by the "demographic dividend", which accrue to all Latin American countries. This dividend, which reflects the favorable ratio of the working-age population to the population in conditions of dependency (children and the elderly), has had a positive impact on the education sector. Demand for primary education will continue to decline over the coming decades (due to a relative and absolute reduction in the child population), while demand for secondary education will begin to decrease (as a result of the relative and subsequently absolute decline in the adolescent population). This is providing governments with the opportunity to tackle the goal of increasing coverage and improving the quality of secondary education cycles.
Lastly, the Social Panorama report analyzes the issue of youth and domestic violence in Latin America. Such violence feeds on various forms of social and symbolic exclusion among youths, such as the lack of equal opportunities, a lack of access to employment, alienation, discrepancies between symbolic and material consumption, territorial segregation, and the absence of public facilities for social and political participation. In addition, there is the issue of street gangs and the involvement of youths in organized crime and armed conflicts.