Poverty rates in Latin America have dropped to their lowest levels in 20 years, according to a new United Nations report which highlights public spending levels as one of the key factors that has allowed the continent to continue to grow despite the global economic crisis.
Between 1990 and 2010, the poverty rate decreased from 48.4 per cent to 31.4 per cent, while the rate of indigence – or extreme poverty – fell from 22.6 per cent to 12.3 per cent.
The decline in both rates is mainly due to an increase in wages, according to the latest report by the Economic Commission for Latin America and the Caribbean (ECLAC). Public money transfers were also a contributing factor, but to a much lesser extent.
The report, presented yesterday in Santiago, Chile, predicts that the region will close this year with 174 million people living in poverty compared to 177 million in 2010.
“Poverty and inequality continue to decline in the region, which is good news, particularly in the midst of an international economic crisis,” said ECLAC’s Executive Secretary Alicia Bárcena.
The report also forecasts that the poverty rate will continue to drop in the next year. However, it states that the indigence rate may have slightly increased (up to 12.8 per cent) because of the rise in food prices.
The report reveals that public spending, and in particular social expenditure, received a significant boost in most countries over the past 20 years.
“In response to the global economic crisis, the countries opted to temporarily expand public spending rather than to shrink it, which was the action traditionally taken. Although, the emphasis is not always placed on society, expansion still prevented the rise in unemployment and social vulnerability,” the report reads.
The report spotlights countries that had substantial drops in poverty in the past year, including Peru, Ecuador, Argentina, Uruguay and Colombia.
However, Ms. Bárcena warned that progress is threatened by gaps in the productive structure of the region and by labour markets without social protection. Only four out of every 10 workers with formal work are enrolled in the social security system, with a large majority of older persons, women, and workers in rural areas being left out of its benefits.
“To jointly improve productive convergence, labour institutionality and universal social protection in Latin America, steps towards fiscal pacts and social dialogue must be taken,” said Ms. Bárcena.
The report also discusses fertility in the continent, observing that over the past 50 years, the fertility rate dropped rapidly, compared with a moderate drop in adolescent fertility. In addition, a chapter on the Caribbean has been included for the first time, which warns of the high level of unemployment and incidence of HIV/AIDS among young people.