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Op-eds and articles by the Executive Secretary |
| Global Crisis Interrupts Five Years of Achievements in Latin America The current global crisis has interrupted five consecutive years of significant economic growth that has benefited Latin American countries, with poverty and extreme poverty diminishing considerably and employment and wages on the rise. The trend towards reducing poverty and indigence begun in 2002 continued throughout 2007. In 2002, a total of 221 million people (44%) were estimated to be living in poverty and 97 million (19.4%) in conditions of extreme poverty. The number of people living in poverty was reduced by 37 million (9.9 percentage points) and those living in extreme poverty diminished by 29 million (6.8 percentage points). Poverty in Latin America in 2008 is expected to reach 33.2% and extreme poverty 12.9% of the population; that is, 182 million people are living in poverty and 71 million in extreme poverty. Extreme poverty did not decrease between 2007 and 2008. In fact, it rose moderately, increasing from 12.6% in 2007 (68 million people) to an estimated 12.9% this year (71 million people). This implies that an additional three million people are living in extreme poverty in the region this year. This data is included in our annual flagship publication, Social Panorama of Latin America 2008. The slower pace of poverty reduction and the slight increase in indigence in 2008 is closely tied to the higher inflation rates observed since early 2007 and particularly to food price hikes. The recent deceleration of inflation in food products could counteract the negative effects that the global financial crisis could have on poverty and indigence in 2009. We expect the world economic deceleration to be reflected in the region through lower demand for its exports and less productive investment, along with diminishing migrant remittances and restrictions on the access to credit for emerging countries in international financial markets. Employment will likely stop expanding in 2009 and real wages are expected to remain, on average, unaltered, or they may diminish slightly. Household income will probably deteriorate, affecting especially independent and informal workers, whose jobs are more vulnerable to economic cycles. The report clearly stresses that, although regional averages show a territorial scenario, behind them are stark differences between countries. Those countries in which household income relies significantly on remittances, whose productive structure is less diversified and which are more dependent on exports to the United States market will be more affected. One of the factors bearing on poverty reduction is the high and persistent inequality in income distribution, as well as the high informality of the labour market. In Latin America, average per capita income of households in the tenth decile is about 17 times higher than that of the 40% poorest households. Most progress from 2002 to 2007 resulted from higher average income of the poorest households, mainly salaries, as well as a slight improvement in income distribution and economic growth leading to higher employment, especially formal employment. Nevertheless, unemployment continues to be high, and in 2006 it was 2.4 percentage points higher than in 1990. Although unemployment rates have dropped in most urban areas since 2002, there continue to be stark inequalities, reflected in higher unemployment rates among the poor, women and youths. In another issue, the report addresses the opportunities of the demographic bonus that benefits all of Latin America. This bonus, which reflects a more favourable proportion of the population in productive age in relation to the population in dependent age (children and older persons), could be used to invest in high school education with a stronger impact. The demand for elementary education is expected to continue dropping, given the shrinking child population; demand for high school education will later drop as well, due to a lower adolescent population. This scenario offers governments the opportunity to set goals to increase the coverage and quality of high school education. Lastly, the report analyzes the issue of youth and family violence in Latin America. This violence is the result of several forms of social and symbolic exclusion of youths, such as unequal opportunities, lack of access to jobs, lack of affiliation to institutions, the gap between symbolic and material consumption, territorial segregation and the absence of public instances for social and political participation. Added to this are gang violence and the recruitment of youths for organized crime and armed conflict. As a corollary, I must admit that poverty in Latin America is not a new phenomenon, but in the Social Panorama 2008 we assert that it has a new profile, characterized by the close ties between poverty and the labour market, which is increasingly unregulated by the State and more dominated by the market and aggravated by the enormous priority given to export-related activities. We also acknowledge that although people's purchasing power, based on their income levels, is related to the degree of access to or satisfaction of their basic needs, this does not invalidate the study of the evolution of other factors that are highly significant for social welfare. I am referring specifically to the Millennium Development Goals, which include, in addition to poverty and employment, other relevant issues such as basic education, nutrition - particularly child nutrition -, health, gender equality and environmental sustainability, among others, and that above all, they acknowledge the importance of intergenerational solidarity. Given that in relation to other developing regions, Latin America presents a relatively favourable situation, especially over the past five years, now is the time to reformulate social goals in light of the crisis in order to overcome one of the region's main problems: inequality. I believe we should examine the lessons learned from earlier crises to revise the development issue with a comprehensive perspective, from the viewpoint of the region and with a medium-term approach. Alicia Bárcena, |