UNDP’s Jessica Faieta discusses key challenges for Latin America in The Guardian’s online chatApr 3, 2014
New York/London - UN Development Programme (UNDP) Director a.i. and Deputy Director for Latin America and Caribbean Jessica Faieta took part today in an online chat promoted by The Guardian titled “Rise of the middle class: Lessons from Latin America.”
Kick starting her newly launched Twitter account, Ms. Faieta highlighted key pillars of UNDP’s work in the region during the discussions with online participants and other top panelists ranging from Americas Quarterly editor Christopher Sabatini and World Food Programme’s Brasilia-based centre of excellence director Daniel Balaban to Maria Cecilia Guemes from the Spanish National Research Council.
“The region has witnessed a profound social transformation: a growing middle class has generated a new landscape for human development and democratic governance in the last decade,” she wrote. “Despite important development achievements, there is a large part of the population still living in poverty.”
Faieta highlighted that according to recent figures, over 90 million people entered the middle class in Latin America and the Caribbean between 2000 and 2012 and by 2016, the middle class is expected to surpass the portion of the population living in poverty.She also stressed that nearly half of the decline in inequality can be explained by improvements in an increase in income.
“Economic growth created greater demand for domestic goods, moving more people — particularly the poor — into the labor force, driving wage increases. This helped reduce the wage gap between college-educated workers and those without a college degree” she said.
“Universal access to massive primary and secondary education in Latin America was the secret ingredient for this equalizing effect in the 2000s and it signals the high payoff of investing in education at every level.”
She reminded participants that Latin America leads the world in social programmes that give financial aid to people in poverty, conditional on keeping their children in school and keeping up with vaccines and medical checkups. These transfers make up between 0.5 percent and 3 percent of GDP, but they account for nearly a third of the decline in inequality and are the principal means of poverty reduction for 18 countries in the region.
Over 25 million families, 113 million people, or 19 percent of the population, have benefited from them. Social transfers cannot substitute for weak or nonexistent social services, but they have moved financial resources into the hands of the poor — without much intermediation.
Faieta also stressed that a major concern for UNDP is that the decline in inequality in Latin America and the Caribbean is slowing down, and in some countries, it is stagnating in the last two years.
“Why is this happening? The critical factors seem to be (i) lower growth in labor income at the bottom of the income pyramid, (ii) a diminished effect of social transfers, either through fiscal constraints or changes in targeting, and/or (iii) a diminished impact of pensions, for either of the previous reasons. Not much has changed on either social transfers or pensions in the period 2010-2012, so, the culprit would seem to be the labor market,” she wrote.
“We know that despite still being a highly unequal region, Latin America and the Caribbean was the only region that managed to reduce inequalities in the past decade and there are lessons for other regions and countries in the world facing increasing inequalities,” Faieta wrote.
“The number one lesson is that markets alone will not solve the problem (poverty and inequality reduction): Countries need to develop a rich array of social policy instruments (and tax reforms to pay for them).”
Other panelists also mentioned key “recipes” from the region such as: 1) good macroeconomic policy (economic growth, low inflation); 2) public assistance programs that seek to break the cycle of inter-generational poverty (conditional cash transfers); 3) better education.
Kate Maclean and Switzerland-bases Brazilian criminal lawyer Luis Fernando Bravo de Barros underlined the importance of participatory democracy and social activism.
“The rise of the middle class is also about power and voice of the population,” Jessica Faieta commented, when participants brought up the recent street protests in several Latin American countries. “Citizens are frustrated by wide disparities in wealth and power and there is weak popular participation in public affairs - especially among young generations.”
She wrote that boosting the political participation of women and young Latin Americans, especially those of African and indigenous descent is crucial.
“Another crucial topic for the region's rising middle class and countries' further development is citizen security,” she added, highlighting key findings from UNDP’s recently launched Latin American Human Development Report on citizen security.
Follow the complete discussion on The Guardian’s website