Millions of Latin Americans risk sliding back into poverty; new generation of public policies crucial to prevent setbacks, UNDP

Jun 14, 2016

Panama City, June 14, 2016 - The main threat to progress in Latin America and the Caribbean is the relapse of millions of families back into poverty. The economic slowdown is part of the story, but not the only cause of such a setback, says the United Nations Development Programme’s (UNDP) Human Development Report (HDR) for Latin America and the Caribbean, launched with more than 60 congresspersons at the regional parliament (Parlatino). To continue to advance and prevent reversals in the social, economic and environmental fronts, the report highlights key policy recommendations, in line with the Sustainable Development Goals (SDGs).

In the report titled Multidimensional Progress: Well-being beyond income, UNDP expresses particular concern over the 25 to 30 million people in the region—more than a third of those who left poverty since 2003 — who risk falling back into poverty. Many are youth and women, with precarious employment in the service sector. They are part of a larger group of over 220 million people (38% of the population, or almost two in every five in the region) who are vulnerable: officially they are not poor (living on less than US$4/day) but have been unable to rise to the middle class (living on more than $10/day).

The factors that pushed people out of poverty are different from those that prevent them from falling back, the HDR stresses. In the past decade, labour markets and education were the biggest engines behind exiting poverty. However, the report argues that it is essential that a new generation of public policies strengthen the four factors that prevent setbacks: social protection, care systems (particularly for children and older persons), physical and financial assets (such as owning a car, a home, savings or bank accounts that act as ‘cushions’ when crisis hit), and labour skills. These four key elements comprise what the regional HDR brands as a ‘resilience basket’, enabling people to absorb shocks and prevent setbacks. This is especially important during economic slowdowns.

The HDR calls on Latin Americans to rethink the region’s progress along multidimensional lines, inspired by the 2030 Agenda for Sustainable Development. New metrics beyond per capita income, economic growth rates and Gross Domestic Product (GDP) are needed to measure development. Nothing that reduces the rights of people and communities or threatens environmental sustainability can be considered progress, the report highlights.

"The challenges of sustainable, holistic and universal development do not end at a certain income threshold: we don’t ‘graduate' from development challenges unless we can respond accordingly to the multiple dimensions that enable people to live the lives they consider valuable, "said United Nations Assistant Secretary-General and UNDP Regional Director for Latin America and Caribbean, Jessica Faieta at the report launch in Panama. "Right now, on the one hand, we must protect the region’s past achievements, including preventing millions from of people from falling back into poverty; on the other hand, we must also promote inclusive policies and comprehensive strategies for populations suffering from historical discrimination and exclusion.”

More of the same does not yield the same results - While about 72 million people were lifted from poverty and 94 million rose to the middle classes between 2003 and 2013, the region experienced a recent slowdown and reversal of poverty reduction rates. The annual average of Latin Americans lifted from poverty was nearly 8 million between 2003-2008 and 5 million between 2009-2014, according to the regional HDR. However, in 2015 and 2016, for the first time in decades, the region saw a rise in the number of poor women and men.

This reversal is not due to the economic slowdown alone. It also results from the limits of labour and fiscal expansions in the region, and the substantive number of informal jobs. More than half of the 300 million workers in Latin America and the Caribbean work either in micro-enterprises with fewer than five employees, or as self-employed unskilled workers or earning no income (apprenticeship programmes, for example). Also, of the more than 50 million small and medium-sized enterprises, 70% are informal, and two of every three new jobs created in the region were in the service sector, which has low productivity and high rates of informality. Without future increases in productivity in sectors with unskilled workers, the sustainability of growth and, consequently, of social attainments is undermined, the report says.

Moreover, the expansion of conditional cash and other social transfers and non-contributory pensions, which account for about 30 percent of the income inequality reduction since 2002, has also reached a fiscal ceiling. The report also points out that the tax burden on the region’s poor is so high that it usually overrides the benefits received by social transfer programmes. The HDR stresses that improving the effectiveness and progressiveness of the tax system is an urgent challenge for the region.

Investing in women and care policies is key if the region is to leap forward, the report argues. Although the proportion of women with university degrees in the region was higher (17.3 percent) than the corresponding proportion of men (14.8 percent), in 2013, women earned an average hourly wage 16.4 percent lower in relation to men. In addition, women work three times more at home than men. Demographic trends and the absence of care mechanisms (especially for children and older persons), combined with the increase in the number of women in paid works, restrict better participation of women in the labour market and the families’ income generation, the report stresses.

"Being a woman of African descent, indigenous, LGBTI youth, a person with disabilities… all of this affects life opportunities, the possibility of social and economic mobility and access to services," said George Gray Molina, lead author and UNDP chief economist for Latin America and the Caribbean. "Every Latin American generation decides which structural changes to pursue: there are pending citizenship and resilience challenges that will not be solved with economic growth alone."


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About the Regional HDR: This third Human Development Report for Latin America and the Caribbean is an editorially independent publication commissioned by UNDP. This report was prepared with financial support from the Spanish Agency for International Cooperation for Development (AECID, in Spanish). Over 20 regional authorities take part in the report’s Advisory Board including ministers, senators and academics.

About UNDP - UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. On the ground in some 170 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations.

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