ECONOMY-ARGENTINA: New President to Inherit Legacy of Poverty

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Aug 16 1999 (IPS) - Poverty levels in Argentina have nearly doubled in the past five years because of a lack of jobs, decreased salaries and destabilised working conditions, which have a decisive influence on family incomes, according to official statistics.

According to latest figures from the National Institute of Statistics and the Census (INDEC) unemployment is now 14.5 percent while another 13.2 percent of the work force is underemployed.

Added to the jobless ranks are four million people who have already given up on finding work and four million illegal immigrants, many of whom are employed in unstable positions.

Up to now, the problem of joblessness has occurred in the context of worsening and spreading poverty, which experts agree is a new social phenomenon of the last 10 years. This period has seen the creation of the “new poor” – members of the middle class who have fallen on hard times.

The middle class is being impoverished by a “brutal drop in family income,” says sociologist Artemio Lopez, of the Social Research Teams. “For every 1,750 people who became poor last year, 1,000 were from the middle class.”

Economist Roberto Frenkel, of the non-governmental Centre for Studies of the State and Society, says that joblessness has had a “perverse effect on the general level of incomes” since the launch of the 1991 stability plan.

Despite a slowdown in economic activity, which began in 1998 after a period of growth – only interrupted a year after the Mexican crisis – poverty has grown both quantitatively and qualitatively since 1994, accompanied by the rise in unemployment.

One of the biggest challenges faced by President Carlos Menem, who steps down in December after more than 10 years in office, was to rein in inflation rates.

He is passing on to his successor a weighty social task: the poverty level today are distressingly similar to those of periods of hyperinflation, according to economic analysts.

In Argentina – a country traditionally blessed with wide opportunities for development thanks to a vast middle class- now has 12 million “poor” inhabitants, out of a population of 36 million, according to INDEC. The World Bank puts the poor figure even higher – at 13.4 million.

“Poor” people are those who must survive on family incomes less than the basic subsistence level for a family of two adults and two children, an amount estimated to be 480 dollars a month.

In truth, the total budget for a family of that size is estimated at closer to 1,700 dollars a month, most economists agree. To that population must be added impoverished persons who earn less than 210 dollars per month. There are 3.2 million Argentineans currently living under this category.

Economists point out that comparing 1999 statistics with those of 1994 shows that the percentage of poor homes in Buenos Aires has jumped from 16.1 percent to 27 percent. The indigent rate has gone from 3.3 to 7.4 percent.

At the same time, there has been a widening of the gap between rich and poor. The World Bank says that the economic liberalisation, accompanying Argentina’s neoliberal model in recent years, has further aggravated inequalities in income distribution.

According to a World Bank study, the price of public services for the poorest sector of the Argentine population has doubled in the last 13 years, after the privatisation of state enterprises.

In 1986, the poorest 20 percent of society spent 9.1 percent of their income on services like electricity, gas, water, telephone and public transportation. Today, they shell out 17.4 percent.

The greatest impact felt by poor families has been in the area of transportation. Doctors in public hospitals assert that they regularly have to give money to the parents of sick children, to enable them to secure required treatment.

The lack of money for transportation is also a barrier to finding work. According to polls carried out by Lopez, 30 percent of those consulted said that they were unable to go look for a job because they could not afford the fare.

Members of the middle class, struggling to avoid falling into poverty, have drastically cut their spending this year which, economic forecasts predict, will end with an approximately five percent fall in the nation’s gross domestic product.

According to a report published this month, telephone companies have suspended service to 730,000 customers – 10 percent of its client base – for failing to pay their bills.

The job crisis in Argentina was highlighted in the latest Human Development Report put out by the United Nations Development Programme (UNDP), which warned of the danger of this country reaching a level of labor instability similar to that of Egypt.

INDEC recognises that 37.5 percent of workers are not enrolled in social security and accordingly do not receive medical or retirement benefits.

The elderly are not in a much better position. On the contrary, the majority of those who receive the minimal check of 145 dollars a month are part of the “new poor.”

At the other extreme, many children seem to be born with their future already mortgaged. More than half of Argentinean children under the age of 14 are from poor familes.