LATIN AMERICA: More Poverty, Fewer Social Services

By IPS Correspondents Reprint | | Print |

Gustavo González

SANTIAGO, Jan 13 2003 (IPS) - The poor economic performance of Latin America in 2002 might tempt some to try to forget the entire year, but the recession has left a prominent reminder in a renewed increase in poverty accompanied by the deterioration of social services.

The calculations of the Economic Commission for Latin America and the Caribbean (ECLAC) show that the number of people living in poverty rose seven million last year, of whom six million could be considered indigent, or living in extreme poverty, largely the result of Argentina’s economic collapse.

The total poor population now stands at 221 million, or 44 percent of the region’s people, while indigence within that percentage increased from 18..6 to 20 percent of Latin Americans since 2001.

>From 1990 to 1997, Latin America and the Caribbean experienced a cycle of moderate economic growth, cutting poverty by five percent, though it remained three percentage points higher than it was in 1980, according to Colombian economist José Antonio Ocampo, ECLAC executive secretary.

The 1980s, marked by the foreign debt crisis, passed into history as the "lost decade" in Latin American development. The situation reappeared in the economic scenario of 1997 to 2002.

In that five-year period, "the region was characterised by stagnation of economic growth and by the fight against poverty and, in some cases, by complete recession," said Ocampo.

"As such, it would not be an exaggeration to say that the Latin American population has been affected by the negative consequences of a lost half-decade," he added.

María Becerra, 33, resident of a ‘campamento’ (a settlement of precarious houses) in the municipality of Peñalolén in the Santiago outskirts, says her life grew significantly worse during the last year.

"My husband, a bricklayer, was without work for six months and went to look for a job in the north of Chile. I haven’t heard from him since. He left me alone with the five children, the oldest is 12 and the youngest just two years old," she told IPS.

Forced into her new role as head of household, Becerra works cleaning homes in the afternoons, leaving her oldest daughter in charge of the rest of the children, which obligates her to skip school.

Becerra has joined the 40 percent of Latin Americans who make up the informal labour force, workers without contracts or social security benefits, and whose access to other social services is filled with obstacles.

The informal economy and deregulation of labour relations have not proved to be an adequate solution for inequality in Latin America.

Work income – understood as wages and benefits – represent some 80 percent of all income for the region, according to the latest ECLAC figures, based on 1999 statistics.

Men provide around 45 percent of income, while the contribution of women, on the rise, reaches 32 percent. Workers between the ages of 15 and 24 provide another 12.5 percent, and those older than 65 contribute 3.3 percent.

The action of the state in administering basic social services, in this context of wages depressed by the crisis, should be a tool to fight extreme poverty and to designate resources favouring a more equitable distribution of income.

Although studies are not yet available that measure the impact of the "lost half-decade" on basic services, it would not be unrealistic to predict a sharp deterioration in those countries hit hardest by recession, Argentina in particular.

Social spending per capita in the region was 225 dollars in 1997, of which less than a third (73 dollars) went towards education, health services, and potable water services.

Experts Enrique Ganuza, Arturo León and Pablo Sauma, using data from 13 countries, determined that the money earmarked for basic social services was just 12.4 percent of total public expenditures.

To achieve the goal of total coverage of basic social services it was estimated that public resources would need a 20-percent boost, which in the context of the economic performance of the last five years is practically impossible.

Latin America and the Caribbean, with the combined gross domestic product falling one percent in 2002, will have a hard time achieving the growth levels necessary to meet the 2015 goal to cut the number of people living in poverty by half, as established by world leaders at the United Nations Millennium Summit in 2000.

To halve its poor population, the region would have to see an average economic growth of four percent a year, but the poorest countries would have to reach seven percent growth annually, according to ECLAC, a United Nations regional agency.

Ocampo, however, warns that economic growth alone will not curb poverty and indigence.

Also needed are "economic policies that, in addition to expanding the productive base and increasing national product, entail the progressive redistribution of income," says the ECLAC chief.

In other words, it is the same old dilemma, which is not resolved by the market as the sole regulator of the economy.