CARIBBEAN-ECLAC says the regional poverty rate has declined significantly, but income inequality remains high

SANTIAGO, Chile, CMC – The Economic Commission for Latin America and the Caribbean (ECLAC) says despite the Regional Poverty Rate, which rose with the COVID-19) pandemic, declining to a level similar to 2014 and reaching the lowest level on record in the last year, and estimated 172 million people in Latin America and the Caribbean (LAC) still do not have enough income to meet their basic needs.

In addition, the UN organization said 66 million of those people could not buy a basic food basket.

The report “Social Panorama of Latin America and the Caribbean 2024: The Challenges of non-contributory social protection in advancing towards inclusive social development” noted that the percentage of the population living in poverty in 2023 was 27.3 percent, marking a decline of 1.5 percentage points compared with the year before.

However, the figure is more than five percentage points vis-à-vis the figure in 2020, the most critical year of the COVID-19 pandemic. This is also the lowest figure registered since comparable records have been in place.

The extreme poverty rate affected 10.6 percent of the region’s population, 0.5 percentage points below 2022 levels but above 2014 levels.

“In total, 172 million people were living in poverty in 2023, of whom 66 million were living in extreme poverty,” ECLAC reported.

ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, who presented the report, noted that the document indicates that poverty continues to affect working-age women more than men and that the percentage of children and adolescents in situations of poverty is considerably higher than that of other age groups. Poverty is also greater in rural areas (39.1 percent) than in urban areas (24.6 percent).

ECLAC also indicates that between 2022 and 2023, there were no significant changes to income inequality levels in the region, which remained stubbornly high.

Between 2014 and 2023, the Gini index slightly decreased by four percent, dipping from 0.471 to 0.452.

The Social Panorama of Latin America and the Caribbean 2024 also warns that the region’s lack of social protection remains high. In 2022, one out of every four households (23.5 percent) lacked access to social security, either contributory or non-contributory.

ECLAC argues that non-contributory social protection is vital in the households of the first, lowest-income quintile since one out of every two of those households accesses social protection via that channel.

“This means that policies for cash transfers or in-kind transfers (such as school meals) and labor inclusion programs are key for linking people with social services and making headway on eradicating poverty and reducing inequality.”

The report verifies that non-contributory pension systems (NCPS) are central to poverty reduction in old age. In the last 20 years, the coverage of NCPS among people aged 65 and over increased by more than 27 percentage points, and during that period, poverty in this same population fell by 14.3 percentage points.

“The strengthening of social protection systems in Latin America and the Caribbean, in particular non-contributory social protection, is a strategic space for adopting an integrated approach that can have a significant impact on poverty reduction, the diverse causes of inequality, and the low levels of social cohesion in Latin America and the Caribbean and, therefore, on the attainment of inclusive social development,” said Salazar-Xirinachs.

“Tackling the development crisis in the region necessitates moving towards universal, comprehensive, sustainable, and resilient social protection systems. To that end, we must urgently reinforce the social, institutional framework with technical, operational, political, and prospective (TOPP) capabilities”.

According to the report, in 2023, social spending amounted to 11.5 percent of gross domestic product (GDP) in Latin America, very similar to the 11.4 percent of GDP seen in 2022.

Social public spending is the main component of total public spending in Latin America (53.3 percent on average in 2023).

In the Caribbean, social spending as a share of total spending fell to 41.3 percent in 2023, further widening the gap with Latin American countries.

According to ECLAC, progress in eradicating poverty requires the establishment of an investment standard for non-contributory social protection of between 1.5 and 2.5 percent of GDP or between 5 and 10 percent of total public spending.

“On average, the Social Development Ministries of 20 Latin American and Caribbean countries spent 0.8 percent of GDP and three percent of total public spending on non-contributory social protection in 2022.”

The report also includes a chapter on social protection in light of the care crisis and population aging. This scenario demands policies with a gender, intersectional, and rights-based approach.

In the next 25 years, the population aged 65 and over will double (from 9.9 percent to 18.9 percent of the total population), numbering 138 million people by 2050.

“The sexual division of labor and the current social organization of care create gender gaps that manifest themselves throughout the life cycle and in the obstacles that women face to labor inclusion and social protection,” ECLAC said.