SANTIAGO, 10 December 2008: Latin America risks reverting its achievements in poverty reduction in recent years due to the international financial crisis and rising food prices.
The combination of economic growth and improvements in the labour market over the past six years raised nearly 40 million people above the poverty line. Additionally, wage earnings of urban workers increased, as did social expenditure, contributing to diminish inequality among rich and poor.
Unemployment rates have dropped progressively since 2002 in most urban areas of Latin America, although it continues to be high. Unemployment was 2,4 percentage points higher in 2006 than in 1990.
As a result of the international crisis, employment is expected to stagnate during 2009 and real wages will remain unchanged or may decline slightly. Unemployment could rise, especially affecting the poorest population. The current trend already shows a greater concentration of unemployment among low-income workers.
These are some of the conclusions of the report Social Panorama of Latin America 2008 released this week by the Economic Commission for Latin America and the Caribbean (ECLAC).
Economic forecasts suggest that average household incomes will deteriorate, particularly among independent and informal workers whose jobs are most sensitive to movements in economic cycles.
From a gender perspective, the differences in employment rates between women of low and high income groups (higher than among men) reflect certain obstacles that may worsen in a situation of crisis. The economic crisis could affect activities with a high participation of women workers, such as commerce, financial services, the manufacturing industry -particularly textiles and maquilas (eksportzone virksomheder. Red.), tourism, restaurants and domestic help.
The limited availability of fiscal resources may negatively affect social spending, and this may apply additional pressure on households.
In light of these negative effects of the crisis, and similar to the reasoning behind the new Millennium Goal target, ECLAC stresses that achieving full and productive employment and decent work in Latin America is key to reducing poverty and income inequality, given that the labour market is the main link between economic growth and lowering poverty. In this context, ECLAC suggests augmenting efforts to improve the functioning of the labour market.
Social assistance to groups vulnerable to the crisis should be reinforced through food baskets, emergency pensions, employment programmes and other similar initiatives.
To address the problems of unemployment and diminishing income, ECLAC reasserts the need to create special public investment programmes in infrastructure, extend unemployment insurance and strengthen financing, coverage and the institutional framework of conditional transfer programmes.
Kilde: www.eclac.org
