Latin America is caught in a “development trap” with high income inequality and low economic growth — a problem now exacerbated by the effects of the Covid-19 pandemic. The conclusion comes from the UNDP (United Nations Development Program), which announced this Tuesday (22) the Regional Human Development Report for Latin America and the Caribbean.
The solutions, according to the document, involve improvements in social policies, combating violence and reducing the concentration of economic and political power.
The arrival of the coronavirus health crisis, says the document, weighed more heavily on those who were already left behind, widening inequalities throughout 2020 and 2021. The loss of income was more intense on the poorest, especially the poor. informal.
The document recalls that Latin America became the epicenter of Covid-19, which triggered economic and social crises. The increase in poverty and hunger is associated with limited fiscal space, which makes it difficult for governments to implement measures. For UNDP, rebuilding can take a long time.
Among the biggest concerns, the report cites the uneven impact of the health crisis on students. There are barriers for the poorest, such as the difficulty in accessing technological tools at home and the disparity in the training of family members.
“The educational level of adults in Latin America is still highly determined by the educational level of parents. Covid-19 is likely to reinforce that pattern,” says the report.
Latin American countries observed a generalized reduction in inequality indices between 2000 and 2010. In the case of Brazil, the UN body (United Nations Organization) mentions as an important factor the policy of readjusting the minimum wage.
From 2010 onwards, the pace of improvement was losing strength, reaching a stagnation in recent years. Some countries on the continent reversed the trajectory and observed a worsening of the index even before the arrival of the coronavirus pandemic.
One of the symptoms presented by the UNDP for inequality in Brazil is the share of income accumulated by the elite. The richest 10% in the country hold 57% of the national income, second only to the concentration observed in Chile and Mexico in an assessment carried out with ten countries on the continent.
Inequality has different layers that are analyzed by UNDP. The agency mentions, for example, the difference in opportunities between men and women. In Brazil, they earn on average 25% less than men with equivalent characteristics and training.
The document also highlights the discrimination faced by LGBT+ people in the labor market, in addition to being more often victims of violence. The document highlights that ethnic minorities continue to suffer from a lack of recognition and lag behind in accessing basic services.
The report states that Latin America’s economic performance in recent decades is characterized by high volatility and mediocre results. The average growth of countries usually oscillates between 0% and 3% per year.
According to the agency, a determining factor for these results is the low productivity common to Latin American countries.
The report brings research that seeks to understand what people think about inequality. The argument is that it is important to know the perception of injustice because it determines the political attitudes of societies.
In Brazil, for example, 86% of people think that the distribution of income is unfair (the Latin American average is 81%). Furthermore, 74% of Brazilians believe they are governed by the interests of small and powerful groups (an average of 77% on the continent).
According to the UNDP, the concentration of power in the hands of a few is one of the factors that tend to increase inequality and low growth. These groups influence distorted policy making. And, according to the document, Latin America is dominated by a small number of giant companies with a high level of power.
“This influence is exerted through interference in tax reforms, in ways that range from blocking tax increases for companies and business owners to the commitment of fiscal resources, pressing for exemptions and subsidies for their operations, which prevents spending redistributive,” he says.
To eliminate these distortions, the UN body suggests revising market rules to eliminate favoring private interests, in addition to promoting debate on how to tax the super-rich.
Another central point for the proliferation of inequality is violence. Latin America is home to 9% of the world’s population, but it is responsible for 34% of the violent deaths registered in the world.
In the pandemic, one factor has worsened significantly in this area, according to the document. There was an increase in the incidence of domestic violence.
For the UNDP, as it is experienced disproportionately by people who are already in a fragile situation, violence contributes to perpetuating the deprivation of these populations. Furthermore, it deteriorates rights, worsens physical and mental health, reduces educational outcomes and limits participation in the labor market.
As a way of facing the problem, the UN suggests establishing more effective justice systems, improving statistics, promoting women’s economic empowerment and discussing the decriminalization of substances that are now illegal.
Another problem observed in Brazil and neighboring countries is the labor market segmented between formal and informal. The latter group is less protected, receives lower quality services and has greater difficulty in improving income conditions.
The UNDP claims that poverty has fallen in Latin America mainly because of direct resource transfer programs, and not so much because the self-earned income of the poorest has increased.
The agency states that social protection for the vulnerable is one of the main tools to mitigate inequalities and suggests that the entire population exposed to a certain risk be covered by the same program, without fragmentation.