Even though it’s announced, it doesn’t stop impacting. With the latest measurement of the Permanent Household Survey (EPH), poverty once again passed the 40% threshold (40.1%), which means that 4 out of every 10 Argentines (at least in the large urban centers, which is where INDEC takes the respective samples) were below the poverty line in the first half of the year. For its part, the proportion of poor households, meanwhile, remained fixed at 29.2%for the simple reason that lower-income families have more children and that also impacts greater child poverty.
Steps.
Poverty in Argentina seems to have climbed, once again, another step. Recent history, especially since the 2001/2002 crisis, is that, with each inflationary hit or abrupt increase in unemployment, the poverty rate rises almost instantly. But the stabilization policies that ultimately manage to control the price index cannot reverse the decline in income with the same speed. It is what Augustine Salviadirector of Argentine Social Debt Observatory of the UCAwhich since 2001 has been making a complete x-ray of the causes and effects of poverty, calls “structural poverty levels”. In four decades it rose from 10% in the ’80s to 20% in the ’90s (also combined with very high open unemployment) and already in this century it oscillated between 30 and 40%, with a peak in the but of 2002 and a certain rest in relatively calm years but that could never drop below 25%. The sociologist Eduardo Donzaresearcher of ODSA explains that throughout all this time it was verified that the two variables that have the most impact on the dynamics of poverty are employment and inflation. “What is new about this situation is the balance of the pandemic that also affected middle sectors (for example, commercial premises that did not reopen), despite the fact that there is an overheating of consumption because money burns in the hands that seem more a sample that is not saved because there are no expectations“, Add. In a year with high inflation like this (124% in the last interannual measurement, but with an acceleration since August) a kind of “sense of wealth” is observed due to nominal salary increases and extraordinary aid, of short duration until prices cover it. but that feeds the desire to spend.
The economist and demographer Rafael Rofman, a specialist in social policies, highlights that the incidence of poverty in Argentina had a floor of around 25% (considering the methodology currently in use) for several decades. “This reflects that there is a sector of the population that has structural problems, so possible improvements in average income do not benefit them, and also that the country’s macroeconomic problems have made it almost impossible to sustain a cycle for many years. sustained growth for more than two or three years”, he comments. In this nucleus there is a part of the population (close to 20%) with incomes very close to the poverty line: for them, a bad macroeconomic period implies being poor and a good one allows them to improve somewhat. “But another sector needs sustained economic growth and, at the same time, other structural problems (housing, education, access to services) to be corrected in order to significantly improve their standard of living.”, he concludes.
Price race. Martin Gonzalez Rozada He is an economist and researcher of the Di Tella University and make a “poverty nowcast”which estimates its incidence measured in terms of the percentage of people living in poor households, on a semiannual basis, with a monthly update, using the CPI and projections of total family income. Its last measurement had shown 41.8%, almost 1.7% more than that of the EPH. But this measures an average for the semester (January-June) while the monthly estimates anticipate what could happen to poverty in the next measurement in a context of price acceleration. In the first half of the year, the CPI rose 50% while the third quarter projection for the second half is over 75%. The price dynamics seemed to have been installed after the post-STEP devaluation in the monthly double digits. “The main impact is that of inflation of the total basic basket, which increased around 115% between the first half of 2022 and the first half of 2023, while total household income increased on average ‘only’ 104% in the same period. ”, points out González Rozada.
For its part, Manuel Mera, Director of Social Protection CIPPEC, says that salaries seek to keep up with inflation and rarely achieve it. “Even during the times of increases, workers often see their income eroded until a new salary jump arrives. Furthermore, wage negotiations are a delicate issue since they are used to anchor inflationary expectations, and therefore very high expectations of wage increases at the aggregate level can in theory generate expectations of high inflation,” underlines.
What will come.
Since the EPH “photo” graphs what happened a semester ago and when, as in this case, it corroborates what was intuitively anticipated, expectations are set on what is projected for the second part of the year, populated by uncertainty about the effect of electoral monetary expansion. “What I hope is that the poverty incidence for the second quarter of 2023 reported by the INDEC data is the floor of the poverty rate that we are going to observe in the second half of the year. The income distribution data from last week suggest that the poverty rate for the second quarter would be around 41% and that would be said floor,” concludes González Rozada.
The key, beyond inflation that often clouds the scenario because it is comfortably installed in the three annual digits, lies in improving the features of the labor market, characterized by low salaries and informality. “In addition to the direct relationship with inflation, productivity factors also come into play that limit the ability to generate income in microenterprises and small businesses.”closes Mera and gives as an example the impulse from CIPPEC to the Youth Employment policy.
Like a vicious circle, macroeconomic deficiencies end up deflating the strength of the labor market and this conspires against an effective comprehensive policy to quickly lower the level of poverty. Just as minors are the most affected by poverty rates, young people are those who are left behind in the workplace and discriminated against in self-employment or employment with very low productivity. Reversing this puzzle is not about targeting a single variable, but about combining macro stability with the creativity and effectiveness of appropriate programs.. Measuring poverty and indigence is very necessary but it is not enough to promote a policy that prioritizes its reduction to a minimum.
