Poverty increases in Argentina and affects 42% of the population

Poverty increases in Argentina and affects 42% of the population
Poverty increases in Argentina and affects 42% of the population

The Covid-19 pandemic increased poverty in Argentina in 2020, which now affects at least 42% of the country’s population, or 19 million people, according to Indec (Argentina’s National Institute of Statistics and Censuses). At least 10.5% of the population lives in a situation of destitution, without enough income to buy a basic food basket for the month.

Another worrying fact brought up by the Indec report: considering the age group, children between 0 and 14 years old are the population most affected by poverty in Argentina. More than half of them (57.7%) are poor, that is, about six million children, of whom more than 1.7 million (15.7%) live in a situation of destitution in the country, according to estimates.

At the end of 2019, the poverty rate in Argentina was around 35.5%, but the economic effects of the pandemic pushed nearly three million people below the poverty line throughout 2020. Experts assume that the current situation must be even worse, because in the last quarter of last year there was a suspension of emergency pandemic aid programs, accompanied by strong inflation.

Agustín Salvia, director of the UCA Social Debt Observatory, told the newspaper Àmbito that the fourth quarter of 2020 saw an even higher poverty rate, at 45%, since, although there was a certain economic recovery at the end of the year, emergency social programs were suspended, inflation rose sharply and the jobs generated did not have the same level of quality as the jobs lost during the pandemic. Argentina closed 2020 with an unemployment rate of 11%, compared to 8.9% the previous year.

It is important to note that Argentina calculates the index of indigence and poverty according to the ability of families to access the basic food basket (set of foods and beverages that satisfy nutritional, caloric and protein requirements) and the total basic basket (which includes also items such as clothing, transportation, education, health, housing, among others), respectively.

In the second half of 2020, the costs of these basic food baskets increased by about 16% in the country average, while the average family income increased only 8.5%, which helps to explain, according to Indec, the increase in the poverty rate in Argentina as a whole. This mismatch between inflation and income also shows that the situation of people living below the poverty line has worsened in this period.

According to Indec, the average monthly income of poor families in the second half of 2020 was 29.5 thousand pesos (about R $ 1.8 thousand, considering a family composed of a couple and two children) and the basic food basket total was 50.8 thousand pesos (about R $ 3.1 thousand). This average monthly income of 29,500 pesos was just slightly above the cost of the basic food basket, which in November, for example, cost 21,000 pesos (approximately R $ 1,200) for a family of four.

This relationship between income and prices explains why peaks of poverty have been observed in Argentina over the past few decades. Federico de Cristo, professor at the Faculty of Business Sciences at the Austral University (Pilar-Argentina), explains that each time there is a great devaluation of the currency and increases inflation, this skyrocketing poverty occurs because many people who are in temporary financial difficulty are included in the poverty index. “So it may happen that below the poverty line there is a family that has its own house, that has a car and a reasonable standard of living. But that temporarily has an income problem. Someone in this family may have been unemployed, for example, ”he exemplified.

Therefore, the trend is that the number of poor Argentines will decrease as soon as inflation and exchange rates stabilize and purchasing power is recovered. The problem, as pointed out by Flávio González, a law professor at the University of Buenos Aires, is that when these poverty jumps occur, not everyone who was pushed below the poverty line during the crisis can get out of it when the situation normalizes. “Structural poverty jumps in every economic crisis,” he said.

In a text for Infobae, the Argentine journalist Eduardo Alucindo recalled that after the 1989 crisis, when poverty reached 50% of the Argentine population, the rate was never below 20%. A similar phenomenon occurred after the 2001 crisis, which raised the poverty rate to 58%. After that, the number of poor people did not drop by 25% of the population. “It does not seem risky to assume that perhaps the floor is now consolidating at around 30% or more,” writes the journalist. “This is the most alarming sign, because it would mark a larger and more consolidated scale of structural poverty”.

In an interview with El Destape radio on Wednesday, the Minister of Social Development of Argentina, Daniel Arroyo, said that the country’s structural poverty level is in the region of 30%. “Argentina has a structural poverty rate of 30 points and if tomorrow (…) the economy flies, poverty drops to 30% and then it stagnates,” he said.

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