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06 May 2021
The Latin American continent was the most affected by the COVID-19 pandemic and also the most damaged in economic and social terms, a tragedy never seen in the last 120 years. The latest report from the Economic Commission for Latin America and the Caribbean (Cepal) warns that the increase in the level of poverty is unprecedented, reaching 22 million new poor in 2020: a setback in 15 years on the continent of hope also due to long-standing structural factors that have prefigured a dysfunctional style of development. For this reason, the economic reactivation will have to rely on important structural, productive, fiscal and institutional reforms, to advance in the configuration of a new style of inclusive and sustainable development.
The "Panorama Social de América Latina 2020" report estimated that last year the poverty rate reached 33.7% of the population and that of extreme poverty stood at 12.5%, levels that have never been recorded in the past 12 and 20 years. The total number of people living in poverty has thus risen to 209 million, of which 78 million in extreme poverty, eight million more than in 2019.
Several attempts by governments to prevent the increase in the number of deaths from Covid-19, prevent health collapse and juggle to maintain economies.
In most countries, more than 50% of the population is employed in "informal" jobs - observes Cepal - and since the beginning of the pandemic there has been an exponential growth of the new rich, opening a deep breach on inequality and employment on the continent.
"Eight out of ten Latin Americans are vulnerable, which is why it is necessary to create universal social protection systems", recalls Alicia Bárcena executive secretary of the institution, warning of a stop of the social elevator;
in 2019, 59 million people were part of the middle class, experiencing a process of downward economic mobility.
According to the data collected, the continent is experiencing a second wave mainly in Mexico, Brazil, Peru and Chile, which at first began to open their economies and then were subsequently forced to take action. The continent has recorded about 29.4 million infections and about 900,000 deaths since the beginning of the pandemic. This is due to overcrowding, lack of basic necessities, fragmented health systems and slow and uneven access to vaccination.
“While Chile is a regional leader and has already inoculated more than 18% of its population, there are countries like Guatemala, Paraguay or El Salvador that have barely vaccinated a few thousand people.
So we will never achieve herd immunity by 2021 - adds Bárcena - We are experiencing a strong global accumulation of vaccines in developed countries: an international collaboration is urgently needed ".
La pobreza y la pobreza extrema alcanzaron en 2020 en # AméricaLatina niveles que no se han observado en los últimos 12 y 20 años, resp.
#CEPAL estima que in 2020 the rate of pobreza extrema se situó en 12.5% y rate of pobreza alcanzó el 33.7% of population.
https://t.co/O0XxMGQlNZ pic.twitter.com/SuEGh9kQ7K
- CEPAL (@cepal_onu) March 4, 2021
Growing consensus on redistribution of wealth and taxes on big fortunes
For years it has been thought that to end inequality it was necessary to fight poverty. Today the pandemic has shown that this is no longer enough. It is the time when even the richest contribute to get out of this profound crisis.
"The virus is a very strong marker of social inequalities," says the director of the Centro de Estudios Avanzados (Calas), Hans-Jürgen Burchardt. Inequalities and development problems in Latin America are not due to a lack of resources but to a lack of correct distribution. Resources do not support the internal development of countries and - adds the German economist - most countries have failed to create a competitive local level of business that caters to the domestic market. The vast majority is focused on exports. and it is controlled by a small group of people or families. ”It is these groups of business and family empires that have strengthened during the pandemic. So the crisis has plunged Latin American workers into a very precarious situation.
In this way, the system of bonuses provided by the state - says the business sector - induce people to no longer want to work. “It's a stereotype, it's not correct - says Buchardt - a street vendor often kills himself by working longer hours than anyone with a stable and secure job. Most of the rich are not born of meritocracy and are not so because they work a lot, rather they are rich by inheritance or privileged family networks ”. Some Latin American entrepreneurs reject the tax increase by threatening to leave their countries: “How can a minority, in a context like this, threaten to leave because they will become a little less rich? In Latin America you are free to be rich! There are no taxes on inheritance, capital and patrimonial income ".
The academician also warned that currently 10% of the highest-income people in Latin America pay an average effective tax rate of only 5.6% on their income, in some cases as little as 1% to 3%. .
Argentina, Uruguay, Colombia and Bolivia have already imposed modest tax increases on wealth and large fortunes, while Chile and Mexico are working to introduce new taxation. The recent announcement by US President Joe Biden to raise taxes on the wealthy and corporations reinforces this idea. "It is the first time that the International Monetary Fund is not in favor of austerity - says Ruiz, an IMF official - we need new resources from those who have the most, as well as the need to adopt new measures to prevent flight of capital and money transfers abroad ".