Why has “poverty” increased in Peru and what is the government planning?

Kathia López, 58, gets up very early every day to take care of her children. She is a single mother of two children, ages 6 and 11, and is in charge of a common pot –an initiative also known as a popular kitchen– in San Juan de Lurigancho, the most populous district in Peru according to the most recent population census. .

“Inequality exists. It is clearly seen that men have a better chance of finding a job even though they are single parents. They do not assume the responsibility of taking care of the children. On the other hand, single mothers have to share work at home with work. Sometimes, they tell us: ‘You are a woman and you are not going to have a job as you should be,’ López explained during an interview with the voice of america.

López had a stable job before the arrival of the coronavirus. She was a product seller in the largest commercial emporium in the Peruvian capital, Gamarra, located in the La Victoria district of Lima. The fear of her disease led her to give up and she had to take refuge at home to care for her family.

However, this mother had to generate income and so she founded her common pot. “It is a way to also help single mothers who are in the same situation that I am going through,” she explains. “The situation is complicated. Everything has risen too much. Things are no longer within reach as before. Between neighbors we collaborate with food ”, she adds.

figures

The case of Kathia López, without a job and trying to survive, is an example of the visible consequences in the current context of poverty that Peru is going through. According to recent reports, the income is insufficient to purchase a basic basket of food and other essential products.

The National Institute of Statistics and Informatics (INEI) pointed out in its most recent report “Evolution of Monetary Poverty 2011-2022”, disclosed in this month of May, that the estimated number of people in poverty in 2022 is 9 million 184 thousand, which means an increase of 628 thousand people with respect to the year previous in the South American country. This represents 27.5% of the population.

Among the most affected regions are Cajamarca, Huánuco, Puno, Ayacucho, Pasco, Loreto, Huancavelica, Callao, Piura, Lima, among others.

The report “Evolution of Monetary Poverty 2011-2022” was prepared with the results of the National Household Survey and concluded that “in 2022, extreme poverty reached 5% of the country’s population (1,673,000 Peruvians) and increased by 0.9% compared to the year 2021; while, when comparing it with the year 2019, it was higher by 2.1 percentage points”.

The World Bank reported that 700,000 Peruvians would have gone from being part of the middle class to a situation of vulnerability and another 700,000 would have gone from vulnerability to poverty. It also concluded that the factors causing this situation would be the economic slowdown, inflation and high labor informality.

This study of the global entity not only measured economic income – which according to the report would be 6.85 dollars a day per capita – but also access to basic services, health and education level.

Perfect storm

The economist Alejandro Indacochea explained to the voice of america that the most recent reports on monetary poverty in Peru are the result of what he described as a “perfect storm.”

“We have had the pandemic, everything that the government of Pedro Castillo meant, the blockade of the roads for the protestsCyclone Yaku and what could come with the arrival of a second phenomenon of the Coastal Child”, he explained.

Indacochea believes that this situation of poverty reopens the debate on the reformulation of social programs. “We have to support Pensión 65 (an economic aid plan for people over 65 who do not have a formal pension) which, although they will not overcome poverty, will improve the situation somewhat. A food recovery law like it exists in Spain, where there are expensive restaurants and supermarkets that can support compatriots who are in a situation of vulnerability, ”he mentioned.

However, the expert also referred to the fact that beyond assistance, the population must be explained that the aid must be paid. “If we grew at 2.1% in ten years, we would be at the level of what we were in 2014. From now to 22 or 25 years, we would continue with 20% poverty. At the rate we are going, we are not going to solve this problem, ”he opined.

Indacochea urged that a national austerity plan be implemented in all sectors of the Peruvian State, in order to work on strategies to reduce the social gaps that have grown more in recent years.

Lack of investments

The former Minister of Economy, Mercedes Aráoz, explained to the VOA that the setback in poverty reduction has occurred, fundamentally, due to the lack of public management in 2022. “Private investments that continue to fall have been paralyzed. The GDP rate (Gross Domestic Product) continues to go down. The World Bank projections are that growth will be below 2.5%”, he added.

Aráoz highlighted that the increase in vulnerability in the country began, in large part, due to the mismanagement that former President Martín Vizcarra (2018-2020) did during the pandemic. “It locked up the vulnerable population that is in the informal sector for too long. They live at work from day to day and they were the most hit, ”he recalled.

The former minister added that the recovery of formal employment in Peru has been very little, which has an impact on the income of the most vulnerable families who must also suffer from the rise in food prices. In her opinion, this scenario was not addressed by the government of Pedro Castillowho is serving pretrial detention after his decision to close the Congress of the Republic and declare a “government of exception” on December 7, 2022.

“Without private investment, there is no economic growth. It is the one that generates the formal employment that gives you the chances of reducing poverty more strongly. We also have a regulation of laws for formalization that does not help, ”she said.

The economist also pointed out that the vision of President Dina Boluarte regarding poverty reduction is unknown. At the same time, Aráoz observes that there are solitary efforts within the government of ministries, such as the Economy and Production, to improve their management.

“The work of the Central Reserve Bank is key to addressing this problem [de la pobreza]. Fiscal policy must be focused on collection and promote formalization that goes through a process of changes that helps small and medium-sized businesses to grow and not stay small. Labor regulations should also be more flexible and private investment must be worked more in sectors such as tourism, commerce and mining that can help us have more tax revenue to consolidate the welfare state that exists in Peru”, settled Aráoz, alluding to the measures that in your opinion should be implemented in the short term.

The government responds

The economy minister, Alex Contreras, has said that the government of Dina Boluarte will work on a special package to reduce poverty this year.

“In the last eight years, poverty has not moved. The pandemic caused it to rise 30% and as a society we cannot tolerate that more than nine million Peruvians do not have the minimum, ”he said.

For the time being, the government has promulgated a registry for the female head of the household in a situation of poverty or extreme poverty, which will be systematized and prepared by the Ministry for Women.

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