( Spanish) — Why is poverty rising in Argentina?
The question has been at the center of public debate in the South American country for years, as inflation rises, the peso devalues and presidential candidacies are set up in a key election year, but the answer is not that simple and not even the statistics have been under scrutiny.
For much of its history, and at least for as long as measurements have been made, Argentina maintained relatively low levels of poverty compared to its neighbors in Latin America, and although the gap has narrowed, this trend is still noticeable.
But in recent decades, and especially after the covid-19 pandemic, poverty, both internally measured and regionally compared, has begun to rise, or at least its reduction seems to have stagnated.
According to the latest measurement of the National Institute of Statistics and Census (Indec) for the second half of last year, 39.2% of the Argentine population was below the national poverty line, while the figure reached 29.6% of households.
“The last time we had such high poverty levels was in 2005. We have been stagnant for 20 years,” economist Leonardo Marcarian told Radio.
In December 2019, at the beginning of the mandate of Alberto Fernández, the current president, poverty –measured as a percentage of the population– was at 35.5%while in December 2015, when Mauricio Macri took office, it was estimated at around 30%, according to data from the Center for Distributive, Labor and Social Studies (cedlas) of the National University of La Plata and the Argentine Catholic University.
At that time, and since INDEC’s intervention in 2007, official statistics in Argentina had little credibility and for this reason alternative sources were used, especially in the case of poverty, which had not been published since 2013 and which in 2012 had been reported in only 5.4% (Cedlas estimates it for that period between 26 and 30%).
INDEC was later reformed during the Macri government and has regained its credibility, but tensions over the composition of the different baskets, the methodologies and the poverty register itself remain latent.
Beyond this statistical -and political- drama, there is a consensus that poverty has been rising in the last decade and with each presidency, after the recovery at the beginning of the 21st century that, in turn, took place after the outbreak and the economic, political and social crisis of 2001, when the highest levels of poverty in the history of Argentina were recorded: in 2002, the worst moment, reached 57.5%according to official statistics, and the impacts of that crisis are still felt in the country.
INDEC publishes historical poverty data since 1988 onwards, which show that the lowest poverty of the period was recorded in May 1994, when it reached 16.1%. Although these data refer only to the Greater Buenos Airesthe territory surveyed at that time by the organization, which in 2003 began publishing data from across the country.
Before that, there were only estimates: Agustín Arakaki, from the University of Buenos Aires, points out in an academic study that in Greater Buenos Aires, the metropolitan territory that includes the city of Buenos Aires and its surroundings, 4.57% of the population was below the poverty line in 1974, and by the year 1982 it had jumped to 21.5 %.
And esteem that in the 1940s and 19950s poverty would have been between 6 and 8% during the 1940s and 1950s, and that going into 1960 it would have remained at similar figures.
About causes and explanations
But why is there poverty in Argentina and it is difficult to lower it?
Added to the complexity of the measurements, then, is the difficulty of the explanations.
For the United Nations, Poverty has its causes in “unemployment, social exclusion and the high vulnerability of certain populations to disasters, diseases and other phenomena that prevent them from being productive”.
In the Argentine case, from the Center for the Implementation of Public Policies for Equity and Growth (cippec) demographic and fertility educational factors are added, especially in the case of child poverty, which is higher, while a report from the National University of Quilmes it also adds the chronic problem of currency devaluation and inflation to the equation.
As reported by INDEC, at the end of the second semester of 2022, poverty stood at 39.2%. (Credit: Telam)
According to this text, signed by Mariano Messera, Nicolás Milano and Luca Vázquez, the devaluation of the currency and unemployment would be the two most important variables in Argentina when it comes to explaining the growing poverty.
“This is due to the fact that without employment, a person does not obtain the capital to acquire the basic resources to live, added to the fact that the devaluation of our currency means that with each month that passes
fewer resources can be bought with the average salary of an Argentine”, says The report.
Argentina does not escape the characteristic problems of the region to which it belongs, Latin America. According to the Economic Commission for Latin America (Cepal)these are low growth of the Gross Domestic Product (GDP), economic vulnerability and high inequality.
And all this in a context of a possible “middle-income trap”, or the moment of stagnation that comes after a low-income economy manages to make the leap to medium or upper-middle income and has lost competitiveness, and which would affect to countries like Argentina, Mexico and Brazil, according to the World Bank.
And with regard to its GDP, the growth of the Argentine economy in recent decades has been marked by strong variations, between jumps and recessions, and underperforming some of its neighbors, such as Brazil and Mexico.
Martín González Rozada, a professor in the Department of Economics at the Di Tella University, told Radio that “in order to reduce poverty in the long term, Argentina needs to grow ten or fifteen years sustainably.”
“It is a complex structural situation and one that is not easily resolved since none of the last governments could provide a solution,” said Eduardo Donza, a researcher at the UCA Observatory of the Argentine Social Debt. “We lack policies that are of development and that they are sustained over time”.
While for Leopoldo Tornarolli, from the Center for Distributive, Labor and Social Studies (Cedlas), “the main explanation for the growth in poverty has to do with the loss of purchasing power of wages” due to inflation.
Argentina and the world
The basket of goods used in the past by INDEC –even without referring to the period in which the organization lost credibility-– is not the same as today, and comparing over time, and even more between countries, since each place measures differently, is difficult.
One possible solution is to use the daily income thresholds established by the World Bank, based on dollars adjusted for purchasing power parity (PPP), a tool that tries to register the real purchasing power in each country, enabling comparisons.
The World Bank thus establishes three daily income thresholds per person to measure poverty across different countries: US$2.15, for extreme poverty; that of US$ 3.65, of poverty for low-middle income countries; and that of US$ 6.85, of poverty in upper-middle income countries.
How does Argentina’s current poverty compare this year with that of its neighbors?
A low-income neighborhood in Argentina. (Credit: Telam).
Using the threshold of US$6.85 (PPP, constant 2017 prices), the assigned by the World Bank to the Latin American and Caribbean region, Argentina recorded a poverty of 11% according to the latest values of 2021.
These figures are among the lowest in the region: only Chile (8% in 2020) and Uruguay (7% in 2021) register lower levels of poverty. (Taking 1994 as a reference, Argentina had in that year the lowest poverty rate in the region).
Mexico (33%, in 2020), Brazil (28%, in 2021), Colombia (39%, in 2021), to cite just a few examples, they have higher current poverty values.
What levels do high-income countries record instead?
What about low-income countries?
In this group, poverty is much higher, always based on the same threshold: reaches 84% in India (2019), 91% in Nigeria (2018) and 60% in Indonesia (2022), to name just three.
These cold numbers do not represent, however, the scourge of poverty in Argentina and the world. But they are a basis for trying to understand it.
